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Tips to Improve Cash Flow Management

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Tips to Improve Cash Flow Management

When running a startup company or a small business, proprietors face many hurdles when getting started. While the initial costs are cumbersome to most, running the company requires plenty of business cash flow management to ensure continuous growth. Finances are often the most challenging aspect of tech startups and other young companies, and getting money matters right can help operations.

Small business accounting considers cash flow improvement to ensure timely cash going in and out of the company. The trick to making profits is ensuring client invoices are paid in full and on-time, all while investing money into the right areas. Here are ways to better manage business cash flow for all startup companies:

Prepare Cash Flow Strategies Through Projections

It always pays to put things into writing, so having a cash flow projection sheet for the coming year, each quarter, or even weekly. Accurately listing down business cash flow can help you see when trouble is brewing in your company’s operations, which gives you a starting point to fix things.

These projections aren’t future glimpses. They’re more educated guesses made through various metrics in your company’s operations. Seeing invoices and payment histories, successfully tackling upcoming expenditures, and other aspects of being a startup company can help push your business into a better position.

Another thing to consider when projecting cash flow is listing down all possible upcoming expenditures. This list will include rent, inventory, salaries for workers, and other taxation items that need to be accounted for at all times. Ensuring all these are noted for the coming months will help you make more educated decisions about your startup company’s future moves.

Improve the Way You Conduct Receivables

In business, not all sales made will constitute an instant payment. If this were the case, cash flow would never be an issue. However, you can employ some strategies to improve how you manage receivables. Everything boils down to moving things at speed, which means creating more products and turning these products into cash.

Some ways to convince customers to ride in on the trend are to offer discounts to those who pay bills early or quickly, ask for prompt deposits during orders, or do credit checks. Other strategies can include liquidating old and outdated products as soon as possible and identifying slow-paying clients while shifting to a “cash-on-delivery” process to ensure payment.

Cashflow Video Guide

Learn the simple steps to prepare cash flow projections to improve your business cash flows.

Employ Strategies to Survive Rough Times

Lacking cash to do business is a typical instance that many companies face, especially startups. Small business accounting services always recommend returning to everyday business practices to help manage your company’s shortcomings. By being aware of what you need to do, you can create a plan of action to ensure that the way out is clear. 

One way to navigate a difficult financial situation is to seek help from entities like your business’s suppliers. These people have interacted with you and similar startup companies, helping them lend money to keep your enterprise alive. They might also provide more flexible terms than other lending institutions. Keeping your startup company thriving will be challenging during low points, but sticking with a concrete plan can help you get past low periods. 

Conclusion

Cash flow improvement is essential to make a startup company survive. Every single bit of cash that goes in and out is vital when financial security isn’t fully developed, which is why small business accounting services always recommend being meticulous. Startups might have to change some policies, employ various strategies, and be more assertive when demanding payment from clients to survive the oversaturated market that is extremely brutal for most.

To get more details on accurately making cash flow projections for your business, watch this step-by-step video tutorial, where I talk through each step of creating an adequate cash flow projections document. The guide also includes a template that you can download and customize for your specific needs. Watch the Cashflow Projections Video Guide now.

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Finding the Perfect Accountant For Your Startup: What to Know

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Finding the Perfect Accountant For Your Startup: What to Know

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When breathing into life your new startup business, you might be tearing your hair out trying to develop your business plan, prepare to meet investors, and just keeping the business afloat. However, there may be one aspect of business that might just be more important than all that which you may have forgotten: the accounting side. 

If you remembered to handle that side, then that is great! If not, then that is okay—it’s a basic mistake that can be rectified if you act quickly. Accounting is not exactly the most obvious aspect of the business, but it is an incredibly important one, as taking control of one’s money ensures the company’s ability to survive, especially during its infancy! As such, it’s best left for a professional to handle.

With that being said, here is how you can choose the right accountant for your startup:

Check their experience 

First things first, always look at their experience. This includes their understanding of cash flow management, ability to work with taxes, and other accounting-related know-how. You will want to find accountants that have gained their experience from the industry that your business will be in, as this will allow you to access accountants with the industry-specific knowledge to fully manage your financial needs!

In other words, make sure their expertise is not only enough, but it also must be relevant to the industry you are in! That’s because different industries will generally have different needs, and having one that has worked in similar companies such as yours will guarantee they know how to work with you properly.

