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As an auto shop owner, one of the most important aspects of managing your business and ensuring it is profitable is effectively organizing and analyzing financial statements in order to make sound decisions for your shop and employees. As an accountant for auto shop owners, I often see financial statement issues arise that cause frustration, overwhelm, and discrepancies in a shop’s finances. In this blog post, I’m breaking down 6 of the most common issues with auto shop financial statements and offering quick tips on how to fix them. Financial Statement Issues In Auto Shops Not Understanding Your Financials The first issue I see with financial statements is auto shop owners simply not understanding their financial statements. They don’t know what they’re looking at, what the numbers mean, or how to navigate QuickBooks. This can make it really hard to make sound financial decisions if you don’t know how to use them to increase profits and make sound financial decisions. Solution: The solution to this issue is to set your financial statements up in a way that you can easily access, organize, and understand them. We recommend using QuickBooks for all of your financial statements, as this makes it easy to organize and analyze them. Shop Management Software Doesn’t Match QuickBooks The next common financial statement issue is having discrepancies between your Shop Management System (SMS) and your accounting software, such as QuickBooks. This can lead to a lot of confusion and inaccurate financial reporting. Your SMS may offer one figure, but what QuickBooks shows is the most accurate financial recording. Solution: The solution to this issue is to make being consistent in your financial reporting a priority. Calculate and record your financial data in the same way each month, at the same time of the month. Err on the side of being conservative with your figures to ensure your shop remains profitable and your financial statements reflect the actual performance of your shop as accurately as possible. Parts and Labor Income Are Not Split Out Failing to keep parts and labor income separate in your financial statements is another big issue, which makes it difficult to see where your actual revenue is coming from. With labor, there are so many factors to consider, such as employee wages, paid time off, benefits, etc, so it’s important to keep these aspects separate. Solution: The solution for this financial statement issue is to organize your income into separate categories for parts and labor. This will give you clarity in your finances and make it easier to analyze how profitable each aspect of your business is. This will help you make more informed decisions for your business. Parts and Labor Cost Of Goods Sold Are Not Split Out Similar to the last problem, if you fail to split out parts and labor costs of goods sold, you can create discrepancies in your gross profit margin. This is a key indicator of the overall financial health of your business, so it’s important that it is as accurate as possible. It’s important to note that technician pay should be classified as a labor cost of goods sold for the most accurate financial reporting. Solution: When setting up your accounting software, make sure to create a clear separation between parts and labor costs of goods sold. This will help you see the profitability of each side of your auto shop, allowing you to lean into the revenue streams that bring in the most money for your shop. Be sure to classify technician pay as a labor cost of goods sold. Not Tracking Warranty Work Warranty work is where a lot of financial statement issues arise. When you are looking at your financial statements, you must account for warranty work, otherwise, your income will look skewed as well as your expenses. Solution: To ensure warranty work is classified and tracked properly, create a simple system to track this work and any transactions related to warranties. This will keep your financial statements accurate. Misclassifying Transactions The last common financial statement issue in auto shops is misclassifying transactions. When you set up your QuickBooks, do so in a way that allows you to easily classify each transaction properly right away. This is an issue with a simple fix, but it can drastically skew your financial statements. Solution: After setting your QuickBooks up in a way that works for you to keep everything properly classified, make sure to regularly review your transactions to verify they’re accurately classified. This will help you catch any outliers or misrepresentations before it becomes a huge issue. All in all, by knowing what financial statement issues to look out for in your auto shop business, you can ensure you are set up for success and have your QuickBooks laid out in a way that works for you, that makes it easy for you to manage and understand. View full article

