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Understanding Resale Certificate Rejections and How to Prevent Them

August 4, 2025 / / 0 Comments

Navigating Texas taxes can be overwhelming for businesses, especially when it comes to understanding resale and exemption certificates. These documents are essential for claiming tax exemptions on qualifying purchases. However, despite their legal standing, many Texas business owners face denied certificates during audits. In this month’s blog, we will explore the most common reasons resale and exemption certificates are rejected.

What Are Resale and Exemption Certificates?

In Texas, resale certificates allow businesses to purchase items tax-free if they’re reselling them. Exemption certificates apply to specific purchases, such as those made by nonprofits or government entities. Although both are legitimate tax-saving tools under Texas Comptroller guidelines, their misuse or mismanagement often leads to issues during an audit.

Auditors primarily aim to verify compliance with tax laws, and that’s where many businesses fall short. Whether it’s incomplete documentation or incorrect usage, these small missteps can raise red flags.

Related: learn more about whether manual or automated bookkeeping is right for you here.

Common Reasons Texas Resale & Exemption Certificates Are Denied

Even well-intentioned businesses can find themselves in trouble if they don’t follow protocol. Auditors in Texas are meticulous when verifying exemption claims, and they frequently deny certificates based on these common issues:

  • Improperly filled-out certificates: Leaving out key fields like tax ID numbers or signatures makes the document invalid.
  • Wrong certificate type used: Using a resale certificate when an exemption certificate is required – or vice versa – will lead to rejection.
  • Failure to prove resale intent: If there’s no documentation or the product clearly wasn’t resold, expect the exemption to be denied.
  • Outdated certificates: Certificates must be current and updated regularly.
  • Missing backup documentation: Sales invoices, purchase orders, or proof of resale should always accompany certificates.

Related: Learn more about why a bookkeeper is a must for your small business here.

How to Protect Your Business:

Ensure certificates are complete, accurate, and obtained before audit begins. Keep detailed records—and if in doubt, seek a compliance review.

Related: learn more about the difference between tax planning and tax preparation here.

Let MARIELA RUIZ, CPA, PLLC Help You

Don’t let avoidable mistakes cost your business time and money. Our team specializes in Texas tax compliance and audit preparation. Whether you need a quick review or full-scale assistance, we’re here to help you stay ahead of the curve. Contact mruiz-cpa.com today at (956) 997-0067 to schedule a consultation and ensure your resale and exemption certificates are audit-ready.

Minimizing Self-Employment Taxes: A Guide for Texas Entrepreneurs

July 10, 2025 / / 0 Comments

If you are self-employed in Texas, understanding self-employment (SE) tax is vital. Because you pay both the employee and employer portions, managing this tax burden can significantly affect your profit margin. That’s why every Texas entrepreneur should consider strategies to minimize SE tax legally. In this blog, we will share four practical, IRS-approved tips for reducing your tax exposure.

Tip 1: Take the SE tax deduction. You are allowed to deduct the employer‑equivalent portion of your SE tax on Form 1040, reducing your adjusted gross income and your income tax liability. While it does not reduce the tax you pay directly, it lowers taxable income. Be sure to report it correctly on Schedule 1 of your return.

Tip 2: Maximize legitimate business expenses. Net earnings from self-employment drive the tax calculation, so lowering that figure through ordinary and necessary deductions, such as home office costs, mileage or vehicle use, and health insurance premiums, can substantially reduce your SE tax base. Texas self-employed individuals can also deduct health insurance premiums paid for themselves and qualifying dependents.

Tip 3: Elect S‑Corporation status. By forming an LLC or corporation and making an S‑Corp election, you can pay yourself a “reasonable salary” subject to payroll taxes while leaving the remainder of the profit as distributions, which are not subject to SE tax. This structure can dramatically reduce your SE tax bill, but make sure your salary reflects IRS guidelines to stay compliant. Failing to pay a “reasonable salary” can trigger IRS audits or penalties.

Tip 4: Contribute to retirement plans like a SEP‑IRA or Solo 401(k). Contributions reduce your taxable income, and some retirement plans are self-employed specific. For example, you may contribute up to ~25% of net earnings to a SEP‑IRA or, if eligible, a Solo 401(k)—both lowering your adjusted gross income and reducing your SE tax base. Texas entrepreneurs benefit from this above-the-line deduction regardless of itemizing status.

Read More: Bookkeeping for Freelancers and Self-Employed Individuals

In Summary

Texas entrepreneurs can legally reduce their SE tax by using the SE tax deduction, maximizing business expense write-offs, electing S‑Corp status, and contributing to self-employed retirement plans under IRS rules. To ensure these strategies are implemented correctly, contact MARIELA RUIZ, CPA, PLLC in Mission, TX. Visit mruiz‑cpa.com for expert guidance and personalized tax planning.