Look at their qualifications 

Experience is essential, and so are qualifications. Being qualified for the job means that they are actually authorized to offer their services in the specific area.

With that in mind, be sure the accountants you work with are fully qualified for the job. This means getting the credentials and certificates they need to prove that they know what they are doing—that they are able to give you the reliable and professional accounting help you expect out of them! 

If you are hiring from a firm, then looking for a trustworthy firm can increase your chances of accessing qualified accountants.

Cashflow Video Guide

Learn the simple steps to prepare cash flow projections to improve your business cash flows.

Set up a meeting with the accountants 

Whether you are hiring from a firm or standalone accountants, you will need to meet with the exact individual you want to work with. If this isn’t possible, then always ask the firm about the exact person you will end up working with, and try your best to meet that person before proceeding. 

During this meeting, you will be discussing your company’s needs and ask them if they have the services you want. Do not forget to ask them for feedback on your business plan. See whether they are comfortable with the plan, and take note of how they approach the matter. This will give you a preview of how they work and how they interact with clients—both factors that will make or break your experience when working with them.

Conclusion

All in all, do as much research as you can and ask all the questions you want the answer to when you meet the firm or accountant you are going to work with. If you like what you hear, they likely are the right accounting firm or professional to work with to set your startup on the road to success. 

On the other hand, if you still have concerns or dislike what you are hearing, it is better to move on and look at other accounting professionals! This may take more time out of your hands, but finding the right individual to work with is the difference between a successful startup and one that’s doomed to failure.

FiBrick is a people-centric accounting firm offering accounting services to startups and scale-up businesses all over the US to secure success. Reach out to us and get accounting services for startups today!

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Get Your Startup Going: 7 Financial Tips for Business Startups

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Get Your Startup Going: 7 Financial Tips for Business Startups

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About to launch a startup? Exciting times, indeed. But there are a lot of things you need to sort out first, especially when it comes to your finances. Let’s face it—building a startup is one of the most difficult things you ever have to do, albeit exciting. A lot can go wrong if you don’t manage your finances right. Therefore, we will share with you some tips to help you avoid these common financial mistakes. 

Prioritize Cash Flow Management

One of the reasons startups fail is poor cash flow management—they just run out of money. And this something you don’t want to happen. Proper cash flow management will ensure you know where every single amount is coming from and where it’s going. Moreover, a part of this is establishing a realistic budget for your business. 

Track and Monitor Expenses

As you launch your startup, you will be dealing with a lot of expenses left and right. Tracking and monitoring your expenses is crucial for cash flow management and tax filing. While hiring an accountant to handle this may be the best choice, the fear of not being financially ready for it as a start-up is real. Don’t fret; there are accounting firms that cater explicitly to startups and scale-ups!

FINANCIAL KPIs opt-in

Learn the 7 KPIs all startup founders should use to assess their company’s performance and take actionable measures to address areas where the company is underperforming.

Put a Limit on Fixed Expenses

At the early stages, it’s essential to keep your expenses low. So, before you rent a huge and beautiful office space, think again. Operate at a low cost first so you can allocate most of your capital to growth that will let you reach your goals quickly. A lot of startups focus on the wrong things and forget that their revenue should always come first. 

Be Prepared

When starting a business, you never know what can happen; therefore, you need to prepare yourself for the worst possible situation. Have reserves for both personal and business in an emergency savings account. You can never be too prepared for bad situations. 

Value Your Time

As a business startup owner, you need to remember that every minute of your time is valuable. Therefore, consider that when planning your schedule and your daily activities. Remember that every second you spend doing something unrelated to your business is time and money wasted. 

Put Focus on Customer Acquisition

Your startup will be nothing if you don’t have customers. So, focus on identifying different acquisition channels and work on optimizing your costs. Indeed, you can’t test every possible acquisition channel at first, which is why you should focus more on lucrative opportunities. 

Pay Yourself

Compensate yourself enough to live. You don’t need to pay yourself a lot of money at first, but it should be enough to put food on the table. Also, your hard work and dedication to your startup are valuable. 

Start It Up Right

Launching a business startup requires careful planning. One of the things you need to focus on is your finances because one wrong move with it can be detrimental to your business. Use these tips to sort out your finances that will set you on the right track. 