As a business owner, hiring the right people to work for you and serve your customers is a critical aspect of running a successful company. As you look to grow your team, there are two different categories of workers to be aware of: employees and contractors. Both of these types of workers serve essential roles, but it's vital to understand the differences between employees and contractors, as there are different legal compliances, tax obligations, and nuances to both. In this blog post, we’re diving into the key differences between employees vs contractors so you can make the best, most informed hiring decisions for your business. Key Differences Between Employees and Contractors Definition and Role Clarity The most fundamental difference between employees and contractors is their relationship with your business. Employees are individuals who work under your direct control and management, performing tasks assigned by you that are integral to your daily operations. On the other hand, contractors are external workers or individuals who are hired to complete specific projects or provide specialized services, working independently and autonomously from the business. Work Schedule and Degree of Control The degree of control that a business has over its workers is another defining aspect between employees vs contractors. Employee-employer relationships typically involve a higher degree of control and direction from the employer. As an employer, you dictate an employee's work schedule, the tasks they perform, and how they accomplish them. Contractors differ because they generally have more independence and control over how they complete their assignments, when they work, and where they work. Ownership of Tools The ownership of necessary tools needed to complete a job is another distinguishing factor between an employee vs contractor. An employee will be supplied with the necessary items, tools, and softwares necessary to complete their job. A contractor must supply their own tools and softwares, as they are likely used for more than one client. Tax Implications There are vastly different tax implications when hiring employees vs contractors, and understanding these is crucial. When you hire an employee, you are responsible for withholding and remitting income taxes and Social Security from their wages. Hiring contractors is different in the tax sense because they are considered self-employed and are responsible for their own taxes. As the employer, you don’t withhold taxes for contractors, but instead, they summarize their earnings on a Form 1099 at the end of the year. Employment Benefits As a business owner hiring employees, you may be required to provide employee benefits, such as health insurance, retirement plans, paid time off, and other benefits, depending on your company policies and legal requirements. Since contractors are self-employed, they do not receive these benefits from your business. Long-Term Commitment and Dependence Hiring an employee for your business implies there is a more long-term commitment with the expectation of ongoing work. Employees are likely dependent upon the business for their income and benefits. With contractors, these commitments may be more short-term and have a defined scope and timeline. Of course, contractor contracts can be renewed or terminated depending on the business’s needs or the contractor’s desires. Contractors likely have a roster of clients, so they are less reliant on one single client or business for their income. Ensuring Legal Compliance Classifying employees vs contractors correctly is critical for legal compliance. Misclassifying employees as contractors and vice versa can lead to an array of legal issues and expensive penalties. Stay up-to-date on the specific worker criteria set out by the IRS, Department of Labor, or other state authorities in order to ensure you are differentiating the two and classifying your workers properly. Knowing the differences between employees and contractors is vital for managing your team effectively and ensuring compliance with tax and labor laws. As you expand your business and hire new team members, take the time to assess the nature of the work and the relationship with the individual to make the appropriate classification. Understanding these differences is key for making informed financial decisions. View full article

Thank you! Well, you're in luck. I happen to know a few of those people

Running an auto repair shop is a rewarding career and an integral part of a community. However, it also comes with its fair share of financial challenges. As an auto shop owner, you must understand the importance of implementing the necessary systems and processes to keep your business profitable and sustainable long-term. In this blog post, we’re uncovering a few of the most common auto repair shop financial mistakes to avoid so you can stay successful and improve your bottom line. Top Auto Repair Shop Financial Mistakes To Avoid Neglecting Proper Inventory Management Inventory is one of the most significant expenses that an auto repair shop has. Failing to manage your inventory efficiently can lead to issues such as overstocking, which ties up valuable capital, or understocking, which leads to a loss in revenue and dissatisfied customers. In order to avoid this financial mistake, implement a robust inventory management system that tracks parts usage, orders, and replenishment schedules. This will help you find the right balance and optimize your cash flow. Ignoring Preventative Equipment Maintenance Another common auto repair shop financial mistake to avoid is not putting the proper preventative equipment maintenance procedures in place. An auto repair shop relies heavily on specialized equipment to deliver quality services to its customers. Neglecting to maintain this equipment regularly can lead to expensive breakdowns, emergency repairs, and force you to cancel customer appointments (which also leads to a loss of revenue). To avoid this, create a maintenance schedule for all tools and machines, ensuring they remain in excellent working condition, reducing unexpected expenses, maintaining safety, and improving efficiency. Overlooking Employee Training and Development Skilled and well-trained auto repair shop technicians are the key to running a successful shop. They are the ones doing the daily manual labor, therefore, you should invest in continuous training and development for your staff to help them improve their skills, enhance customer service, and reduce the likelihood of errors or costly mistakes. Incentivize your team to seek certifications and stay up-to-date with the latest advancements in automotive technology. An auto shop that values innovation and constant growth will see the benefits both in customer satisfaction and in their bottom line. Inadequate Budgeting and Financial Planning Many auto repair shop owners are great at the actual manual work and labor involved in running a repair business, but when it comes to creating a comprehensive budget and financial plan, they’re not as skilled or confident. Without a clear financial roadmap, it’s challenging to track expenses, identify areas where you can cut costs, or allocate resources effectively. To ensure your business is running like a well-oiled machine financially, develop a detailed budget that takes into account all overhead costs, labor expenses, marketing efforts, and savings for future investments. Ignoring Marketing and Customer Relationship Management While marketing is an ever-changing field, it's so important to embrace modern marketing technologies, such as digital advertising, social media, and targeted promotions in order to grow. Word-of-mouth marketing is great, but it should not be your sole reliance. Additionally, you must prioritize customer relationship management by collecting feedback, addressing concerns promptly, and offering loyalty programs to retain existing customers and attract new ones. Not Complying with Tax Obligations Finally, the last auto repair shop financial mistake to avoid is not complying with tax obligations. Tax regulations for businesses, including auto repair shops, can be complex and ever-changing. Failing to comply with tax obligations can lead to penalties, hefty fees, and legal issues. To avoid this mistake and ensure you are fulfilling your tax obligations properly, consider hiring an accountant or tax professional who understands the automotive industry to help you navigate tax requirements and maximize deductions. View full article

