8 Tips for a Smooth Auditing Process

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StrategyDriven Managing Your Finances Article | 8 Tips for a Smooth Auditing ProcessAfter you file your small or midsize business’s taxes for the year, you think you’re done with taxes. However, sometimes you’re contacted about the process that most business owners dread: an audit. While being audited is a long process that takes extra time, by following these eight tips, you ease your worries and help the process go more smoothly.

1. Don’t Panic

If you’ve filed your taxes honestly, you don’t have anything to fear from auditing services. Most auditors look for blatant fraud such as inaccurately reporting your gross income. They also examine your accounting procedures and make sure that they’re sufficient for your business’s size. For example, if you don’t have an accounting department and your business is growing, they may recommend that you hire a full-time employee to oversee your finances. Remember, all you have to do is cooperate with the auditors’ questions, so take a deep breath and get ready for your audit.

2. Keep Your Records

Audits are usually ordered within seven months of when you originally filed your taxes, but the Internal Revenue Service can audit your reports from up to two years ago. For example, if you’re audited in July 2021, the audit could be for your 2020 or 2019 taxes. As a result, it’s critical that you hold on to all your tax forms:

Don’t forget to retain your employees’ tax information as well and the forms verifying their ability to work. Keep all these forms organized by year, even after you’ve filed your taxes, so that you’re ready when it’s time for an audit and assurance.

If you’re overwhelmed by all the paperwork, it’s time to find a new organizational system. Scan your paperwork and store it in well-labeled online folders that you can access from any computer. To streamline this process, use a service such as DocuSign rather than printing your forms.

3. Plan Ahead

Scrambling to prepare for an audit makes you look unprofessional and increases the probability that you’ll make a sloppy error. As soon as you find out that you’re being audited, start working with your accounting team to get the forms ready and make sure your books are up-to-date. Leave room in your schedule to take off work during the audit so that you can answer the auditors’ questions. Finally, choose one of your accountants to serve as the primary contact for your auditing team.

4. Think About Your Changes

Has your small business undergone any major changes that affect your accounting procedures in the relevant tax year? For example, did the tax laws change for your industry, or did you upgrade your personal reporting requirements? Consider whether the leadership of your office changed or was restructured, and note any grants or loans you received. By telling your auditors about these factors before the audit begins, you help them understand potential discrepancies in your books.

5. Learn About Tax Laws

Tax laws change frequently, but they don’t always affect your business. It’s critical that you follow all the developments in financial legislation so you’re ready to implement a change. You don’t want to discover during an audit that you’re required to keep your records a certain way. If you’re struggling to understand the laws on your own, reach out to a lawyer, a certified public accountant, or a professional from the Financial Accounting Standards Board.

6. Look Back

If you’ve been audited before, now is a good time to review that auditing report. Did you fix the issues that the previous auditors pointed out, or are you still making them? What parts of your books were confusing or misleading from their perspective? Looking at your auditing report also gives you an idea of how long the process will take and how much you need to be involved.

7. Speak Up

When an auditor asks you a question and you’re not sure what he or she means, don’t be afraid to speak up. Ask follow-up questions and request clarifications; otherwise, you can’t give your auditing team the correct information. If your auditors ask for a record and you don’t think it’s relevant, explain why you don’t think it’s necessary and ask for their perspective.

8. Read the Report

When the auditing process is over, read through the finished report and decide what changes you need to make. Where did you succeed, and where did you fall short of your industry’s requirements? Keep this report close at hand so you can refer to it as you implement changes in your accounting procedures.

No one wants to be audited, but the process is actually beneficial to you. You learn about your accounting mistakes and adjust your practice to align with the law. Just make sure to stay calm, be honest, and keep good records.

Top Tips on How to Reduce Your Debt in 2021

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StrategyDriven Managing Your Finances Article |Reduce your Debt|Top Tips on How to Reduce Your Debt in 2021While the coronavirus may have had a dramatic impact on household finances in the UK, it only really accelerated a trend for rising debt levels that was already prevalent nationwide.

More specifically, people in the UK owed an estimated £1,688.5 billion by the end of October 2020, with this having increased by 21.8 billion year-on-year. This translates to a rise in debt of £412 per UK adult over the year, which is worrying when you consider the wide scale job losses that have already occurred as a partial result of lockdown measures.

In this article, we’ll consider the primary risks of accumulating debt, while offering some tips on how to reduce and effectively manage your burden in 2021.

