MARIELA RUIZ, CPA, PLLC

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Tips for Managing Expenses as a Small Business Owner

Starting a small business is often fueled by passion, but managing expenses requires a sharp eye and a steady hand. However, according to a study by Fundera, 20% of small businesses fail in their first year and 30% of small businesses fail in their second year. These statistics underscore the importance of solid financial management from day one. In this month’s blog, we will walk you through some tips to help you manage your expenses effectively and maximize your profits.

Set a Realistic Budget and Stick to It

Creating a budget isn’t just about making numbers match. It’s a roadmap for your business’s financial health. Start by categorizing your expenses, such as operating costs and employee wages. Aim to keep your fixed costs as low as possible in your early stages. Once you’ve laid out a realistic budget, do your best to stick to it. Budgets also help you differentiate between your business and personal expenses, a critical aspect if you’re transitioning from a hobby to a business.

Related: Learn more about accounting considerations when transitioning your hobby into a business here.

Monitor Cash Flow Regularly

Cash flow is the lifeblood of any business. Monitoring it allows you to understand exactly how money is moving in and out of your business. Regular cash flow analysis will show you patterns, like times of the year when revenue is low or when expenses tend to spike. Tracking cash flow on a weekly basis can help you anticipate shortfalls and plan accordingly. You can always use accounting software to automate this process.

Plan for Retirement Early

It’s easy to focus all your energy on your business, but don’t overlook your personal financial future. Planning for retirement should start as soon as possible, even in the early years of your business. Setting up a retirement plan is not only a smart personal investment; it also offers tax advantages for your business.

Related: Learn more about how to plan for retirement as a business owner here.

Keep an Eye on Fixed Costs

Fixed costs are the expenses that remain the same month after month, such as rent, utilities, and payroll. While some fixed costs are non-negotiable, there are ways to manage them smartly. For example, consider using a co-working space instead of renting a full office. The less you spend on fixed costs, the more flexibility you’ll have in managing other expenses.

Final Thoughts

Managing expenses is a cornerstone of any successful business. By following the above tips, you can ensure your business remains financially healthy. If you need further assistance with expense management, MARIELA RUIZ, CPA, PLLC is here to provide expert guidance. Contact us today at (956) 997-0067 or visit our website at mruiz-cpa.com to learn more about our financial consulting services.

How to Plan for Retirement as a Business Owner

As a business owner, planning for retirement involves more than just saving money. It requires a strategic approach to ensure that your personal and business finances are aligned with your long-term goals. This guide will provide you with essential steps to help you prepare for a financially secure and fulfilling retirement.

Evaluate Your Current Financial Situation

The first step in retirement planning is understanding your current financial standing. This includes assessing your personal savings, investments, and retirement accounts. It’s crucial to determine the current value of your business and its potential for growth or sale. Additionally, identifying any outstanding debts or liabilities that could impact your retirement plans is essential for a comprehensive evaluation.

Related: “Tips For Keeping Accurate and Organized Financial Records”

Set Retirement Goals

Clearly defining what you want your retirement to look like is a vital part of the planning process. Decide when you want to retire, as this will influence your savings and investment strategies. You may consider the kind of lifestyle you want in retirement, including travel plans, hobbies, and living arrangements. Estimating your annual expenses in retirement will help you understand how much income you will need to support your desired lifestyle.

Develop a Retirement Savings Plan

Once you have a clear picture of your financial situation and retirement goals, you can develop a savings plan. Maximize contributions to retirement accounts such as IRAs, 401(k)s, and SEP IRAs to ensure you are taking full advantage of tax benefits and compound growth. We also recommend diversifying your investments across different asset classes will help reduce risk and increase potential returns. Reinvesting profits from your business into retirement savings or other investment opportunities can also boost your retirement fund.

