Tips for Startups

There's often a narrow margin between a successful business and a struggling one. Something as simple as credit-card processing fees can spell the difference between black ink and red. But if you think those fees are an unavoidable cost of doing business, think again.

When the Fine Print Isn't So Fine for You
As we trend toward a cashless society, more and more businesses have begun accepting credit cards — which also means accepting the processing fees that come along with them. But what many merchants fail to realize is that those rates are flexible. And the merchants often end up paying way more than they need to.

To give you just one example: Let's say your business accepts different cards with processing rates that range from 1% to 3%. Some third-party processors simply round everything up to the highest rate and charge 3% for all cards. So even if you accept four cards that charge 1% and just one card that charges 3%, you end up paying your processor 3% across the board. The merchants are actually entitled to rebates in that scenario, but few know enough to ask.

As a wealth management strategist for more than 30 years, I advise clients on how to build and balance their three pools of money. Retirement planning isn't just a matter of saving money; it's a matter of investing money and allocating resources in a way that delivers the best return. So the goal is to get the longest compounding curve out of the assets that are taxed the least.

Unfortunately, not enough people implement a net after-tax plan early enough to generate the assets they'll need to have the kind of retirement they want — or even to have a solid retirement at all. This is especially true of small-business owners, who are often so consumed with the demands of operating the business that they fail to plan for the future.

Plan for the End Right from the Start
A detailed exit strategy should be a part of every business plan. But it isn't enough to map out an exit strategy for the business — you need one for yourself, too. In fact, if you start your own business, it's even more important to factor in retirement planning than it would be if you simply kept working at a job somewhere. You'll no longer have access to your employer's plan because now you are your employer.

If you have a great commercial lease for your business, consider yourself fortunate. And don't take it for granted. Things can change at any time.

I had a client who had been in the same location for more than 20 years when the landlord summarily decided to raise the rent by $25 per square foot. With just a few months' notice, we had to scramble. We found a good building, and the prospective landlord loved my client — but evidently not enough to avoid nickel-and-diming them to death when it came time to sign the lease. I guess the landlord figured he had my client over a barrel because time was so short.

The landlord figured wrong. My client nixed the deal and continued looking. In the end, we found them an even better location, with a favorable sublease. Moral of the story: You don't have to let the landlord call all the shots when you negotiate a lease — even in a tight market like New York City (where my firm operates). The following are five tips to help you get the best terms.

Congratulations — you have an idea for a potentially lucrative small business. All you need is the funding. Several avenues are available, and you should take the time to explore them all before deciding what's best for you.

In case you missed the emphasis, the operative word there is best. With that in mind …

1. When evaluating financing options, remember that it's not always about the interest rate. Terms and conditions matter quite a bit. Even as a C corp, S corp or LLC, you can lose what you've invested, and you may be asked for "personal guarantees" that will entangle you long after a business fails.
2. Match the duration of your financing with the duration of your assets. If you have two-year loans with a big balloon payment at the end and you can't roll your debt in two years because of a major recession, that's a big problem. Ever hear of Lehman Brothers? Yeah, they did that.

Disagreements with employees, clients, and independent contractors can create risks for your small business. By having certain employee and contractor documents in place, you can help safeguard your company.

Here's a quick look at some of those key documents:

• 1099s: Make sure your paperwork is in order before January, when 1099s are due.

• Employment records: Organize your employee records (e.g. applications, performance reviews, W-2s, non-compete agreements) and keep them in a central location. Plus, confirm the records for each employee are complete and up-to-date.

• Employee handbook: This is an important document for your business and will help you avoid potential employee issues. It should lay out expectations for your employees in detail and include your mission statement along with your anti-discrimination and anti-harassment policies.

Many business owners think of a budget as a limitation. Instead, they should think of it as a set of guidelines.

The purpose of a budget is to identify the points at which you need to implement various contingency plans. And the process isn't necessarily restrictive; a budget prepares you to react not only when something bad happens, but also when something good does. If you find that a competing company is unexpectedly for sale, for instance, can you adjust your budget in order to buy them out?

You Can't Do the Math Without the Numbers
For a small business, creating a budget shouldn't take more than a couple of hours, and the benefits are tremendous. If you're doing it right, it forces you to consider the financial metrics that are actually driving your organization. Where is your company, and what can it achieve in the next year? Or three years? Or five years? What steps do you need to take during the next several months to get started toward those goals?

Once you've set your annual budget, you need to reevaluate at least once during the year to determine where you are relative to your projections. That simple process can make your company proactive rather than reactive.

Do you have a new business that shows promise or an established business that's having a growth spurt? Either way, at some point you'll probably wonder whether an infusion of cash could help you reach that highly desirable (though difficult to define) "next level."

Getting Your Priorities in Order
As a first step, make sure your records are organized and up-to-date. A number of bookkeeping issues, from misclassified expenses to improperly applied COGS, can jeopardize your loan application.

The key reports and documents you’ll typically need to provide are:

• Current P&L: This represents your revenue minus your operating expenses for a given period of time. If it's a negative number, then a loan won't fix your problems.

• A balance sheet: I covered this one in an earlier post. Basically, the balance sheet is a snapshot of your company's liability, assets and capital on a specific date.

Two years ago, I blogged about how outsourced bookkeeping services can help you keep your financial records up to date and enable you to avoid filing for an extension on your business tax returns. With the September drop-dead nearing once again (this year it's September 17 instead of September 15), it's a good time to revisit the topic.

Putting the Tension in Extension
The deadline extension exists to give businesses a break in the event of unforeseen circumstances. For example, if a natural disaster impacts the business or a personal health crisis affects a key employee just ahead of the March 15 deadline, it would be unreasonable for the IRS to fine the business for filing a late return. (To be clear, we're talking about small businesses that are structured as partnerships or S corporations. Note that the Final deadline for C Corporations and individuals (with extension) is October 15, 2018) An additional six months ought to be ample time to resolve any issues.

Originally posted on the Bill.com blog.

You’d like to think your business is safe from fraud. But there are many, sneaky ways that those with ill intent — both inside and outside your organization — can take advantage of your company.

But, by noting the below risks, you can begin to plug any leaky opportunities for fraudulent activities.

Using paper checks
According to this survey of finance professionals, three out of four businesses were victims of check fraud and check forgery in 2016. Yes, you read that right. Seventy-five percent of businesses have been subjected to financial crimes.

The true culprit? Paper checks.

Those little pieces of paper give fraudsters everything they need to steal your money — account number, routing number, and even your bank and address. It’s like handing burglars the key to your house.

In 2009 Steven Conyers acquired a CMIT (Completely Managed Information Technology) Solutions franchise in Brooklyn, New York.

Demand for his franchise’s services, which range from IT troubleshooting to data security upgrades, grew steadily. So did the demands on Conyers’ time. Desktop-based bookkeeping, which lacked real-time functionality or integration with his project management platform, was a particular drain. Supporting Strategies found a solution.

More Time — and No More Fines
Although he had an outside accountant, Conyers still had to input much of the bookkeeping information himself. He often fell behind, which proved costly. "Like most franchises, we have to report on a monthly basis," Conyers says. "I was reporting late, and the fines were costing me money."