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For over a decade, we've been fielding a wide array of questions here at The Springer Company. What's become clear is that many small, family-owned businesses face similar challenges. While each business is unique, they often share more in common than you might expect.
Question 1: My tax return shows I made money. Why don't I see that in my bank account?
It depends on so many factors. While cash business tax returns should "match" the profit or loss against the same amount of money at the bank, you may have to look at other portions of your corporate tax return to see if there was a debt reduction or if shareholders received large distributions.
For businesses using modified cash or accrual accounting methods, you may have a simple timing factor at play. Suppose a deposit was received in your accounting system, but the bank delayed the deposit by a day or two at the end of the year. In that case, you've found a reconciliation to note in your corporate return. You may also have payables where the expense is claimed even though the money for the cost is still in your company bank account.
For any company with fixed assets, your large purchase may result in you having to claim the asset's cost over time instead of all at once. Again, you've got a timing issue -- cash now with the expense over five or more years.
Question 2: How do I keep my proprietary data secure?
It's a tough truth: unless you can trust your brain - and your brain alone - to keep a secret, your proprietary data is vulnerable. With the widespread use of cloud storage, automated computer backup software, and human curiosity, it's safe to assume that your data is not entirely under your control. But that doesn't mean you should leave the safe open for anyone to walk in. Doing your best to protect your data is crucial. The key is to use trusted service providers with dedicated teams to help you keep your information secure.
Question 3: I keep having to raise my prices. Am I setting my pricing incorrectly?
Probably not. While setting the price of a good differs from that of a service, you know the costs that factor into running your business and producing a finished product. We always recommend using a simple spreadsheet to help you double-check your fixed expenses compared to what you charge, plus a small amount for profit or as a safety margin. Once you see your costs versus your income by client/product, you should feel comfortable and confident in any price increase. As long as your increase feels fair and will be supported by your market/clientele, you are setting your pricing as correctly as possible.
Question 4: Where do I find qualified staff?
Everywhere. So many small businesses want one employee to be "the" fix. That is a lot of pressure to put on one person. Think about it: you have tasks you dislike, which is probably why you want to hire someone. The real key is giving yourself the time to find the person you need. Many websites for employee hunting or job listings will tell you it's how you sell the job and offer competitive wages and benefits. Sure, a nice hourly rate with medical insurance is great. However, people want to feel good about their work, so they are looking at the overall brand these days. A trusted brand and business culture are more significant factors in the Millennial and Gen Z workforce.
Another factor to consider is your interview process. Are you asking the right questions? Are you actively listening to the responses? Are you to the point you are so desperate for staff that you take anyone who walks in the door? Having a hard look at your process may also find a flaw internally rather than externally.
Pro Tip: We have a favorite question we recommend every employer ask: If I need you to take me and a suitcase to the airport right now, what is in the trunk of your car? Listening to the answer provided can tell you so much about the person you're interviewing.
Question 5: Do I really have to keep all of this paperwork and document everything?
Short answer: Yes.
The paperwork and documentation you keep is your proof of employment, validity of an expense, or what happened on [insert any random date here]. The name of the game is proof. You can keep the records digitally if storage space is an issue. You can also store items more generically, if the thought of organizing everything causes stress. Running a business has many joys, but the little things - like documentation - cause the most significant issues.
Legal Disclaimer: This post contains general opinion-based information for taxpayers and should not be relied upon as the only source of authority. Taxpayers should seek professional tax advice for more information. This information is presented for entertainment purposes only.
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