What are the Risks of Debt?

Debt mounts when you continue to spend outside of your means, and are subsequently unable to repay your individual bills consistently or on time.

As a consequence of this, your individual debts start to accrue late payment charges and interest fees, creating a scenario where even minimum payments do little to eat into your original liability.

While this is problematic from the perspective of unsecured debts (as debt can continue to mount before creditors look to pursue court action), it’s even more damaging when dealing with secured liabilities.

This means debts pertaining to mortgages and car financing, and failing to pay these entities could ultimately cause you to default on your agreements and lose the underlying asset.

Why Online and Mobile Banking are Crucial When Controlling Debt

In the fundamental fight against rising debts, one of the best and most accessible weapons is online (or mobile) banking.

Both entities have become increasingly popular in recent times, with an estimated four out of every 10 UK adults now regularly using relevant mobile banking apps.

Virtual banking definitely offers advantages in the quest to combat debt, not least because you retain instant access to your account and can view transactions in real-time.

This makes it incredibly easy to review your spending and make achievable cash savings, which can in turn boost your disposable income levels and the amount that can be committed to paying off debts.

The type of instant online accounts offered by Monese are especially purposeful in this respect, as they can also be synched seamlessly with third-party budgeting apps to help you manage your spending in real-time.

Most importantly, you can secure a Monese account without needing to undergo a credit check, which may prove crucial for those struggling with debt and a history of missed or late payments.

How Else Can You Look to Manage Your Debts?

By using this type of account and a budgeting app in unison, you can begin to take control of your finances and structure a viable debt repayment plan.

Assuming that your budget has created enough for more discretionary spending, this will help you to concentrate a higher proportion of money on debt repayment and help you to begin repaying more than just the accrual of monthly interest.

Once you’ve begun to repay your debts on a regular and timely basis, you can open a line of communication with creditors and create the opportunity to ask for interest rates to be lowered (either temporarily or permanently).

This will really help the fight against debt, by reducing the time taken to settle accounts and the total amount repayable over time.

Easy Ways To Raise Capital For Your New Venture

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StrategyDriven Managing Your Finances Article |Raise Capital|Easy Ways To Raise Capital For Your New VentureAlmost three-quarters of new businesses and startups need a helping hand to get up and running, so if you are trying to figure out how to raise some much-needed capital, you are far from alone.

Sadly, money does not grow on trees – life and business would be so much easier if it did – but there are some ways to get the capital that you need to start up your new business venture without having to sell your soul. Let us take a look at some of them.

Launch a crowdfunding campaign

Crowdfunding is becoming an increasingly popular way of raising money, and that is because there are so many success stories with it. It is a case of having the right business idea and the right pitch – get those right and you will have hoards of people wanting to help you out financially.

Using a crowdfunding agency gives you the chance to connect to people with like-minded interests and knowledge that you may not otherwise be in touch with. It also allows you to get an idea of the level of interest in your product or service and what resonates with people who may be your target audience. It also gives you an opportunity to practise your pitch and your marketing campaign and tweak it for the future. Most importantly, it helps you raise the capital for your new venture.

Find an angel investor

The general definition of an angel investor is an accredited business person or individual with a net worth of more than $1 million, or an annual income exceeding $200,000. In most cases, they work alone, but at times will work alongside other angel investors to build up a fund.

An angel investor works by providing capital for the business start-up in return for convertible debt or ownership equity – imagine along the lines of Dragon Den. These are usually used when a traditional investor will not take the risk.

Ask family and friends

Many people turn to family and trusted friends when they are trying to raise the money to launch a new business venture. According to the Global Entrepreneurship Monitor, 5% of US adults have invested in a company started by someone they know. It is a tricky one though because it relies on a huge amount of trust and faith. You need to treat it like any other formal business transaction – draw up legal contracts with clear rules on how the money should be paid back, the time frame and what will happen in the case of late or missed payments. Be aware that it a risky way of getting capital, as if things do not work out as you hoped and you find yourself unable to pay the money back, it can irreparably damage your relationship.

Raising money to start your new business venture does not have to involve countless trips to that bank and meetings. It can be much more straightforward than that. The key is to have a solid business idea and a business plan to go with it.

Should Your Business Pay Home Office Costs For Remote Employees?

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StrategyDriven Managing Your Finances Article |Remote Employees|Should Your Business Pay Home Office Costs For Remote Employees?The COVID-19 pandemic has forced so many businesses to adopt remote working overnight. While there are a lot of benefits to remote working and it’s much safer for everybody right now, there are some challenges for your employees.

