New Minimum Wage and Overtime Regulations

Minimum wage is going up significantly for exempt employees (from about $23k/year to $47k/year). If you are a small business owner, this may mean that you need to start paying overtime to employees who previously didn’t qualify for it.  

According to the Fair Labor Standards Act (FLSA), certain employees (executive, administrative and professional employees) are exempt from overtime pay as long as they meet a certain wage threshold. A new rule will go into effect December 1, 2016 that requires exempt employees be paid at least $913/week ($47,476/year) in order to remain exempt. Employees making less than that will be non-exempt (entitled to overtime pay). 

 Image from https://www.dol.gov/
The effective date of the Final Rule is December 1, 2016. The initial increases to the standard salary level (from $455 to $913 per week) and HCE total annual compensation requirement (from $100,000 to $134,004 per year) will be effective on that date. Future automatic updates to those thresholds will occur every three years, beginning on January 1, 2020.
— US Department of Labor, The Final Rule

Visit DOL.gov to read more about this new regulation.

Need help preparing your bookkeeping system for the change? Email David@DEKEbookkeeping to set up a consultation. 

 

Client Spotlight: Best Kept Self

We’re always eager to talk about our clients, and we recently decided to share some of their stories on the DEKE blog. We wanted to pick a client who could speak honestly to the struggles of entrepreneurship and share some helpful advice, and Shauna Mackenzie, founder of Best Kept Self, is an expert in both departments.

About Best Kept Self

Best Kept Self is a web-based community and digital publication for freelancers and entrepreneurs who want to explore a variety of self-care topics. The publication has more than 40 contributors who write for and engage with entrepreneurs worldwide. Visit www.bestkeptself.com to learn more about webinars, live chats and other programs. 

The Challenge

Like most business owners, Shauna wears a lot of hats. Prior to working with DEKE she was managing all of her financials in house. She had a general idea of “the numbers” but didn’t have the capacity to thoroughly analyze financial data on a monthly basis. Company growth (including the addition of new, sub-entities) made accounting systems more complex, and Shauna was busier than ever with day-to-day operations.

THE SOLUTION

Shauna hired DEKE Business Bookkeeping in 2012 for data entry, budgeting, financial statement preparation and consulting services.

 Photo from BestKeptSelf.com

Photo from BestKeptSelf.com

Bookkeeping is such an understatement because David really takes a 360 approach to helping me grow my business and make wise decisions to keep the financial health of my business strong. When I hired Dave, my business was making a transition where things were becoming more intricate and complicated. Multiple sub-entities, payroll, and a recent upgrade to an S-Corp meant I needed an expert to assist in keeping it all straight (and in the black) and that’s exactly where David was able to step in and make a huge difference for me and my businesses.
— Shauna Mackenzie, Founder of Best Kept Self & Principal of Shauna Mackenzie Inc.

The Results

  •  All Shauna Mackenzie Inc. entities (including Best Kept Self) have maintained positive cash flow.
  • Expenses that negatively impacted bottom line have been completely eliminated.
  • Revenue for all Shauna Mackenzie Inc. entities (including Best Kept Self) has increased.  
  • Shauna added a co-owner (by partnering with a competitor) which doubled revenue for the respective entity.

Learn More

Shauna told us that “[as an entrepreneur], time management and delegation are two very important skills to master.” We agree, but it can be tough to take the first step. Outsourced business functions are a viable solution for many business owners, and we hope that you will schedule a complimentary call (when you’re ready) to learn more. 

DIY Bookkeeping: When and How to Make it Work

bookkeeping

Most people assume that proper bookkeeping requires one of two things – math skills or the proper software. Those things sure do come in handy, but I would argue that good books require something far more important. Good books require discipline. 

Bookkeeping, by definition, is the discipline or skill of maintaining systematic records of financial transactions. Bookkeeping is not a mathematical process. With consistency, patience and the proper tools (I recommend Quickbooks Online) most business owners are capable of managing their own books without formal education, but there are a few exceptions to that rule…

3 Reasons to Outsource Bookkeeping

  1. You do not understand accounting software and have no interest in learning.
  2. Your tax preparer has alerted you to inconsistencies and/or improper practices.
  3. Your business is growing. Outsourced payroll, a new business loan or a recent purchase of substantial business assets may all signify that it’s time to outsource your books. 

Learn more about the benefits of outsourced bookkeeping here, or email David@DEKEbookkeeping.com to schedule a complimentary call.

Another Year is In the Books

DEKE Business Bookkeeping is celebrating an anniversary this month. We have been serving business owners throughout the Lowcountry for six years now, and in that time we’ve had the pleasure of working with a lot of wonderful people. Thank you so much for your continued support. We look forward to what the future has in store—new clients, new achievements for the clients we already serve and continued success for ourselves.  Cheers to six years!