How to Build a Strong Financial Foundation for Your Business in Its First Year

April 8, 2025 / / 0 Comments

Starting a new business is exciting, but it also comes with a host of responsibilities, especially when it comes to managing your finances. The first year is crucial for establishing a foundation for long-term success. Laying a strong financial foundation early can help you make smarter decisions, stay compliant with tax laws, and avoid costly mistakes that can derail your growth. In this blog, we’ll explore the key steps you should take in your first year to build a financially sound business.

1. Separate Personal and Business Finances
One of the first financial steps every entrepreneur should take is opening a separate business bank account. Keeping personal and business finances separate not only helps you stay organized but also simplifies tax preparation and financial tracking. It’s essential to establish your business as a separate legal entity, such as an LLC or corporation, and obtain an Employer Identification Number. This will allow you to properly manage business income, expenses, and deductions without confusion.

2. Create a Detailed Budget and Financial Plan
Budgeting is essential in your first year because it gives you a clear picture of how your money is being spent and what your revenue goals need to be. A good financial plan includes start-up costs, monthly operational expenses, projected income, and a cash flow forecast. Having a well-thought-out budget helps you stay focused on your financial goals and prepares you to pivot quickly if things don’t go as expected.

3. Track Every Dollar and Monitor Cash Flow
Accurate bookkeeping is vital from day one. Use accounting software or work with a professional to track all income and expenses. This allows you to monitor cash flow, spot trends, and make informed decisions. Many businesses fail because they run out of cash—not necessarily because they aren’t profitable. Keeping a close eye on your financial records ensures you can cover expenses and plan for investments as your business grows.

4. Stay Compliant and Plan for Taxes Early
Tax planning should never be an afterthought. From estimated quarterly taxes to payroll and sales tax obligations, staying compliant can save you from penalties and interest down the road. Be sure to understand your federal, state, and local tax requirements. Working with a CPA can be a game-changer here—they can help you identify deductions, prepare filings correctly, and ensure you’re not overpaying or underpaying taxes.

Related: Why Every Small Business Needs a Bookkeeper

Build Smart. Grow Strong. Partner with MARIELA RUIZ, CPA, PLLC
Starting a business is a big step, but building a solid financial foundation is what will keep it standing tall. From separating finances to tax planning and compliance, taking proactive financial steps in your first year pays off in the long run. MARIELA RUIZ, CPA, PLLC is here to guide you through every financial milestone. With expert accounting, tax, and advisory services tailored to small businesses, we’re committed to helping your business succeed from day one. Visit mruiz-cpa.com today and take the first step toward financial clarity and confidence.

Why Every Small Business Needs a Bookkeeper

February 4, 2025 / / 0 Comments

Running a small business comes with a long list of responsibilities, from managing operations to ensuring excellent customer service. Amidst all these tasks, bookkeeping can often take a back seat. However, maintaining accurate financial records is crucial to the success of any business. Here’s why every small business needs a professional bookkeeper.

1. Keeps Your Finances Organized

A bookkeeper ensures that all your financial transactions are recorded and categorized correctly. This helps you maintain a clear picture of your income, expenses, and overall financial health. Without proper bookkeeping, financial confusion can lead to costly mistakes.

2. Saves You Time

As a business owner, your time is valuable. Bookkeeping is a time-consuming task that requires attention to detail. By hiring a bookkeeper, you can focus on growing your business while leaving financial record-keeping to an expert.

3. Helps with Tax Preparation

Tax season can be stressful, especially if your financial records are disorganized. A bookkeeper keeps your financial documents up to date throughout the year, making tax filing smooth and hassle-free. They also help ensure that you maximize deductions and stay compliant with tax regulations.

Related: Learn more about what to do if you’re a small business preparing for tax season here.

4. Prevents Costly Errors

Errors in bookkeeping can lead to significant financial issues, including penalties, missed payments, and incorrect tax filings. A professional bookkeeper ensures accuracy in your records, reducing the risk of costly mistakes.

5. Provides Valuable Financial Insights

Understanding your financial data is key to making informed business decisions. A bookkeeper can provide reports and insights that help you identify trends, cut unnecessary costs, and improve profitability.

6. Supports Business Growth

As your business grows, so do your financial responsibilities. A bookkeeper helps manage cash flow, monitor expenses, and prepare for expansion. Having a clear financial picture makes it easier to secure loans or attract investors.

Conclusion

A bookkeeper is an essential part of any small business. They help keep your finances in order, save you time, and provide valuable insights that contribute to your success. Whether you’re just starting out or looking to scale your operations, investing in a bookkeeper can make a significant difference. If you’re ready to streamline your financial management, consider hiring a professional bookkeeper service from us today. Contact us at (956) 997-0067 or visit our website http://www. mruiz-cpa.com for more information.