Creating a positive working environment in the home can be difficult and expensive. But many companies aim to solve this problem by giving their employees a stipend to create their own home office.

Shopify and Twitter, for example, offered to give each remote employee $1,000 to set up their home office. This money is to be spent on things like ergonomic office desks and chairs, or new laptops. Some companies are also offering a monthly payment to help cover things like internet or phone bills.

For big companies like Twitter, this expense is manageable and it seems like a no-brainer if it makes life easier for their employees. However, it’s not so easy for small businesses and paying your employees a similar stipend will put a lot of financial strain on you, so is it really worth it?

What Are The Benefits Of Paying Home Office Costs For Your Remote Workers?

Although it is a big expense to cover, it may be the best thing for your business in the long run. If you pay this money to your employees you will notice a big increase in productivity. It’s difficult to work productively if you don’t have a comfortable, well equipped space to do it. But if you give your employees the money to buy a proper office desk and chair so they can stay comfortable and focus, they will get a lot more done.

Giving your employees some financial assistance also increases access to tech tools, which employees may not otherwise use. Expecting your employees to pay out of their own pocket for a brand new laptop is unreasonable, especially considering their utility costs are likely to increase while they are working from home. The same goes for upgrading their internet connection to accommodate video conferencing. This means that many employees will struggle to work effectively because they are using outdated tools. Giving them some money to update their tech tools will benefit them as well as the business.

You should also consider it an investment for the future because it’s likely that the business world will be changed permanently by the pandemic. Remote working is going to become far more common, and that’s good for businesses because it cuts your office costs. However, if you expect your employees to continue working remotely in the future, you need to help them get their homes set up for it.

What Are The Downsides?

The obvious downside of these payments is that they put a lot of financial strain on the business in an already difficult time. So, before you make any promises, crunch the numbers and make sure that you can afford it.

The other thing to be aware of is that employees may spend the money elsewhere. Although this is unlikely, you may decide to ask them to purchase items and then reimburse them afterwards to avoid this.

Overall, if your business can afford it, paying home office costs for your remote employees is a good idea.

What makes a good investor pitch?

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StrategyDriven Managing Your Finances Article |Investor Pitch|What makes a good investor pitch?Pitching your startup to investors is a nerve-wracking experience for everyone. Even the great business leaders of today like Elon Musk and Bill Gates have had to stand in front of a group of investors, and ask them for money.

You only have a brief window of opportunity to make that first impression and hook in your audience.

Knowing what makes a good investor pitch is a large part of the battle, so what does make a compelling investor pitch?

Research your investors

You don’t want to take a cookie-cutter approach to your pitches if you are making more than one. Do your homework on each potential set of investors. What is their investment profile like? What successes and failures have they had in the past. You want to try and remind them of the former rather than the latter.

Investors will be able to spot a generic pitch a mile away, especially if it misses the mark with its target audience.

Confidence is key

You might be a nervous wreck but confidence is a must. Not only confidence in yourself, but in your business and your ideas. Why would someone give a lot of money to someone who isn’t confident in their own ideas?

There’s a fine line between confidence and arrogance, so don’t overdo it. Invest in having your pitch deck drafted by a professional Business Plan Writer, they can help to guide you through best practices in this area. Work on your presentation skills.

Business V emotion

A successful pitch needs both style and substance. You want to excite your audience by the prospect of investing in you and back it up with the cold hard facts.

Keep it short

It’s difficult to keep the magic happening for very long. Capture their attention, build up momentum and then get out and leave them wanting more.

Take them on a journey

Craft a compelling story for potential investors. It is great for nailing down the sequence of your pitch deck and takes your investors along with you on the story of your great idea.

Focus on investor benefits

As with all successful sales campaigns, focus on the benefits, rather than the features. You need to focus on what benefits and value you’ll be bringing to them, not the costs or features.

Know your business model inside and out

You’re going to get a lot of questions thrown at you. You can’t hide behind your pitch deck, no matter how great it is.

Your business model is the center of your pitch, you need to make it sparkle. Lose the investors here and it will be very hard to get them back.

Use visual aids in your pitch deck and presentation. Use examples of where a similar model is already being used successfully.

Be clear about what you want from them

What are you looking for from your investors? Partnership? Equity share? Remind people at the outset so that no one goes through the rest of the pitch for your startup under any kind of misapprehension.