It’s been 3 years since the onset of the global Covid-19 pandemic, and we are still feeling the side effects when it comes to accounting, taxes, and tax refunds. In both 2020 and 2021, the IRS issued notices under the Tax Code, giving them the authority to postpone deadlines and due dates related to filing tax returns due to the federally declared disaster. However, these notices did not pertain to the IRS lookback period for refund claims filed after April 15th. Therefore, many taxpayers who file yearly after April 15th will not be able to claim a refund as it falls outside of the lookback period. Now, in 2023, a new notice has been issued by the IRS, extending the lookback period for refund claims. Here is a rundown of everything you need to know about this IRS extension. What is a Lookback Period First off, it’s important to understand exactly what the IRS lookback period for refund claims is. In general, a taxpayer must claim a refund on their taxes within 3 years from the date the related tax return was filed or 2 years from the date that the tax regarding the claim was paid. This IRS lookback rule allows taxpayers to request a refund in amounts paid within the lookback period. The Extended IRS Lookback Period Since the IRS failed to extend the lookback period in 2020 and 2021, many taxpayers who filed after April 15th have been left unhappy and without an option to request refund claims on those payments. In an effort to remedy this problem, the IRS has issued a new notice regarding the lookback period, Notice 2023-21. This notice disregards the time periods from April 15, 2020 to July 15, 2020 (2019 tax returns) as well as from April 15, 2021 to May 17, 2021 (2020 tax returns), when determining the start of the lookback period. This notice comes in an effort to realign the lookback periods with the formerly postponed due dates for filing tax returns due to the pandemic. What Does the Extended IRS Lookback Period Mean for Taxpayers? While the IRS’s extended lookback period is a positive move for taxpayers, it does not fully fix the problem created 3 years ago. This should be taken as an opportunity to look deeper into tax law and how we can create a permanent solution and prevent this type of misalignment in the event that future disaster filing postponements are made. People are already weary of the IRS, filing taxes, and making refund claims, and this situation definitely does not help their confidence. It is our hope that necessary changes are made to ensure that all taxpayers have the opportunity to claim credits or refunds moving forward without being denied. All in all, taxes and dealing with the IRS and lookback periods can be stressful, but the best way to ensure your tax filing and refund claim experience is as positive as possible is to keep your bookkeeping and financials up to date and organized so you always have what you need and can file on time. If you need help getting your bookkeeping and finances organized and ready for tax season, I’m happy to help with our bookkeeping and financial services. Feel free to browse our services and book a free consultation call with us today! View full article

Have you ever walked into a room and stopped because you couldn’t remember what you were trying to do? Forgetting is easy. Especially when it’s something that we don’t actively engage with on a regular basis. When it comes to the reasons for what we do and the decisions we make as a business, remembering the “why” behind our actions is important. How It Started ThreeRivers Bookkeeping started because I wanted to help small automotive businesses overcome a challenge I observed while working with them. I started my career working with mechanics and automotive specialists in a related industry, but I realized that my passion was for helping those small businesses in a different way. Managing Bookkeeping’s Challenges Bookkeeping is boring and tedious. Keeping everything properly organized takes so much time, effort, and specialized knowledge that everyday business owners can’t easily handle it. And errors in bookkeeping, which are quite common, can financially ruin businesses. Errors can make it harder to budget correctly. But worse is the damage caused by errors that impact taxes. My goal in creating Three Rivers Bookkeeping was to help remove bookkeeping as an obstacle for small businesses. Even as I am coming up with new services (coming soon), my goal is to help businesses eliminate obstacles and run their businesses more efficiently and effectively. Build Wealth Through Business How much money do you want to make? In other words, what do you want to do outside of business? This is a question we ask our clients when we start working with them. What you want to do with your time, will require a specific amount of money. And in order to make the amount of money you want, your business will need to make a certain amount of money as well. While there are many people who work on books and do bookkeeping, the key difference between them and Three Rivers is our desire to help our clients build wealth through their businesses. View full article

Taxes are annoying. They cost your business a lot of money to pay. And then you have to spend a lot of time gathering all the proper documentation. And don’t forget to keep it organized. That’s where I have a couple of tricks that I recommend for my clients that I would like to share with you. Use a Receipt Manager A receipt management system will allow you to collect and organize your receipts digitally. You won’t have to worry about losing the receipts or not being able to access them when you need them. There are two types of receipt management softwares that I recommend depending on your situation and business needs. While both of these apps have a recurring membership structure, with your financial security at stake, it’s better to get something good that you have to pay for. Dext Dext’s primary focus is the ability to snap pictures of your financial documents and receipts while allowing you to split and itemize those receipts. It also has more features that are available at higher tiers of memberships. HubDoc Hubdoc does most of the same things as Dext but can’t itemize receipts. It is less expensive and has a different approach to organization. Whichever of these two you choose, I recommend starting with a free trial and seeing which one is the right fit for your business. Track Mileage Digitally Tracking and calculating mileage can be tricky. But you don’t have to do it manually. And with a good software you won’t have to stress about it at all. TripLog TripLog has a few key features which make tracking mileage easier. The most important feature is their compliance with tax codes. After that, they offer tools that can track your trips automatically, and help you classify your trips easily. And they offer good packages for either large businesses or individuals. In Conclusion There are plenty of other softwares that can help you avoid wasting time with tracking and organizing your documents for tax season. And using them will not only help you feel less stressed when it comes time to visit your tax preparer. They will make your daily management of your business easier too. Don’t miss out on using tech to set your business up for success. View full article