Plan for the Sale or Succession of Your Business

Your business is likely one of your most significant assets, so planning for its future is crucial to your retirement. If you intend to pass the business to a family member or employee, creating a detailed succession plan is essential. If selling the business is your preferred option, prepare it for sale by improving financial records, increasing profitability, and enhancing its marketability. Obtaining a professional valuation of your business will help you understand its worth and how it fits into your retirement plan.

Related: “Bookkeeping for Freelancers and Self-Employed Individuals”

Consider Tax Implications

Tax planning is an essential aspect of retirement planning for business owners. Utilizing tax-advantaged retirement accounts can help minimize your tax burden. It’s crucial to understand the tax implications of selling your business and exploring strategies to reduce taxes. Additionally, working with a CPA and estate planning attorney to develop a plan that minimizes estate taxes and ensures your assets are distributed according to your wishes will provide peace of mind.

Seek Professional Advice

Retirement planning can be complex, especially for business owners. Seeking professional advice can help you navigate the process. A financial advisor can provide personalized investment strategies and retirement planning advice tailored to your specific needs. A Certified Public Accountant (CPA) can assist with tax planning, business valuation, and financial management, while an attorney can help with estate planning and legal aspects of business succession or sale.

Conclusion

Planning for retirement as a business owner involves careful consideration of your personal and business finances. By evaluating your current situation, setting clear goals, developing a savings plan, and seeking professional advice, you can create a roadmap to a secure and fulfilling retirement. At MARIELA RUIZ, CPA, PLLC, we are dedicated to helping business owners in Mission, TX, plan for a successful retirement. Contact us today at (956) 997-0067 or visit our website at mruiz-cpa.com to learn more about our financial consulting services.

Accounting for Nonprofits: Unique Considerations and Reporting Requirements

Nonprofit organizations play a crucial role in addressing social issues and making a positive impact on our communities. However, when it comes to financial management, nonprofits face unique considerations and reporting requirements that set them apart from for-profit businesses. Proper accounting practices are essential for nonprofits to demonstrate transparency, accountability, and maintain the trust of their donors and stakeholders. In this blog post, we will explore the distinct aspects of accounting for nonprofits and shed light on the specific reporting requirements they must adhere to.

Classification of Funds & Compliance with Reporting Requirements

One of the key differences in accounting for nonprofits lies in the classification of funds. Nonprofits often receive contributions that are restricted for a specific purpose, such as a capital campaign or program funding. These funds must be carefully tracked and reported separately from unrestricted funds. Nonprofits must also consider the treatment of in-kind donations, which are non-cash contributions like services or goods. While these donations can be valuable, they require specific accounting treatment to reflect their fair value accurately.

Another crucial aspect of nonprofit accounting is compliance with reporting requirements. Nonprofits are subject to various regulations, including filing annual reports with the appropriate government agencies and providing financial statements to donors and the public. Additionally, depending on the size of the organization and the amount of funding received, nonprofits may need to undergo independent financial audits. These audits provide an objective evaluation of the organization’s financial statements, enhancing transparency and accountability.

Related: “Best Bookkeeping and Accounting Practices for the Success of Your Business”

Revenue Recognition

Nonprofit organizations must also pay attention to their revenue recognition practices. Unlike for-profit entities that primarily focus on revenue generation, nonprofits rely heavily on contributions and grants. When recording these funds, nonprofits need to determine whether they should be recognized as revenue immediately or over a period of time. This consideration ensures that the financial statements accurately reflect the organization’s financial health and performance.

Related: “Tips For Keeping Accurate and Organized Financial Records”

Conclusion

At Mariela Ruiz, CPA, PLLC, we understand the unique accounting challenges nonprofits face and are here to help. Our experienced team has the expertise and knowledge to navigate the complexities of nonprofit accounting and reporting requirements. Whether you need assistance with fund classification, compliance, revenue recognition, or any other accounting matter, we are committed to providing tailored solutions to meet your organization’s needs. Contact us today at (956) 997-0067 or visit our website mruiz-cpa.com to learn more about our services and how we can support your nonprofit’s financial success.

