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How Small Businesses Can Use Artificial Intelligence

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Female teleworker texting using laptop and internet, working online. Freelancer typing at home office, workplaceScience fiction movies and books may portray artificial intelligence as a human-like giant brain with thousands of wires coming from it that control whole cities and their populations. The reality today is that artificial intelligence is unobtrusive, everywhere, and we are interacting with it multiple times daily without always recognizing that we are.

Artificial intelligence is being used by large corporations in a range of areas, including sales, marketing, customer service, employee training/coaching, and logistics. Small businesses can also employ artificial intelligence to improve customer service, reduce costs, and help drive revenues.

What It Is

Artificial intelligence (AI) is a branch of computer science that focuses on building smart machines capable of performing tasks that typically require human intelligence. Essentially, it endeavors to simulate human intelligence in machines. Examples of AI applications many people are familiar with include smart assistants (such as Siri and Alexa) and virtual agents that interact with customers and guide them to possible solutions. Looking ahead, self-driving trucks and cars are in various stages of development, and some vehicles already have self-driving features.

Customer Service

AI can be deployed through the use of chatbots to handle a variety of tasks, such as directing callers to the function they want (e.g., automatic payments). On a more complex level, AI can be used online to help customers with product search and discovery and respond to requests with relevant recommendations. Businesses can use data gathered from AI chatbot customer interactions to identify where in the process problems may arise and what these problems are so that they can be eliminated in the future.

Logistics

Moving goods from one point to another requires up-to-the-minute data so that what is being shipped is shipped in the most efficient and cost-effective way possible. Certain AI programs can predict points where congestion may happen and help redirect trucks and vans so that they avoid bottlenecks and slowdowns. AI essentially streamlines the supply chain. It can do something similar when it comes to warehouse management — identifying choke points that slow the movement of goods from point A to point B.

Marketing

AI marketing sets out to leverage customer data and machine learning to anticipate a customer’s next move and to nudge that customer toward either buying something or increasing his or her average order value. Businesses are using AI to attract, nurture, and convert prospects.

By tracking a customer’s online searches, AI programs can identify what products an individual might be interested in and may be considering buying. AI can target that individual with ads highlighting products or services previously identified as being of interest to the customer. This approach essentially uses machine learning to offer personalized product recommendations.

Sales Training

AI can be used to coach salespeople to improve their sales skills and help them increase their percentage of successful sales calls. AI programs exist that can analyze a number of variables that are used by the most successful salespeople and use that data to identify strategies that can be replicated and utilized by other salespeople within the organization.

As with any technology, there are costs involved in incorporating AI into a company’s operations. A financial professional can assist you in analyzing the costs and potential financial benefits of any new technological enhancements your small business may be considering.

How to Overcome Accounting Challenges Most Small Businesses Face

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Asian caucasian colleagues sitting on couch discussing solve business issuesPerhaps the number one action you can take to support the financial health of your small business is to stay on top of accounting. Make sure you’re aware of most small businesses’ accounting challenges and learn how to overcome them. We’ll tell you how here!

Banking

You’ve been banking for years, and you know how to manage the task. However, when you own a business, banking isn’t like managing personal checking and savings accounts. Unfortunately, many small business owners use their personal funds to pay for business expenses, especially when first starting out. Even small costs add up over time. This “cross contamination” of spending between personal and business accounts can lead to costly mistakes, not to mention headaches for your accounting team. Keep personal expenses, and business expenses separate all the time. Have dedicated bank accounts and credit cards only used for one or the other. If you need to track down an expenditure, you only need to look in one place.

Budget

When bank accounts are separated, budgeting becomes exponentially easier. You can even use an accounting software program to help you keep up with money coming and going to and from your business. However, recognize that simply entering information into a software program is not the end of the work when balancing a budget. Thinking that is true ends up being the downfall of many small businesses. Budgeting for a business means forecasting to ensure that unexpected expenses can be covered, managing inventory, taxes, and more. A shift in any direction can throw off any budget. That’s why many small businesses opt to outsource their accounting. The known upfront expense of doing so can far offset costly budgeting errors down the road.

Unexpected expenses

As mentioned above, you must consider the unexpected as part of your budget. Additional (new) taxes, payment delays from customers, rising costs of materials and supplies, new employee training, etc., are all possibilities. A qualified accountant is aware of these unexpected expenses and others that your business could face and knows how to prepare you for them. Awareness of what could financially happen in business is crucial to long-term profitability.

