Document Your Systems to Save Time and Money

If you find that you constantly have to call employee meetings to remind everyone how business should be conducted within your company, you may have a bigger problem than you think. document systemsSure, there are some employees who will find it impossible to get with the program, but if confusion reigns throughout, you’ll have to ask yourself just how well, if at all, your systems have been documented. After all, how can you expect your employees to have a clear idea of expectations if there isn’t anything to reference? Here are 5 easy steps that will help you clearly document your systems and save you both time and money over the long haul.

Document Your Systems

  1. Identify your systems – This step is the most important because it lays the foundation for the remaining steps. Start by identifying the key systems within each of your business units or departments. You can ask employees to help you since they’re most likely familiar with the systems and can provide insight into redundant functionality.
  2. Map them out – Once all the elements have been identified, you need to create a diagram that shows their relationship to key functions in your business. Typically you’ll have systems that manage your lead generation, development, conversion, fulfillment and relationship management. After you map out what you have, you’ll want to map out the systems that you’ll need for the future. This step requires a little bit of forward thinking as it’s important to include elements that you know are coming as your business expands.
  3. Prioritize – There is a pretty good chance that you are going to have a rather substantial list of systems to organize, and that all begins by figuring out which are the most crucial to the success of your business. When possible, try to identify where you have systems that have similar functionality so that you can reduce a redundant system. Eliminating a system is a decision that shouldn’t be made lightly, as you may find that certain systems are dependent on others. Prioritizing means knowing which are the most important systems and which should be considered for elimination.
  4. Assign accountability – If you have multiple systems, you’ll want to assign accountability to others so that you don’t get caught up managing systems instead of your business. Chances are that the employees you chose to help identify required systems are the ones that you trust the most. Delegate some of the system curation, implementation and management responsibilities to them.
  5. Document processes – The final step is to document all of the systems in a way that everyone can see and follow. Every employee should have access to the documentation so that they can familiarize themselves with the process and steps required.

Once you’ve documented all of your business systems and have removed redundancies, you’ll need to train employees and provide reference information. This way they’ll know exactly what is required of them without having to ask or be reminded.

If you’d like some help with your system audit, let me know. I can help you set up systems that will increase efficiency and save you time and money. Contact me today.

How to Determine Salary Structures as a Subcontractor

Subcontractors as well as other small businesses must keep a close eye on expenses and salary structure. Determining what wages to pay your employees within a total compensation plan requires knowledge of skills, prevailing wages, project expenses and profitability.Subcontractor

Know Key Skills

You probably already know the skills that you need for each of the jobs that are included in your list of services. Take the time to document the job description, including the title, tasks required, skills, abilities and work environment. Use the Department of Labor’s job resource tool O*NET to help you discover the tasks, technology, knowledge, skills, abilities, work activities, work context, education, work styles, work values, and wage trends. When you take the time to list these out, you create clarity with your job applicant as well as your hiring staff.

Pay Competitive Wages

O*Net has a link to Careeronestop, which can provide a range of hourly or annual wages specific to your state or zip code. Inexperienced employees can often be brought in at the low range if your total compensation, which includes paid time off, health and retirement programs are competitive. More experienced employees can command a higher wage, but are often worth it because they are more efficient and able to train your newer employees.

It’s important to note that there are minimum wages that you must pay your employees, even if the project you are working on is project based. On October 13, 2013 the Industrial Commission of Arizonan signed a resolution resulting from ARS 23-364 that raised the minimum wage. The hourly rate increased to $7.90 per hour effective January 1, 2014. You must pay at least this wage even if that means that you don’t make a profit on your project-based contract.

Subcontractor Profitability

Generally, contractors pay subcontractors by the job so that employment lines aren’t blurred, which could cause a reclassification of the subcontractor to employee status. Smart contractors ensure that the subcontractor has behavioral and financial control of their business as well as contracts that describe the nature of their relationship.

Because pay is often tied to the job, you must be competitive in your bid while still remaining profitable. Knowing what you pay your employees is just one component of the entire bid, but often times the highest expense. Don’t underbid just to get the job unless you can sustain your business with your current cash flow and have reasonable expectations of future higher paying contracts.

Subcontractors that create fair compensation structures will attract, retain and maintain performing employees. Compensation structures include salary, incentives and benefits. Determining the right mix for your small business requires research, planning and continuous improvement. It’s one piece of the financial health of your business. Contact me today if you’d like to discuss how I can help you implement systems and processes that improve your profitability.

Loan Requirements for Small Businesses

If you’re looking for a loan for your small business, consider yourself normal.small business loan In fact, 80% of small businesses need some sort of financing. While larger banks have cut funding over the last few years, local banks seem to be loosening the purse strings a little bit more. Since 2007, small-business loan volume at smaller, more local banks grew by $17 billion.

