Author: Stephen Huck

As a business owner, managing your finances should be your priority on your to-do list. You have to focus on inventory, manage accounting and bookkeeping, and other financial tasks in front of you. But all these functions require clarity in your financial statements and bookkeeping records.

Delayed or missed entries in business bookkeeping can pave the way to financial disaster and business failure. Building a clear picture of your financial health will contribute to business growth. If a business is ready to audit, it attracts investors.

Accounting Problems That Can Sink Your Funding

1. You do not use an accounting software

Manual work is always the hardest and is at risk of errors. A small accounting error can lead to considerable losses in the business. An accounting software, according to your business size, is as essential as funding your business. Small business owners can also get specific software to meet their needs.

Working on a spreadsheet is not like working in accounting software. Be sure to research and find the appropriate accounting software to make your business bookkeeping run smoothly.

2. Financials are incorrect

Incorrect financials are a threatening accounting problem in your business. If your finances are wrong, it may sink your funding round in your business.

Any error in financial statements leads to considerable losses. Business bookkeeping and other business operations will be messy if you do not keep your financial data current. Your accounting statements must be clear and transparent. Income and expense statements must be clear and related to cash flow and balance sheets. Delayed data entry is a significant risk for fraud and theft.

3. There are projections for revenue, but there is no financial data

You cannot have a clear picture of how much revenue your business has generated unless you know the expenses and purchases you have made. Your sales have increased, but is that according to the profitability of your business? Investors want to get a clear and transparent presentation of your financial data to invest their money. A business loan cannot be achieved from banks unless a clear, transparent financial record of your company is present. 

4. Financials are not produced monthly

In a small business, it is often thought that it is appropriate to produce finances on a quarterly or bi-annual basis. However, monthly financials show investors that you are closely monitoring your business.

If you do not produce monthly financial statements, a negative balance can result if expenses are made but no income statement is updated. Invoices that need to be paid by the company may go unnoticed, which can damage a company’s reputation. It can also end terms with suppliers, halting or significantly reducing business growth.

5. Your personal and business accounts are all mixed up

Business owners often mix their personal finances with business expenses. Keeping these two finances separate is of utmost importance. If these two finances (personal and business) are not segregated, then it cannot be known what was intended for business and what was used personally. The amount of profit that was generated out of your invested capital cannot be estimated correctly.

Your funding will sink if you do not keep a separate business account. 

Conclusion

As a small business owner, you have the drive to grow your business at lightning speed! However, it’s important to keep in mind that accurate financial records are essential to success. Don’t overlook accounting issues during the initial stages of your business. If you do, it could negatively impact your funding prospects and harm your ability to secure funding. Stay on top of your finances and watch your business grow with confidence!

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.

The best way to combat fraud is through awareness and prevention. The most effective prevention measures are the regular inspection of procedures and employee screening. Practical fraud prevention strategies should always be part of the company’s manual. Employees should know these fraud prevention methods in their orientation and conduct periodic awareness programs.

Dishonest Employees

Owners may have implemented fraud prevention strategies, but they also need to remember that every employee may not be honest and loyal. Employees may be involved in unethical accounting practices, inventory pilferage, and other financial losses.

Checking Service Records Before Hiring an Employee

The very first measure is employee screening before hiring. To avoid fraud, an employee’s past service record, educational certificates, and legal antiquity should be screened carefully. Employees are the most essential asset for fighting against fraud, but hiring the wrong person can result in employee fraud. Fair employment practices should be adopted as a preventive measure against fraud happenings.

Awareness Program for the Prevention and Detection of Fraud

Training and educating staff to report suspicious activity is of vital importance. Employees should know they will face strict disciplinary action if they commit fraud in your company. In case of involvement in fraudulent activity, they should know that your organization has a zero-tolerance policy for fraud. Everyone in the company should have an orientation of the fraud policy, know the types of fraud, and to whom any suspects should be reported. An awareness program often emphasizes that it’s the responsibility of all employees to play the role of fraud prevention. Ethical training and education of employees are scheduled under this program.