Payroll

While unexpected expenses are likely the most daunting for a small business, payroll is almost always the most significant. Payroll entails more than what you pay employees. New employee classification, if incorrect, could cost you a bundle in penalties. Other payroll-related accounting challenges are pay accuracy, proper tax filing, compliance, and paid time off tracking.

Unless you’re an HR professional, and chances are you’re not if you’re the business owner, consider recruiting a qualified accountant to help you manage payroll. It will save you headaches in the short term and money in the long term.

Taxes

A conversation about accounting and small business isn’t complete without discussing taxes. The tax struggle can be daunting, from filing to making sure you pay enough but that you don’t overpay. A significant challenge regarding taxes is merely keeping up with the ever-changing tax laws. A qualified accountant or CPA will be up-to-date on new regulations and guidelines so that you don’t have to be.

Overcoming accounting challenges like these is easy with a qualified accounting team on your side. Consider outsourcing your accounting needs so that your focus remains where it should – on running your business your way.

Contact our accounting professionals now for help managing your small business finances.

Bundling Items in QuickBooks? Build Assemblies

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If you regularly sell the same groups of products, you can save time by creating assemblies.

Some things just naturally go together. If you manage a fast-food restaurant, for example, you probably sell similar combinations frequently, like a double cheeseburger, fries, and a soft drink. If you run a car dealership, there are numerous ways to upsell your customers by adding accessories, maybe at a discount. Even very small businesses can bundle items. You might sell handmade jewelry and want to put together a package that includes cleaner and cleaning cloths for one price.

You can, of course, continue to sell all of those products separately. But you may find you can bump up your sales (and profits) by creating assemblies (sometimes called “kits”), bundles of items that are sold as one unit. You can build these automatically if you’re using QuickBooks Desktop Premier or above. Here’s how.

Putting Items Together

If you’re already creating item records and recording product sales in QuickBooks, you probably already have Inventory turned on. If you don’t, open the Edit menu and select Preferences. Click Items & Inventory, then Company Preferences. Make sure the boxes are checked for the options you want.

Haven’t started creating item records yet? We can help with that if you have questions about how QuickBooks handles this. In fact, we encourage you to contact us about this critical process, because some of the records’ fields may be foreign to you. If you want to try it on your own, open the Lists menu and select Item Lists. Click the down arrow next to Item in the lower left corner and then click New. The New Item window will open.

Since you’re going to be building assemblies, you have to create records for all of the products that will be included. So choose the Inventory Part option under Type. Complete the rest of the fields here and click OK.

Once you have enough product records created to start building assemblies, go through the same steps you went through to open the New Item window. Rather than selecting Inventory Part under Type, though, click on Inventory Assembly. Instead of defining a single item in this window, you’ll be choosing the components that will be included. This is your Bill of Materials.

You won’t have to complete every field in this window, but several are required. Give your assembly its own Item Name/Number. Then, so you know what you’ll be pricing, jump down to the Bill of Materials window and select the items that your assembly will include in the table provided. If you completed all of the fields in the product records, QuickBooks will fill in the other columns on each line except for quantity (QTY), which you must enter.

When you’ve completed the table for your assembly, enter the Total Bill of Materials Cost in the Cost field above it, then supply the Sales Price that you will charge. Select the correct Tax Code and Income Account. Then go down to the bottom of the screen under Inventory Information and select the appropriate Asset Account. You’ll also need to specify at what point new assemblies should be built (minimum and maximum). There are four other fields on this line that QuickBooks will fill out once you start building assemblies and selling them.

Building Assemblies

The hard work is over now. When you want to actually start building assemblies, open the Vendors menu and click Inventory Activities | Build Assemblies. Select the kit you want by opening the drop-down menu next to Assembly Item. The items you selected will appear in the table below. QuickBooks will also display the maximum number of kits you can build given the quantity of inventory on hand. Enter the number you want in the Quantity To Build field and click the Build & Close button.

Now, when you go back to your item record, you’ll see that QuickBooks has filled in the On Hand number to reflect the assemblies you just built.

