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Accounting Is Sexy! October 30, 2009

Posted by Julie Duriga, CPA in Uncategorized.
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Japanese Tearoom 2Yes!  It is true accounting is sexy.  Sometimes the numbers need to be lured out from their secret hiding places as they wait to be invited into your life.  Sometimes the numbers need to be played and manipulated in order to get what you want from them.  Sometimes the numbers are aggressive and loud as they beg you to pay attention to them.  Your numbers sometimes wait for you to massage them and run them through your fingers.  Sometimes when you interact with your numbers the results can be heartbreaking and other times the numbers will bring a feeling of elation. 

Your numbers can bring you direction, focus and clarity if they are appreciated and respected.

In addition to being sexy, your numbers can bring you the feeling of control and power.

Pay attention to your numbers and they will guide you through confusion, uncertainty and bring the satisfaction of helping you make decisions with a solid sense of fact.

 Visit www.UniversityForBusiness.com for other tools to help you love your numbers.

Increase Vendors or Increase Products? October 25, 2009

Posted by Julie Duriga, CPA in Uncategorized.
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j0438994I had my first proposal for a question and would love to start some discussion and gather opinions…

My sales are good but stagnant.  Should I increase the product line or number of vendors?

I do believe that if your sales are stagnant and you are not seeing the increases that you would like that it is time to look at the data and see what your customers are interested in.  I would spend some time doing some reasearch to see what your competitors are doing.   What is selling well in the market place?  Of course, if there is a super star vendor out there that your customers will love, then by all means…but move carefully before selecting new vendors.

Increasing the number of vendors can and usually does complicate your life, the number of bills you have and the number of possible transaction increases.  I would try to leverage and maximize the current relationships that I already have before I started looking for new vendors.

Questions?  Comments?  Please write and let us know what you think…

How Much Should I Pay Myself? September 26, 2009

Posted by Julie Duriga, CPA in Uncategorized.
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j0438379Since there is so much interest in my previous blog post, “How Do I Pay Myself?” I thought it would be fun to write to entrepreneurs to answer the question to “How Much Should I Pay Myself?”

Unfortunately, the answer is almost always this:  “The owner gets whatever is left over…”  Your employees have to be paid first, your rent must be paid first, your telephone bill…these are all things that you need to stay in business.  Unfortunately, for various reasons, most small business owners don’t make enough money their first few years to make a formal salary for themselves.

We will say that this is an excellent reason to do reasonable, conservative cash flow projections.  Your cash flow projections for your small business will tell you how much you should pay yourself and will tell you what is left over after meeting all of your expenses.  Projections are a critical part of the business plan because they tell us if we are marking our stuff up enough, if our overhead is too high, what are the quantities that we have to sell in order that we may break even and end up with enough profits to have a salary.

The second part of the cash flow business projections is to really know how much does it cost you to live.  Sometimes, when small business owners are running their cash flows for their business, they forget that they have to make paying themselves a priority.  Ideally, you want to have profits and a salary! 

Visit us at our website to get your free E-Book titled “How Do I Pay Myself? The Entrepreneur’s Guide to Building a Business AND Bringing Home the Dough.”  www.UniversityForBusiness.com

We also offer a really cool twenty minute video about how running your business affects your bottom line. We use islands, cars and bridges to demonstrate the movement of profits and losses between your personal and business bank accounts. This immediate download is avaialble for only $6.99. Twenty minutes with a CPA for only $6.99, what a deal!

How Can Depreciation Help Me? September 19, 2009

Posted by Julie Duriga, CPA in Uncategorized.
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j0432694Depreciation is one of the most complex areas of accounting and this area is where accountants have the most flexibility as far as reducing tax liability or showing strong net income when it is most needed.  Depreciation affects the income statement and can drastically lower your tax bill. When we depreciate an asset, we are not expensing it all at one time but over a period of 5, 10, or 15 years.  Some assets like buildings are expensed over a period of 27.5 years.