Do you need help with your startup business? FiBrick is a people-centric accounting firm based in New York, NY that offers a range of services for startups and scale-ups. Contact us today!

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How to Better Manage Your Cash Flow as a Startup: Our Guide

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How to Better Manage Your Cash Flow as a Startup: Our Guide

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When even established companies find it challenging to do a cash flow analysis, you can expect young businesses to struggle with this task even more. Chances are, you started a business because of your passion for a particular industry, or it could be because you want to show the world your talent and skills or achieve a lifelong dream. But whatever your reason is, one thing is for sure – you want to gain profits!

One of the best ways to gauge your progress is by looking at your cash flow. Yet, it’s not so easy to understand it all. But because you are a business owner, you need to know how to manage your cash flow efficiently and properly. 

Here are four effective ways to manage your cash flow as a startup:

1. Know where the money is coming from and where is it headed.

As a startup company, you need to have a clear understanding of where you are getting your cash from and where you plan to spend it. Don’t make the mistake of overlooking cash flow statements because these serve as your records. You must highlight the inflows and outflows, the average revenue per account, and the operations’ cost.

2. Consider the bigger picture

While the cash flow statements will give you an idea of how your cash flow is going, there may be a few factors that affect them. For instance, there may be a few late payments that are not reflected, and this can give you a false idea of having an excellent financial status. Similarly, a recent big purchase may make it seem that you are financially in danger, but if it improves your productivity and profitability, it’s putting you in a better position. For this reason, you must not solely rely on those statements and always see the bigger picture.

Cashflow Video Guide

Learn the simple steps to prepare cash flow projections to improve your business cash flows.

3. Have a solid cash flow management plan 

One effective way to manage your cash flow is by coming up with a management plan that you can easily follow. But you should not copy from anywhere but make this plan yourself because your business is different from that of others. You also have your own needs and obstacles that you need to overcome. With that said, some features must be in every cash flow management plan, including identifying cash flow obstacles, recording day-to-day expenses, and preparing to improve overall cash flow.

Make sure you have detailed documentation, as this will not only help you keep track of your cash flow but also serve as a great tool to attract investors in the future!

4. Measure all financial metrics

Keep in mind that you must not solely focus on how much income you are making. It is easy to make this mistake because that’s what’s important, right? Well, it is, but so are other indicators. You need to thoroughly understand cash flow as it gives you a clearer idea of how your business is performing!

Conclusion

As a startup company, you might be overwhelmed by all the things you need to take care of. From making sure that your products or services are of high quality to dealing with your customers, it can’t be easy to add more tasks like managing your cash flow. The good thing is, you don’t have to be the only one handling it all. You can outsource your accounting and finance needs to a reputable accounting advisory partner who can help you manage your cash flow and simplify this aspect of your business. This way, you can solely focus on growing the company!

FiBrick is an accounting firm that’s dedicated to helping startups in New York, NY, reach their full potential. We can take care of tasks like cash flow analysis and other things related to your business’s accounting and finance side so that you can continue doing what you do best.

Contact us today to schedule a consultation with one of our experts!

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Cash Flow Analysis: 6 Mistakes Tech Startups Should Avoid

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Cash Flow Analysis: 6 Mistakes Tech Startups Should Avoid

If you’re an owner of a tech startup, you should understand cash flow analysis well. Managing a business requires the proper skills and understanding of cash flow management to keep the business running smoothly. In the journey of managing a business, some mistakes can hamper the seamless process of business transactions. As a startup owner, you should be aware of how to avoid them.

Ask every successful business owner, and they will agree that the following mistakes can lead a business to failure:

Overspending

Avoid hurting your cash flow. A lot of business owners can easily be a victim of overspending. In some cases, you might be required to spend more than you need to. However, you should not be too reckless in spending without paying attention to where you are allocating your money. Some expenses may damage your business instead of creating good investments. Forget the idea that you can spend it in any way you want because you are making money. Make sure to instill discipline and formulate careful planning before spending.

Not Following a Cash Flow Budget

Make sure you set realistic expectations when it comes to your future sales. Create an effective strategy to make sure that your customers will pay. Use a cash flow report to keep track of the money that is coming in and out. A cash flow budget should also be created to help you anticipate when you can receive more money so that you can plan during a crisis. 

