Cash flow problems are a common problem for nearly any business these days, and independent retailers are no exception. Here are six things retail store owners can do to make an immediate improvement in their cash flow.

Cash flow is an ongoing challenge for independent retailers, as it is for many small businesses. Sales growth remains modest at best, and credit remains largely unavailable to many independent retailers. That puts many squarely behind the eight ball.

Here are some tips that can help you drive more dollars to the bottom line:

Understanding Cash Flow Challenges

Cash flow problems in retail can stem from a variety of sources. Poor inventory management is a common culprit, leading to either overstocking or stockouts, both of which can tie up cash unnecessarily. Inefficient payment procedures, such as delayed invoicing or lax credit terms, can also disrupt cash flow. High operational costs, including rent, utilities, and payroll, can quickly deplete cash reserves, especially during slow sales periods.

Additionally, economic downturns can reduce consumer spending, further straining cash flow. For small to medium-sized enterprises (SMEs), these challenges are often magnified due to limited resources and financial flexibility. Understanding these root causes is crucial for developing effective strategies to manage and improve cash flow.

Common Cash Flow Issues and Their Impact on Retail Sales

Retailers often face several common cash flow issues, such as insufficient cash on hand, poor cash flow forecasting, and inadequate cash reserves. Insufficient cash on hand can lead to reduced inventory levels, making it difficult to meet customer demand and potentially driving customers to competitors. Poor cash flow forecasting can result in unexpected shortfalls, making it challenging to cover operational expenses or invest in growth opportunities. Inadequate cash reserves can leave a retail business vulnerable to emergencies or economic downturns, leading to delayed payments to suppliers and decreased customer satisfaction.

Effective cash flow management is essential for maintaining a healthy cash flow, helping ensure timely payments, and investing in initiatives that drive growth and increase retail sales.

Maintaining a cash reserve is essential to cover unexpected expenses, helping ensure that your business can withstand unforeseen circumstances that could halt revenue.

Proper forecasting is crucial to prevent negative cash flow, as it helps in understanding future sales and expenses, helping ensure business sustainability.

1. Focus your retail marketing strategy on your proven customers

These are the customers who have demonstrated already that they value what you do and the merchandise you sell. What else can you offer them? These are also customers who have shared their email addresses with you. This is your list, and it’s one of the most valuable assets you have. Marketing to these customers is much less expensive (and more productive) than marketing more broadly using expensive traditional media like newspapers and magazines.

2. Turn your inventory to increase retail sales

Having more doesn’t mean you’ll sell more, especially when the extra inventory is in unnecessary depth of stock or in items at the fringes of assortments. Lean inventory, closely aligned to support prudent sales plans, promotes a greater sense of urgency with customers to buy now, when they first see it, rather than wait for when it might go on sale. Replenish more frequently, in smaller quantities, continually bringing in new, fresh, exciting merchandise.

3. Don’t compete with yourself

Many independent retailers will want to adopt a Better-Best or a Best-Only pricing structure. Offering too many options where customers can trade down to a less-expensive item leaves money on the table and slows the turn on the higher-priced offerings, thus lessening their perceived value. If consignment merchandise is part of your mix, make sure they complement rather than compete against your assortments.

4. Get paid for what you sell

Sales and promotions melt away cash flow, not to mention the fact that they lessen the perceived value of your offering and encourage customers to wait for the next sale. Getting paid also requires, however, that you fully mark up your merchandise in the first place. Markups tend to naturally erode as wholesale costs increase and retail prices don’t fully keep up, unless you actively manage your markups to keep them where you need them.

5. Make payroll a manageable expense to manage cash flow

For most independent retailers, payroll is the largest cash outflow after merchandise payables. A payroll that is primarily made up of salaried and full-time hourly employees may provide a level of stability but can be pretty inflexible and can create significant cash flow challenges, particularly during slower periods. A more balanced payroll, between salaried and full-time hourly employees and part-time employees, provides the flexibility to more closely align payroll dollars with when they’re truly needed.

6. Stop doing things the way you’ve always done them

Familiarity is comfortable, but it inevitably leads to diminishing returns. Customers thrive on newness — on new merchandise, presentations, and experiences. Repetition breeds staleness, and that will drive customers elsewhere. The most successful independent retailers are always re-inventing themselves, testing new items, programs, presentations, and concepts.

Enhancing the Customer Experience

Creating an engaging environment is key to boosting retail sales and enhancing the overall customer experience. Start by optimizing your store layout and design to ensure a smooth flow and easy navigation. Use dim and warm-colored lighting to create a welcoming atmosphere, and consider incorporating a signature scent to make your store memorable.

Technology can also play a significant role in enhancing the customer experience. Implement personalized customer service through digital tools that track customer preferences and purchase history. Offer complimentary services, such as gift wrapping or personal shopping assistance, to add value to the shopping experience. Encourage customer feedback to continuously improve and adapt to their needs. By creating an inviting and engaging environment, you can increase customer satisfaction, loyalty, and ultimately, drive sales.

Create an engaging environment to boost retail sales. A comprehensive retail marketing strategy can help connect with customers through authentic brand storytelling and understanding their desires. Additionally, a retail sales strategy centered around customer loyalty, such as implementing loyalty programs, can incentivize repeat purchases and improve customer retention. Sales associates play a crucial role in delivering personalized customer service and enhancing the shopping experience by using technology to access customer profiles and make tailored recommendations. Furthermore, having knowledgeable sales associates on the sales floor during peak hours is essential for maximizing revenue through effective upselling and cross-selling techniques.

After all that we’ve been through, how much cash flow is enough? It’s not enough just to be cash flow positive. The challenge is to generate exceptional cash flow from the sales revenue you’re generating, even as you work to grow revenues even further.