The process of building assemblies may feel a little foreign at first. And if you’re going to keep some on hand, you’ll need to pay extra attention to your inventory levels, which you can do by running the Inventory Stock Status by Item report. So, this is an area where you may need to consult with us. We’re available to go over inventory and assembly concepts with you, or any other element of QuickBooks.

Small Business Taxes: Who Pays What?

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Successful smiling mature businesswoman using laptop and computer while doing some paperwork at the office.There are various federal taxes that may apply to your small business. The type and form of business you operate determines what taxes you must pay and how you pay them. At the federal level, several different taxes may apply.

Excise Taxes

The IRS defines an excise tax as a tax imposed on the sale of specific goods or services, or on certain uses. Federal excise tax is typically imposed on the sale of items such as tobacco, fuel, alcohol, tires, heavy trucks and highway tractors, and airline tickets. Many excise taxes are placed in trust funds for projects related to the taxed product or service, such as highway or airport improvements.

An excise tax may be imposed at the time of import, sale by the manufacturer, sale by the retailer, or use by the manufacturer or consumer. Some excise taxes are collected by a third party, which then must remit the taxes to the IRS in a timely manner. An example of a third-party collector of an excise tax is a commercial airline, which collects the excise taxes on airline tickets that are paid by airline passengers. Businesses that are subject to federal excise taxes must generally file Form 720, Quarterly Federal Excise Tax Return. Certain excise taxes, such as those owed to the Alcohol and Tobacco Tax and Trade Bureau, are reported on different forms.

Income Taxes

Income taxes must be paid on business profits. How that tax is paid depends on how the business is structured. Most small businesses are pass-through entities, which means that the business’s profits or losses are passed through to the owners and reported on their personal income tax returns.

Partnerships and multi-member limited liability companies (LLCs) generally file a partnership business tax return for informational purposes only. The individual partners and LLC members pay income taxes for their share of the income of the business. Note, however, that some LLCs elect to be treated as a corporation for tax purposes.

An S corporation files an S corporation income tax return for the business. Like a partnership, an S corporation’s net income is divided among the owners, who pay tax on their share of that income individually.

A sole proprietor reports business profit or loss on a separate schedule filed with the sole proprietor’s individual income tax return. Unless an election to be treated as a corporation has been made, the owner of a single-member LLC also reports the company’s profit or loss directly on the owner’s return.

Social Security and Medicare Taxes

Employers must generally withhold Social Security and Medicare taxes from their employees’ wages and must pay a matching amount. Employers must also withhold the 0.9% additional Medicare tax on employee wages and compensation that exceeds a threshold amount.

Self-Employment Taxes

Self-employment tax is a Social Security and Medicare tax primarily for individuals who work for themselves. It is similar to the Social Security and Medicare taxes paid for other workers.

Federal Unemployment Tax

Employers are required to report and pay the Federal Unemployment Tax Act (FUTA) tax separately from federal income taxes and Social Security and Medicare taxes. FUTA tax is not withheld from wages; employers are responsible for paying the tax.

Business owners should exercise extreme care when it comes to paying taxes since any mistakes on their part could result in significant penalties. For assistance, consult a tax professional.

Cash Flow Strategies for Cash-Strapped Businesses

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american dollars in the hands

Cash is critical to the functioning of every business. Maintaining a healthy cash flow not only allows a company to meet its financial obligations but also gives it the flexibility to take advantage of emerging opportunities.

All too often, however, small businesses find themselves in a cash crunch, struggling to pay the bills and stay afloat. The good news is that businesses can take various measures to manage cash flow more effectively.

Controlling Expenses

A good place to start is by reviewing expenses to determine if there are areas where you can shave costs by contracting with another vendor or renegotiating existing contracts. Costs for ongoing goods and services, such as utilities, shipping, and telecommunications, should be reviewed frequently to see if expenses can be reduced. And when paying suppliers, consider whether it makes financial sense to take advantage of any early payment incentives that may be offered.

Keeping Debt in Check

Debt can be a useful tool if used properly, so be sure to keep it at a manageable level. Before your business takes on a new loan, reach out to multiple lenders and compare the terms they offer. When acquiring equipment, consider whether leasing may be a better option than borrowing money to finance its purchase. For short-term financing needs, a line of credit is a helpful tool. The lender will base interest charges only on the amount your business draws from the credit line.