Without a cash flow budget, you will have to guess where the money should be coming from and may cause you to increase the risk of getting penalties, an overdue bill, and late payments.

Cashflow Video Guide

Learn the simple steps to prepare cash flow projections to improve your business cash flows.

Not Having a Buffer of Cash on Hand

Despite the efforts to protect your company’s cash, still, cash disruptions may happen. It is a reality that every business owner should learn to face. You might think that having a bunch of savings on hand will not make a massive difference. But, it is much difficult for a business to operate with zero balance. When the time comes that there are low sales in a particular month, a disaster can possibly happen.

Not Recognizing Profit in the Money You Earn

Every business should pay attention to the profits it makes. Unfortunately, some companies went bankrupt even before the end of the year without the capacity to pay employees’ wages and liabilities to suppliers.

Every startup should learn the differences among the profit, loss, income, and expense. Every startup needs to recognize the profit from the money earned by the business.

Expecting and Rushing to Create a Sudden Expense

The tech industry is full of companies who have created success stories as a startup. It is an industry that offers massive opportunities for entrepreneurs to find the next million-dollar idea. 

However, this can also be a reason for committing the mistake of rushing too much. There is nothing wrong with dreaming, but when business owners create high expectations without proper action, this is when poor results can happen. 

There are several tech startups with excellent ideals that fail due to poor management or bad timing. They spend a lot without proper planning, resulting in more significant issues after a month or so. 

Failing to Utilize Good Bookkeeping

New startups sometimes fail to understand the importance of good bookkeeping for all business transactions. Some of them think that they cannot afford it. However, proper bookkeeping can help your business to be on the right track financially. There will be better monitoring of your cash flow, expenses, and other transactions. 

Conclusion

A good cash flow analysis is needed for a tech startup to succeed. With proper bookkeeping and cash flow management strategies, your business will ensure clarity and health to its finances. 

To help you manage your cash flow effectively, we highly advise you to work with a reliable team. FiBrick is a people-centric accounting firm that is committed to helping both startups and scale-ups. We provide services to manage your cash flow effectively. Contact us today for more information!

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Effective Finance Strategies for Every Startup Company

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Effective Finance Strategies for Every Startup Company

Managing a startup company requires energy, time, money, and dedication. A small business should have substantial financing and resources to keep the business functional and growing. To make the business succeed, business owners should learn how to manage the business cash flow effectively.

The following are five finance strategies that can help every startup to handle their money properly:

1. Recognize failures and utilize them to emerge 

Startups can face several failures with their financial strategies. This can happen when the business offers what it can do rather than what the market needs. Small businesses bleed a lot of money without a comprehensive plan and then end up failing with their ideas. 

Another cause of failure that startups can experience is due to poor handling of cash inflows and outflows.

Every business owner should develop and implement sound and effective financial strategies for their business to succeed. They should evaluate their failures—the strategies that didn’t work—and create a better plan to handle the business finances more efficiently.

2. Formulate a financial planning strategy

An integral part of effective financial planning includes evaluating the factors that may impact the strategy negatively. Implement predictive models based on the prior collection strategies if the company experiences a cash flow issue. With comprehensive and careful planning, you can create a better position dealing with creditors. It is also crucial to set a fund against cash flow issues and improve the line of credit.

3. Have an effective debt collection strategy

Bad debts and outstanding invoices can make it challenging for a business to pay for goods, services, and other utilities. Without an effective debt collection strategy, the business will be on the edge of failing. With less cash coming in and debts continue to accumulate, the business will not be able to pay their staff and suppliers, and the overall business operation may be hampered. 

To promote an effective debt collection strategy, ensure that your customers understand the payment expectations. Offer discounts for those who will pay in advance or will make prompt payment. Providing an easier payment option for your customers and clients will help improve your cash flow. 

Cashflow Video Guide

Learn the simple steps to prepare cash flow projections to improve your business cash flows.

4. Use invoice finance

Invoice finance refers to an agreement that a business will deal with an invoice finance provider to finance its unpaid invoices. With the help of this strategy, a business can have access to cash instantly instead of waiting for a long time for the customers to pay their invoices.

There are two ways of accessing money using this strategy. One is invoice factoring, wherein the company allows the whole process to be handled by a third-party. The third-party will advance the needed amount, deduct a certain handling fee, and provide the needed cash flow. 

