Smart Money Choice$

Summer’s here! And with it come thoughts of vacation, relaxation and slowing down.

The effect on most businesses, of course, is that cash flow typically takes a big dip. The looming threat of a recession doesn’t help any either.

But there’s good news. I’ve come up with some tips to help prevent a warm weather cash crunch that may even boost your bottom line.

1.  Ask for your money.

This is a great time to get caught up on your Accounts Receivable and get paid for the work you’ve already done. Review your clients’ accounts and send out statements to remind them that they owe you. 

If you regularly send out statements and still have some slow payers, pick up the phone to give them a friendly nudge. Calling your clients will not only remind them to pay you, but the personal contact from you may remind them that they have more work they’ve been meaning to send your way.  

2.  Invoice your clients promptly.

Riding on the heels of tip #1, be sure to invoice your clients promptly for the work you’ve already done. The longer you wait to send your bill, the longer you’ll have to wait to be paid. Don’t let your client’s “forget” how valuable your services really are. Invoice often and promptly!

3.  Focus on any projects that are nearly done.

If your receivables are in good order, the next quickest way to get money in the door is to finish any projects that are near completion. The sooner you finish them, the sooner you can issue your invoice and the sooner you’ll get paid.

4.  Require a deposit on new projects.

If you have more than your fair share of slow-paying clients, or worse yet, clients who never pay you at all, this is a great time to start weeding out those deadbeats who don’t appreciate your work.

Start charging a 25%-50% deposit up front on new projects coming in. By doing this, you will actually raise your clients’ perception of your professionalism and repel those who don’t truly value your services.

My clients who have had the courage to follow this advice are surprised by the remarkable increase in cash flow, and they are now attracting more high quality, fast-paying clients.

This tactic seems riskier than it really is. If you take the leap of faith, you’ll see an instant increase in cash flow and build a higher quality client base. 

5.  Up-sell, cross-sell, and get referrals from your best clients.

Are your clients aware of the different services (or products) you provide? Send out a personalized letter or greeting card by snail mail to all your best clients.

Tell them about anything new that’s going on in your business, such as your new Web site, a new service offering, etc. Include a separate card that lists all your services and contact information for easy reference. 

Tell your clients how much you enjoy working with them. Mention that you would love more clients just like them, so you’d welcome any referrals they could send your way. 

Just the personal contact from you will usually bring in more business, as well as wake up your clients to the idea of sending you referrals. “Warm and fuzzy” works.

The summertime is a great season to clean up your receivables, weed out less desirable clients, and pull in new business. By implementing these five strategies over the next few months, you’ll not only boost your cash flow in the short term but grow a strong and healthy business for years to come.

Additional Resource:

If you’d like to learn how to build a simple system to boost your business cash flow year ’round, then you will want to take a look at my special report, Cash Flow Kick-Start.

WANT TO USE THIS ARTICLE IN YOUR OWN BLOG OR E-ZINE? You have permission to re-publish it, as long as you include the following author’s bio and link:

Gabrielle Fontaine, PB is a freelance Professional Bookkeeper and Certified QuickBooks ProAdvisor. She specializes in assisting Internet-savvy entrepreneurs to get control of their books and maximize profits. Gabrielle also publishes the business-boosting online ezine, Smart Money Choices. Get more information at http://www.BookkeepingDirect.com

It’s tax day!

No, it’s not time to file your income tax return again already, but if you’re supposed to be paying quarterly estimated taxes, today is the day the second quarter payment is due for 2008.

For many who pay estimated taxes, this payment is a tough one. That’s because it was just two short months ago that we had to pony up the dough for any taxes that were due to close out 2007, PLUS shell out even more money for the 2008 first quarter estimated tax payment.

What about you? Do you already have the cash available to make the second quarter payment without feeling a painful pinch?

If not, you’re not alone.

Many self-employed folks–surprisingly, even those making piles of money–come up short on cash when trying to pay their estimated taxes because of not planning ahead.

These people are then forced to send in their payments late or, worse yet, not at all. That costly strategy can really bite hard because it means facing a huge tax bill next April 15th, which can be further inflated by underpayment penalties.

Ouch!

Whenever I see small business clients headed toward this painful yet common tax trap, I suggest my simple two-step system to make keeping up with estimated taxes easy and almost painless. (Of course, we all know paying taxes is never completely painless.)

STEP 1: Use a simple spreadsheet to keep track of your estimated tax amounts.