I’m not going to sugarcoat things. Times are hard. And they aren’t going to get any easier. One of the problems that makes hard times worse is fear. Fear of the future Fear of financial issues Fear of a collapsed economy We could spend all day writing out lists of the things we are afraid of, but we don’t have time to be that thorough. There are however a few key fears when it comes to your business finances that I believe need to be faced and addressed. Losing Savings When your money reserves start to dip, it’s easy to feel the pressure. Pressure turns into stress which turns into sleepless nights and uncomfortable discussions about money. Inflation is probably the biggest drain you will face in your finances. But that doesn’t mean your situation is hopeless. You can slow or stop the losses by eliminating redundant purchases and waste. Unused subscriptions for things such as streaming services are one of the largest sources of wasted money (and they’re easy to find and fix). Losing Work As business owners, spending money is less scary when you have enough work coming in to pay the bills. When work slows down, what you need is a strategy to boost your sales. Sometimes you need to start or increase your marketing. Other times you may need to seek help from a business coach to help you find where your business is not reaching its potential. Slow downs are unavoidable, but there are ways to handle them. Losing Investments The stock market is not fun to watch. Your money is riding a roller coaster, but you still feel your heart drop when the market turns down. The good news is that investing is a long-term game. If you miss the best days on the market, you will miss out on a lot of money. That’s not to say that every strategy works for every person. And you should seek out a financial advisor to help you make the best decisions. But just because the market is down today, doesn’t mean that the market will be down forever. Living Boldly Once you have recognized and faced your fears, you can start to address the solutions. Most companies that fail to grow or even survive, fail because they can’t or won’t face their fears. You can’t solve a problem you aren’t willing to look at. Sometimes you need help to get through the challenge of facing your fears, but in the end it will be worth it. If you don’t know how to address your financial fears in your business, I would be happy to speak with you and give you some direction. View full article

I don’t have a crystal ball. And I can’t predict the future. But there are some things I do know about what is coming in 2023 based on the current direction of our economy. And none of it looks pretty. Continued Inflation Inflation has been at an all time high for the past year and it’s not going to suddenly go down. Thanks to government spending and the printing of money to pay for that spending, inflation has spiked. And normal inflation which comes from increasing costs of goods and services is still a factor. All that to say, inflation is going to continue to impact the economy and business finances well into 2023. Less Disposable Income With inflation and increased cost of living comes a decrease in disposable income. A factor we are beginning to see, even now, is the reduction of unnecessary spending in low income households. While it starts by affecting low income households, it will begin to affect middle class households very soon. Many local businesses depend on people being willing and able to spend money on non-essential items. More IRS Involvement Last year saw the largest increase to the IRS in decades. The number of agents that have been added is a sign of increased focus on small businesses and increased audits. Expect to pay more in taxes or to be stuck dealing with surprise audits as the government attempts to crack down on errors in filing and those who evade payment. Preparation is Essential Local businesses fail first. When the economy suffers, the mom and pop style stores will bear the brunt of the problems as they don’t have the resources to spread out the losses. Survival requires preparation. You have to start making decisions now if you don’t want to get caught off guard by increased financial hardships.That’s where a review of your current financial situation can be extremely helpful. If you want to be prepared, I would be happy to sit down with you and discuss some solutions. Just set up a no-obligation appointment to get started! View full article

Last year I had the privilege of`appearing on @carmcapriotto podcast, Remarkable Results. We had a fantastic time talking about how to take care of your business finances and a few things you need to know to have a successful business. Here are a few of the points we discussed. Know Your Break Even Point The first thing you need to know about your business’ finances is what your break even point is. What is the point where your income and your expenses balance out? In other words, at what point do you actually start to make money? To know this number you have to know your expenses. What are your fixed expenses (the expenses that stay the same every month like rent and to some extent utilities)? What are your variable expenses (like labor, parts, and equipment)? And what debts do you have to pay? Once you put together your list of expenses, you can then begin to calculate how much money you need to make just to hit the $0 mark. And from there you can start to build a plan to make money beyond that. Know How to Make Your Income You also need to know how your income is broken down. For most mechanics shops that I have worked with, parts and labor are each about 50% of the income. But if you look more closely, certain services and parts are more profitable or make up a larger percentage of your sales. Knowing those details will help you decide how to grow beyond the break even point. And if you have a business coach who is helping you, you can use their advice combined with your knowledge of where you income comes from to make strategic decisions for the direction and goals of your business Know Your Accounts The last tip that I shared on the show is to know your accounts. You need to know where your business is as you go and not only when you are looking back through your purchases. It helps to have a bookkeeper who can help you keep on track and flag any issues they see as they come up. You also need to have the right model for your financial planning. Although I am not a financial advisor and cannot tell you which model to take, I have seen my clients succeed with a profits first model. With the right model for your business, you can improve your strategic decisions and not only focus on paying the next bill. Additionally, you need to have your accounts in order. It helps to have accounts set aside for distinct purposes. I have seen successful companies have separate accounts for purchasing, payroll, taxes, and other types of expenses. Success Takes Work These points are only the tip of the iceberg. You need a lot of other things in place to build a financially stable business. It takes a lot of work but it is worth it. We talked about these points in a little greater detail on the podcast so make sure you check it out here. And if you have any questions about how you can build a financially stable business (especially in the automotive service industry), please let me know. I would love to see how we could help!