Accounting for E-commerce Businesses: Challenges and Best Practices

In the fast-paced world of e-commerce, where transactions are conducted online and businesses operate across borders, accounting becomes a crucial aspect of managing finances. Proper accounting practices are essential for e-commerce businesses to accurately track their revenue, expenses, and overall financial health. However, accounting for e-commerce businesses comes with its own unique set of challenges. In this blog post, we will explore the challenges faced by e-commerce businesses in their accounting processes and discuss best practices to overcome them.

E-commerce Accounting Challenges

One of the main challenges faced by e-commerce businesses is the complexity of sales tax compliance. With transactions occurring across multiple states or even countries, businesses must navigate through various tax regulations and requirements. Determining the correct tax rates, collecting and remitting taxes, and staying up to date with changing regulations can be a daunting task. E-commerce businesses need to invest in robust accounting software that can handle multi-jurisdictional tax calculations and automate the process to ensure compliance.

Another challenge is inventory management. Unlike traditional retail businesses, e-commerce businesses often have large volumes of inventory that need to be accurately tracked. Inventory valuation, including the cost of goods sold (COGS) and determining the value of unsold items, can be complex. Implementing an efficient inventory management system that integrates with the accounting software can help businesses maintain accurate records, optimize inventory levels, and make informed financial decisions.

Furthermore, the reconciliation of online payment platforms poses a challenge for e-commerce businesses. With multiple payment gateways, such as PayPal, Stripe, and Square, it becomes crucial to reconcile transactions and ensure that all payments are properly recorded in the accounting system. Failure to reconcile can lead to discrepancies in financial reports and hinder the accurate assessment of the business’s financial performance. Regular reconciliation, along with the use of accounting tools that integrate with payment platforms, is essential to maintain accurate and up-to-date financial records.

Related: “Accounting Mistakes That Could Harm Your Small Business”

E-commerce Accounting Best Practices

To overcome these challenges, e-commerce businesses should consider adopting best practices in their accounting processes. Investing in cloud-based accounting software that is specifically designed for e-commerce can streamline financial management and provide real-time insights into the business’s financial health. Additionally, partnering with an experienced CPA firm that specializes in e-commerce accounting can provide valuable guidance and expertise in navigating the complexities of e-commerce accounting.

Implementing robust internal controls is also crucial. E-commerce businesses should establish clear policies and procedures for sales tax compliance, inventory management, and reconciliation of payment platforms. Regular audits and reconciliations should be conducted to ensure accuracy and identify any discrepancies or errors promptly.

Related: “Why Is It Essential to Hire an Accountant When Starting a Business?”

Rely On an Experienced CPA

In conclusion, accounting for e-commerce businesses comes with its own set of challenges. However, by leveraging technology, implementing best practices, and seeking professional guidance, e-commerce businesses can overcome these challenges and achieve accurate financial reporting. At MARIELA RUIZ, CPA, PLLC, we specialize in providing comprehensive accounting solutions for e-commerce businesses. Visit our website at www.mruiz-cpa.com or give us a call at (956) 997-0067 to learn more about how we can assist you in managing your e-commerce accounting needs.

How to Prepare Yourself for Tax Day 2023

As soon as the tax season starts, the countdown to Tax Day begins. However, many Americans hold no brief on paying taxes and take this matter for granted, but at the end of the day, Tax Day is inevitable. Also, Tax Day brings a mountain of paperwork; therefore, the sooner you get started, the better prepared you’ll be. Here are some tips to help you get ahead of the game and ensure filing your 2023 taxes is easier.

Check the Latest Tax Laws

Every year brings something new to U.S. income taxes, and 2023 will be no different. This means staying updated with the latest tax laws is a necessity. The tax code is constantly changing due to many reasons, such as high inflation and stock market volatility, which calls for new tax brackets that you don’t want to miss.