The easiest way I’ve found to do this is to record your gross revenue in a spreadsheet. Then apply a specific percentage to that amount, say 25%. The result is the amount you should set aside for paying your estimated taxes.

The percentage you use is only an estimate as your income accumulates throughout the year, and it is unique to your tax situation.

A quick way to calculate a reasonable starting percentage is to look at last year’s numbers. Divide the total amount of your tax liability by the total of your gross revenues. Don’t forget to include ALL the taxes you paid–federal, state and local–throughout the year. This percentage is a reasonable starting point.

When your actual 2008 taxes have been calculated next April, you’ll know whether any adjustment is needed in the estimate you are using on your spreadsheet, based on whether you have money leftover or don’t have quite enough.

Now, once you’ve applied that percentage to the gross revenues you’ve pulled in so far this year, the result is the amount you should put aside to pay your quarterly taxes. Since we are already halfway through the year, subtract any estimated payments you have made so far from this amount.

Going forward, every time you receive a payment from your clients, you should update the gross revenue amount you’re tracking on your spreadsheet and it should calculate the corresponding additional allowance for taxes you should immediately set aside.

You will also want to use the spreadsheet to track your estimated payments as you make them throughout the year, including the actual dates on which you made those payments. This information will be needed to give to your tax preparer next spring.

But how do you make sure that you don’t use the money you are earmarking for taxes for something else in a moment of weakness?

STEP 2: Open a savings account just for taxes.

An online savings account is ideal for this purpose. But if you prefer, a savings account at the bank where you have your business checking account will work just as well.

By putting your tax money in a separate savings account, it will discourage you from using that money for any other purpose. As a small bonus, as your tax savings balance builds, you will be paid interest on the accumulating money.

Remember the purpose for this account is to assure that the cash is available when it comes time to make your quarterly payments. This quick and simple method is designed to mimic the ease of automatic withholdings employees get from their employers, and often allows them to look forward to a tax refund.

Using this system, you could get the same result. You may even find that your tax savings account shows “leftover” money when everything is said and done next April. Wouldn’t that be a pleasant tax experience for a change?

Bottom line: By using this simple two-step system, you can stop worrying about having enough cash to make your tax payments.

In fact, I’ve even got an incentive for you to help implement this system right now. I’ve arranged it so that you can get paid $25 just for opening an online tax savings account.

As you might imagine, I can only offer this bonus to a limited number of people, but if you’re ready to make the Smart Choice of “automatically” putting aside money for your tax payments, I’ll show you how to do it and get $25 for taking action when you click here.

Come next April 15th, you’ll be glad you did.

WANT TO USE THIS ARTICLE IN YOUR OWN BLOG OR E-ZINE? You have permission to re-publish it, as long as you include the following author’s bio and link:

Gabrielle Fontaine, PB is a freelance Professional Bookkeeper and Certified QuickBooks ProAdvisor. She specializes in assisting Internet-savvy entrepreneurs to get control of their books and maximize profits. Gabrielle also publishes the business-boosting online ezine, Smart Money Choices. Get more information at http://www.BookkeepingDirect.com

This is the time of year when the IRS is sending out notices not only regarding Tax Rebates, but also on discrepancies relating to tax returns filed in April. The scammers are taking advantage of the timing.

The latest scheme involves a tax refund form that is sent via email, supposedly by the Taxpayer Advocate Service (a real organization within the IRS that assists taxpayers with unresolved problems). This one is especially blatant in the type of information it requests.

At the bottom of the message is a phony name and signature, claiming to be the Taxpayer Advocate. The idea is that you fill in the form and submit it directly to the Taxpayer Advocate to receive a tax refund.

Of course, the only way to get a tax refund (or the Economic Incentive Rebate this year) is to file your annual tax return. Refunds are not issued with the use of a separate application form. And the IRS sends notices via US Postal Service, not email.

So, if you receive this bogus message, be assured that it is a scam and simply delete it.

Another scam circulating is less obvious. In fact, I actually received one of these emails in my inbox recently. It’s supposedly from the US Tax Court.

This message is what’s called “Spear Phishing,” which is an email spoofing attempt that targets a specific organization. Again, this is a scam. The Tax Court is not sending any email notices to anyone, whether they currently have a case before the Tax Court or not.

You can identify this fake email because it will have the words “US Tax Petition” in the subject line, along with a fake docket number. The sender address is noreply@ustaxcourt.org.

If you get one of these messages, DO NOT reply or click through on any of the links. Just delete it. And have no fear. If either the IRS or the Tax Court wants to contact you, they’ll send you a letter in the regular mail.