EXAMPLE:  Let’s say you buy a 5,000.00 laptop for your business.  For purposes of depreciation we would say, that this laptop looses its value over 5 years at 1,000.00 per year.  Quite simply, all we do is divide 5,000.00 by 5 years.  Rather than showing a 5,000.00 expense on the income statement right away, we only have 1,000.00 expense per year.

This is beneficial if we are trying to get loans from the bank, this way we have a higher net income.  If we took the entire 5,000.00 and expensed it this year, it would lower our net income but this would also lower our tax bill.  The lower our net income, the lower our tax bill.

Depreciation is an important topic to discuss with your accountant.  Sometimes it is better to put your equipment on a longer time frame, such as the laptop over 10 years…this might help you in later years when you are more profitable to lower your tax bill in the years when you need it the most.

 Visit my website for more tools to help you run your business better.  www.UniversityForBusiness.com

What Is An LLC? August 31, 2009

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j0441315An LLC stands for Limited Liability Company.  What is an LLC?  It is the most flexible but confusing entity to most small business owners.    There is no federal tax form for an LLC.  Although the IRS recognizes the entity, there is no specific tax form for the LLC.   As a small business owner, it is critical to know how your tax return is going to be filed.

 The LLC is filed at the state level with your Secretary of State.  When you file for your EIN number with the IRS, you still get to pick if you are going to be a Sole Proprietor, a Partnership or an S Corporation.  If you are choosing to be a Sole Proprietor or a Partnership you are required to file form 8832 with the IRS.  If you are choosing an S Corporation, you are required to file form 2553 to let the IRS know that you are choosing an S Corporation status. 

To make this a bit clearer, in the CPA business, the conversation almost always goes something like this. 

CPA-“Oh, you are an LLC…what is your filing status?”

Customer-“I am an LLC.”

CPA-“What status did you choose with the IRS to let the IRS know how you will be filing your tax return?”

Customer-“I am an LLC.”

And on and on we go…

When you visit your accountant and you have filed your LLC paperwork you will save a great deal of time, money and confusion when your accountant asks, “What is your filing status?” and you know the answer.   You can proclaim loudly and say, “I am an LLC filing as….”  Remember your three choices are Sole Proprietor, Partnership or S Corporation. 

Some attorneys will help you make the choice of what your filing status you should be, other attorneys will file the LLC paperwork and then tell you that you need to go see your accountant about your filing status.

Visit us at our website to get your free E-Book titled “How Do I Pay Myself? The Entrepreneur’s Guide to Building a Business AND Bringing Home the Dough.”  www.UniversityForBusiness.com

We also offer a really cool twenty minute video about how running your business affects your bottom line. We use islands, cars and bridges to demonstrate the movement of profits and losses between your personal and business bank accounts. This immediate download is avaialble for only $6.99. Twenty minutes with a CPA for only $6.99, what a deal!

What’s In A Name? How Should I Name My Business? August 28, 2009

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j0438994In my research for the book Confessions of Entrepreneurs, (I decided that I would include stories of many, many entrepreneurs, rather than just my story.  What do you think?)  Don’t  you think it will be more interesting to have many entrepreneurs telling of the mistakes that they made in their business rather than just one (me) person confessing the errors of their ways?

As a CPA, I had only one choice to name my business, Julie Duriga, CPA.  That was my choice.  We were going to call it Duriga Accountants but my state board told me that was not possible.   

I was surprised to learn that one of the first mistakes that some small business owners make is the way they name their business.  They give their businesses names that are meaningful to them or a name that is meaningful  in their family or a name they think it is really cool.  Some small business owners give their business a name that is sophisticated and sometimes give their business a Latin name.  Which sounds fun but in fact you spend useful, valuable time explaining what the name means rather than how you bring value to other people’s lives. 

I ran into a friend at the YMCA the other day and she told me that her and her husband had an organic landscaping company called Terrat Systems.  I asked her if she did Terraces after asking her to repeat this several times and she sighed heavily and explained that the name was just Latin.  Quite honestly I am not entirely sure that I am spelling Terrat correctly, I tried to Google it but nothing comes up that is relevant.  They currently live in Asheville and have a nursery, I asked her what the name of their new business was and she proudly declared that it was called, “Carolina Native Nursery.”  It says it all, doesn’t it?  We can move on to more important aspects of her business rather than asking to repeat the name and asking her what it means….