Applying for business credit? Here are four basics to consider. If you or your business are seeking credit and feel a bit nervous about your chances of getting the cash you need, pause for a moment, take a deep breath, and remember this simple acronym.

This very tight, almost non-existent lending market for small businesses invokes many emotions from business owners seeking capital to grow and expand. These emotions run the gamut from despair to downright anger.

If you or your business are seeking credit and feel a bit nervous about your chances of getting the cash you need, pause for a moment, take a deep breath, and remember a simple acronym — C.R.A.P.

C – Credit. Your personal credit matters. It matters more now than ever. Today, lenders aren’t looking for ways to say “yes”; they’re only looking for reasons to say “no.” Their easiest, quickest method is to pull your personal credit history. If your credit score is not in the excellent range, the answer is “no” — before these lenders spend both time and money performing other due diligence on you or your firm.

Lenders want to ensure that you (the borrower) put them first when it comes to allocating the money you or your business has. The best barometer of your willingness to repay your creditors is your personal credit history — period. So, before you begin talking with lenders, pull your credit report. If your score is not in the upper 2% of all borrowers, simply say to yourself, “crap,” and move on.

R – Repayment. Even with a strong credit history, if you can’t demonstrate right now that you can make minimum payments, the answer will be “no.” Lenders don’t care that you think you’ll make a million dollars with their loan proceeds sometime in the future. You have to demonstrate that you have (through personal income) or your business has (through the conversion of assets or from profits) the cash flow to repay the debt facility — right now.

Put yourself in their shoes. Banks and other lenders don’t want to be your partner and take an equity stake in your business. They want to be repaid and earn interest on the money they lend. This is their business and how they make their money. So, before you begin talking with lenders, determine how you intend to pay them back (from income — personal or business) that you earn “now.” If you don’t have income or another method of repayment, simply say to yourself, “crap,” and move on.

A – Assets. This is an asset-based lending environment. Asset-based means more than just having collateral. Lenders want to lend against specific assets that are, for the most part, guaranteed to repay their loans. Assets like business credit card receipts, accounts receivables or purchase orders, or even business property and equipment. Thus, lenders can have first-lien entitlements to these assets. They will control them to ensure that their (the asset’s) cash flow comes through them first.

For example, with accounts receivable factoring, the lender will invoice your customer, requiring that all payments go through them. Thus, the lender is paid first (you get the remaining payment). If you do not have assets, either business or personal, assets that are wholly owned by you and have significant value, simply say to yourself, “crap,” and move on.

P – Persistence. Persistence is the key to getting any loan in any environment. You will hear many “nos” before you hear one “yes.” More than likely, you will hear many “nos” before you hear even one “maybe.” Just stick with it. Each lender has its own lending policies and area of expertise. Some lenders are flush with money to lend, while others are overextended. To get the loan you need, you have to work hard and just persevere. Don’t take “nos” personally — use them as building blocks for the next time. So, if you’re unwilling to put in the time and effort, simply say to yourself, “crap,” and move on.

Understanding Business Credit

What is business credit?

Business credit refers to the creditworthiness of a business, evaluated based on its credit history, payment habits, and financial stability. Think of it as a report card for your business’s financial health. Just like personal credit, business credit is a measure of your ability to repay debts and manage finances effectively.

For small businesses, establishing business credit is essential. It opens doors to loans, lines of credit, and other financial assistance that can fuel growth and expansion. In essence, business credit is the lifeline that can help your business thrive.

Why is business credit important?

Business credit is more than just a number; it’s a key to unlocking financial opportunities. A good business credit score can help you establish a solid reputation with lenders, suppliers, and vendors. This reputation can translate into lower interest rates, better loan terms, and higher credit limits.

Moreover, having strong business credit allows you to further separate your personal and business finances, reducing the risk of personal liability. This separation not only protects your personal assets but also enhances your business’s overall financial stability. In short, a robust business credit score is a cornerstone of a successful and financially healthy business.

Establishing a Strong Foundation

The journey to building strong business credit begins with laying a solid foundation. The first steps are registering your business and obtaining an Employer Identification Number (EIN). An EIN is a unique nine-digit number assigned by the IRS for tax purposes. It’s like a Social Security number for your business. Having an EIN is important because it’s often required to open a business bank account, apply for credit, and file taxes.

To register your business, you’ll need to file Articles of Incorporation (if you’re forming a corporation) or Articles of Organization (if you’re forming an LLC) with your state government. This process officially recognizes your business as a separate legal entity. Once registered, you can apply for an EIN online through the IRS website. With your business registered and an EIN in hand, you can open a business bank account, apply for credit, and start building your business credit history.

Remember, registering your business and obtaining an EIN are just the first steps. To truly establish business credit, you need to create a business credit profile, make timely payments, and maintain a good credit history. By doing so, you’ll build a strong foundation that will support your business’s financial growth and stability.

While the above is meant to provide a bit of humor in these troubling times, the information provided is still good guidance when you are seeking credit for business growth. Therefore, instead of being surprised, shocked, or just downright angry when you get turned down, think about the acronym C.R.A.P. If you spend time ensuring that you’re creditworthy before you begin your search, not only do you stand a better chance of getting the loan you need, but you should save valuable time and energy in the process.

Copyright BusinessMoneyToday.com

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As a first-time business owner, it’s important to keep track of your own money going into your business. To do this, you must record capital contributions, which is the money that you, the owner, use to start and maintain your business. This article will explain what a capital contribution, also known as an owner’s contribution, is and how it works, why it’s important to track deposits to your business checking account, and the potential tax benefits.

What is an owner’s contribution? 

An owner’s contribution is money that you, the owner, bring to the business. This can include money transferred from your personal account into a business checking account. It can also include other investments you make in the business or items you bring in, such as furniture or the equipment you buy for the business. When you make a capital contribution, you’re essentially investing in yourself and your new company.