Organize Your Tax Documents

After having a good understanding of the newest tax codes, now it’s time to get organized for Tax Day. Gather the necessary documents you need to file your return. You can check our blog, where we talked about how to file your taxes in 2022. Follow the same steps, and by implementing the new tax codes, you’ll figure out whether it’s feasible to file your own taxes or outsource the task to a tax professional.

Related: learn more about the importance of hiring a tax expert here.

Update Your Information

This may sound obvious, but it can be easy to overlook. If your marital status, address, or employment has been changed, it’s important to reflect these changes to SSA and IRS. IRS clearly states that any delay can affect the process of your tax return and might lead to penalties – and this is the last thing you want.

Review Your Past Returns

Take a look at your past tax returns to see if there are any areas where you may need to improve your record keeping or documentation. This will help you avoid any errors or misunderstandings when preparing your current year’s return. Now, with everything in order, you are ready to file your taxes!

Enlist MARIELA RUIZ, CPA, PLLC’s Help

Preparing for tax season is a bit stressful and overwhelming experience, but you don’t have to play it by ear. MARIELA RUIZ, CPA, PLLC is here to ensure that your return is accurate and complete. We offer the best tax preparation services in Mission, TX. Check our website to learn more about our services or simply give us a call at (956) 997-0067 for further assistance.

Financial Controller Services

The growing pains that flourishing companies experience look different and fluctuate over time based on department, company size, rate of growth, and other key factors. In finance departments, management may notice that as transactions increase in volume and complexity, managing the day-to-day duties of accounting and finance, while maximizing growth and performance can get overwhelming. When this happens, it may mean it’s time to invest in adding a financial controller to the payroll.

What is a Financial Controller?

A financial controller is someone who’s a certified public accountant (CPA) or has equivalent industry experience and education in accounting or finance. Controllers are hired when a company’s finance department requires supplementary support with some of their financial oversight. Every financial controller job is unique, but most will be responsible for ensuring maximum financial efficiency, health, and compliance within their company.

Who Needs a Controller?

As a company becomes more inundated with business overtime, it is normal to crave additional assistance in order to ease the increasing workload on each individual. It is often the chief financial officer (CFO) of a company who will eventually require the direct support of a financial controller. Depending on the company, a financial controller may be responsible for helping the CFO with financial reports and statements, preparing budgets, providing internal audits, preparing taxes, managing purchase orders and other financial related duties.

Final Thoughts

Outsourcing financial controller services for your growing business can provide a cost-effective resource of support at a critical time in your business’ development. Whether your company needs temporary or permanent financial support, you can rely on Mariela Ruiz, CPA, LLC of South Texas! She has a proven track record in her field and is committed to honesty, efficiency, and success every time! Call our team today at (956) 997-0067 to find out how we can help you and your business thrive!

Accounting for Small Business Owners

One of the most challenging jobs entrepreneurs and small business owners are responsible for is accurately managing their finances and taxes up to legal standards. From payroll services to tax preparations most small business owners find that investing in expert outside help is well worth ensuring meticulous perfection throughout the books. Below we review some key points you or your CPA should be aware of when managing the finances for your small business.

Bookkeeping

It’s crucial for small business owners to keep accurate financial records regarding all aspects of their business through bookkeeping. Bookkeeping can include anything from payroll services and financial statement preparation to reviewing invoices and managing expenses and revenue. It provides vital data that can help with management decisions, taxes, and getting approved for business loans.

Audits

Nearly all successful businesses will perform regular internal and external audits to ensure authenticity and search for any inconsistencies. External audits are more effective than internal audits than because they eliminate any possible conflicts of interest, must be completed by a CPA, and provide impartial results.

Taxes

When it comes to small business taxes there is so much more involved than just the tax preparation itself. Many small business owners benefit from strategic tax planning and audit representation to further ensure their business is safeguarded by the best. Texas is home to the second largest economy in the country and with that comes unique tax conditions for franchise owners, limited liability companies, sole proprietorships and other small business owners.

