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3 Key Benefits to Automating Accounts Payable

StrategyDriven Managing Your Finances Article |Accounts Payable Automation|3 Key Benefits to Automating Accounts PayableThe accounting department is one of the most important in a business. It’s therefore vital that it runs smoothly and that errors are kept to a minimum. Usually tasked with reducing costs and improving business performance, a key tool in delivering these objectives is accounts payable automation software. Some of the key benefits are outlined below.

Eliminate Manual Data Entry and Reduce Errors

Accounts payable can use a lot of business resource because it is traditionally a very manual process. Usually it requires someone transferring or inputting invoice information from one system to another be it from an email or a paper invoice. This kind of manual data entry often leads to errors, especially when dealing with large amounts of data.

In accounts payable in particular it’s especially important that mistakes aren’t made as they can have a huge impact on business. An additional zero or a decimal in the wrong place can disrupt other departments and in smaller businesses can lead to cash flow problems.

Implementing accounts payable automation software will help to reduce common errors and will free-up employees to work on higher priority deliverables. One key feature of good accounts payable software is AI driven invoice capture. This will automate the capture of data within invoices that are received via mail, email or fax and input it into the system. Manual data entry and errors are therefore almost completely eliminated.

Streamline Business Processes

All businesses will have an accounts payable process in place to ensure that invoices are paid on time and that the correct approvals are sought. However, usually employees rely on each other to know their part in the process. This becomes a problem if someone leaves the business as it can cause a breakdown in communication, key parts of the process to be missed and payments being delayed.

One way to overcome this is by setting up workflows and processes within automated accounts payable software. Having a visual representation of the procedure and a digital sign off process means that everyone is kept in the loop. It also means that invoices are logged and processed on time and efficiently.

If your business gets discounts for early payment of invoices this can be especially valuable.

Take Advantage of Holistic Reporting

Being able to generate and access reports that give an indication of the health of your business is vital. Typically accounts payable might be using spreadsheets or other software that isn’t linked to other systems in the business. This can lead to data quickly becoming out of date as it’s captured at a single point in time.

Connecting automated accounts payable software to existing systems will give you a holistic view of your business. Real-time dashboards and reports, as opposed to snapshots of data, will ensure that everyone is kept in the loop and that decisions are made based on the most up to date data.

Having this insight will help across the business and deliver on key objectives including:

  • Increasing responsiveness to customers
  • Being pro-active about any emerging cash flow problems
  • Providing a better service based on data-driven insights

“Can I Deduct That?” 8 Must-Know Tax Deductions for Small Businesses

StrategyDriven Managing Your Finances Article |Tax Deductions for Small Businesses|"Can I Deduct That?" 8 Must-Know Tax Deductions for Small BusinessesThere are over 32 million small businesses operating in the US.

That’s a lot of people working hard to sell their products/services and, hopefully, turn a profit!

Let’s face it, money is the lifeblood of any business. It’s a competitive world. With insufficient capital to hand, it won’t be operational for long.

For that reason, it’s vital that small businesses squeeze as much money as possible from operations.

Tax deductions constitute one essential method of doing exactly that.

After all, paying a hefty tax bill is rarely pleasant. For small businesses trying to maximize their profits, it can even mean the difference between success and failure. Are you looking for ways to save money on your business’ tax bill this financial year?

Keep reading to find out 8 must-know tax deductions for small businesses.

1. Business Supplies

Let’s start with the basics:
You can deduct from your tax bill all of the expenditure on essential business supplies.
It might not seem like much. However, any owner knows how much these necessary fees can stack up. For boot-strapping start-ups, every little bit counts!

Look around you. It’s possible to claim for almost anything you’ve bought for the purpose of doing business. Stationary (pens, pencils, paper, staples…), printers, cleaning materials, desks, chairs, sofas, whiteboards, projectors…The list goes on.

You can deduct any and all of them.

2. Travel Expenses

Business travel isn’t cheap.

It’s also essential for many companies. Business travel is commonly a vital aspect of creating leads, meeting with investors, attending conferences, generating interest, and so on.

There is all manner of opportunities to travel for business purposes.

Nicely, almost all of it can be claimed for. Often, entertainment costs can be claimed for too.

All of those flight tickets, bus tickets, train fares and so on are all deductible. Likewise, certain related expenses such as meal costs, room service, dry cleaning and so on can be claimed.

Of course, keeping a solid record of each transaction is important. Equally, certain limitations apply too. You can’t claim for absolutely everything! You must understand your tax obligations in full to be successful in any tax preparation.

3. Personal Vehicle Expenses

Many small business owners use their personal car for work purposes.

The money spent on this process is often tax-deductible. Note that only the business side of things can be claimed for! It’s crucial to separate the business from personal usage.

Granted that’s possible, then you can claim for everything from mileage to parking fees. It’s often tricky to ascertain true mileage for a trip. Be sure to record mileage by referring to the odometer, or a GPS system.

Don’t forget to deduct expenses for insurance and maintenance costs too. Owning a vehicle isn’t cheap. Using it for work can only exacerbate that. Be sure to leverage the tax deductions available!

4. Necessary Overheads

Look at what you fork out every month to keep your business operational:

Rental commitments, utility payments, internet costs, and phone usage are all crucial costs. They’re all unavoidable expenses. You couldn’t do business if you didn’t pay for them all.