How does a personal funds contribution by an owner work? 

When you make an owner’s contribution to your business, you need to create a financial record of the money you’ve invested. This financial record is important for tracking the money going into your business.

When recording an owner’s contribution, it’s also helpful to create a journal entry. This involves entering the amount into both the debit column and the credit column of your balance sheet in your accounting software to accurately reflect the transaction.

When you contribute money to your business, the bank automatically creates a record of how much you’ve invested. This record is important because it shows you how much money you’ve put into your business. Tagging the deposit as an “owner’s contribution” or “capital contribution” makes it easy to reference later.

This also helps you to keep track of how much money you’ve invested, where the money is coming from, and where it’s going. This financial record also helps prove to potential investors that you’re serious about your business. 

Why track deposits to your business checking account? 

Tracking deposits to your business checking account isn’t just another creative business idea; it’s essential for a few reasons. First, it helps you to monitor how much money is coming into your business. This is especially important if you’re relying on outside investments or loans. Secondly, it lets you keep track of expenses, which is important for budgeting and determining what needs to be paid. Finally, it helps prove to potential investors that you have invested in your business.

Owner Contributions and Business Equity

Owner contributions play a crucial role in shaping a business’s equity. When you inject personal funds into your business, it directly increases your stake in the company, which is recorded as an increase in your personal equity account. This boost in equity not only enhances your investment in the business but also strengthens the overall financial position of your company.

These contributions can be utilized in various ways, such as purchasing business assets, covering operational costs, or paying off business expenses. Each of these actions contributes to the growth and sustainability of your business. By diligently tracking your owner contributions, you gain valuable insights into your company’s financial health, enabling you to make informed decisions about future investments and strategies.

Capital Investments vs. Owner Contributions

While capital investments and owner contributions are often used interchangeably, they have distinct meanings in the realm of business finance. Capital investments encompass all funds contributed by owners, partners, or external investors to fuel the business. On the other hand, owner contributions specifically refer to the personal funds that you, as the owner, bring into the business. So, all owner contributions are capital investments, but not all capital investments are owner contributions.

Both capital investments and owner contributions can be vital for the growth and expansion of your business. They provide the necessary financial resources for innovation, risk management, and scaling operations. By recording these contributions separately, you can maintain accurate financial records and help ensure compliance with tax laws and regulations. Understanding the difference between these two types of contributions is essential for making strategic decisions about your business’s financing and investment plans.

Potential Tax Benefits 

Tracking your startup costs alongside your contributions can also provide potential tax benefits. You may be able to deduct your startup costs from your taxable income. This can be a great way to help increase your tax refund by making sure that you aren’t paying too much in taxes. 

Best Practices for Owner Contributions

To maintain accurate financial records, it’s essential to track owner contributions regularly. Use a reliable payment method, such as a bank account transfer or personal funds transfer, to help ensure transparency and traceability. It’s also advisable to maintain a separate equity account dedicated to recording owner contributions, which helps in tracking changes in ownership interest over time.

When recording owner contributions, be meticulous about including the date, amount, purpose of the contribution, and the payment method used. This level of detail helps ensure that your financial records are comprehensive and accurate.

Additionally, consider consulting a tax accountant or lawyer to ensure compliance with relevant laws and regulations. By following these best practices, you can help ensure that your owner contributions are accurately recorded and your financial records remain up to date and compliant with regulatory requirements.

How to Track or Record Contributions in an Equity Account

You can track your contributions by keeping a detailed record of all the deposits you’ve made to your business checking account. You should include the amount and date of the contribution, as well as the source of the money (such as personal savings or loans). You can also use accounting software, like Money Pro, to track your contributions. Accounting software can help you keep a detailed record of all of your investments and help ensure that you’re claiming the correct deductions on your taxes.

When you track money for owner contributions, it’s important to create detailed journal entries. If you use personal money for business expenses, make sure to record these transactions accurately. Additionally, when you transfer money from your personal account to your business account, document the transfer to maintain clear financial records.

Conclusion 

As a first-time business owner, it’s important to track the money going into your business. Capital contributions are a great way to do this, as they are the money that you, the owner, bring to the business. Tracking your capital contributions helps you to keep track of how much money is coming into your business, where it’s coming from, and where it’s going. It also shows potential investors that you’re serious about your business.

Everyone makes big-ticket purchases at some point in their lives; we all need items like vehicles, houses, and equipment. Big-ticket items are called “big” because you typically have to invest more time and money to buy these goods than you do your other purchases. In addition, most of your big-ticket items are meant to last you quite a long time before you need to replace them. Managing finances effectively for big purchases is crucial for maintaining financial stability.

That being said, no price threshold makes something a “big-ticket item” because, at the end of the day, how expensive an item is is relative to the person buying it. For instance, something over $100 might count as a high-cost acquisition to one individual, while another considers $2,000 cheap. That said, most consumers would agree that cars and houses are always big-ticket items.

From a retailer’s perspective, a big-ticket item could be any product that has a higher price and profit margin than other merchandise in their store.

Another term for big-ticket items is “durable goods.” This name fits because these goods are meant to last a long time; they’re are not intended to be replaced frequently. And due to their high cost, buying durable goods typically requires consumers to plan their purchase ahead of time, save up money, or pay for their durable goods through a financing plan.

More often than not, big-ticket items are “necessary goods” and not “luxury goods”; they’re things like houses, cars, office equipment, and so on. These kinds of purchases require serious planning from both the business and the consumer. Consumers need to be aware of how they will afford the big-ticket item, and businesses need to ensure the payment process goes as smoothly as possible.