Segregation of Job Descriptions

People should know their responsibilities, limitations, and what they are held accountable for. Policies and procedures should be written. All workers should have orientations and frequent training regarding these policies. A clear organizational structure should exist. Segregation of duties and rotation of staff in altered areas can also aid in the detection and prevention of workplace fraud. Make everyone accountable for their actions, and not only will they take pride in their roles, but they will also be less likely to commit fraud.

Strict Monitoring

Loopholes in your policies and procedures only compel workers to commit fraud. Identify risk areas under your control where a breach of trust is most likely to occur. Recognize the elements that encourage people to involve themselves in fraudulent doings. Access to inventory storage areas, sensitive data, and financial statements should be highly restricted. Managers should set an example by doing the right things and having zero tolerance for any suspicious activities. Often, the most “trusted” people become scammers when there is an oversight of internal controls.

Surprise inventory checkups of the financial statements should be done periodically. Employees should feel the continuous pressure of being monitored.

Documentation is crucial for internal controls to prevent fraud. Consecutive numbering of all receipts, purchase orders, and receipts should be done. Deliveries should match purchase orders. No stock should be stored without records. All receipts should carry signatures and stamps of more than one person. Prevent accounting fraud by hiring account managers and experts.

Reporting System for Fraud

Honest people often hesitate and are reluctant to report wary and suspicious activity. An anonymous reporting system should be introduced to workers. An open-door policy is also helpful for fraud risk management. Employees should interact with management and raise their concerns without fearing penalization or repercussions.

Fraud Detection

The best deterrent against fraud is the existence and visibility of a fraud detection strategy. Hiring certified fraud examiners can help prevent fraud in the long run. They provide consultancy, continuous monitoring, and develop measures to prevent fraud.

Conclusion

Investigations of fraudulent cases have revealed that people commit fraud only when they find it easy and get an opportunity. Continuous monitoring and evaluation of an effective fraud policy is an integral part of measures to prevent fraud.

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.

Virtually every business faces fraud, and it has cost companies an estimated 5% of their annual profits. Businesses that lack preemptive fraud prevention measures are the most at risk. Fraud itself can be a civil wrong or a criminal wrong, and in some cases, it may cause no loss of money, property, or legal right but can still be an element of another civil or criminal wrong. Traditional in-house controls can be ineffective in averting fraud. The most important thing to do is to discover what steps can be adopted by individuals to protect their businesses from fraud.

Types of Frauds

There are several techniques to commit fraud, as criminals use their imagination to find new methods daily as the world progresses. Some of the most generally committed types of fraud include:

1. Check Fraud: Check fraud happens when an individual deliberately pays for something with a check and knows that there is not sufficient cash in the account to cover the cost or when a person fakes or forges a check stolen from someone else.
2. Internet Sales: Internet frauds are becoming more widespread since the world depends severely on technology. This type of fraud comprises of selling fake or forged items or taking fees with no intention to ship or deliver the item.
3. Website Misdirection: This happens when hackers copycat respectable establishments such as Amazon, eBay, or PayPal, transmitting customers to another website where they enter their credit card information. The criminal then uses this information to make personal acquisitions.
4. Charities Fraud: For several years, felons have benefited because Americans generously give to praiseworthy causes. Convicts implore individuals to make contributions to different foundations that do not exist.
5. Work-from-Home Scams: Operating from home sounds like a dream come true to many people, so it is not astounding that many individuals fall for this sort of fraud each year. Criminals promise a salary to people who sign up for their fabricated work-from-home job, often demanding that money be paid upfront with the promise of a significant settlement in a short amount of time.
6. Identity Theft: One of the most frequently executed types of fraud in this age, identity theft mugs victims of their money, credit rating, and personal identity. Impostors obtain credit cards, bank accounts, and other personal information, using them for personal gain.
7. Credit Card Fraud: In today’s environment of automated transactions, credit card fraud has become a dominant crime. By gaining people’s credit card information through various resources, the criminal can rapidly make a large amount of purchases before the consumer even comprehends what is happening. Credit card fraud is categorized as identity theft, identity assumption, or a fraud spree, depending on the particulars of the criminality.
8. Insurance Fraud: Insurance fraud is committed every day by people who otherwise would not consider themselves to be lawbreakers. Incorrect or inflated insurance claims for automobile damages, health care expenditures, and homeowners or renters insurance are deemed insurance fraud. They may be charged as crimes, depending on the circumstances and volume of the fraud.