You can get more information on these scams straight from the government websites:

www.ustaxcourt.gov
www.irs.gov/newsroom/article/0,,id=155682,00.html

WANT TO USE THIS ARTICLE IN YOUR OWN BLOG OR E-ZINE? You have permission to re-publish it, as long as you include the following author’s bio and link:

Gabrielle Fontaine, PB is a freelance Professional Bookkeeper and Certified QuickBooks ProAdvisor. She specializes in assisting Internet-savvy entrepreneurs to get control of their books and maximize profits. Gabrielle also publishes the business-boosting online ezine, Smart Money Choices. Get more information at http://BookkeepingDirect.com

Computers are a vital part of doing business on a day-to-day basis. Daily operations usually involve inputting data, creating documents, processing and recording financial transactions, sending email and using websites of all kinds.

Without computers, an amazing number of businesses would come to a grinding halt. I know I would be finished without a computer and the Internet! What about your business?

As wonderful as technology has been for small businesses though, there is a BIG vulnerability that comes with computer dependency. Hardware failure.

Millions of dollars are spent annually to recover lost data. The data recovery industry is HUGE and continues to grow. That’s because it’s a given. Your computer hardware will fail sooner or later. Whether it’s due to internal or external forces, it will happen. Are you ready?

I’ve had my own share of computer crashes that could have put me out of business in short order – if I didn’t have complete backups. But I did. My computer’s hard drive crashed not once, but three times in just one month. All data was destroyed and lost. Apparently the problem was an obscure glitch with the motherboard that was frying the hard drive. Yes, the computer was still under warranty, but if I didn’t have those backup copies of all my data, my business would have been dead.

Could you handle a complete crash of your computer hard drive right now?

At the time of those crashes, I was using a tape backup system. But I wouldn’t dream of using that same system now. Computer files are much larger now. It would take far too long and it’s way too risky as well. At the time, I was only keeping a copy of the backup in my desk drawer. But I realize now that it wasn’t a smart plan for storing backup data.

What if there had been a fire in my office or a break-in? What about a hurricane or an earthquake that destroyed everything in my local area? If that had happened, there would have been no way I could have put my business back together.

That’s why I’m now a big fan of online backups.

Most of us have heard and agree that keeping an off-site backup copy is a good idea. But how many of us actually do it, or do it regularly? I didn’t. That is, until I started using an online backup service.

An online backup service is convenient, inexpensive and easy. You just need a high-speed Internet connection. All your files (or just the ones you select) will be transferred to a secure online file storage server, which is usually located in a different part of the country. Your backups can be scheduled automatically too, so you don’t have to remember to do it manually.

Being able to restore your data easily is also important. Different services use different programs for backing up your files. So if you decide to make the smart choice of using an online data backup service, it’s a good idea to practice restoring your backed-up data so you’ll know how to get at your files when the need arises.

Of course, you have many choices when it comes to online backups. Here are a few options I’ve explored myself and recommend:

- QuickBooks Online Backup – You can set up this service from within QuickBooks. Just go to the Help menu, click Add QuickBooks Service, and you will find Online Backup as one of the choices. You will also be given the option to sign up when you perform a regular backup within QuickBooks software.

- FilesAnywhere – this is the online backup service I use, which has many other nifty features built in for your business. They also offer a free trial to see if you like the service. I like that you can set up an icon on your desktop to get access to your backup files anytime you need them (no special restore program needed). 

- Amazon S3 (Simple Storage Service) – this is something new I’ve just learned about from my online business mentor, Jim Edwards. It is an inexpensive way to get a huge amount of secure online storage space for your computer data. I’m still figuring out how to use it, but it is a very powerful alternative if you have lots of multimedia files that take up a ton of memory. You can learn more about this new service directly from Amazon at http://aws.amazon.com/s3.

Using several backup methods is the best protection against the inevitable. Take steps now to implement a backup strategy and protect your computer data. It’s certainly one of the smartest choices you can make for your business.

WANT TO USE THIS ARTICLE IN YOUR OWN BLOG OR E-ZINE? You have permission to re-publish it, as long as you include the following author’s bio and link:

Gabrielle Fontaine, PB is a freelance Professional Bookkeeper and Certified QuickBooks ProAdvisor. She specializes in assisting Internet-savvy entrepreneurs to get control of their books and maximize profits. Gabrielle also publishes the business-boosting online ezine, Smart Money Choices. Get more information at http://BookkeepingDirect.com