Making Life Easier for Customers

When consumers plan their purchases, they tend to factor in how they will pay for the item at hand. Customers might ask themselves many questions: What payment methods does this business accept? Does the business offer financing plans? Understanding financing options and strategies is crucial when purchasing significant assets like vehicles and homes.

It’s not feasible for every consumer to pay upfront, so companies that allow customers to pay in installments are far more likely to receive business from people who need a product.

Secure Payment Processing

From the business side, it’s important to have a secure payment processing system. In the past, businesses were more hesitant to accept and process payments via credit card, ACH, and other digital methods; these methods were more prone to fraud and chargebacks. But now there are a variety of payment processors available to businesses, making it easier than ever to securely and safely offer digital payment methods to customers.

A good payment processing system should include features that deter, detect, and prevent fraud and seamlessly align with business operations, saving time relative to traditional methods. When it comes to making big-ticket sales, significant amounts of money are on the line, so it’s essential that you have an easy-to-use yet secure platform that can process large transactions.

Paying for Big Ticket Items: Your Options

There are lots of ways to pay for big-ticket purchases, and cash is still the simplest. Some would even argue that cash is the best way to pay. After all, when you pay with cash, you don’t have to worry about paying lenders back. You also won’t have to worry about how much your interest payments accumulate over time. That said, it’s rare for someone to have enough cash on hand to buy a car, much less a house. If they can, it’s probably the result of saving for months or even years to make the purchase.

The next option (and arguably the most popular way to pay) is credit. Paying with a credit card or line of credit allows you to finance payments and potentially earn reward points. Depending on your credit provider, you could face low interest rates — or extremely high ones, which can be an advantage or disadvantage depending on the rate.

Some merchants offer their own financing plans. Merchant financing is similar to credit, but unlike credit card companies, there are no third-party underwriting transactions. Instead, customers are responsible for paying in installments. If you go this route, it’s important to understand the interest rate associated with the merchant’s loan, as it can impact monthly payments and long-term financial obligations.

If merchants and consumers want extra security, they can coordinate the transaction through an escrow service. An escrow agent is a third party that facilitates a transaction, holding the money and regulating the transfer until the transaction is considered complete. However, escrow services might charge hefty fees.

Obtaining a personal loan from a bank can provide greater flexibility and higher borrowing limits despite potentially higher interest rates and fees.

Assessing Your Finances for a Big Purchase

Before making a big purchase, it’s crucial to take a step back and assess your finances. Understanding your financial situation can help you make informed decisions and avoid potential pitfalls. Here are some key factors to consider:

• Income: Start by calculating your net income. Ensure you have a stable source of income that can support your monthly payments without straining your budget.
• Expenses: Review your monthly expenses, including essential costs like rent or mortgage, utilities, and groceries, as well as discretionary spending on entertainment and hobbies. This will give you a clear picture of your spending habits.
• Savings: Check your savings account to ensure you have enough funds for a down payment, closing costs, and other upfront expenses. Having a healthy savings cushion can make a big difference.
• Debt: Take a close look at your existing debt obligations, such as credit card debt, student loans, and personal loans. Make sure you can handle additional monthly payments without overextending yourself.

By thoroughly assessing your finances, you can determine how much you can afford to spend on a big purchase and make decisions that align with your long-term financial goals.

Managing Monthly Payments

When it comes to making a big purchase, managing your monthly payments effectively is key to avoiding financial strain. Here are some tips to help you stay on track:

• Create a budget: Allocate a portion of your income toward your monthly payments, helping ensure you have enough left for other essential expenses. A well-planned budget can help you stay organized and avoid overspending.
• Prioritize needs over wants: Be honest about what you need versus what you want. Prioritize essential expenses and cut back on discretionary spending if necessary.
• Consider interest rates: Understand the interest rates associated with your loan or credit card. If possible, negotiate for a lower rate to reduce the overall cost of your purchase.
• Make timely payments: Set up automatic payments to ensure you never miss a due date. Consider making extra payments when possible to pay off your debt faster and save on interest.

By managing your monthly payments wisely, you can avoid financial stress and make steady progress toward your financial goals.

Avoiding Financial Strains

Avoiding financial strains is essential when making a big purchase. Here are some strategies to help you stay financially healthy:

• Avoid overspending: Be realistic about what you can afford. Stick to your budget and avoid the temptation to overspend on a big purchase.
• Consider the total cost: Calculate the total cost of the purchase, including interest rates, fees, and other expenses. Make sure you can afford the full cost, not just the initial price tag.
• Build an emergency fund: Save three to six months’ worth of expenses in an easily accessible savings account. This fund can cover unexpected expenses and provide a financial safety net.
• Monitor your credit score: Regularly check your credit score to ensure you’re not accumulating too much debt or negatively impacting your credit. A good credit score can help you secure better interest rates and loan terms.

By following these tips, you can make a big purchase with confidence and stay on track to achieve your long-term financial goals.

Which payment method is the best?

What’s the best way to pay for a big-ticket item? Ultimately, it depends on an individual consumer’s financial status and which payment methods the seller accepts. Digital methods like credit or debit cards might be the most user-friendly, but there are pros and cons to cash payment or loan financing, too.

As a merchant, it’s important to have a payment-processing infrastructure that can securely process large transactions. As a consumer, it’s important to weigh your options and consider what the future consequences will be for committing to the purchase. Regardless, significant amounts of money are on the line when you make large purchases, so from the perspective of both parties involved in the transaction, you want to make sure things go as smoothly as possible.

Here’s a novel thought: let Uncle Sam pay for your holiday gifts and entertaining.

No, I’m not talking about anything illegal. You can’t buy personal gifts and bill them to your business. That’s called fraud. And that’s not how you want to end the 2024 tax year.