When it comes to finding the right person to help your business maintain your finances and bookkeeping, trust and comfort are at the top of our client’s priorities. The clients that chose to work with us asked us a bunch of questions before we began working together. And while I can’t tell you the exact questions they asked, I can tell you the kind of questions they asked and the key principles that convinced them we were the right fit. Look For Value The first topic our clients covered in their questions was about value. While price was a consideration, they were more focused on the value they would be getting for their money. If you are only concerned about how much it will cost, you may end up missing out on the best value for your money. You need to find a bookkeeper who offers a good rate for good services. But don’t just consider the number or breadth of services included in the cost, consider how using the services will help you achieve your goals. Sometimes the services a company offers can help you accomplish more and be more efficient in your work. Whatever you decide to do, make sure that the value you receive is actually valuable to your bottom line. Look For Accuracy Accuracy matters. Even if someone is good at balancing a checkbook, they might not be good at handling the reconciliation processes. And worse yet, not all bookkeepers are capable of helping your business stay in good standing with federal and local legal requirements. You need to find someone who is attentive to even the smallest details and is willing to put in the extra effort to ensure that everything is correct. Look for someone who is knowledgeable about the legal requirements placed on your business for both financial reporting and tax planning. Having someone on your team to manage those aspects will set you miles ahead of where you could be by yourself. Look for Growth Your books are a treasure trove of information. And in the right hands, your books can be used to plan for consistent and significant growth. An average bookkeeper can keep track of all your financials and make sure everything’s up to date. An excellent bookkeeper can help you use the accurate information in your books to identify areas for improvement and growth. Running a business today is harder than ever. And trying to keep up with inflation and cost increases is getting more and more challenging. Having a bookkeeper who is looking to save you money where possible, and grow your money in other areas is an invaluable asset. Our Solutions At Three Rivers Bookkeeping, our entire goal is to help business owners grow their business through accurate bookkeeping that enables them to work on the parts of their business that matter to the bottom line and have the confidence that their business is moving in a positive direction. If you are looking for a bookkeeper, I would be happy to talk with you about your needs and the solutions we offer. Natalie Paris https://threeriversbookkeeping.com/ 907-331-0208 [email protected]

One of the biggest and most consistent challenges that my clients face is payroll. All bookkeeping is repetitive, but payroll seems to come up more frequently and present more challenges, especially for smaller companies. One of the first things that I recommend to all my clients when I start helping them with their books is to take payroll off of their plates. Here are four reasons why. Withholding Taxes Is Tricky If you are an employer and you aren’t using independent contractors, then you are required to collect withholding taxes on behalf of your employees. Calculating the correct amount to withhold and including the right amounts that include taxable fringe benefits is easy to mess up. Having your bookkeeper manage your payroll and manage those withholdings is far easier and less messy for you and your business. Misclassifying Employees Another area that affects taxes is how you classify your employees. If you fail to classify your employees correctly, you could end up on the hook for a tax bill for failing to collect and pay the appropriate taxes. Expensive mistakes like these are easy to avoid if you are using a bookkeeper to manage your payroll. Bookkeepers know exactly how to classify your employees so that your business is collecting and withholding taxes appropriately. Mistakes in Hours and Data Entry Far too often the mistakes made in payroll get overlooked. When you have 20 people to pay, you have to spend time reviewing their hours, and a small error can go unnoticed. Especially if you are busy trying to run your business. These little mistakes add up over time and can cause big errors. And if you try to fix them, you will lose hours checking over your data. A bookkeeper that double-checks every entry and is careful in calculating hours using bookkeeping software is better equipped to avoid most errors and fix any errors that slip through. Time Wasted While you may think of the time you spend taking care of payroll as just the time it takes, handling payroll yourself costs you more than you may realize. Not only are you spending time managing your payroll, you are also not spending time doing what you really need to do- running your business. How many clients did you not help because you were looking for an error in your numbers? How much more money could you have made using those same hours in another area of your business? Time is your most valuable resource as a business owner. Don’t waste it by trying to save money instead of making money. Doing payroll yourself might seem like a great way to save money, but more often than not it ends up costing more in the long run in terms of time and money. It’s always easier and better to have a service or a bookkeeper help you manage your payroll. Natalie Paris https://threeriversbookkeeping.com/ 907-331-0208 [email protected]