Loan Requirements

Every small business loan program is different and may have different requirements. However, it’s likely that you’ll submit similar information to your loan officers. Getting organized will save you time in the long run. Before you start the application process consider gathering the following information in one place:

  • Personal Information: You’ll probably be asked to provide a history of personal information, such as residential addresses, names, criminal record, educational background, employment history, tax returns, bank statements, social media activity and credit reports. Remember to review your credit reports for inaccuracies as they can significantly impact whether or not the bank approves your loan. Signed personal financial statements may be required if you have more than a 20% stake in your business.
  • Business Plan: All small business loan programs require a documented business plan with financial statements, including profit and loss, cash flow and a balance sheet.
  • Business Financials: Be prepared to submit bank statements, tax returns, and a credit report for your business. As with your personal credit report, it’s important to review your business credit report for inaccuracies. You may also be required to provide projected financial statements as part of your business plan or as individual documents.
  • Collateral: If your business requires a higher-risk loan, you’ll need to provide collateral to secure the loan. Your collateral document will include the value and cost of personal or business property used to secure the loan.
  • Legal Documents: In addition to the items above, you may have to submit multiple legal documents, such as business licenses, registrations, Articles of Incorporation, third-party contracts, franchise and lease agreements.

If you’re just starting out, it’s likely that you’ll have a tough time securing a small business loan. Don’t give up. Start with a small business credit card and build up your financial reputation. You can read my latest article on small business credit card requirements to get started. In my next post, I’ll list some alternative and more creative ways of funding. Until then, let me help you get your business financially sound and on the right path. Contact me today.

How Arizona Sales Tax Reform HB 2111 Impacts Your Business

Arizona’s sales tax reform HB 2111 is set to go into effect on January 1, 2015. What this means is that local sales tax collection will be simplified, centralized, uniformly systematized and less complex, especially for non-construction trades and service providers. That’s great news for your business.

HB 2111 Means Centralization and Simplification

Arizona’s current system allows for multiple state and local tax administrations. Certain cities collect transaction privilege tax (TPT) resulting in multiple licensing requirements, tax returns, state and local tax bases, audits and interpretations. Under HB211 they will be centralized under a single administration and protect you from being subject to multiple audits by multiple jurisdictions.HB 2111

Under the new law, you can pay state, county, and municipal taxes online through the Arizona Department of Revenue’s (ADOR) portal or submit them manually using required forms. In other words if you’re business is in Phoenix, you’ll go online, file and pay tax to both Phoenix and the State of Arizona one time rather than filing and paying tax to the city of Phoenix and then separately filing and paying tax to the state of Arizona. Since you’ll only need to submit one TPT return and payment, you’ll save both time and money.

One Single Audit System

There will also be one standardized statewide audit system that includes one audit manual that’s administered by ADOR. All auditors will be trained on the audit process. Protests of TPT audits will go to the Office of Administrative Hearings instead of the municipal tax hearing offices. Having one audit system means that if you get audited, you won’t be audited by multiple jurisdictions.

Tax Changes to Non-construction Trades and Services

Arizona’s TPT on contracting work results in more audits than any other activity. Currently, contracting tax is applied to 65% of the final amount charged to the customer irrespective of the costs of materials. This system places an incredible administrative burden on all contractors, especially trades, like plumbing and HVAC repair businesses that service customers in many cities and must comply with the multiple tax codes at each work site.

Under HB 2111, contractors who work directly for the property owner will pay retail tax on materials unless they are subcontracting. Subcontractors will need an exemption certificate from ADOR to buy materials tax exempt for a specific project.

Become More Efficient

Although HB 2111 makes it easier on all businesses, collecting and reporting taxes has never been and will never be a revenue generating activity for your business. Be efficient and accurate so that you only need to deal with it one time.

If you find that you business is inefficient or you just want to take it to another level, give me a call and I can help you scale your systems, create efficiencies and close the gap between your bookkeeper and tax adviser. Don’t waste another dollar; contact me today.

How Technology Changed the Role of the Accounting Department

Technology has changed the way we do business across the board and the accounting department isn’t immune.technology Although some aspects of accounting have been slow to change, the days of milling away on a calculator working through a stack of papers are long gone. Admittedly, there are still many accounting firms and departments that are still behind the times when it comes to adopting the latest technology, but that’s changing rapidly.

Technology helps improve the flow and efficiency of the accounting department. It facilitates better accounting practices and improved interactions between clients and business owners. Finding the right tool can be difficult, but with some guidance and focus you’ll find the benefits far exceed the cost.