Another one is invoice discounting, where the business can keep the invoice collection in-house but with access to the associated cash, as long as the company can prove that their collection is ongoing. 

Both these invoice finance strategies can help a startup to generate funds and leverage the business. If you choose to use any of these strategies, make sure first to know how it works.

When it comes to the process of handling the money of your business, it is best to do thorough research and make sure that well-recognized banks approve the business.

5. Strive to specialize in meeting your customers’ needs

One of a business owner’s essential skills is providing top-notch service to meet the customer’s needs. Make sure to focus on what you know and continuously improve it for your customers. Outsourcing can be an effective strategy, too. It can help your business to extend the business processes and optimize your resources. 

The company should be able to provide the best offers when it comes to product development, marketing, customer service, and innovations. Remember that today’s businesses continue to emerge and innovate; thus, your company should also be well-adept with the current trends.

Conclusion

It is a must for every business to develop and implement a clear and compelling set of financial strategies. This is to ensure that handling money and other business operations will be done accordingly. Business owners should be cautious and bold when it comes to managing financial matters in the company.

To help you manage your cash flow effectively, we highly recommend getting assistance from a team you can rely on. FiBrick is a people-centric accounting firm that is dedicated to helping startups and scale-ups. We offer a wide range of services to manage your cash flow effectively. Get in touch with us today!

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Cash Flow Management: A Guide for Tech Start-Up Owners

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Cash Flow Management: A Guide for Tech Start-Up Owners

Running a tech start-up involves assessing the performance and financial health of your business. You have to prioritize cash flow management, which is a process of monitoring and optimizing the movement of cash throughout your business. 

Many business owners, unfortunately, make the common mistake of overlooking their revenue and expenses. Learn more about cash flow management and the problems your start-up company can encounter, and ways to solve them by reading this article.  

What Is Cash Flow Management?

Cash flow management is the process of monitoring the amount of money coming into and out of your business. As a tech start-up business owner, you have to avoid extending cash shortages when managing your cash flow. It means you have to prevent having an overly large gap between your cash inflows and outflows so you can ensure you can pay your bills and stay in business for as long as possible,

What Are Some Cash Flow Problems I Can Encounter?

As a start-up business owner, you may be running on a limited budget. You may have to deal with financial emergencies in the form of slumps in sales that may lead you to take drastic measures. 

You may also lack the luxury of favorable credit terms since you still have to develop a credible record of your accomplishments. As a result, it may be challenging for you to find willing lenders to loan you and accomplish your financial goals. 

In addition, your stock is important in the continuous operation of your business. Your suppliers may demand cash payments for your goods until they trust you enough to supply products on credit. 

You may also have to deal with late payments from customers. All of these cash flow problems may affect your adherence to your financial obligations. As a result, your business will gradually underperform until you file for bankruptcy. 

Cashflow Video Guide

Learn the simple steps to prepare cash flow projections to improve your business cash flows.

How Do I Solve These Cash Flow Problems?

The best way to face these cash flow challenges is to develop a cash flow management plan. You should develop a projection that lets you prepare your working capital better, so you can satisfy your operating expenses and maintain a strong positive cash flow record. As a result, you make a positive impression on your creditors.

Don’t forget to maintain a consistently detailed and accurate cash flow record to help you scale your business and invest more capital in expansion. By properly tracking your cash flow, you can hire new employees, obtain better equipment, and even open up new branches.

You may also keep cash flow prediction reports, which can allow you to determine expected cash inflows. They may help you forecast periods when you may receive low cash inflows and make the necessary measures to maintain your operations even while experiencing financial challenges. 

Conclusion

Cash flow management is a crucial aspect of operating your start-up business. It helps you know the availability of cash in your business and lets you prepare for potential financial problems. It can also dictate your success or failure, and failing to prioritize it can even lead to excess debt or bankruptcy. Fortunately, you can save yourself from these problems by keeping the information above in mind. You can also work with experienced accountants to help you with this task.

If you’re looking for business accountants who can help you with cash flow management, then you’ve come to the right place. At FiBrick, we specialize in offering accounting services for tech start-ups like yours. Contact us to learn more about how we can help you!

