RESOURCES

*legal disclaimer here

HERE ARE SOME COMMON TAX FORMS

Form 8832 - change of address

Form 2553 - to elect S Corp tax status for an LLC

W9 - Tax Payer Information Form

Form 1040 - Individual Income Tax Return

Form 1040ES - Estimated Tax (quarterly)

Schedule C - Form 1040 addendum

Form 1120S - S Corp Income Tax Return

Form 1065 - Partnership Income Tax Return

FREQUENTLY ASKED QUESTIONS

What is a PNL?
Profit and Loss statement which is commonly referred to as a PnL, (aka comparative income statement). This report will detail income earned (gross + net) against the selling costs and operating expenses to ultimately provide the bottom line which determines whether there was profit, or not, during a specific time period.

How about a balance sheet?
A balance sheet details a company’s assets (inventory and cash), its liabilities (bills owed), and shareholders’ equity (ownership).


I need to be better at budgeting. What can I do?
Budgets are effectively limits and it takes time and experience to set them appropriately. If you have difficulty setting financial boundaries and sticking to them, you’re putting many things at risk (especially employees). So what’s a simple trick? Set incremental savings targets and meet them. Just like you budget for ice cream, budget for cash. It’s king, after all.


WHAT THE HECK ARE COGS AND ARE THEY IMPORTANT?
Cost of Goods Sold.
COGS, or Cost of Service, is pretty dang important. They are the metrics used to tell the numerical story of how much it costs you to provide your goods or services.
So why is this so important exactly?
You can only truly understand your profitability and how effective your service rates are by examining what it takes to produce your work. Only then can you price your services and goods adequately so that you’re in the black and not the red.


CASH OR ACCRUAL ACCOUNTING?
So, there is a pretty simple difference between these two types of methods. Cash accounting recognizes revenue and expenses only when money moves in or out of your possession. Accrual accounting recognizes revenue when it is earned, and expenses when they're billed (not paid). There are benefits to each. If you’d like to learn more, get in touch.


WHAT CAN I DO TO PREVENT FREAKING OUT AT TAX TIME?
Good bookkeeping.
Don’t fall behind on your books. Poorly kept books are the biggest point of frustration for any size business at tax time. Not to mention the biggest payout for your tax accountant. Keep your books running smoothly all year round so your reporting is good to go January 15th, not April 15th at 11:59pm

WHAT IS FULL CHARGE BOOKKEEPING?
A full charge bookkeeper is a financial professional who handles all aspects of bookkeeping for a company, typically taking on more responsibilities than a regular bookkeeper. Here are the main duties and characteristics of a full charge bookkeeper:

1. Comprehensive Bookkeeping: They manage all the bookkeeping needs of a company, including maintaining the general ledger, preparing financial statements, and handling accounts payable and receivable.

2. Payroll: Full charge bookkeepers often handle the entire payroll process, including calculating wages, withholding taxes, and ensuring timely payments.

3. Bank Reconciliation: They reconcile bank statements with the company's financial records to ensure accuracy and consistency.

4. Financial Reporting: They prepare detailed financial reports, including balance sheets, income statements, and cash flow statements, often on a monthly, quarterly, and annual basis.

5. Budgeting and Forecasting: They may assist with or oversee budgeting and financial forecasting to help guide the company’s financial decisions.

6. Compliance and Tax Preparation: They ensure compliance with federal, state, and local regulations, and may prepare and file tax returns.

7. Management of Accounting Systems: They often oversee and manage accounting software and systems to ensure they are functioning correctly and efficiently.

8. Interaction with External Auditors: Coordinate with external auditors and financial service providers like CPA’s and LTP’s during financial audits or reporting periods, providing necessary documentation and information.

50 / 30 / 20 BUDGET
If you’re Googling budgets you will see this everywhere. So what does it mean?
The 50/30/20 budget is a simple rule of thumb for allocating your income.

It means that:
50% of your income goes to your needs (rent + utilities + food)
30% of your income goes to your wants (movies + meals + hobbies)
20% of your income goes to savings and debt

Is this a good budgeting system? It’s straightforward and certainly a good starting point. However, good budgets require personalization and an understanding of your goals. Ultimately, you should work with a financial advisor to help define your goals and create a budget that serves them.

ZERO-BASED BUDGETS
Most people have heard of a zero-based budget. Zero-based budgeting means that your income less your expenses should equal zero across time. It’s a handy budget to prevent over-spending. How does this work in practice?

Let’s say you have an income of $7,000 per month. Your expenditures within that month should also be $7,000. Expenditures won’t be only your monthly bills like rent and utilities, but also your debt payments and savings goals. To get to zero sum, let’s create an example:

Income:
Full-time job: $6,000*
Side-hustle: $1,000*
*after taxes!

Expenses:
Rent: $2300
Renters Insurance: $40
Utilities: $275
Gas/Travel: $150
Groceries: $350
Meals: $250
Student Loan: $1500
Credit Card: $500
Savings: $1400
Fun: $235

Final Total? $0.00
Is a zero-based budget right for you? It’s def an approachable starting point. The main goal, as with most budgets, is to help prevent you from spending money you don’t have. Zero-based budgeting is a great way to understand where all your money goes but it takes diligence to track your expenses and update each month, as well as proactively allocating money to the right places (like retirement, debt and savings). Sticking to the same spending month in month out is nearly impossible and zero-based budgeting often excludes those inevitable expenses like fixing a flat tire or forgetting your skateboard on the L train. Twice.

This is a lot to consider. If you have specific questions or concerns about the above or are looking for some help on how to plan for the next few months, please reach out.