Inside Small Business | Small Business & Home Business Marketing

Dear Small Business Owner

Maggie Sefton, Novelist

I’m leaving tomorrow for two back-to-back mystery conferences - Ft.

Lauderdale and then Denver. We novelists are always working on planes/shuttles/airports/coffee shops, whatever. Writing away because we live in a world of deadlines.

For the record, I haven’t worked as a CPA for years (I let my license lapse), but when I did I worked mostly on small business accounts.

Exactly like what I have myself. Writing novels is a small business, too, and I’m self-employed. So that means I have to file a Schedule C form just like any small business.

Okay, off the top of my head - in between my own business emails, here’s some “down in the trenches” small business advice:

• Most of the problems small businesses get into seem to revolve around accounting or bookkeeping issues. They don’t keep track of their expenses or the money they receive or, here’s the biggie, they fail to pay their quarterly tax returns, both state and federal. Money is tight one quarter, and they forget. That’s a big no-no. The Tax Guys will jump on that faster than fleas on a dog.

• Businesses that involve product sales also have to report sales tax collections on a quarterly basis. And, if there are employees who work for the business, then there are social security taxes that have to be withheld from their wages and reported. And there are other quarterly taxes as well to keep up with.

• My best advice for small business owners is to start a very simple system to keep track of income and expenses. The easiest is a manila envelope in the desk drawer. Shove in all receipts, invoices, slips of paper w/numbers, whatever. Shove it in the envelope.

• Then, save yourself a lot of headaches and heartache and take that envelope to an accountant or bookkeeper. Quarterly is better, because then you’ll get a regular and timely handle on how your business is doing.

• Since I am the “friendly neighborhood accountant” for my business, I do the books. But, since most people seem to find accounting tasks odious at the least, I advise them to pay someone else to do it for them.

• And you don’t have to use a CPA for the quarterly record keeping. Save money and use an accountant or bookkeeper who does it for other businesses and knows how to file “quarterlies.” Stay on track. Then at the end of the year, take those records to a CPA and have them file your yearly income tax returns. And save all those receipts.

• If you’d like to save money on the bookkeeping fees, then have one of those expand-a-files that you can label for expenses, etc. Take a look at a Schedule C and use the same categories: advertising, supplies, business meals, phone expense, and my all time favorite–”Other.” That includes postage.

• Also a very big expense for some business, like mine, is auto mileage. Keep a notepad in your car so you can keep track of how far you drive when you’re visiting clients or going to conferences or delivering products, whatever. Jot down that mileage in your daytimer or whatever you use regularly. That mileage adds up and the amount allowed is actually quite good. So, don’t lose out on an important expense. Keep track.

All this may sound too simple to be repeated, and it is. But, alas, people forget it all the time. And it is the fastest way to get into trouble. Believe me, this is where most small businesses have problems. And the statistics aren’t encouraging.

Nearly 90% of all small businesses go belly-up within three to five years.

Why?

Accounting issues: keeping track of money coming in and out and paying taxes on time. So, stay on track and stay out of trouble.

Good Luck! I’m off to the airport and another conference.

–Maggie Sefton

Maggie Sefton is the author of the nationally bestselling Berkley Prime Crime mysteries: Knit one, Kill two, Needled to Death, A Deadly Yarn, and A Killer Stitch. To learn more, visit www.maggiesefton.comor her blog at www.cozychicksblog.com

           

Posted on Tuesday, March 4th, 2008 at 5:22 pm and is filed under Marketing, Money/Finance, Small Business. You can follow any responses to this entry through the RSS 2.0 feed.