Technology Eliminates Data Entry

The days of data entry personnel are fading quickly as new technology makes their job less relevant. Of course data can be entered in by the client or other staff, but more likely than not it’s transferred from one bank to another, submitted at point of sale or scanned automatically The simplicity of entering new information as it is being taken in means that the job of data entry is almost obsolete.

Technology Improves Time Management

Single systems with multi-user and remote access allows access to your businesses financial information whenever you need it. This means that you don’t have to wait for your accountant to gather the information and bring to your office. Instead, you can log into the system at any time, get the information you need immediately, and make educated decisions about your business.

Technology Facilitates the Separation of Roles

Because the information is so readily available, it’s easy to separate the roles and accountability of those who help process the information. Previously, your business would come to a halt if your accountant left without notification, became injured or ill and was out for weeks or months at a time. It was difficult to find a replacement who could step in and figure out the accounting system. Now, the different roles in the accounting process can be shared which means that you reduce the impact of one person leaving your company.

Cloud Accounting Platforms

Cloud computing is where everything is headed. Not only because it’s convenient, but also because if facilitates a more mobile world. Cloud-based systems provide access to your data when you need it, in an encrypted and safe environment. No time delays, no wasteful double entries and no difficulty in getting the information you need.

Today, technology is rapidly changing the way we do business and keep track of our accounting information. The simplicity and direct entry means that instant information is now readily available so you can make more informed decisions. If you’d like some help picking out the right solution for your business, I’d be happy to help you. Contact me today!

How to Find the Perfect Accountant for your Accounting Department

Hiring a qualified person for your accounting department naturally requires that they have the necessary education and experience for the job. However, it takes more than skills and knowledge of accounting to make for a good employee.accountant
Soft skills and culture fit are arguably even more important in finding the person who can fit into your workplace culture. What follows are some tips into finding the right accountant for different offices in your business structure.

Accounts Receivable Accountant

Here you will need someone with good customer skills. This is a position where they will interact with customers and the general public. This means that the candidate that is selected must have a good, open personality that is pleasing and appeals to customers or clients who may have questions or seek more information.
When hiring, look for someone with good people skills, who is patient and has a friendly attitude. This means you will need to ask potential candidates about their past experience in working with customers even if it was not accounting related.

Accounts Payable Accountant

In this role, candidates for this position should have a good understanding of what proper pricing is for the type of items or services that you purchase. While it should not be expected that they know the exact price of everything your business acquires, they should have the skills to look up such information.
When hiring, search for someone who has research skills, previous experience as a buyer and who generally thinks before acting. Quite often, bad purchases are made because the accountant made an assumption based on outdated information or a misunderstanding of what the items actually were. You need someone who thinks and researches before they act.

Payroll Accountant

Payroll is one area where you need someone with an outgoing personality. This is for someone who works well with your employees and takes the initiative in understanding their questions and provides friendly, accurate responses.
Search for someone who is outgoing, friendly and pays close attention to detail. For accountants in payroll, this is a very important position that requires a personality that can handle the day-to-day stresses as well as work with employees who have questions or concerns.

Overall, finding the right type of accountant for a position means more than just their education or accounting background. You’ll want to see if they have the personality traits that are best suited to the job. This can be discovered by using behavioral interviewing, asking for examples of situations where they’ve encountered a difficult situation and listening to their responses.
Obviously, if a candidate has specific experience in any one of these three fields, then you will want to put them at or near the top of your hiring list. However, in many cases good, qualified accountants may have similar experiences in other areas which you will need to examine in order to make the proper choice. A little research and a few more pointed questions can reveal the right person for the job.

How to Be in the 20% of Businesses that Succeed

No one starts a business with the express purposes of failing, yet an alarming number of business owners will eventually end up closing their doors permanently. In fact 80% of start-ups will close within the first 18 months. It makes you wonder what the businesses that succeed do differently from those that fail. While the location of your business and what you offer can play a major role, there are 9 other elements that you should consider.