Fraud Prevention and Warning Signs

To avoid becoming victims of fraud, people need to protect themselves by learning the warning signs of fraud:

• Phone calls in which the caller asks for money to be sent in exchange for an offer.
• Phone calls in which the caller asks for a social security number (even if they only request the last four digits).
• Phone calls in which the caller asks for personal information, including a bank account or credit card number.
• Receiving unsolicited mail or emails requesting the person send money with the threat that he may lose their credit card or driver’s license if they do not obey.

 

Possibly, the most significant personal policy to protect yourself against fraud is to never provide personal information over the phone, mail, or email. A respectable bill collector, bank, or loan company never demands money upfront. Suppose a person receives an offer or a demand for payment. In that case, they should look up the corporation’s contact information, contact the establishment directly, and check with the Better Business Bureau in their state to ensure the company is authentic. When retailing an item of significant value, an individual should also appeal a cash payment to avoid check or wire fraud.

Final Note

Keeping these warning signs in mind, individuals can prevent fraud by detecting fraudulent activities.

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.

Corporate fraud is something that has affected almost every business at one time or another. It is a sad price of doing business. Corporate fraud can be any fraud that is committed against a specific company. Corporate fraud cases are complex, private, and can include financial scandals or evasions of fiscal responsibilities. It can also come as theft of physical assets, confidential information, or cash. Also, misappropriate use of business accounts, fraud of payroll, extortion, credit and banking-related frauds, specified insurance fraud, and much more.

Types of Organizations Affected by Corporate Fraud

Now, the question is how can we measure the extent of corporate fraud and what steps can we take to eradicate this obnoxious scam from our organizations? Everyone faces this issue, and it doesn’t depend on the organization’s size, industry, net worth, or location. Fraud does not discriminate. You cannot plan to squelch white-collar crime without discouraging healthy business growth that benefits the consumer. The government vigorously tries to avoid fraud with different policies, rules, and techniques designed to help law enforcement detect schemes before they blow up.

 

According to recent studies by the American Institute of Certified Public Accountants (AICPA), small businesses are greater targets of fraud. Small and midsize companies undergo a more significant part of fraud damages than do larger companies. The reason is apparent: small companies don’t have the resources to implement proper fraud prevention protocols. Also, even if implemented, the protocol is often taken lightly by company employees.

Fraud Prevention Program

Specialists estimate that businesses lose 5-6% of their yearly profits due to white-collar fraud. A complete fraud prevention program is required if you do not want to become a part of these statistics. This consists of three things:

• Training/education
• Exploration/investigation
• Preemptive prevention

Training/Education

It is the responsibility of the stakeholders to give every employee complete training on identifying the signs and symptoms of a fake business con and how to report these scams efficiently. Even if someone in the business has recognized the fraud, they often hesitate to come forward because it may be hard for that individual to explain the situation, and they fear losing their position in the company based on what they have found. The most important thing for a company owner to tell all employees is that they have their complete trust, rely on their actions, and that they should come forward without any hesitation in case they find something. Whether it is a small or large organization, employees are most likely to report suspicious activity when they have the essential knowledge to help the company as an integral part of the fraud prevention program. Almost 90% of the time, corporate frauds are committed within the organization, so while fraud avoidance efforts are designed to stop employee fraud, inspections of suspected fraud should discourage other employees from committing fraud.

Exploration/Investigation

Secondly, once the fraud has been identified, proper and thorough interrogation and an investigation is a must. Identifying and inspecting signs of fraudulent doings should never be overvalued or taken too superficially. All employers must remember the influence on the company’s reputation and internal atmosphere of setting the wrong person under exploration.