But if your business uses the cash method of accounting (as many sole proprietors do), you may be able to legally cut your tax bill by hundreds or thousands of dollars by making a few strategic decisions for your business between now and the end of the year. If you’re a sole proprietor, those tax savings may more than cover your holiday spending, practically speaking.

In this guide, we’ll talk about some ways you can make the most of your year-end tax planning for federal taxes (we don’t really cover state or local income taxes here). But before you pursue any of these tax planning strategies, keep in mind that you should chat with a tax professional to get personalized guidance.

When many Americans receive their tax refunds, they take that “bonus” money and go on vacation, get a new wardrobe, or buy a large-ticket item they’ve had their eye on. Maybe you’re thinking that all of these are great options, but none of them provide any long-term benefit.

Say you’ve calculated your tax return amount, and now you’re wondering what to do with that money. Why not make an investment in yourself that can net you sustained returns? One way to achieve this is by launching your own business.

Consider the possibilities: no more cubicles, no living paycheck to paycheck, and, best of all, being your own boss and essentially running your own life. If this sounds good to you, why not take that tax return, create a business plan, and get started? But if you didn’t receive that much money with your tax return, don’t worry, as you could still start that business with title loans.

If you’re a small business owner, tracking tax-deductible expenses is a crucial part of your financial management strategy. Not only can keeping organized records throughout the year save you money come tax season, but it can also help you save lots of time and effort.

When using effective tax-deductible expense tracking techniques, you already have the information you need — and it will be well organized, comprehensive, and accurate.

Keep reading to discover what types of expenses can be deducted and how ZenBusiness’s Money Pro app can make keeping track of everything easier than ever.

Understanding Business Expenses

Before you can start tracking business expenses, it’s essential to understand exactly what they are.

What are business expenses?

Business expenses are the costs incurred by a business to generate revenue and operate efficiently. These expenses can include a wide range of items, such as salaries, rent, utilities, equipment, marketing, and travel expenses.

Understanding what constitutes a business expense is crucial for accurate financial reporting, tax compliance, and informed decision making. By clearly identifying and categorizing these expenses, businesses can help ensure they’re capturing all potential tax deductions and maintaining a clear picture of their financial health.

Importance of Tracking Business Expenses

Tracking business expenses is essential for small business owners to maintain a clear picture of their company’s financial health. By accurately recording and categorizing expenses, businesses can identify areas for cost reduction, optimize cash flow, and make informed decisions about investments and resource allocation.

Moreover, tracking business expenses is necessary for tax compliance, as it enables businesses to claim legitimate tax deductions and avoid penalties. Effective expense tracking helps small business owners stay organized, helping ensure that all financial records are up to date and ready for tax filing.

What expenses can be deducted?

A good expense tracking strategy starts with understanding exactly what can be deducted. In fact, many small business owners miss out on potential tax deductions because they don’t effectively track business expenses or simply don’t know certain expenses can be deducted come tax time.

The Internal Revenue Service (IRS) defines business expenses as the costs of carrying on a trade or business. Furthermore, according to the IRS, these expenses are “usually deductible if the business operates to make a profit.”

An expense must be both “ordinary” and “necessary” to the business in order to be deductible. In this instance, “ordinary” just means that the expense is a commonly accepted one in your line of business (such as tables for a restaurant owner or office supplies for an accounting firm). “Necessary” does not mean that the expenses need to be absolutely indispensable, but simply refers to costs that are helpful and appropriate for your business.

Common Tax-Deductible Expenses

Some of the most common business expenses that may be tax deductible include:

• Payroll expenses
• Home office expenses
• Rent or mortgage payments (if you buy or rent space in which to operate your business)
• Commercial/business insurance costs
• Company vehicle expenses (and any other professional travel expenses)
• Equipment depreciation
• Employee benefit costs
• Retirement plan expenses
• Business-related taxes
• Interest expenses (this refers to interest charged on money you borrow for business expenditures)
• Various types of operating expenses (based on your business type)

It’s also important to note that the rules can vary greatly depending on your business type. For instance, small business taxpayers may account for costs of goods sold very differently from larger companies, and new entrepreneurs may need to “capitalize” (rather than deduct) certain startup costs. Please refer to IRS.gov for specific information, current regulations, and any other specifics you need to know.

Setting Up for Expense Tracking

Thankfully, setting up your expense tracking strategy isn’t too complicated. First, you’ll need to open a business bank account. Then, you’ll need to decide on your tracking method.

Open a business bank account

Opening a dedicated business bank account is a critical step in setting up a business expense tracking system. This account should be separate from personal bank accounts to ensure that personal and business expenses are not commingled. A business bank account provides a clear record of business transactions, making it easier to track expenses, manage cash flow, and prepare financial statements. Additionally, a business bank account can help small business owners establish a professional image and build a strong credit history.

By keeping personal and business finances in separate bank accounts, small business owners can streamline their expense management and help ensure accurate financial planning.

Choose how you’ll track expenses

Once you’ve set up a business bank account, you’ve got a solid foundation for tracking your expenses. There are a variety of methods you can use to track your business expenses. Some small business owners who are just starting out choose to track manually using a spreadsheet. Others choose a more robust accounting software.

But as with many aspects of business, the more you can streamline things, the easier your life will be. That’s where business expense tracking programs like ZenBusiness’s Money Pro come in.

How ZenBusiness Money Pro Easily Tracks Tax-Deductible Expenses

ZenBusiness Money Pro helps users keep track of business expenses efficiently and easily because it can link directly with your business bank account. This is where we can help.

Money Pro automatically selects tax-deductible expenses

Money Pro pulls in expenses directly from your bank account (once you connect it). It then selects the expenses it believes are tax deductible and compiles them for tax purposes. All expenses are automatically and instantly organized. You’ll have a full list of itemized deductions automatically. 