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Everything You Need to Know Before Forming Your Own LLC

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Everything You Need to Know Before Forming Your Own LLC

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One of the most popular choices of small business owners is an LLC (limited liability company). This is largely due to tax advantages, liability protection, and flexibility of management that typically comes with this kind of business entity. In order to achieve success in business, there are several things you need to know before looking to get funded and starting your LLC.

What is an LLC?

LLC is a type of business structure wherein entrepreneurs get pass-through taxation and limited liability protection. The LLC is similar to a corporation in that it exists legally as an entity that’s separate from its owners. Sometimes, owners are also known as members. It’s usually not possible to hold owners personally responsible for any liabilities and debts of the business.

Pass-through taxation is allowed for by an LLC as the taxation of income doesn’t happen at the entity level. A tax return for the LLC is necessary for LLCs who have two or more owners. Losses or incomes of the LLC that appear on that return get passed to the owner/s. Owners must then report loss or income on their own personal tax returns, then pay any due tax.

What are the benefits of forming an LLC?

There are several options available for anyone looking to start a business. This includes forming a corporation, a sole proprietorship, or entering into a general partnership. Another option is the limited liability company. There are several advantages to making the choice to go into an LLC, such as:

Pass-Through Taxation

Taxes for LLC are not paid on the business entity level. Any loss or income is “passed-through” to the members, which are then reported on their personal income tax returns. Due taxes are paid on an individual level. It’s very helpful to hire an accountant as part of a team when you begin forming your LLC.

Cashflow Video Guide

Learn the simple steps to prepare cash flow projections to improve your business cash flows.

Management

Corporations typically fall under the management of a board of directors. LLC members can either manage things themselves or elect their choice of management groups.

Limited Liability

There is no personal liability on the part of owners for acts of other owners or the LLC itself. This is one of the appeals of forming one. Business debts cannot be settled by creditors when they pursue personal assets like the savings accounts or houses of members. In contrast, general partners or sole proprietors can be pursued regarding the debts of the business. However, it should be noted that an LLC (and corporation) can lose its limited liability.

Flexible Membership

Owners/members can come in many forms, not just individuals. There are corporations, trusts, and partnerships as well. The number of members that can be part of an LLC is limitless. The restrictions on S corporations (essentially a corporation that chose to be taxed as a pass-through entity under the Internal Revenue Code’s Subchapter S) are much tighter in terms of who is considered a shareholder. There are only so many people or entities who can be a member.

Conclusion

An LLC, or limited liability company, is one of the most popular choices of smaller business owners. Membership is flexible, and there is no maximum for who can be part of it. There are several benefits to this, including management flexibility and tax advantages. 

Need help with accounting for startups? Contact FiBrick today! We are a people-centric accounting firm that offers a suite of services for startups and scale-ups.

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Why You’ll Benefit from Hiring a Fractional CFO

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Why You’ll Benefit from Hiring a Fractional CFO

Running a start-up company is often challenging, and this goes beyond generating revenue from products and services. While it can get overwhelming to manage several employees and even various clients, many forget that they need to consider their cash planning and tax strategies each year. Getting lost in the financial side of things can make things much more challenging, where small business accounting comes into play.

Tech startups are exceptionally talented at the modern-day trends of technologies and innovating new devices and software. The modern start-up company is a force to be reckoned with, and it is expected to grow increasingly over the next coming years. However, it pays to know that bookkeeping and financial management are still going to be met with difficulties, as these aren’t skills taught just anywhere. These lapses are where a business accountant will help any start-up company get their feet off the ground.

Hiring a Business Accountant to Act as a CFO

A Chief Financial Officer (CFO) is an integral part of the business sphere, as they manage most finances and practically view the world through the numbers game. They are well-versed in tax strategies, bookkeeping, budgeting, and other financial matters. However, many start-up companies might not have the budget to have a full-time CFO available on deck to run the operations, where small business accounting firms can help.

In terms of outsourcing financial matters, you call these professionals fractional CFOs, who are experienced individuals that help with contractual finance work. They can assist with multiple needs, such as cash planning, bookkeeping, tax structuring, budgeting, and even drafting business plans. If your company is having difficulties raising capital, implementing newer accounting software and systems, or even running an audit, a fractional CFO can be a big help.

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What are the Benefits of Hiring a Fractional CFO?