Preemptive Prevention

Thirdly, and the most critical factor in a fraud prevention program, is to carry out specific preventative measures to see the general picture and know the background of fraud, categories of fraud, and detection techniques applicable to fraud in a corporate setting. Decide what action should be penalized to the culprit or guilty party based on the investigation results. There should be a structured report according to the elements of proof for the relevant offenses. The action taken will undoubtedly set an example in front of everyone in case of any future corporate mishaps.

Final Note

The one sure thing for almost all business owners to know is that we can never completely eradicate fraud in our businesses. Still, we can take preventive measures and be more efficient with keeping a strict eye on all things related to corporate fraud by properly educating everyone working in the corporation.

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.

In business, focus improvement means that your systems are improved by gradually removing restraints and improving the system as a whole. To focus on the growth of a business, it is essential not to waste time dealing with the system’s constraints. By doing so, the focus of the people associated with the company will be on the business functions.

Focus Improvement

Operating a business is not an easy task, no matter how experienced you are. A business needs your investment, your time, your energy, and your complete focus. If you are distracted, you will not be able to give attention to business operations wholeheartedly. No matter how efficient the tools and software you are using to manage business functions are or how highly qualified the staff you hired to run your entrepreneurship may be, the business still demands your focus wholeheartedly.

Business bookkeeping and accounting is a difficult task. As an entrepreneur, you also must know the value of making the right decisions at the right time, along with the consultation of accountants. Reading financial statements, matching accounting statements, and discussing finances with your accountants all need your focus and attention. Keeping a check and balance on your bookkeeping is not an easy task, and if your mind is already not focused on the work, you cannot interpret whether the expenses are going in the right direction, much less anything else. A small mistake in business or a slight delay in business-related decisions can slow the growth of a company, leading to a period of recession if you are not entirely focused.

Similarly, suppose you are dealing with clients in a service business or having a meeting with other entrepreneurs. If your mind is not focused or you are not fully prepared for the meeting, it will leave a bad impression on your clients and/or investors. You must be aware of your environment. What is going on in the market? When can you reach other markets? What strategies can you adapt to increase business financing? How do you increase the market share of your products?

How to Become More Focused

Understanding the importance of focus is one thing, but how to become more focused is another. Here are some ways to focus efficiently on your business and its operations.

Make a daily to-do list. Paste it on your wall or computer table so you will be reminded and stay focused on the tasks you need to accomplish in a day. Then, divide your day into daily tasks and select one task at a time to tackle. Plan out how to precisely achieve that task and create deadlines to finish it in the allotted time. When you finish that task, allow yourself to feel accomplished before focusing on the next task. Follow this simple procedure to accomplish your task list.

 

Also, try taking small breaks in between the tasks on your list. These breaks can take 5 to 15 minutes, so long as they allow your mind to refresh. Grab a cup of coffee or tea to mentally relax before working on the next item on your task list.

When taking a break or working on your tasks, keep your mind away from other interruptions and thoughts. It is crucial to avoid unnecessary things such as checking your inbox or social media frequently. Likewise, close any unnecessary browser windows on your computer to minimize distractions.

Office work should be kept in the office, if possible. When out of the office, try improving your focusing skills by practicing yoga and meditation. Proper sleep, hygiene, and eating are as important to stay focused and alert at the office just like task lists, taking breaks, and minimizing distractions.

Conclusion

Becoming more focused is important for everyone in today’s fast-paced world. Entrepreneurs, essentially, need to be more focused as it affects their day-to-day tasks and meetings. This, in the long run, results in successful business growth.

