During a troubled economic period many businesses struggle with cash flow management. Here are three tips to help manage the process:
1. Review your process flows for accounts receivable and accounts payable. The goal is to reduce receivables and extend payables where it makes sense to do so. Collection procedures and credit granting policies for A/R can reduce risk of uncollectible accounts, while automating recurring billing procedures and initiating progress billing procedures standardize cash receipts.
2. Take a look at your companies supply chain. You may be able to negotiate vendor terms and discounts, find new suppliers, or alternative parts that reduce overall costs. Reviewing fixed costs contracts, such as insurance premiums, can elicit savings in reduced rates, but also ensures proper coverage. As your business changes, the levels and amounts of insurance previously provided may no longer be needed. Consider auditing vendor agreements for conformity with terms of contracts and premiums are correctly invoiced. Initiating simple controls can prevent and detect costly errors.
3. Manage inventory levels. Divide products into low or high volume sellers then make decisions about which products to stock and which to order based on sales volume. Review sales projections weekly and report backlogs and/or missed promises for accurate production scheduling. Calculate your economic order quantity (EOQ) based on the total demand for the year, the purchase cost for each item, the fixed cost to place the order and the annual storage cost for each item.
To develop a “working capital scorecard” or to obtain more information on any of the components mentioned herein, contact Campanelli & Associates CPA.
Wednesday, July 7, 2010
Wednesday, February 10, 2010
Interactive: Word 2003 to Word 2007 command reference guide - Word - Microsoft Office Online
Remember when we used to use Lotus 1-2-3, and had to learn the Excel commands? Well, if you've been postponing the upgrade to Windows 2007, this reference guide will make the transition to Word 2007 a little easier. Check it out.
Interactive: Word 2003 to Word 2007 command reference guide - Word - Microsoft Office Online
Interactive: Word 2003 to Word 2007 command reference guide - Word - Microsoft Office Online
Thursday, December 24, 2009
THE SOFT SELL
I love the Bud Light commercial where the girl pins a boutonniere on her date’s lapel. First it falls, which is too light. When she staples it on his suit, it’s too hard. I just saw this commercial again during Monday Night Football this week, and it makes me laugh every time. GO GIANTS!
Anyway, the same is true in business when you’re selling a product or service. Barnum Financial Group does a great job at this. Fees are clearly documented, so you know up front what to expect. No one likes hidden fees and they always come back to bite the business owner in the end, figuratively speaking, of course. So consider the following elements while reviewing your 2010 price list:
1. Think with the end in mind, starting with your desired net profit margin and list all your cost components; direct, indirect, variable and overhead costs. In order to price effectively, you need to have a thorough understanding of these cost components.
2. Take it a step farther, and calculate costs for each product you sell. It’s not enough to calculate net profit without thinking about the contribution margin of each item you sell, as variations between profit margins are likely to exist from one product to another.
3. Consider the role product mixes can play in determining price. It’s o.k. to sell a product at a low margin, if compatible products keep customers coming back. This is when forecasting can help measure the effect of changes in sales volume.
For more tips and information regarding price setting and cost management call Campanelli & Associates CPA LLC at 203 243-6999.
Anyway, the same is true in business when you’re selling a product or service. Barnum Financial Group does a great job at this. Fees are clearly documented, so you know up front what to expect. No one likes hidden fees and they always come back to bite the business owner in the end, figuratively speaking, of course. So consider the following elements while reviewing your 2010 price list:
1. Think with the end in mind, starting with your desired net profit margin and list all your cost components; direct, indirect, variable and overhead costs. In order to price effectively, you need to have a thorough understanding of these cost components.
2. Take it a step farther, and calculate costs for each product you sell. It’s not enough to calculate net profit without thinking about the contribution margin of each item you sell, as variations between profit margins are likely to exist from one product to another.
3. Consider the role product mixes can play in determining price. It’s o.k. to sell a product at a low margin, if compatible products keep customers coming back. This is when forecasting can help measure the effect of changes in sales volume.
For more tips and information regarding price setting and cost management call Campanelli & Associates CPA LLC at 203 243-6999.
Sunday, December 6, 2009
Employee or Contractor
Sometimes it is unclear whether a worker is an employee or contractor. Yet improper classification may not only result in fines and penalties by the IRS, but can also leave the employer open to other liabilities and lost income. The criteria I use to determine if an individual is deemed to be an employee or an independent contractor is based on the following three principles:
1. Determine who has control over how the work is performed. When the work is done according to employer’s specification, the worker is typically classified as an employee. Control can be acknowledged in a number of ways. For example, a restaurant employs a food service worker, who prepares meals according to instructions by management. The worker is considered an employee.
2. The amount of time and payment terms. When the person is paid based on completion of an assignment, and/or wages are agreed to be paid upon satisfaction by the employer, the perception is that the worker is independent. Other factors indicating an independent relationship are that the worker determines when the work is completed and splits his time between several employers.
3. The behavior of the parties and agreement between the parties. Here is when actions speak louder than words. An employee cannot send in a replacement, but an independent contractor can subcontract the job. Who provides the tools, who can terminate the relationship, and who determines the rate charged are all factors to consider when classifying worker status.