Final Thoughts

Over the years Mariela Ruiz, CPA, LLC has provided countless business owners in Hidalgo County, TX with affordable and convenient bookkeeping and payroll services including audits, tax preparations, financial consulting, forensic accounting and much more. Visit our website for a full list of our array of services or call (956) 997-0067 for any questions you may have.

What is Solar Power Tax Credit?

Green energy sources have many benefits to you and the world, including a federal tax credit or home and business owners who have had solar power panels installed before December 31. The federal solar tax credit, known as the investment tax credit (ITC), is much more profitable than a deduction. However, for taxpayers to get the full benefit, the world needs a sufficient income. Here are what tax professionals should know about ITC.

Introduction

When the government provides a tax incentive, it is happy about it, especially when local and state enticements convoy it. According to the Environmental Protection Agency, the government passed the ITC as part of the Energy Policy Act, which has been extended four times since its initial passage. The credit is now at 26 percent for the next two years so that eligible taxpayers can have a dollar-for-dollar decrease in the amount of income tax they owe. Taxpayers are looking forward to 2023 because the tax credit will drop to 22 percent. Renewable portfolio standards are in some states where utility companies give clients a specified minimum amount of electricity from solar. Utility companies buy energy made by a solar customer’s house. The value of solar renewable energy certificates will vary by state, but this is an example of taxpayer liberation.

How Does It Work?

            Solar power panels remain to provide people with prospective savings after filing their taxes. Solar energy creates opportunities to resell excess energy, evade power outages when harmonizing with a battery, and charge electric cars. The sun’s rays shine on the solar panels resulting in generating electricity that gives homeowners lower electric bills. The energy is completely free to the owner once the payment to the solar company ends. Also, solar power works all day, even when it is raining or dark overcast. Utility companies can offer the ability to sell back electricity to the grid for a credit on a homeowner’s electric bill. The utility companies can credit a home’s electric account.

The government is devoted to solar power that many states and cities have recognized property tax exemptions on solar. The solar panel installation calculates property tax fees giving homeowners and companies more money.

Conclusion

Solar energy panels have many benefits for businesses and homeowners. However, it could be challenging to understand everything about the tax deduction that comes with installation. You can count on Mariela Ruiz, CPA, PLLC, to help you with your taxes. We can give you tax advice for any situation you are in and find a financial solution that benefits you. We want to save you money by providing attentive and well-strategized plans, so call us at (956) 997-0067 today!

What You Need to Know for the 2021 Tax Season

Many will agree that 2020 has been a year of unique challenges but 2021 is just right around the corner! With that being said, below we discuss some things to keep in mind as we approach 2021 and the upcoming tax season.

Tax Day is Thursday April 15th, 2021

This is the date you must file you taxes before! Most can take the standard deduction which has increased from this year to $12,400 for single filers and $24,800 for married couples filing jointly. You may also itemize your deductions which is a little bit more painstaking, however is worth it if your itemized deductions exceed your standard deduction.

Stimulus Checks Aren’t Taxable

The CARES Act was instituted near the beginning of the COVID-19 pandemic and gave many citizens a onetime payment of $1200. These payments will not count as taxable income in the upcoming year which is great news for most tax payers! You can think of it as a kind of advanced refund you would have received as part of your 2021 tax refund.

Unemployment Income is Taxable

The pandemic has caused much of the country to shut down for extended periods of time, leaving many Americans jobless through no fault of their own. If you were one of the millions of Americans who received unemployment benefits in 2020, you have to pay taxes on that income. If you opted to defer taxes on your unemployment payments before you received them then you will need to save for the taxes that will be due when you file, or pay estimated quarterly taxes to stay ahead.

Final Thoughts

As always, consult your tax professional to get the most out of your taxes in 2021 and speak with someone who can help you in your specific financial situation. Mariela Ruiz, CPA, PLLC is here to help individuals and business owners in the Mission, TX community with their taxes and wishes you all a prosperous 2021!

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