There are Three Main Purposes of Financing

• Funding a business start-up
• Financing for the growth and expansion of a business
• Dealing with unforeseen financial encounters

Sources of Business Financing

• Self-Funding
• Giving up Equity
• Debt

An entrepreneur takes on debt to fund massive purchases that they could not afford under normal circumstances. A debt arrangement means that the borrower is given money under the condition that the money will be paid back later with interest. There are different types of funding:

• Business credit card use
• Small Business Administration loans
• Foreign investors
• Crowdfunding/selling shares of the business
  
  

An Entrepreneur Must Be Clear of the Situation and Considerations When Taking Loans

Consider the following when taking a loan

1. How early are the finances needed? If there is no time to wait, then debt financing may be the only option left to invest in the business.
2. How much finance is needed? If there is a small amount to be invested, a loan can be taken.
3. If a company is running successfully and financing is required urgently, debt can be taken.
4. Debt is beneficial if you want to keep the business local and keep the whole ownership with you.
5. When taking debt, the lender has no claim to equity in the business. Ownership remains the same. Business operation and bookkeeping decisions remain with the owners/entrepreneurs/executive management.
6. When net profit is increased, the lender will only be given the borrowed money and the interest in it. If business progress and rewards are more significant, the entrepreneurs will reap the rewards. The lender will not claim or share in the business rewards/profits.
7. Interests on debt can be subtracted from the business’s tax returns. Borrowing money can be a gift to entrepreneurs. The cost of interest decreases the taxable profit that your business earns. Thus, it reduces the tax expense in your company/business. Large corporations/businesses also use this strategy to minimize tax expenses.

Consider options other than taking loans

• Debt has to be paid back with interest, whether the business is a success or not.
• High interest in debt during a recession of business can dissolve the company.
• The bigger the debt-to-equity ratio in the business, the riskier the business is considered by investors.
• The company is usually required to place assets of the company as security/warranty to the lender.
• If you are making day-to-day purchases and are small in numbers, then using a business credit card is the best option.

 

It can be a challenging duty of entrepreneurs to decide when and how business financing is right for the business. If the entrepreneur does not have enough money to be used as a capital investment, they may go to lenders to borrow money or take debts from banks or financial institutes. Starters in the business field are not experienced, and lenders will not give them an accurate picture. Getting loans in the wrong situations and at the wrong times costs financial losses to entrepreneurs.

Entrepreneurs must understand these essential factors before going to lenders

• Credit history: previously, how has the business financing been managed?
• Ability to pay back the loan: is the business going well enough to pay back the amount borrowed with interest?
• Has the entrepreneur invested enough personal finances as capital in the business?
• Does the business have assets to be put down as security in debt if the company fails or a period of double-dip happens?
• Does the entrepreneur have enough experience in business financing and business operations?

Conclusion

If entrepreneurs are not experienced, they can consult with bankers and accounting firms to get a clear picture of their business and when to take a loan. They can benefit from the advice of bankers as well. 

Using the right tools and assistance at the right time for business financing is a way to a successful business. 

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.

Borrowing money is sometimes a business necessity, and sometimes, business owners go into debt to boost business growth. This often has the opposite result, and instead of rapid growth, the debt becomes a severe cause of cash flow and other business funding problems. Small business owners should prepare and implement a step-by-step guide to ensure that they can get out of debt before the company fails.

Getting Out of Debt

Step one

• List All of your debts, their balances, and interest rates.
• After tracking down all your debts, you will have a clear idea of how much is payable.

Step two

• Set periodic goals.
• Plan out your total debt. Then, know the dates of their payback schedule. Divide your debt into monthly savings in a separate account in your business. You will keep an amount of money every month on that account reserved for debt payments.

Step three

• Reduce expenses. The crucial step in getting out of debt is to minimize expenses in the business.
• Make a priority list.
• Ensure your employees’ wholehearted participation.
• Strictly check accounting statements, especially financial statements.
• If you are spending a considerable amount on advertising your products, you cannot cut all of the advertising costs, but you can find alternatives. Go for social media advertising, and it will also aid in direct interaction with your potential clients.

Step four

• Do not mix your personal account with your business account. This is one of the biggest accounting mistakes small business owners make. You will not get the true picture of your business’s financial status.