Top 3 Tax Mistakes

1.    Mixing Business with Personal Finances

Law doesn’t require that you keep business and personal accounts separate, but it sure makes bookkeeping a whole lot easier. Separate accounts will ensure that your financials reflect all relevant activity. Income and expenses may be inaccurately reported or missed entirely when your accounts are commingled, and that could mean penalties and missed deductions for you.  And if you are an LLC or corporation, commingling of your personal and business activity could put you in jeopardy of losing the liability protections these types of organizations provide.

2. Misclassifying Labor

Are you reporting labor correctly? If you’ve reported an employee as an independent contractor, you may owe penalties and interest on the employer share of employment taxes. Ensure your employees are classified correctly with these guidelines from a previous post.

3. Missing Out On Deductions

Good books will ensure that you have everything you need to validate deductions come tax season. I’ve put together some helpful tips for smart spending and tracking expenses (mileage deductions, equipment purchases and strategic spending, but you may want to consult with a tax professional for additional deduction strategies. 

Avoid a Tax Fiasco

The mistakes listed above really boil down to one thing—poor preparation. An organized bookkeeping system will be your best friend come tax season. A little research and consistent practices will take you a long way! And if you are struggling to find time or the proper system to get your books in order, it may be time to call in a professional. Email David@DEKEbookeeping.com to learn more. 

 

Should Your Small Business be Using E-Verify?

DEKE Business Bookkeeping offers payroll services to many of our bookkeeping clients, and while we are not equipped to function as an outsourced HR department, we often field general HR questions. Many of those revolve around new hires and compliance implications.

Everify for Small Businesses

You’ve likely heard a lot of talk about E-Verify on the campaign trail, but did you know that employers in the State of South Carolina are required by law to use it? According to SC legislature HB 4400, which was passed in 2008, all employers are obligated to use E-Verify or some other verification process effective July 1, 2010. Refusal to comply can result in fines, debarment from government contracts and criminal penalties.    

What is E-Verify?

E-verify is web-based software that helps an employer to validate whether or not an employee is eligible to work in the United States.

How can your small business access the E-Verify system? 

Visit the official E-Verify website at uscis.gov/e-verify/employers to enroll. Once registered, you can easily login to access the online system. When verifying a new hire, you will need a photo ID (a driver’s license or identification number) and a social security number or work visa. The verification process should happen quickly (in as little as five minutes). 

Learn More 

For more information on how to use E-Verify, visit smallbiztrends.com.

And if your business is seeking payroll services, it may be time to outsource your bookkeeping. Email David@DEKEbookkeeping.com to learn more about the options available to you. 

Tracking Mileage for Tax Deductions

Mileage

Do you use a personal vehicle for business purposes? Are you maintaining detailed mileage logs? Mileage can account to a sizeable tax deduction, but if documented incorrectly, the cost can be even greater. If your books are subject to an IRS audit, your inadequate mileage log could cost you your deduction as well as time and money spent defending yourself in court.

Spend some time setting your records straight now to avoid owing the IRS later. To prove that you are entitled to a mileage deduction, you must document the following for each and every trip:

  • How far you drove
  • When you drove
  • Where you drove
  • The business purpose for which you drove

It can be a hassle when you are running late or in a hurry, but this information is absolutely necessary to justify your deduction(s).  And while a good, old fashioned paper log will suffice, a lot of business owners are turning to mobile apps to stay more organized. Here are a few that you may want to consider…

  • MileIQ
  • The Mileage Ace
  • TripLog
  • Mileage Log+

Visit americanexpress.com to learn more about other apps that can help you to track business expenses.

Are you using a mileage app? If you’ve found a good one, email David@DEKEbookkeeping.com. We would love to share your find with others!

 

Assessing the Financial Health of a Small Business

I recently read an article from entrepreneur.com that described the lack of business cash flow as a “symptom and not a cause of business failure.” I couldn't agree more, and that is why it is absolutely crucial to ensure that you have a clear understanding of your company finances.

Financial Warning Signs

  • Little or No Profit – This can be a difficult symptom to diagnose. Even great businesses have struggled with profitability at some point along the way. If your business consistently relies on outside money and not profit in order to sustain itself, that is a sign of a much larger problem.
  • Slipping Margins – Gross margins (gross profit divided by sales) are an indicator of your business’s ability to manage important expenses. Net margins (net profit divided by sales), is an indicator of profit (a much better indicator than outright profit alone).
  • Profit but No Positive Cash Flow – Your business can be profitable without generating positive cash flow. That seems like an oxymoron, but it’s an issue of liquidity (can your assets be easily/quickly converted into cash).

Financial Stability: How’s your business doing?

It can be difficult to tell if your small business is financially stable… especially if you are unable to calculate or determine the items listed above. If you are struggling to make sense of your books, it may be time to consult with a professional. Your friendly, James Island bookkeeper can help you to better manage company money. DEKE Business Bookkeeping caters to the unique needs of small businesses in the Charleston area. Schedule a complimentary call to learn more.

Source: http://www.entrepreneur.com/article/239730