Make changes on the go

You can also manually de-select any items that aren’t tax deductible. Just click the box next to the expense, and it disappears. This makes it easy to separate expenses into “tax” and “non-tax.”

Easy Business Expense Tracking

Additionally, the app makes it easier than ever to track business expenses by displaying all of your expense tracking information in one convenient, user-friendly dashboard. That way, everything you need is right at your fingertips.

We make it easier than ever to view, find, sort, and track expenses — bringing your tracking strategy into the future and away from time-consuming manual efforts and the frustration of potentially missed deductions.

Compare ZenBusiness Money and QuickBooks.

Tracking Tax-Deductible Expenses Manually

If you opt not to use a business expense tracker app like ours, you’ll need to keep up with your tax-deductible expenses manually. While the old-fashioned way will certainly require more time and effort, here are a few tips to help you organize your strategy and make sure you’re being thorough:

• Pay for all business expenses out of your business bank account (or with a business credit card) to keep personal expenses and business expenses separate.
• Pay for business expenses with checks, debit cards, and credit cards (never cash) to keep expenditures more trackable. If you ever have to use cash, make a written record of it.
• Keep a log of all business expenses (either in accounting software, a virtual cloud, or in a physical notebook/filing system), with expenditure types separated into categories.
• Keep accurate records of your payroll expenses.
• Keep all bills related to your business (company phone bills, employee cell phone bills, office rent bills, etc.).
• Safeguard all of your expense records (receipts, invoices, bills, etc.).

More Tips for Small Business Owners on Organizing Receipts and Expenses

As you can imagine, knowing how to manage business expenses and tax deductions while staying organized with a manual tracking method can become pretty unwieldy. A great way to compile everything in one place is by maintaining a comprehensive spreadsheet that maps out all expenditures.

You can set your spreadsheet up however you’d like, but we recommend devoting specific tabs to different types of expenses or date ranges. You can also split expenses up by category: fixed, variable, period, and so on. There are lots of expense tracking spreadsheet templates that you can use to organize your tax deductions.

Better yet, as we’ve already mentioned, you can use a tax deduction tracker app to take most of the manual effort and guesswork out of the entire process. 

Our Money Pro app was created to help you easily keep track of deductible business expenses, streamline your expenditure information, and help ensure that no possible deductions slip through the cracks.

Plus, our app isn’t just for tracking expenses. It can also help you make sure you get paid by customers. Use it to easily send custom invoices, accept credit card and bank transfer payments, and manage your clients all from one easy-to-use dashboard.

Download the ZenBusiness Money App

Planning a holiday office party is the perfect way to celebrate the season and bring the team together. With the right office holiday party ideas, you can create a fun, memorable experience that everyone enjoys. And you don’t always have to break the bank (but you can go extravagant if you want). 

Here’s your ultimate guide to planning a holiday work party that’s festive, engaging, and free of stress!

Pre-Party Planning

Before getting into the fun parts, a little planning goes a long way. Nailing down the basics, like the date, time, and location, will set the foundation for a smooth and successful holiday party.

Set a date and time

Choosing the right date and time is essential to maximize attendance. Consider scheduling the party during the first or second week of December. This way, you’re less likely to interfere with family or travel plans that often fill up during the holiday season. 

Once you’ve settled on a date, send out a save-the-date notice to let everyone know well in advance. Calendars fill up quickly during December. 

Avoid scheduling conflicts with other company events, and, if possible, survey your team to find a time that works best for most. Understandably, not everyone will be able to make the event work, but coordinating as many schedules as possible shows a lot of consideration for your team. 

Choose a venue

Selecting a venue that suits your theme and budget will make the event feel well-organized and special. Options can range from hosting the party at your office to booking a local bar, restaurant, or event space. 

Whatever choice you make, be sure to consider the number of guests. Your venue will also need to be able to accommodate any activities you have planned. Booking the venue early helps prevent last-minute scrambling, so secure it as soon as you can.

Holiday Party Activities

One of the most enjoyable parts of holiday office parties is choosing activities that everyone will love. Whether you’re encouraging holiday spirit, team-building, or creative expression, there are plenty of office Christmas party ideas to create a festive atmosphere.

Foster holiday spirit

Set the tone for a joyful celebration by incorporating activities that bring out everyone’s holiday spirit. Hosting an ornament-decorating station lets employees craft personalized decorations to take home. 

If you want to add humor, consider a holiday costume party or ugly sweater party – a guaranteed hit for creating laughter and fun photo ops. For a more classic celebration, a traditional Christmas theme with holiday decor and music can be a warm and inviting choice.

There are myriad possibilities for building the perfect ambiance, so feel free to be creative or appeal to your company’s unique traditions. 

Team-Building and Games

Holiday parties are a perfect time for team-building activities. A holiday scavenger hunt is an engaging way to build teamwork, allowing everyone to work together to find hidden items around the office or event venue. 

If gift exchanges are more your style, a Secret Santa or White Elephant exchange adds excitement and lets everyone show off their creativity with unique or humorous gifts. If you go this route, be sure to clearly communicate expectations for acceptable price points or assigned recipients. 

If you need some virtual holiday party ideas, keep in mind that a virtual holiday escape room or an online party platform can bring everyone together, no matter where they are. 

Creative Expression

For a hands-on activity, set up a cookie or gingerbread decorating station. This adds a delicious touch, allowing everyone to enjoy their creations or take them home. Hosting a holiday-themed art class, an office ornament decorating party, or a wine and paint night provides a creative outlet and encourages employees to unwind and enjoy themselves. 

If you want to add entertainment, a holiday karaoke session or talent show is a fantastic way to showcase hidden skills and have everyone cheering each other on.