Step five

• Keep a firm control of your business bookkeeping to avoid fraud.
• Cut short on unnecessary expenses.
• Manage business operations more effectively.
• Predict, analyze, and sort out business funding, cash flow, and other problems over time.

Step six

• Revise your budget.
• Keep the money for monthly payments of the debt. Do not use this money for any other purchase. Otherwise, the debt with interest will continue to pile up. Manage your inventory. Do not purchase extra stock.

Step seven

• Sacrifice the fast track for slow growth.
• Many entrepreneurs want to grow their businesses by leaps and bounds in no time. 
• Try not to go into more debt for rapid growth in business until you have paid back all of the previous debt.

Step eight

• Know the exact cost of the services you provide to your customers. Never compromise on price, or the company will either dissolve or go into increasing debt.

Step nine

• Stay sharp in your business situation. Use accounting software to keep an up-to-date accounting system.

Step ten

• Drop credit cards. Credit cards should be used minimally in small-sized businesses as the loans will pile up quickly.

Step eleven

• Think productively about producing more income.
• Debt counselors often suggest finding means to bring more money into your business to eradicate your business’s debt-payment liabilities once and forever. Find ways to increase your income. 
• Liquidating high-value assets can be done as a last resort, but still, it provides an option for paying the debt on time. You can sell a valuable asset of your business that is not being used or is not a part of the capital investment.

Step twelve

• Work harder and work more. Create extra shifts and put in overtime to get out of debt. You can seek out options to work overtime for the time being while your company is in debt.

Step thirteen

• Every time you achieve your goal, reward yourself. Keep achieving your goals until your company is debt-free.

Conclusion

Getting out of debt is of great importance. If not paid down promptly, interest can increase the debt to an unmanageable level. It can further force you to take on even more debt to run business operations. Instead, prepare and implement a guideline for you and your employees to get out of debt fast.

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.

Making payroll is perhaps the most essential task for a small business. Unfortunately, issues regarding payroll in small businesses are also common. Here are five common payroll problems and how to avoid them.

Hiring Out-Performs Income

Often, small companies will experience rapid growth, and a business owner can feel mounting pressure to hire more employees. A small business will not have had time to build up revenue to appropriately pay the added staff in some cases. Before reaching that point, the business owner should assess growing business activity and needs against the current payroll staff’s skills and workload. This will allow the owner to develop smart strategies to efficiently use the current human resources without over-extending payroll funds. Staff expansion should only happen after the business has built enough steady income to meet new employees’ required payroll.

Temporary Staff is Needed

You must know when to hire new staff, how to manage their payroll funding when the revenue builds up, and how to overcome expenses until your revenue is generated, which means temporary staff might be a good option. For example, if your business wins a project and you need more staff to complete the task before the deadline, you must increase your company’s payroll. However, a temporary project also increases the expenses of a company. This is a common scenario in construction companies, landscapers, and designers. Fortunately, this process is predictable and calculable, so prepare in advance and plan out finances and any other foreseeable issues. You can take money from your business’s last season or borrow money for payroll funding until the next season yields revenue.

Over-Staffing

At start-up, business owners often hire more employees than business needs require. New business owners can get in the habit of hiring staff for any new task that arises instead of efficiently dividing the work among the existing staff. Before hiring another team member, explore other options, such as outsourcing contractors, finding automated tasks to reduce the burden on the team, and reorganizing existing teams.

Delayed Payments or Discounts Given to Customer

Many customers delay their payments; however, if your small business runs short on income, you can quickly generate invoices and immediately send them to customers. This will help minimize any extenuating delay in receiving payments from your customers.

One incentive to receive payment quickly is to offer your customers discounts if the payment is made within a given time frame before the deadline.

Another option is to use Invoice Factoring for typically slow-paying customers. Invoice Factoring is when a business sells its invoices to a third party, known as a factor or factoring company, at a discount. This service can be provided by independent finance providers or even by banks.