Managing Inventory

Maintaining excessive inventory can tie up cash unnecessarily. If your business carries inventory, avoid overstocking. Your inventory management system should be able to indicate the minimum quantities that you need to keep on hand in order to meet your customers’ needs.

Simplifying Billing and Collections

Employees who handle billing and collections should have specific, clear guidelines. By standardizing the process, you help ensure your business will be paid promptly. You can speed up payments by offering discounts for early payment or by encouraging your customers to pay using electronic funds transfer. To help minimize the problem of unpaid accounts, consider making follow-up calls or sending email or text message reminders within a set period after you have provided goods or services or when a bill’s due date passes. Minimizing Taxes When Possible

Deductions and credits can help your business limit its tax burden and boost its cash flow. A knowledgeable tax professional can keep you informed of any special tax breaks that may be of value to your business, such as the energy credit for the acquisition of various types of alternative energy property.

Make Planning a Priority

Identifying the causes of reduced cash flow and taking steps to rectify a cash flow crunch is critical to the ongoing success of your business. Proper cash flow planning can help you make better use of budgets and employ financing and capital more effectively to increase revenues as well as boost profits. If erratic cash flow is a recurring issue for your business, it can be helpful to gain the insights and the input from an experienced financial professional.

5 Topics Every Business Owner Should Discuss with An Accountant

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Your accountant or CPA is a business asset that you should put to good use year-round, not just at tax time. There are several topics beyond taxes that business owners should discuss with their trusted financial professionals. In this article, we cover five of them for you. While the new year is traditionally when business owners think of making financial, strategic, and other business-related plans, any time is the right time to speak to your accountant to discuss the following aspects of your business. You can’t begin the conversation too early, but it could be too late in some cases, so don’t put aside these five essential talking points.

1. Financial Planning

Budget is front of mind for business owners, but other financial issues impact your business, too. Consider a full portfolio review with your accountant to plan your financial future. Some critical topics to cover include strategies to improve cash flow, existing business loans, capital investment, charitable contributions, employee-related expenses like bonuses and health care, retirement planning, and asset management.

2. Company Growth

The goal of all businesses is growth. With growth comes change. As your business objectives shift, your valuation and tax liability often shift, too. Any changes you experience in your business should be conveyed to your accountant or CPA so that they can apprise you of liabilities or status changes. For example, suppose you plan to expand, add additional locations, make significant staffing changes, merge companies, acquire new businesses, or plan to sell your business. In that case, you should set up an appointment with your accountant to develop a logical strategy to address the change.

3. Inventory

If your business sells or resells tangible goods, inventory is vital. Sales tax laws and regulations can be challenging. Many states have rules about nexus (i.e., how much presence a business has in a city or state) related to where businesses warehouse inventory and fulfill orders. Your accountant can assess your order process to verify your restocking and ordering processes to maximize cash flow, ensure unsold inventory is accounted for, and ensure that sales tax is collected everywhere your company has nexus.

4. Risk Management

Do you have a plan in place to protect your business from disruption? Many do not. If that applies to your business, contact your accountant to discuss continuity planning to protect your business. They can provide professional insight regarding how to mitigate risks should a disruption occur. Some topics to address are whether your insurance policies are up to date, if all compliance, security, and privacy standards are met, whether your business has fraud protection in place, and if the existing internal controls protect your business. Given the time and capital small business owners invest in their passion, they must take time to manage any potential risk that could destroy what they worked so hard to create and build.

5. Tax Compliance

Lastly, as a business owner, you always want to be tax compliant. And this doesn’t apply only to federal taxes. It is just as essential to make sure state-imposed taxes are addressed on time. Regulations and tax laws change frequently, so it is vital to have a firm grasp on these. The best way to ensure you do this is to have your accountant guide you. They can inform you of any changes that affect your business and advise you on addressing them. Discuss collecting and filing W2s and 1099s for any contract employees; ensure exemption and resale certifications are collected and stored correctly; comply with online sales and nexus rules; and have an internal review to find any issues that might trigger a sale tax audit.

It helps to think of your business accountant as an extension of your team, an impartial adviser who will assess the risks and rewards associated with your business. They will answer your questions and illuminate unclear topics for you. They may bring up important points you’ve yet to consider, so make that call today and get a meeting on the calendar to discuss these critical points with your accountant. And remember, you can do your part by making sure you keep business and personal finances separate and maintaining complete, organized records.