For that reason, it’s possible to deduct it all from your tax bill! This can make a big difference at the end of the financial year. Again, accurate record-keeping throughout the year is essential.

5. Software & Equipment Costs

Almost every business has specific demands.

Industry-specific equipment and software is often a necessary expense. Likewise, updates and new installs are vital to staying up to speed.

These costs represent another worthwhile deduction on your tax bill. You can claim for each and every one of them, up to a certain amount of money. That means your actual computers, and all computer software can be claimed for.
Other essential equipment (such as equipment for manufacturing) can also be deducted under this bracket.

6. Your Home Office

Most people think of business and conjure images of swanky corporate offices in the city.
And, of course, that’s often accurate.

However, many small businesses are operated straight out of the family home. If that’s your set up, then you have the benefit of claiming for the costs of your home office.

That said, it must be wholly business-related. You can’t work from your kitchen and claim it’s your office! Instead, a designated space from which you operate is required.

Tick that box, and say hello to deductions for internet, insurance, rent, phone bills…and so on. Likewise, furniture and supplies can be claimed for too.

7. Outsourced Professional Services

It’s rare for someone to actually enjoy the tax process!

Consequently, many business owners opt to outsource the process. All bookkeeping and tax returns are completed by a professional.

Nicely, their fee can be deducted from your tax bill at the end of the year. Even better, it’ll be their job to work it out and complete the forms for you!

It doesn’t stop there. You might work with lawyers and consultants as well. It’s possible to claim for the money you’ve paid them too.

8. The Interest Payments on Debt

If you’ve gone into business, then chances are you’ve taken on debt to fund it.

Leverage, in the form of bank loans, is often an essential means of getting it up and running. After all, almost every business needs upfront investment to become a success. This start-up capital is used for all sorts of reasons. It can amount to a significant sum.

The burden of debt is rarely fun. However, it’s possible to claim for some of it.

Unfortunately, the loan itself is off-limits. But the interest payments are entirely tax-deductible.

Final Thoughts on Tax Deductions for Small Businesses

There you have it: 8 essential tax deductions for small businesses to know about.

Millions of small businesses are currently operational in the US. It’s guaranteed that profit maximization is a priority for every single one of them.

Indeed, the ability to cut expenses and turn a profit is vital to remain in business. Cutting costs wherever possible often comes into it. Tax deductions are an easy and essential method of doing exactly that.
Hopefully, this post has highlighted the main sources of tax deduction out there.

3 Surprising Ways Small Businesses Waste Money

StrategyDriven Managing Your Finances Article |Managing a Small Business|3 Surprising Ways Small Business Waste MoneyWhen you are new to the business world, mistakes are an unavoidable element of your learning curve. You are still in the process of defining how to become a leader, how to run a company, or simply how to share your business ideas in a way that appeals to investors. Let’s get things straight from the start: Not everything you do will be perfect. It doesn’t have to be; nobody was born a knowledgeable entrepreneur. Mistakes are a stepping stone in building up your experience, and as such, you shouldn’t be afraid of them.

However, while some mistakes can be an opportunity for self-improvement, others can present dramatic risks for your business. Indeed, some errors can be costly. What makes them even worse is that money-wasting mistakes could easily be avoided if you were to work with an expert at your side. Indeed, if there’s one good reason why small business owners shouldn’t multitask, it’s this one: Every mishap caused by lack of knowledge or attention will drag your finances down!

Online marketing campaigns are easy to set and to scr*w up

Digital marketing campaigns are not only a popular strategy to launch your company, but the general feeling you get from a quick search on the Internet is that you can manage them in a few clicks. The truth is slightly different. While digital marketing tools are readily available for all to use and enjoy, it doesn’t mean that digital marketing is simple. On the contrary, unless you master essential digital skills such as web design, social media communication, and PPC, you can’t profit from your activities. You’d be surprised how easy it is to waste money in a poorly managed PPC campaign – we’re talking thousands! Leave those to someone who knows how to make the most of your digital presence.

Keeping on top of your bookkeeping and tax is HARD

Most small business owners choose to keep their books in-house. Unfortunately, unless you’re a trained accountant, your financial reporting might be affected by involuntary discrepancies. Errors of omission, when you accidentally fail to record a transaction, or transposition errors, when you mistyped data, can lead to more dramatic budgeting and tax issues. Additionally, managing financial reports is a specialized and time-demanding activity that is best left to experts such as Brilliant Tax. Entrusting professionals with your bookkeeping frees up valuable time, which you can repurpose on income-generating activities.

You’re wasting too much energy throughout the day

Did you know that commercial buildings account for around 20% of energy consumption in the US? Businesses don’t use a fifth of all the energy in the United States. Heating, cooling, and lighting habits in offices and commercial buildings can lead to vast wastes of energy. Many companies admit to leaving windows open while using the HVAC system, for instance. Others choose to leave the lights on throughout the night, even after the building has been deserted. Simple changes, such as making your staff aware of waste behavior can help to cut down your energy bills at the end of the year.

Small businesses have, by definition, a limited budget. You can’t afford to throw your capital away if you’re trying to build up momentum. Identifying areas of improvements can finance your future success.