Misconstruing Payroll Taxes

It is imperative that you carefully calculate your payroll taxes. Otherwise, the Internal Revenue Service (IRS) will notify you that you owe your employees money. This will naturally create payroll issues for your business and your employees.   However, it is essential to note that a taxpayer can request the Internal Revenue Service to negotiate payroll taxes for a small business and settle payroll taxes less than the total amount.

Conclusion

Payroll problems are a common issue for small businesses. If a company is running short on funds to meet payroll, the priority must be to secure funding from an alternate source. After all, if not carefully planned, payroll funding problems can drastically harm your business’s credibility and financial health. Small business owners should strategically manage their payroll funding by avoiding common mistakes like ill-timed hiring, poorly planned temporary projects and staff, over-staffing, delayed payment receipts, and misconstrued payroll taxes.

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.

Leadership Skills in a New Business

Entrepreneurs are considered leaders with vision and exceptional ideas that take the strengths of their company and employees together to achieve the organization’s goals. Leaders of a new business usually handle the responsibility of the success or failure of the business upon themselves, and the most prominent risk faced by the company is serious business debts.

But, numerous examples of failures of new companies in the corporate world show us that there is a difference between entrepreneurs and capable leaders. Many entrepreneurs have great ideas, but they lack the necessary leadership skills and proper bookkeeping to execute these ideas with adequate team management.

The central role of a leader in a start-up is not just generating ideas. A core leadership skill is taking the team and organizational resources currently available to execute the plans. Team building is another essential skill that leaders must possess to make their company a successful endeavor.

Decision Making Under Stress

The most significant strength of any leader of a new business or a start-up is the ability to make crucial decisions in a short and limited time. Scientific research by experts at Harvard indicates that true leadership capabilities are determined when they are under duress. For example, how well does a leader handle their serious business debts?

Procrastination in leaders is not an ideal trait for running a new business smoothly. The leader needs to be vigilant and close to employees in critical times. Keeping the employees close and explaining the principles of proper bookkeeping to them makes for excellent leadership skills. 

Managing Teams in the Initial Stages of New Business

A significant strength of a new business leader is the art of managing people in teams to help the company achieve its goals and objectives. The difference between a failed venture and a successful one is selecting the right side. When the new start-up business is going through turmoil and faces the dangers of serious business debts, sometimes the leader will be aware of how their team members regard their individual personalities. Still, in stressful situations, people’s reactions are different.

Without proper guidance from the leader, the team will collapse and eventually cause the company to fail. Instead, the main strength of the company and its leaders is to use the skills of each team member in different environments.

Irreplaceable Traits of a Leader

The leader of any new start-up must rely on their skills and tend to focus and improve their decision-making skills because these traits are unique. Another critical aspect of the company’s strength is to stick with the founding team of the company when facing severe business debts.

Managing debts and similar critical business scenarios brings about the best and the worst traits of teams and leadership. It is essential to rely on the strengths of each team member and communicate the problems wisely.

Communication Between Team Members

The communication skills of a leader in a new business are necessary because the leader must be able to communicate all of the necessary information needed for proper bookkeeping. The strength of a successful leader is to align the dominant and distinct features and abilities of their teams.

The team must feel comfortable sharing their ideas to make the new company successful. For this purpose, the roles assigned to groups must be flexible and according to their abilities. Developing a new venture in the current volatile corporate environment is necessary for the leader and the team. The focus must be on getting new clients and adding more business while focusing on minimizing serious business debts. Customer retention as a core strength of a new company depends on adequately communicating the client’s needs by business leaders to their team. Some client needs are complex and need more communication between groups and the leader.

The Bottom Line Conclusion

Effective leadership is essential for new business ventures; the undeniable fact that skilled leadership leads to better team management. Proper team management is a major strength for a new business to overcome challenges. The company’s success is just a fraction of good performance by the leader, but it is more dependent on the role of team members and their efforts. About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.

