Mileage Rate – Quick Tip

Happy new year!

Many of us are wrapping up the past year by closing out our books. At the same time, we’re preparing for the new year by upgrading our accounting software, reviewing new budgets, and establishing new and improved ways to grow our small business.

Be ahead of the game by making even the smallest applicable adjustments to your bookkeeping now for 2018. One change that may affect your employee expense reimbursements and your deductions at year-end is the new mileage rate of 54.5 cents per mile up from 53.5 cents in 2017.

These pennies add up!

See the following link for more info:

https://www.irs.gov/newsroom/standard-mileage-rates-for-2018-up-from-rates-for-2017

 

Recording Payroll and the Importance of Time

A small business will often employ an outside payroll service to execute their payroll and all that it encompasses including filing the required federal and state payroll reports and making tax payments. If your business opts for an outside service, you may be familiar with the reports submitted to you upon completion of your periodic payroll. But, as you know, the procedure doesn’t stop there. Accounting must then be completed.

The reports contain all details for each paycheck, tax liabilities, and payroll fees for the period; all of which become part of the company’s financial statements. However, a common occurrence for the busy owner who wears many hats is just giving the reports a quick glance to confirm the operating fund has the cash requirements to cover the scheduled deductions. The reports are then set aside for a thorough review at a later date. The problem that arises is just that – the later date.

A frequent mistake when recording the payroll out of period is taking a shortcut by making a lump sum entry and ignoring individual paychecks and their actual dates. This is especially true when a company consists of a high number of employees as doing so will save time in bookkeeping tasks that have already fallen behind. Unfortunately, this method will not only create a headache when reconciling your bank statement, but will also create inaccurate tax liabilities and expenses which will lead to bigger issues at year-end.

Reconciling to the payroll reports each pay period is crucial for expenses and liabilities to be 100% accurate. To accomplish this, record actual gross wages and accrue tax liabilities in real time. In so doing, data will be contributed for processing of annual tax returns throughout the year.

This is a bookkeeping task that needs prompt attention and one more way to save money. Your tax accountant will earn more billable time with other clients!

Keeping Your Circle Small

When establishing a small business, the owner may employ a minimal staff to wear many hats in an effort to keep the company running on a small budget. This familiar scenario often leads to individuals performing tasks outside of their capabilities. The result is too many chefs in the kitchen leading to miscommunication, innocent mistakes and costly fees to correct them.

Especially in the financial management of your business, it’s best to keep your circle small and have one designated person, whether in-house or outsourced, to maintain your basic bookkeeping. Beyond basic bookkeeping, a second individual is typically employed to reconcile books, create budgets, manage the general ledger, provide periodic financial reporting, and process year-end closings. Assigning one individual to communicate necessary information and manage financial data in order to complete these tasks will eliminate errors and protect confidentiality in your financial statements and tax filings.

When creating your budget, be sure to itemize accounting fees as it pertains to your company without skimping. A cutback on this line item may incur more of an expense than needed, not only resulting in a high budget variance but decreasing your bottom line.

The Condominium Association and Self-Management

Many condominium associations choose to self-manage. Instead of hiring an outside party to maintain the property and its funds, the board of managers assume the entire responsibility of the operations for the association. In theory, this type of management style comes with its benefits.

First, the board is in complete control of all matters concerning the association. These include fiscal activity, insurance requirements, repairs and improvements, and ownership issues. Second, self-management saves money. All tasks are completed by the board on a volunteer basis. Board members are paid a minimal amount, if any. Duties may include anything from balancing the books to sweeping the halls.

Many condominium associations prefer self-management under the assumption that it provides for the perfect community. They’re relying on fellow owners to care for a mutual investment. However, self-management is often a recipe for disaster and even the smallest of communities may suffer its consequences.

Typically, specific tasks will be delegated to various members of the board. One will manage the bookkeeping, another may oversee exterior maintenance and employ various contractors such as landscapers and cleaners, and another may be in charge of capital improvements. The board will initiate legal action in order to collect delinquent condominium fees. They will address questions from the association, banks, and realtors among others using condominium documents to guide them. The board, essentially, rule the kingdom.

However, positive perceptions of self-management often change while one is serving his/her term. A conflict of interest invariably arises with a disgruntled owner or two. Whether it be a challenge to the cost of a weekly cleaner or inadequate insurance coverage due to poor judgement, there’s always room for debate. Board members who live on the property rarely look forward to that awkward encounter with a neighbor for whom the foreclosure on their home has been initiated. Whereas self-management seemed like a good idea at inception, it soon brews into resentment.

A management company or financial manager will take charge of all of the aforementioned tasks and more and procure qualified outside services to complete projects when necessary. While utilizing their expertise, personal involvement will not impede progress. Confrontation with an argumentative homeowner will not dissuade them from doing their job. And while they understand they can’t please everybody, elected members of the board begin to familiarize themselves with the notion, self-managing is a “thankless job” and hostility presents itself at monthly meetings.

Whatever type of management the condominium association chooses, a utopian community is just a fairytale. No management style is without its flaws but each has its unique benefits. The objective is to maintain the property and its funds while providing peace of mind for the Board and the majority of the community; a community in which one will enjoy calling home.