Monthly Archives: September 2015

Do You Keep Track of Your Business Mileage?

Most business owners, sales people, and some employees should keep track of their business miles for tax purposes. In my experience, most do not keep very good records, and scramble to come up with an amount to prepare their taxes.

The best practice is to keep a vehicle mileage log. It doesn’t have to be fancy, as it can be written in a notebook, but a better option is Microsoft Excel, which helps with the calculations. An example of a good log would show the following:

  • Beginning of year odometer reading
  • Columns to show the date, where traveled, description, and the business miles driven
  • A total at the bottom for business miles
  • End of year odometer reading

Instead of keeping track of everywhere you have driven, for business and personally, you can easily figure your overall miles by subtracting your beginning odometer reading from the ending reading. Subtract your total business miles from the difference to obtain the personal amount.

What’s the benefit of all this extra work? Actually there are several. First, if you are ever audited, you will need to prove the business use of your vehicle. Second, it can reduce your taxes! For example, instead of deducting your actual vehicle business expenses, you may be eligible to use the alternative mileage method. By multiplying your business miles by the mileage rate, currently at 57.5 cents a mile, you can deduct this amount if it is greater than your actual expenses, as long as you have used the mileage method for the first year.

Do You Use QuickBooks? You Should Be Doing This!

QuickBooks is a very popular accounting software program for small businesses, and I use it personally for my practice as well. But, if you are using QuickBooks, there is one key step you should be taking – reconcile your bank and credit card accounts!

Why? When you reconcile your accounts, it helps to make sure that the data you entered is accurate. Everyone makes mistakes when they enter data, even when they upload data (uploaded data has a tendency to duplicate transactions when you have transactions between multiple accounts). This is okay, as long as you catch your mistakes by reconciling to your bank and credit card statements.

Reconciling your accounts will not only help you to make sure bank accounts are accurate, but it will also help you to make sure that your receivables from customers and payables to vendors are more accurate as well.

Fortunately, this is not a difficult task to do. If you have never reconciled before, it may take some work to get the first month’s reconciliation taken care of, but after that, the task become easier.

We offer ongoing QuickBooks support to assist clients with their books to insure they are getting the most from QuickBooks. Do you need help?

How Healthy Are Your Sales?

There are many ways of measuring risk, but did you know that your sales concentration may be placing an unnecessary risk to your business? This also applies to sales professionals as well.

I have seen it over and over again, whereas a small business relies heavily on one or several large customers, and then the customer disappears. Sometimes multiple large customers disappear at the same time. Either they go out of business, cut-back due to a slowdown, have management changes, or other various changes happen that are beyond their control. This will all impact your business as your sales now plummet.

As a good rule of thumb, you don’t want to have more than 10% of your sales from one customer. It creates more risk than necessary because you never know if or when things will change. There is an adage known as Murphy’s Law that states, “Anything that can go wrong, will go wrong.” Additionally, you don’t want to rely heavily on one referral source for new business either. Murphy’s Law applies here as well.

What should you do to minimize your risk? First, never build your business around one or a few customers. This may be the case when a business is relatively new, but over time it is a huge risk. Secondly, assess sales per client to acknowledge who the large customers are. And thirdly, you need to market your business to decrease your risk of serving a few large customers.

A healthy business is constantly looking for ways to reduce risk. This not only decreases your chance of set-backs, but increases your odds of insuring ongoing success.