Give your business an un-sexy, easy to understand business name that people can easily identify what  value you bring to the world.   You will save a great deal of time and you will be able to move on to talking about the more interesting things about your business right away.  You only have a few minutes to make a good impression…spend those few minutes impressing your audience with your product or service!

How Do I Pay Myself? August 19, 2009

Posted by Julie Duriga, CPA in Small Business, Uncategorized.
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j0438810This is a question that I answer virtually everyday.  Of course, every entrepreneur wants to get paid as often as we can and as much as our business can afford.

How you pay yourself depends on the business entity in which your business operates.  Remember the LLC (Limited Liability Company) entity is only a state entity.  There is no LLC federal tax form.  If you have an LLC entity, you are in the eyes of the Internal Revenue Service a sole proprietor, partnership or S corporation.  We say in the CPA business, they are an LLC filing as a sole proprietor.  OR they are an LLC filing as a partnership.  OR they are an LLC filing as an S Corporation.  Make sure that you know what entity you are registered at the federal level, Sole Proprietor, Partnership or S Corporation.

  • Sole Proprietor-You must have two separate bank accounts, one for your business and one for your personal affairs.  When the business gets paid, that cash is deposited into your business account.  When it is time for you to get paid, you can write yourself a check or transfer your funds over from the business banking account to your personal account.  It is important that you leave money in your business bank account (even better to set up a separate savings account)  to hold back your self employment taxes and any potential income tax you may have.  (See blog post called “Put My Taxes Into Buckets, Please.”)  In a sole proprietorship, when you pay yourself this is called an Owner’s Draw.  If you have profits in the business, even though you did not bring those profits home with you, you will still pay both income taxes and self employment taxes on those profits.  If you have employees, they can be run through payroll but you can’t run payroll on yourself in a sole proprietorship or inside of a partnership.  Every quarter, you are required to make estimated self employment taxes.

 

  • Partnership-Very similar to a Sole Proprietorship in that both profits and owners’ draws are subject to both income tax and self employment tax.    There needs to be two business bank accounts and you can do a transfer or write yourself a check from your business account to your personal account.

 

  • S Corporation and C Corporations-As an active officer of the corporation, you are required to write yourself a payroll check.   There is some flexibility as to what how much we can pay yourself in dividends but it is an IRS red flag if there is no payroll for officers in a corporation.  I love it when officers run payroll on themselves and receive a W-2.  This makes for much less of a surprise at the end of the year at tax time.  I personally converted myself to a Corporation entity so that I did not have worry about making those estimated payments throughout the year.  I will get a W-2 this year.  I may even get a small refund!  There is a really nice change.  I love Paychex for payroll.  They are reasonably priced and do their work excellently!  It doesn’t matter if you have just one person on  your payroll, the complexities of payroll are the same if you have one person or twenty five people.

Visit us at our website to get your free E-Book titled “How Do I Pay Myself? The Entrepreneur’s Guide to Building a Business AND Bringing Home the Dough.”  www.UniversityForBusiness.com

We also offer a really cool twenty minute video about how running your business affects your bottom line. We use islands, cars and bridges to demonstrate the movement of profits and losses between your personal and business bank accounts. This immediate download is avaialble for only $6.99. Twenty minutes with a CPA for only $6.99, what a deal!

Networking Events Or Community Service? August 12, 2009

Posted by Julie Duriga, CPA in Small Business, Uncategorized.
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j0432756I love the optimistic energy of an entrepreneur, the air sizzles with hope and excitement.  When small business owners are starting their business,  I believe they underestimate how difficult and how long it takes to develop and maintain their business relationships.   Business is all about relationships, regardless of what you are selling.  People want to buy from people that they know.   How do you do that?  There are so many networking groups and opportunities to meet other people…it is difficult to decide which path to choose.