Food and Drink

A good menu is the lifeblood of any office Christmas party. If you want your team to enjoy themselves, be sure to plan an excellent lineup of food and drinks. By offering a variety of options, you can cater to different tastes and dietary needs without a hitch.

Catering and Dining Options

Hiring a catering service that offers holiday-themed menus can relieve the pressure while adding a festive touch. Buffet-style dining or food stations work well for interactive and flexible dining, allowing people to mingle freely. 

If possible, make sure to include vegetarian, gluten-free, and other dietary options to keep everyone satisfied and comfortable. Chat with your catering team about ways to integrate diet-friendly options seamlessly into your menu.

Food Stations and Bars

Enhance the holiday feel by adding fun drink and snack stations. A hot cocoa bar with toppings like marshmallows, whipped cream, and chocolate shavings is always a crowd-pleaser. For a more adult vibe, consider a wine and cheese tasting or a holiday-themed cocktail bar with seasonal flavors like peppermint or cranberry. If you have a sweet-tooth crowd, a dessert decorating station with festive treats and decorations will be a hit.

Entertainment and Ambiance

Good entertainment and ambiance are essential to creating a party that feels festive and memorable. From music to decorations, these elements tie everything together.

Music and Dancing

Live music or a DJ can energize the crowd and keep the holiday vibes going. If you’d like, you can even set up a dance floor and encourage everyone to show off their moves! If you’re looking for a more classic, intimate atmosphere, you could hire some local musicians for a live performance.

If you’re on a budget, create a playlist of classic holiday tunes and some modern hits to get people in the mood to dance.

Decorations and Themes

Setting a festive theme brings your party together and gives it a polished look. A winter wonderland or a festive holiday market theme with fairy lights, garlands, and a big Christmas tree creates an inviting atmosphere. 

Add small but impactful touches like holiday centerpieces and themed decor around the venue to make the space feel special.

Gift-Giving and Charity

Holiday office parties are a great opportunity to show appreciation and give back to the community. Thoughtful gift exchanges and charitable giving can add a meaningful layer to the celebration.

Secret Santa and White Elephant

Secret Santa and white elephant gift exchanges are party favorites that add an element of surprise and fun. Set a budget to keep things affordable and encourage employees to get creative with their gifts. For a charitable twist, consider having employees make a small donation to a colleague’s favorite charity in place of a traditional gift.

Giving Back During the Holiday Season

If you’d like your company to make a significant impact, you might add a community-focused element to your celebrations. Maybe you could organize a volunteer day or charity event during the party season.

For example, partnering with a local charity or organization is a great way to give back and show your company’s commitment to the community. Encourage employees to donate to a good cause or even set up a fundraising campaign to make a positive impact and spread the Christmas spirit.

Keeping Your Holiday Office Party Affordable

Throwing a holiday office party doesn’t have to break the bank. If you’re working with a smaller budget, consider some affordable office party ideas, like hosting the event at the office and opting for potluck-style food options. Do-it-yourself decor and setting up music playlists instead of hiring a DJ can also keep costs down. Planning ahead and budgeting carefully will help ensure the party stays within your means while you spread holiday cheer.

Final Thoughts: Planning a Stress-Free Holiday Party

Organizing an office holiday party can feel like a big task, but with early planning and a few key steps, it doesn’t have to be stressful. Start the process as soon as possible, and consider enlisting a party planning committee or an event planner to take care of the details. 

And most importantly, remember to relax and enjoy the party! The goal is to create a memorable experience that brings your team together, spreads holiday cheer, and leaves everyone looking forward to next year’s celebration.

By following these corporate Christmas party ideas, you’ll be well on your way to throwing a fun, festive, and stress-free celebration that everyone will enjoy.

Running a totally debt-free business might not be possible, but reducing your debt is a wise move. Here are 13 things you can do to help lower the amount of debt your business carries.

Your business is no different than your home — too much debt can cripple you. Although it might be difficult to run a debt-free business, you should try to manage and reduce it as much as possible. Business assets can be used as collateral for secured loans, but failing to meet debt obligations could result in creditors seizing business assets, including funds in business bank accounts.

Understanding Small Business Debt

Small business debt is a common phenomenon that can be both beneficial and detrimental to a business’s growth and success. Understanding the concept of business debt, its types, and its effects on cash flow is crucial for small business owners to make informed decisions about their financial management.

What is business debt?

Business debt refers to the amount of money borrowed by a business to finance its operations, expansion, or other business-related activities. It can take various forms, including loans, credit card debt, and lines of credit. Business debt can be used to cover operational expenses, invest in growth opportunities, or finance large purchases.

Examples of Good and Bad Business Debt

Good business debt is used to extend the runway and help businesses make purchases that they couldn’t normally make if it makes them more competitive. For example, taking out a loan to invest in new equipment or hire new employees can be considered good debt. On the other hand, bad business debt is money spent without understanding how it impacts a business. For instance, using a credit card to cover operational expenses or fund day-to-day activities can be considered bad debt.

How Debt Affects Cash Flow

Debt can significantly impact a business’s cash flow, which is the lifeblood of any business. When a business takes on debt, it must make regular payments, including interest, which can reduce its cash flow. If not managed properly, debt can lead to cash flow problems, making it challenging for the business to meet its financial obligations. Therefore, it’s essential for small business owners to carefully consider their debt obligations and ensure they have a solid plan to manage their cash flow.

Assessing Your Debt Situation

Assessing your debt situation is crucial to understanding the extent of your business’s debt and developing a plan to manage it. Here are some steps to help you assess your debt situation:

Inventory your debt

Start by making a list of all your business debts, including loans, credit card debt, and lines of credit. Include the following information for each debt:

• The amount borrowed
• The interest rate
• The repayment terms
• The outstanding balance

Reviewing your debt inventory will help you understand the extent of your business’s debt and identify areas where you can improve your debt management.