Tips for Managing Expenses as a Small Business Owner

November 4, 2024 / / 0 Comments

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.

Accounting Considerations When Transitioning Your Hobby into a Business

July 1, 2024 / / 0 Comments

Many people dream of turning a hobby into a small business. Perhaps you’re a chef and would like to open a restaurant. Or maybe you’d like to turn your photography passion into profit. You might not face significant accounting challenges if your new business is profitable over time, but what if the new business’ expenses exceed income? In this month’s blog, we’ll show you key considerations to keep in mind to ensure your transition is smooth and financially sound.

Keep Personal and Business Finances Separate

One of the first steps is to open a separate business bank account. This distinction between personal and business finances is not just a best practice; it’s essential. Mixing the two can lead to confusion, making it challenging to track your business expenses and income accurately. Moreover, it can create issues when it’s time to manage your financial records.

Understand Your Costs

Accurately tracking and understanding your costs is critical. This includes both fixed costs (rent, utilities, and insurance) and variable costs (materials, shipping, labor, etc.). Knowing your break-even point—the point at which your revenue equals your costs—will help you price your products correctly and ensure your business is profitable.

Understand the Accounting Principles Behind Revenue Recognition

While not all businesses are required to comply with the revenue recognition principle of accounting, it’s important to take the time to understand it. In the US, according to the revenue recognition principle of ASC 606, revenue should be recognized when the delivery of promised goods or services matches the amount expected by the company in exchange for the goods or services. 

This will help ensure your financial statements accurately reflect your business’s financial health, and how your business is doing financially.

Related: Learn more about why your business isn’t making money and how to fix it here.

Consider Hiring a Professional

While DIY accounting is possible, hiring a professional accountant can save you time and help you avoid costly mistakes. An accountant can offer valuable insights, ensure compliance with financial regulations, and provide advice tailored to your specific business needs. Additionally, ensure your accountant adheres to accounting ethics to maintain the highest standards in your business operations.

Hire MARIELA RUIZ, CPA, PLLC

At MARIELA RUIZ, CPA, PLLC, we are dedicated to helping you navigate these complexities and set your business up for success. We’ve helped many small businesses like you lay a strong foundation for your business’s financial health. Visit our website at mruiz-cpa.com or call us at (956) 997-0067 to learn more about how we can assist you in making your business financially sound and profitable.

Why Your Business Isn’t Making Money and How to Fix It

January 8, 2024 / / 0 Comments

Businesses may offer outstanding products, maintain satisfied customers, and experience steady growth, but still face challenges in generating profit. This issue is frequently seen in small businesses but it’s not exclusive to them. Even long-standing, well-established businesses can experience this problem. In this month’s blog, we will explore the common reasons businesses struggle financially and provide practical solutions.

Businessman stacking coins with a graph of profit. Business successful growth

Lack of Budgeting and Financial Planning

Failing to plan is planning to fail, especially in business finance. Many businesses don’t have a detailed budget or financial plan, leading to overspending or misallocation of resources.

Solution: Keep a close eye on your finances. Implement strict budgeting and use integrated accounting software to track expenses and revenues. Regular financial audits can also help identify and rectify issues before they escalate.

Related: Learn more about when to consider a financial audit for your startup here.

Inadequate Tax Planning and Compliance:

As a business, it is your responsibility to ensure you’re paying the appropriate amount of taxes specified. Any non-compliance with tax laws can lead to hefty fines and penalties. For instance, in Texas, ignorance regarding the filing of tax returns will result in a 5% up to 20% penalty.

Solution: Work with a tax professional who can help in strategic tax planning and ensure compliance. This may involve tax-friendly business structures, tax deductions, and credits that your business can benefit from.

Related: Learn more about the reasons you need to hire a tax expert here.

Woman accountant use calculator and computer with holding pen on desk in office. finance and accounting concept

Unstructured Financing

Borrowing money or having a line of credit is expected and useful for growing businesses that feel the pressures of tight cash flow. However, what should relieve pressure can become a source of stress if it is not well-structured. High-interest business loans come with high monthly payments, which can tighten cash flow and increase monthly costs.

Solution: Businesses with high monthly payments should seek accountants for professional guidance on how to manage their debts effectively. An expert accountant can assist in creating a customized strategy for managing debt, pinpoint ways to save costs and guarantee the financial stability of your business.

MARIELA RUIZ, CPA, PLLC: Your Partner In Managing Your Business Finances

At MARIELA RUIZ, CPA, PLLC, we help businesses just like you thrive by providing comprehensive financial solutions. Our approach combines personalized financial planning, innovative financing strategies, and cutting-edge technology to empower your business’s growth journey. Visit our website at mruiz-cpa.com or give us a call at (956) 997-0067 to learn more about how we can transform your financial challenges into growth opportunities.