As a bookkeeper, I have unfortunately seen companies fail. They don’t tend to fail overnight. In fact, most of the companies that fail do so for multiple reasons. But before they fail, there are several signs of problems. Three of the most common signs that I have seen are easy to catch and fix, if you know what they are. Inconsistent Sales Sales are what make your business a business and not a charity. But if your sales aren’t consistent, your business will begin to suffer. Most people who choose to be employees choose that path because they can have a safety net. They don’t have to bring in work. They just show up to do the jobs. Inconsistent sales make employees feel less secure in their work. Not to mention the problems that inconsistent sales creates for your bottom line. One of the best things you can do if you need to improve your sales is get a business coach. Even I have a business coach. A business coach can help you understand what you need to do to grow and improve your business. And if you need a business coach, I have a great recommendation for you. Unhappy Employees Another common problem that I see from small businesses that aren’t doing well is unhappy employees. Low morale can come from any one of dozens of factors. But no matter what the root cause, unhappy employees will end up costing your business in the long run. Unhappy employees don’t typically put their best effort into their work. They are also less likely to be looking out for your interests, which can cause increased waste and costly corrections. Sometimes the issues with unhappy employees can be solved by finding better pay structures. Other times you may need to sit down with your employees and figure out what part of the management system is making it harder for them to do and enjoy their jobs. But when you fix morale problems, your team will function better and you can begin to rely on them to have your needs in focus. Unorganized and Incorrect Books As a bookkeeper, it’s rather obvious that I would find the health of a business easily diagnosed via a company’s books. But a couple of the areas that make it easier for even an amateur to identify as issues are incomplete books and disorganization within the books. If your books aren’t organized properly, your business may be wasting money. It’s easy to miss double charges, mistakes in purchases, and other costly errors when you can’t quickly assess and verify income and expenses. Getting a bookkeeper on your team can make a huge difference. A bookkeeper can pay for themselves by helping you avoid wasting money and time. And the stress you will avoid by relying on a bookkeeper will absolutely be worth bringing a bookkeeper onto your team. As a virtual bookkeeper, I don’t have to be an employee to be part of your team. And if you are interested in what that might look like, I would be happy to speak with you about it. Natalie Paris https://threeriversbookkeeping.com/ 907-331-0208 [email protected]

One of the most common questions I get is “Why do I need a bookkeeper?” It’s usually accompanied by a “I can do it myself or have a friend help me for less.” I recently had a client I helped that demonstrates exactly what I do and how it helps. I won’t include their name, or any identifying information, but I want to share with you how the work I do impacts their business. What a Disaster Looks Like I don’t call errors a disaster lightly. A disaster means major problems. When I got my first glance at this set of books, I was shocked that they were still in business. There were a ton of weird transactions that didn’t make any sense. The books had got to the point where they were affecting the taxes. The file was too broken to repair, so I had to start a new file. But the problems with the books hadn’t stayed on paper. The owner didn’t know anything about his income, his sales tax collection, or the state of his bills. And he couldn’t track his expenses in parts or labour. Overall, revenues were trending down drastically. The Problem and How to Solve It Bad bookkeeping affects your whole business. It keeps you from tracking and controlling your expenses. You won’t be able to make adjustments to be more effective if you can’t measure your costs. In this case, not knowing the state of his business, kept this owner from being able to budget and keep his costs under control. And his taxes would end up costing him more due to fines and fees. After I had reviewed his books, I started him on a new file to ensure that none of the problems from the old file were present. I also brought his books into the cloud where they would be easier to access and consistently backed up. I taught him how to send the information to me so we could organize his books properly and categorize his expenses accurately. I also instituted monthly reviews to keep him aware of the state of his books and to help him make better decisions for his business. Success Takes Consistency Because we implemented the right systems and set him up for success. We were able to get him back on track. As of this year, he is on his way to hit his highest revenue ever. He is organized and can analyze what is happening in his company so he can make better decisions and adjustments to keep on track. And he’s able to grow his business and look at expanding. The difference between success and failure was the organization of his books. I’m not saying that every case will be like this client’s. Every set of books brings unique challenges. But fixing your books is a key step to understanding and growing your business. If you want to know how a bookkeeper can help your business turn difficult times into opportunities, I would love to speak with you about your circumstances. Natalie Paris https://threeriversbookkeeping.com/ 907-331-0208 [email protected]