Use these 13 ideas to reduce your small business debt:

1. Know your numbers.

Don’t just be familiar with your numbers — know them. Knowing them means that you know the cost of each of your raw materials, labor, rent or lease costs, and everything else. Do you know what each item costs down to the penny? Do you know the interest rate on each of your debts? If you don’t, you’re probably paying too much for something. Additionally, it’s crucial to understand how much debt your business carries and what constitutes manageable versus unsustainable debt.

2. Be smart about your ordering.

Sometimes, you stock a poor-margin item that gets people into your store, but as a general rule, if it’s not getting you to the margins that others in the industry report, it may not be worth your time. Sales that result in ultra-low margins are costing you money. Identify unprofitable sales and eliminate them or look for a lower price from suppliers.

3. Increase your margins to improve cash flow.

Speaking of margins, each industry has its own benchmark for what is considered strong margins. Do you know yours? Check with your industry trade group, but once you know it, make adjustments. You can raise your prices, lower your costs, or both. The goal should be to raise margins without raising your overhead expenses. What are others charging for the same item? Can you purchase more at a significantly lower cost without losing the savings to debt service?

RELATED: The Break-Even Point and The Break-Even Margin

4. Watch your inventory.

Like things in your refrigerator at home, some items tend to linger. Don’t put off ordering more of your popular inventory, but look for the product that isn’t selling and liquidate it. Understanding your existing debt is crucial when making these inventory decisions.

Inventory is probably where most of your money is tied up. You’re probably paying interest on that stale inventory that everybody forgot about. Don’t let it sit in your store unnoticed. Even if you move it at cost or for a small loss, liquidating is better than keeping the money tied up. Sell it online — eBay or Craigslist, for example.

5. Check your interest rates.

Take notice when you have an economic climate of low interest rates. Refinancing can lead to lower monthly payments, making debt repayment more manageable. If you have older debt, it’s time to renegotiate the terms.

6. Talk about the terms.

If you’re having trouble making payments, talk to the supplier about extending the terms. Automating debt payments ensures they are made promptly, helping you avoid penalties and manage your finances more effectively. You aren’t going to save any money, but lower payments may give you the financial room you need until the product sells.

7. Sell and lease back.

Do you have relatively new fleet vehicles or other larger items? Sometimes, it makes sense to sell the items and lease them back. Payments might be lower. To gauge the payoff that comes from this strategy, you will likely need help from a professional crunching the numbers.

8. Ask your employees.

You were an employee at some point. You know that the people on the front lines will see things that the managers may not. Your employees know where money is being wasted. Ask them. They may be skittish about telling you for fear of retaliation. Explain to them why you’re asking and maybe offer a bonus to anybody who helps the company save money.

9. Be tougher on your customers.

Don’t become that business owner that every customer hates, but do insist that customers meet their payment terms. You probably won’t go to battle if payment is a few days late, but when a couple of weeks go by, it’s time to start calling the customer to ask for payment. If late-paying customers are a big problem, you may want to add a late fee clause to agreements you have customers sign before you begin work for them. Check with your local professional advisors to find out if there are any laws that regulate what late fees you can charge. Good business relationships happen when both parties feel respected and valued.

RELATED: Small Business Collection Strategies That Work

10. Reduce staff.

Nobody likes to reduce staff, but if your business fails, the reduction in staff will be much larger. Sometimes, you have to make tough decisions that negatively impact the few to protect the many. Are there employees you could do without? Could you consolidate positions by paying one person more rather than paying benefits for two employees?

11. Speak to a credit counselor.

Most credit counselors are consumer based, but some work with small businesses. A debt restructuring firm can negotiate with creditors to modify existing credit agreements, making it easier to manage financial obligations. If you’re having trouble negotiating better terms, a credit counselor might be able to help.

RELATED: Small Business Bankruptcy: An Option When You Can’t Pay Your Debts

12. Hire a debt restructuring firm.

Debt management companies come into your business and sniff out where you’re losing money unnecessarily. They may be expensive but worth it in the long run. The U.S. Small Business Administration (SBA) provides valuable insights and resources for managing small business debt.

13. Bring on an investor.

If things are really bad, an investor can offer an injection of cash often in exchange for a piece of your company. A small business owner must carefully weigh the responsibilities and risks associated with bringing on an investor, as it involves significant financial decisions. In general, avoiding this option is best since it involves signing away a portion of your future profits, but if times are really tough, it’s worth considering. However, finding investors is difficult. Don’t wait too long to start looking.

Bottom Line

Change what you can control. You have far more control over your expenses than your profits. You can’t make customers come through your doors, but you can reduce costs. Concentrate on cost reduction and put that money back into servicing your debt.

If you are looking to form a business in a foreign country, you may be surprised to learn that the USA has been known as one of the most foreign-friendly countries to start a business.

On top of this, the United States of America has a consistently strong economy and is a leader for global business and investments. This can be promising for your entrepreneurial endeavors.

How can you start a business in the USA as a non-citizen foreigner? Starting a business in the USA has no citizen or living restrictions. You can use a registered agent service to register your business with an address in the state you are filing in. Starting, buying, or owning a business in the USA does not automatically change your citizenship status, but a green card is not required to begin.

While starting or purchasing a business within the USA can be a relatively easy logistical process, it does come with plenty of challenges. There will be nuances as to types of businesses, as well as laws for working and living, that you will have to navigate. Continue reading to learn more about the types of USA-based businesses you can own as a non-citizen foreigner (both residential or living abroad) and the legal guidelines you will have to follow along the way.

Need Help Starting a Business in the USA?

ZenBusiness will file your formation paperwork for $0 + state fees. Plus, we offer additional services to help you start a business in America.