Nine Ways to Succeed

success

  1. Know your core values and beliefs – Starting a business that you don’t really believe in is a major problem. Some people make the mistake of starting a business based on a current product or market trend, only to find that they don’t really believe in what they are pushing. It is hard to be passionate about something you don’t really care for. If you’re passionate about your business, then take some time to develop and know your core values and beliefs.
  2. Understand your business purpose – Why did you choose to start this business? If you can’t answer that question, you are in trouble. Everything in life has a purpose, and you need to know what that means for your business in order to succeed.
  3. Define your target customer – Poor market research can doom a business before it even gets off the ground. If you don’t take time to know your target market, failure will be sure to follow.
  4. Define where you want your business to be in 3-5 years – A business plan is absolutely essential before you start a business, but it’s also important to continue to plan for the future. Having a clear goal to focus on will help you make more informed decisions.
  5. Determine how you’ll get there – Would you ever hop in your car and head to a specific destination without first having a road map to follow? Of course not. If you want to get from Point A to Point B without becoming lost, you need to know how to navigate that road. Create a plan to achieve your goals.
  6. Prioritize the big things you must do – Being a business owner means wearing many hats and juggling all kinds of tasks. It’s tough to do, but it gets a whole lot easier if you prioritize by level of importance.
  7. Assemble a team and/or outsource – If you do all of the juggling on your own, you will eventually drop something. Stick to what you do best in the business and get qualified help to do the rest.
  8. Develop a marketing plan – This goes hand in hand with finding your target audience. Once you know who they are, you need to find them, let them know who you are and where they can find you.
  9. Remember why you started your business and live your life – If you can follow the steps outlined above, you will be well on your way to success. At that point you can start to leave trusted individuals in control of more and more aspects of the business. It will still be yours, but you will have reached the point where you can step away a little and start to enjoy the fruits of your labor.

I can help you build comprehensive processes and a solid team that will breathe life back into your business. Contact me when you’re ready to get started.

Articles of Incorporation: Your Commitment to Ethical Practices

The term Articles of Incorporation describes the primary rules that govern the management of corporations within the United States. They are your commitment to following the law and are typically filed with a state-based or other regulatory agency.

articles of incorporation

Image Courtesy of Creative Commons Attribution License

Once you become incorporated, you are bound by the law to ethically comply with the rules, policy, and procedures. Just as you’d treat your marriage with respect, your business deserves equivalent respect.

About Articles of Incorporation

When individuals incorporate as an organization in Arizona they are required to complete Articles of Incorporation. The requirements to incorporate naturally vary from state to state. Therefore, it’s important to contact the state’s governmental office, typically their Secretary of State, to learn more about the incorporation process.

Many states including Arizona provide informational documents about how to incorporate. They even provide sample Articles of Incorporation to help individuals learn how to properly fill out the required forms. Generally, they request the following:

  • The name of the corporation
  • The names of individuals who have organized the corporation
  • The purpose of the corporation
  • The number and names of the corporation’s board of directors, in addition to the initial directors and registered agents; and
  • The location of the corporation’s registered offices and street address

Articles of Incorporation typically don’t describe the operations of the corporation in question. Those details are generally included within associated documents for the corporation’s bylaws.

The documents for Articles of Incorporation are important, as it’s the basis for registering a corporation within any state. In most cases, corporations that fail to file for Articles of Incorporation may be served with legal action if they proceed to act without securing their legalities.

Filing for Articles of Incorporation in Arizona

Individuals who want to incorporate in Arizona are required to submit their Articles of Incorporation. In addition to submitting the aforementioned information about their corporation, they also have to submit information pertaining to:

  • The number of initial authorized stocks associated with the corporation
  • The street address and signature of the statutory and registered agent associated with the corporation
  • The names and associated contact information of the business owner or individual who files the articles of incorporation

The Arizona Corporation Commission website provides fillable PDF documents for business owners to complete, print and mail.  In addition, the business owner must pay a filing fee, which is noted on the application form.

The Arizona Corporation Commission generally approves Articles of Incorporation after receiving documents if they are complete and accurate. Then, businesses are required to publish a copy of the document in the newspaper belonging to the county of the corporation’s business location. It must run for three consecutive publications within 60 days of the approval.

Importance of Ethics

Once the application is approved, the business is legal and bound by the laws of Arizona. It’s critical to understand the importance of ethics or run the risk of alienating shareholders, stakeholders, partners, employees, and customers. Unethical practices reduce growth and limit revenue-generating ability.

Here are four reasons why businesses should practice good ethical behavior:

  • Litigation—Breaking the law generally comes with heavy fines and may lead to lawsuits and indictments.
  • Perception—Companies that tolerate unethical practices are subject to wildly unpopular social media outbreaks. Additionally, supplier and partner trust is diminished.
  • Performance—Employees follow their employer’s lead. Furthermore, companies that are unethical tend to have a hard time attracting and retaining talent.
  • Integrity—It’s just the right thing to do.

There are many ways you can encourage ethics in your business, but the best place to start is with you—the owner. Take care of your business so that it can take care of you. What examples of ethical and unethical practices have you encountered?
If you’d like a copy of my latest book, click here: Cash Flow Problems: Don’t Let Them Sink Your Ship.