Whether you like Tom Brady or not, you have to admit he is the Greatest Of All Time. I’m not a football person, but when I hear or read about his accomplishments, I’m amazed. If your shop isn’t the greatest, do you know why? What is your vision for your auto repair shop? One lesson I’ve learned is that you have to see where you want to be in the future. See where you want your shop to be in 3 years or 5 years. When you see this picture of your shop the way you want it to be, what does that look like? Does it bring a smile to your face or fill you full of satisfaction? Another term you may be familiar with is a Unique Selling Proposition or USP. This is what sets your shop apart from your competition. This is the reason why people do business with you when they have other choices. Perhaps your techs are THE very best in town or your pricing is fair and more affordable than the rest. It could be that your customer service is amazing, and you treat you customers like clients. You place them at such a high value that they feel like family. This is my goal in my bookkeeping business. To be THE very best at what I do. To serve my clients as part of their team and not just another vendor. If you couldn’t answer that question about if you shop isn’t the greatest, I can help with that. I have a report that shows you what your competition is doing, so you may adjust and be better than they are. It would be like having a video tape of your next opponent’s practice. You would be able to defeat them because you knew what they were going to do next. This was what the Tampa defense did to Kansas City in this year’s Superbowl. Made Mahomes one frustrated guy and no TD’s! That hasn’t happened often. Andy Reid wasn’t thrilled either. I had a friend who knows football help me with that football stuff by the way. This is part of who I am. I do the research, so I know my clients and I have the experience to expect what they need. I’d love to talk to you about how I can help you become the GOAT of repair shops in your area. Let’s find out how I may be able to be that teammate. The one that helps you become the winner you see when you look at your shop in the future. The best to you and the success of your shop. Natalie Paris https://threeriversbookkeeping.com/ 907-331-0208 [email protected]

Whew! We’re moving on from the PPP loan blog series to dispensing knowledge about the Employee Retention Credit. Hello IRS! With all of the changes and tax time approaching ~2 months away, I hope you’re ready to go. If you haven’t already filed, here is some information that’s about two weeks old, so grab a cup of coffee as we dive into a summary of this credit. This credit is designed to make it easier for businesses that chose to keep employees on their payroll through all the challenges that COVID-19 brought and is still brining. For those of you who kept your employees, thank you and stick with me as I open some data. The name of this is the Taxpayer Certainty and Disaster Tax Relief Act of 2020, and was enacted December 27, 2020. This made changes to the CARES Act and directly related to this was modifying and extending the Employee Retention Credit (ERC), for six months through June 30, 2021. Several of the changes apply only to 2021, while others apply to both 2020 and 2021. Here’s what this new Act reads as an employer, you can a refundable tax credit against the employer share of Social Security tax equal to 70% of the qualified wages they pay to employees after December 31, 2020, through June 30, 2021. The limits of qualified wages are $10,000 per employee per calendar quarter in 2021. This means the maximum ERC amount available is $7,000 per employee per calendar quarter, for a total of $14,000 in 2021. Depending on the size of your team, this could be a substantial credit. You as an employer can access the ERC for Q1 and Q2 of ’21 prior to filing your employment tax returns by reducing employment tax deposits. If you are an employer with 500 or less full-time employees in 2019, you may request an advance payment (subject to certain limits) on Form 7200, Advance of Employer Credits Due to Covid-19, after reducing deposits. In 2021, if you are an employer with greater than 500 employees, you are not eligible for the advance. Here are a couple of eligibility rules. As of 1/1/21 employers are eligible if you operate a trade business during 1/1/21 – 6/30/21 (Q1 & Q2 of 2021) and either of these apply. A full or partial suspension of the operation of their trade or business during this period because of governmental orders limiting commerce, travel, or group meetings due to COVID-19, or A decline in gross receipts in a calendar quarter in 2021 where the gross receipts of that calendar quarter are less than 80% of the gross receipts in the same calendar quarter in 2019 (to be eligible based on a decline in gross receipts in 2020 the gross receipts were required to be less than 50%). If you started your business in 2020 then you can use the corresponding quarter in 2020 to measure your decline. For Q1 and Q2 of ’21 you can measure the decline in gross receipts using the quarter that came immediately before the current quarter (Q4 of ‘20 to measure Q1 of ’21). Effective 1/1/21 the definition of qualified wages was changed to read: For an employer that averaged more than 500 full-time employees in 2019, qualified wages are generally those wages paid to employees that are not providing services because operations were fully or partially suspended or due to the decline in gross receipts. For an employer that averaged 500 or fewer full-time employees in 2019, qualified wages are generally those wages paid to all employees during a period that operations were fully or partially suspended or during the quarter that the employer had a decline in gross receipts regardless of whether the employees are providing services. Lastly, here is a paragraph for employers who received PPP loans from 3/27/20 and forward. You may claim the ERC for qualified wages that are not treated as payroll costs in obtaining forgiveness of the PPP loan. You may check out this link for more information COVID-19-Related Employee Retention Credits: How to Claim the Employee Retention Credit FAQs or contact me and we can talk through this. The next blog will be about what to do after you receive your PPP loan. Natalie Paris https://threeriversbookkeeping.com/ 907-331-0208 [email protected]