If you are starting your own business or you are currently in business for yourself, be sure to give yourself time to develop those relationships.  Make sure that you are putting yourself in front of people doing what you enjoy.  Your passion and enthusiasm will come through and people will be drawn to your positive energy. 

 I have always thought that networking events for the sake of exclusively networking were artificial.  I prefer putting myself in front of people doing what I enjoy and let the business come as it may.   It feels more authentic and genuine to volunteer as a way to meet people.  Of course, I let folks know what my business is about but when I am volunteering or participating in something that interests me, there is so much other stuff to talk about.  If you are just starting out,  consistency is critical.  Being someplace that you love to be over and over again will grow your business in a meaningful and sustainable way. 

Visit my website at www.UniversityForBusiness.com for a free preview of my video for small business owners.

Confessions of an Entreprenuer… August 6, 2009

Posted by Julie Duriga, CPA in Uncategorized.
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Man holding stack of paperwork with hand on calculator with longAs I reflect back on the first three years of my CPA practice, I am looking back at all of the things I did right and all of the things I did wrong.  There wasn’t one big mistake but many, many little mistakes.  I am sure those mistakes are common and that many people have walked down a similar path as I have.  Of course, I have found this to be a great opportunity for a book.  I do believe that this transparency will help other fellow entrepreneurs.  My hope is that folks will say to themselves, “Julie is a CPA and she should have known better.  If she can make those mistakes, I will certainly exercise caution.”  (Or say something similar to this to themselves…)

I want everyone to have a wonderful experience owning their own small business.   I want entrepreneurs to learn from my mistakes so that  business owners will enjoy ownership in their business. 

 The book will consist of listing about ten or twelve errors and the signs that you might be on the path of making similar mistakes to mine and how to prevent or correct those common errors.

Thoughts?  Anything to share?  Write to me, I would love to hear from you…

What Does A CPA Wish She Had Done Differently In Her Business? August 1, 2009

Posted by Julie Duriga, CPA in Uncategorized.
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j0303030There are so many wonderful books on how do things exactly right in small business.  I have scoured the Internet looking for small business books on how people made mistakes.  Everyone says you learn more from your mistakes than from your successes.  There are certain events that have happened in my life that have caused me to reflect on my business of three years.  There are many, many things I wished I would have done differently in my business but I am going to start with three.

  • I wished that I would have asked this question, “Yes, you think it is a good idea but would you pay for it?”  Everyone loves to discuss their ideas but in all actuality, what matters is, will people pay for it.  There are many, many wonderful ideas but making the transition from good idea to payment is a level that needs to be considered with caution and objectivity.  Everyone told me that to teach tax law on the Internet with cartoons was a GREAT idea and it is a great idea but the sales aren’t there yet.  Just because people tell you that it is a great idea, it doesn’t necessarily mean that people are willing to pay for it.

 

  • I wished that I would not have advertised.  I wasted a lot of money on advertising.  I did not get the sales from advertising that I believed that I paid for.  I guess I got scared and felt that I needed to shore up my business with placing ads.  Since I am  a CPA, I received more calls that were a waste of time than was worth the money than I invested in advertising.  It put my name out there for more people to sell me stuff than I was prepared to handle.  Word of mouth is the ticket for professional service business.  What really worked for me was putting myself in front of people doing things I enjoyed. 

 

  • I wish that I not put myself into so much overhead in the beginning.  I was so optimistic at the potential of my business and I rented an enormous, beautiful office that was difficult for me to afford.  This lead to inappropriate choices at times of clients.  I thought I needed a big, beautiful office in order to impress my clients.  All it really did was effectively force me to gamble on clients that were likely not to pay.  I had, of course, hoped that they would pay.  So, I rented a gorgeous office to impress people that did not pay me.    Hmmm…If you keep your overhead expenses low, it reduces the pressure of having to gamble on poor choices of clients.

If you would like to learn more about a good idea that I can’t really figure out how to sell (the cartoons and tax law idea), check out my website at www.UniversityForBusiness.com