Accounting for E-commerce Businesses: Challenges and Best Practices

December 11, 2023 / / 0 Comments

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.

Reasons Your Small Business Needs CFO Services

November 1, 2023 / / 0 Comments

Running a small business requires wearing many hats, from managing day-to-day operations to overseeing finances. While you may have successfully handled these responsibilities on your own thus far, there comes a point when your business can greatly benefit from the expertise of a Chief Financial Officer (CFO). In this month’s blog, we will explore what a CFO is and what CFO services can bring to the table for your business.

What is a CFO?

A Chief Financial Officer (CFO) is a senior executive responsible for overseeing and managing the financial operations of a company. Serving as a strategic partner to the CEO and other stakeholders, the CFO plays a critical role in shaping the financial direction of the organization. They are responsible for financial planning and analysis, budgeting, and keeping your business financial records accurate and organized.

Related: Learn more about tips for keeping accurate and organized financial records here.

Enhanced Financial Strategy and Planning

According to new statistics, the failure rate for new startups is currently 90%. The main reason? A poor financial strategy and planning. A CFO can iron out the wrinkles in your financial management and bring a high level of financial expertise to the table. Your business needs an accurate financial strategy to achieve your goals in both the short term and long term.

Related: Learn more about accounting mistakes that could harm your small business here.

Effective Risk Management

Risk is an inherent part of any business, regardless of the industry. All businesses face risks such as market downturns and unpredictability (as we’ve recently seen with COVID-19). A CFO can help you identify and assess potential risks, whether they are financial, operational, or regulatory in nature. By implementing robust internal controls, developing contingency plans, and monitoring key risk indicators, a CFO can safeguard your business’s financial well-being.

Related: Learn more about key considerations and best accounting practices for startups here.

Rely On an Experienced CFO

As your small business continues to grow, the need for CFO services becomes increasingly important. At MARIELA RUIZ, CPA, PLLC, we offer excellent CFO services designed to drive your business toward sustainable growth and profitability. Visit our website at www.mruiz-cpa.com or call us at (956) 997-0067 to learn more about how our CFO services can benefit your small business.

When to Consider a Financial Audit for Your Startup

August 17, 2023 / / 0 Comments

Startups are a world of excitement, challenges, and opportunities. As the gears of innovation turn, there’s one wheel that entrepreneurs often overlook: the financial audit. While it may seem too formal or unnecessary during the early stages, a financial audit can provide numerous benefits to a young company. In this month’s blog, we’ll talk about when and why a startup should consider undergoing a financial audit.

What is a Financial Audit?

At its core, a financial audit is an examination of a company’s financial statements and related operations to ensure accuracy and compliance with accounting standards and regulations. An external auditor, often from a reputable accounting firm, conducts this examination and provides an opinion on the financial statements’ accuracy.

Key Indicators Your Startup Might Need an Audit

At the outset, startups often operate with lean margins and limited resources. Still, as they gather momentum and secure funding or begin to generate consistent revenue, the intricacies of their financial transactions multiply. This is where a financial audit becomes instrumental. Firstly, an audit provides a detailed and neutral view of the startup’s financial health. This is invaluable to stakeholders, investors, and lenders who bank on accurate financial statements to make informed decisions. Secondly, as a startup plans to scale, whether organically or via mergers and acquisitions, having audited financial statements can smoothen negotiations and due diligence processes. Additionally, certain regulatory and contractual conditions may necessitate an audit. For instance, if your startup is looking to raise a significant funding round or go public, potential investors or regulatory bodies might require audited financials.

Related: Learn more about the key considerations and accounting best practices for startups here.

Benefits of a Financial Audit

A financial audit can help founders and managers identify inefficiencies, uncover potential fraud, and streamline processes. The insights garnered can guide startups toward financial prudence, ensuring that resources are optimally utilized. Moreover, an audit fosters a culture of transparency and accountability within the organization. By regularly reviewing and validating financial transactions, startups build a strong foundation that can weather uncertainties and be well-prepared for future growth.

Related: Learn more about accounting mistakes that could harm your small business here.

Hire MARIELA RUIZ, CPA, PLLC For Your Financial Audit Needs!

We at MARIELA RUIZ, CPA, PLLC understand the unique challenges faced by startups. Our expertise is not just in conducting meticulous audits, but also in guiding young enterprises towards sustainable growth. Let’s embark on this journey together and ensure that your startup’s financial roadmap is both robust and transparent. Reach out to us at our Mission, TX office by calling (956) 997-0067 or visit our website at www.mruiz-cpa.com. Your startup’s future is bright; let us help you illuminate its path.

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