We ended Part 3 of this blog series with “Second Draw PPP Loan Application and Documentation Requirements”. As this second draw is being distributed, the rules are changing. I encourage you to check out the SBA’s website www.sba.gov or go to your local SBA office for additional information. You may also contact me if you would prefer to have a conversation with someone outside the government. My contact information is at the bottom of this post. Beginning Part 4, we start with expanding on this rule from the New PPP Regulations: For Second Draw PPP Loans of $150,000 or Less, Revenue Reduction Documentation is Not Required to be Submitted at the Time the Borrow Submits an Application for a Loan: This section is self-explanatory, but just a bit of clarification for you. When you apply for a loan in an amount that is less than $150,000, you may disregard the required documentation mentioned in the previous blog. There is a three-letter word that causes a pause here “BUT” “Must be submitted on or before the date the borrower applies for loan forgiveness, as required under the Economic Aid Act.” A second piece is that IF you as a borrower do not apply for loan forgiveness, you must provide this documentation to the SBA when they request it from you. So, be prepared. How to Request an Increase for a PPP First Draw Loan if the Borrower Returned All or Part of a Loan, or Did Not Accept the Full Amount Previously Approved: Here are the categories of borrowers that may reapply or request an increase in the amount of the PPP loan: If a borrower returned all of a PPP loan, the borrower may reapply for a PPP loan in an amount the borrower is eligible for under current PPP rules. If a borrower returned part of a PPP loan, the borrower may reapply for an amount equal to the difference between the amount retained and the amount previously approved. If a borrower did not accept the full amount of a PPP loan for which it was approved, the borrower may request an increase in the amount of the PPP loan up to the amount previously approved. You may use the SBA’s E-Tran Servicing website to request an increase in the PPP loan amount electronically. After the request, you are required to provide the lender with supporting documents for the increase. As of this writing, the SBA’s process for collecting information from borrowers was under development. This may be available when you apply for an increase in the loan amount as described above. Clarification on Borrowers that are Ineligible to Receive a Second Draw PPP Loan: Here is some language from the Economic Aid Act that describes borrowers who are NOT eligible to receive a Second Draw PPP loan. Read carefully please? A business concern or entity primarily engaged in political activities or lobbying activities, including any entity that is organized for research or for engaging in advocacy in areas such as public policy or political strategy, or that describes itself as a think tank in any public documents; Certain entities organized under the laws of the People’s Republic of China or the Special Administrative Region of Hong Kong, or with other specified ties to the People’s Republic of China or the Special Administrative Region of Hong Kong; Any person required to submit a registration statement under section 2 of the Foreign Agents Registration Act of 1938 (22 U.S.C. 612); A person or entity that receives a grant for shuttered venue operators under section 324 of the Economic Aid Act; A publicly traded company, defined as an issuer, the securities of which are listed on an exchange registered as a national securities exchange under section 6 of the Securities Exchange Act of 1934 (15 U.S.C. 78f). Pay attention to the punctuation here. At the end of each bullet, there is a semicolon “;”. This means that if the first bullet does not apply to your situation, the next one or the next one, or the next one, OR the NEXT one may. We’re getting close to the end, but this section has some additional clarification of borrowers that will not qualify for the second draw PPP loan. Check out these are examples: You are engaged in any activity that is illegal under Federal, state, or local law; You are a household employer (individuals who employ household employees such as nannies or housekeepers); An owner of 20 percent or more of the equity of the applicant is presently incarcerated or, for any felony, presently subject to an indictment, criminal information, arraignment, or other means by which formal criminal charges are brought in any jurisdiction; or has been convicted of, pleaded guilty or nolo contendere to, or commenced any form of parole or probation (including probation before judgment) for, a felony involving fraud, bribery, embezzlement, or a false statement in a loan application or an application for federal financial assistance within the last five years or any other felony within the last year; You, or any business owned or controlled by you or any of your owners, has ever obtained a direct or guaranteed loan from SBA or any other Federal agency that is currently delinquent or has defaulted within the last seven years and caused a loss to the government; Your business or organization was not in operation on February 15, 2020; • You or your business received or will receive a grant under the Shuttered Venue Operator Grant program under section 324 of the Economic Aid Act; The President, the Vice President, the head of an Executive Department, or a Member of Congress, or the spouse of such person as determined under applicable common law, directly or indirectly holds a controlling interest in your business; Your business is an issuer, the securities of which are listed on an exchange registered as a national securities exchange under section 6 of the Securities Exchange Act of 1934 (15 U.S.C. 78f); Your business has permanently closed.” Again, same observation regarding the semicolons at the end of each bullet. Thanks for sticking with me and welcome to the end of this blog series. Whew, that IS a TON of reading. Again, I am keeping current of the changes as they happen, so if you want to talk, let’s schedule a time to meet soon. Natalie Paris https://threeriversbookkeeping.com/ 907-331-0208 [email protected] View full article