While you’re not paying the full salary of a CFO and are paying for a package for their services list, you save more money and stress when it comes to running payroll. You basically get the full range of services and benefits you need from a full-time CFO with the selections you need for the times at hand. If you’re looking to optimize your cash flow for payroll or find the budgets for investing in research and development, these professionals can help.

CFOs are essential members of the entire management team, as all things in business boil down to money in the end. A company’s success depends on how profitable its products or services are and if they are making more money than spending. All kinds of lapses in judgment and blind spots are visible to a small business accountant when they run financial audits to optimize everything.

Fractional CFOs are also well-versed in dealing with various clients, which allows them to view your situation with a unique lens. Since they have no attachment or bias towards your company, they can make more educated recommendations than a CFO employed full-time. If you permit them to make suggestions, they will tell you what they believe needs to be done for better growth. Sometimes, businesses need to see the bigger picture, and only an external entity can show this most of the time.

Conclusion

It can be challenging to deal with financial decisions and running bookkeeping all while being a proprietor or a CEO all by yourself. Hiring a fractional CFO can help give your business the direction it needs to push forward with better growth and increased education on future trends. With a professional’s help, your business will be less likely to fall short.

In FiBrick, we would love to support your business’ financial success.  Let’s schedule a call to talk about your accounting, bookkeeping, and tax questions. 

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The Pros and Cons of Growing a Limited Liability Company

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The Pros and Cons of Growing a Limited Liability Company

People having a meeting

Anyone planning to put up a small business should take a step back and consider their options, especially if they only have a limited amount of resources. One way to push through with such a decision is by looking to build a Limited Liability Company (LLC).

Keep in mind that, just like all things, forming an LLC to make your dreams of owning a start-up business come true has its ups and downs. Before you pour all your hard-earned savings into your plan, you may need to assess your situation and determine if this is really the right move to make for your venture.

Keep reading below to find out the pros and cons of having a Limited Liability Company.

The Pros of Owning a Limited Liability Company

When it comes to running a large corporation, it’s necessary to schedule meetings with the board of directors, shareholders, and partners regularly. But when it comes to owning an LLC, you will be working with fewer corporate policies, leading to lesser meetings. As a result, employees can manage their time better and do not have to deal with too much paperwork.

With an LLC, you don’t have to answer to ownership restrictions, particularly regarding the number of members the company can accommodate. If you want to hire professionals that aren’t residents or citizens of the US, you are free to do so as long as they abide by the laws and gain the proper documents!

Besides that, if you want to find a way to keep a closer track of your company’s cash flow, you are free to apply the cash method and hire an accountant to manage it accordingly. The process involves acquiring income first before considering it as part of the business’ profit.

For those worried about spending a considerable portion of their company’s savings on paying taxes, it’s vital to know that with an LLC, you can benefit from tax flexibility. That way, it can help you stay away from paying for double taxation! As the owner, you are not obliged to answer unemployment insurance taxes by taking money out of your own income.

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The Cons of Putting Up a Limited Liability Company

When dealing with the profits your LLC acquires, they may have to answer to social security and medicare taxes. Depending on your situation, owners might even have to address more taxes than what an owner of a regular corporation usually faces.

Regarding employee salaries and profits, they may involve self-employment taxes, unlike corporations that solely deal with salary taxes. If your start-up company doesn’t make too much revenue, it will take a toll on your salary management unless you seek a business accountant for help.

Moreover, it’s a business owner’s responsibility to acknowledge profits right away, as compared to C-corporations that are not required to divide their earnings to their shareholders. Since you don’t have to face double-taxation for your LLC, you can immediately add the profits you earn to a member’s income.

Unfortunately, you and your employees can expect to receive fewer fringe benefits with an LLC, including group insurance, medical insurance, medical reimbursement plans, and parking fees. Instead, each of you will have to treat them as taxable income.

Conclusion

Before you make the big decision of starting a Limited Liability Company, it’s best to understand what it takes to invest in a business that has its own fair share of benefits and drawbacks. It will help to ask advice from an accounting company so that you can figure out if an LLC is the right solution given your circumstance.

Are you looking for a small business accounting service to help you manage your company? FiBrick is an accounting firm providing an array of services catering to start-ups and scale-ups. Get in touch with us today to schedule a consultation!

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  • 349 5th Avenue, Suite 816, New York, NY 10016

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