The Vital Role of Small Businesses in the Economy

Small businesses are the steadfast backbone of our economy, acting as a vital source of employment, innovation, and community engagement. They not only create jobs for countless individuals but also foster new ideas and products, ensuring that money remains within the local communities. The absence of small businesses would leave our economy struggling to maintain its vitality and resilience. However, many people conflate the terms “small-business owner” and “entrepreneur” despite the fact that while both run small enterprises, their leadership styles and operational philosophies are quite distinct. Entrepreneurs often embrace significantly higher risks in pursuit of groundbreaking opportunities, whereas small-business owners prioritize stability and consistent operations.

Understanding Small-Business Owners

A small-business owner is someone who takes on the responsibility of organizing various corporate processes and assumes the inherent risks that come with running a business. Their primary goal is to create a profitable enterprise, aligning with the definition set forth by the Small Business Administration (SBA). This agency is dedicated to supporting small-business owners in their pursuit of success, providing essential resources and services for those seeking financing.

While the SBA possesses a keen focus on aiding small businesses, it is essential to recognize that owners typically function as owner-operators. This means they tend to concentrate on immediate sales and operational tasks, often exercising caution when it comes to broader strategic initiatives. They are less inclined to take bold risks, favoring decisions that ensure steady, incremental growth rather than drastic shifts in direction.

The challenges faced by small businesses are starkly reflected in statistics: approximately 50% of these enterprises falter within the first four years, while a staggering 25% fail within their inaugural year. Moreover, around 76% of small business owners report encountering significant marketing hurdles as they navigate the increasingly complex landscape of online platforms available for advertising their goods and services.

Private companies continue to represent the bedrock of economic stability, providing essential services and goods. On average, businesses with fewer than 5,000 employees maintain a modest workforce of about 13 individuals. Additionally, the demographics of small-business ownership are shifting; currently, around 51% of small-business owners are over 50 years old, while only 16% are younger than 35.

For many employees, the transition to larger industries brings clear advantages. Employees at companies with over 100 employees typically earn about 31% more than their counterparts in businesses with fewer than 100 employees. The evolution of financial management has also prompted a shift in how small businesses operate—more than 50% now enlist the expertise of a Chief Financial Officer (CFO) or controller to oversee their financial accounts.

In 2014, the IRS evaluated a staggering $2.1 billion in civil penalties against individuals filing business income taxes. Out of the 1.09 million penalties issued, 47% were due to late payments, while fewer than 0.5% stemmed from inaccuracies.

Addressing the Gender Gap in Entrepreneurship

The entrepreneurial landscape reveals another pressing issue: only four out of every ten new entrepreneurs are women. This gender gap has slightly widened since the mid-1990s despite the encouraging presence of grants and programs aimed at empowering women-owned businesses.

Distinguishing Small Business Owners from Entrepreneurs

At the heart of small-business ownership lies a clear and compelling vision: addressing specific challenges faced by their communities. Small-business owners possess a profound understanding of their ventures and target markets, allowing them to cater effectively to the needs and desires of their customers.

These individuals value stability and predictability; they thrive on understanding what lies ahead and proactively preparing for it. Their decisions are calculated and methodical, often grounded in detailed financial records that guide their path forward. While the outcomes may not always be monumental, they consistently strive for progress, ensuring the resilience of their operations.

Small business owners are often preoccupied with immediate objectives. They create detailed daily and weekly to-do lists, manage their teams, build relationships with customers, and actively engage in networking to attract new clientele—all while keeping the wheels of their operations in motion.

Emotionally, small-business owners forge a deep connection with their enterprises. They are frequently hesitant to sell or transfer their businesses to anyone outside their family, as they prefer to maintain control over the daily decision-making processes and operational intricacies that define their work.

Concluding Thoughts

For those new to the business realm, the terms “entrepreneur” and “small business owner” may appear interchangeable at first glance. However, a deeper examination reveals that these roles are far from synonymous. Both groups share the common goal of self-employment and profitability, but they fulfill different functions within the broader economic landscape. Nearly every country relies on the tenacity and creativity of small-business owners to nurture a vibrant economy, while entrepreneurs push the boundaries of innovation and drive economic growth further. About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.