When in doubt, the IRS can make a determination on a case by case basis. For more information, go to http://www.irs.gov/newsroom/article/0,,id=173423,00.html.
1. Determine who has control over how the work is performed. When the work is done according to employer’s specification, the worker is typically classified as an employee. Control can be acknowledged in a number of ways. For example, a restaurant employs a food service worker, who prepares meals according to instructions by management. The worker is considered an employee.
2. The amount of time and payment terms. When the person is paid based on completion of an assignment, and/or wages are agreed to be paid upon satisfaction by the employer, the perception is that the worker is independent. Other factors indicating an independent relationship are that the worker determines when the work is completed and splits his time between several employers.
3. The behavior of the parties and agreement between the parties. Here is when actions speak louder than words. An employee cannot send in a replacement, but an independent contractor can subcontract the job. Who provides the tools, who can terminate the relationship, and who determines the rate charged are all factors to consider when classifying worker status.
When in doubt, the IRS can make a determination on a case by case basis. For more information, go to http://www.irs.gov/newsroom/article/0,,id=173423,00.html.
Wednesday, November 25, 2009
10 Important Facts about the Extended First-Time Homebuyer Credit
Here are the top 10 things the IRS wants you to know about the expanded credit and the qualifications you must meet in order to qualify for it.
- You must buy – or enter into a binding contract to buy a principal residence – on or before April 30, 2010.
- If you enter into a binding contract by April 30, 2010 you must close on the home on or before June 30, 2010.
- For qualifying purchases in 2010, you will have the option of claiming the credit on either your 2009 or 2010 return.
- A long-time resident of the same home can now qualify for a reduced credit. You can qualify for the credit if you’ve lived in the same principal residence for any five-consecutive year period during the eight-year period that ended on the date the new home is purchased and the settlement date is after November 6, 2009.
- The maximum credit for long-time residents is $6,500. However, married individuals filing separately are limited to $3,250.
- People with higher incomes can now qualify for the credit. The new law raises the income limits for homes purchased after November 6, 2009. The full credit is available to taxpayers with modified adjusted gross incomes up to $125,000, or $225,000 for joint filers.
- The IRS will issue a December 2009 revision of Form 5405 to claim this credit. The December 2009 form must be used for homes purchased after November 6, 2009 – whether the credit is claimed for 2008 or for 2009 – and for all home purchases that are claimed on 2009 returns.
- No credit is available if the purchase price of the home exceeds $800,000.
- The purchaser must be at least 18 years old on the date of purchase. For a married couple, only one spouse must meet this age requirement.
- A dependent is not eligible to claim the credit.
For more information about the expanded First-Time Home Buyer Credit, visit IRS.gov/recovery.
Sunday, May 17, 2009
New Vehicle Sales Tax Deduction
The following message was received from a friend and colleague who is a financial planner. I am forwarding the information to you, as it captures the important rules to qualify for this new deduction:
If you're purchasing a new car by the end of the year, you may benefit from a temporary new deduction created by the American Recovery and Reinvestment Act, which was signed into law in February. As a result of this legislation, if you purchase a new passenger automobile, light truck, or motorcycle (vehicles must have a gross weight rating of no more than 8,500 pounds) on or after February 17, 2009, and before January 1, 2010, you'll generally be able to deduct any state or local sales and excise tax you pay on the purchase on your 2009 federal income tax
return. New motor home purchases can qualify as well.
Individuals who itemize deductions on Form 1040, Schedule A, can include state or local sales and excise tax as part of their deduction for taxes paid. If you don't itemize deductions, you can deduct the qualifying sales and excise tax as part of your standard deduction.
There are, however, a couple of limitations:
• The amount of sales and excise tax that you can deduct is capped at the amount that would be paid on a vehicle with a purchase price of $49,500. So, if you purchase a $100,000 motor home, only the sales and excise tax attributable to the first $49,500 of your purchase price is deductible.
• You're not entitled to a deduction if your modified adjusted gross income (MAGI) is greater than $135,000 ($260,000 if you are married and file a joint return). And you're only entitled to a partial deduction if your MAGI is between $125,000 and $135,000 (between $250,000 and $260,000 if you are married and file a joint return).
Note: For 2009, you already had the option to deduct general state and local sales tax in lieu of state and local income taxes--the new rules allow you to deduct the state or local sales and excise tax attributable to a new vehicle purchase in addition to state and local income tax. The new rules are also more generous in cases where your state imposes sales tax on a new vehicle purchase at a rate that's higher than the general sales tax rate: the temporary deduction rules allow you to deduct the actual tax paid (subject to the limits noted above) instead of limiting you to the tax that would have been paid under the general sales tax rate.
If you're purchasing a new car by the end of the year, you may benefit from a temporary new deduction created by the American Recovery and Reinvestment Act, which was signed into law in February. As a result of this legislation, if you purchase a new passenger automobile, light truck, or motorcycle (vehicles must have a gross weight rating of no more than 8,500 pounds) on or after February 17, 2009, and before January 1, 2010, you'll generally be able to deduct any state or local sales and excise tax you pay on the purchase on your 2009 federal income tax
return. New motor home purchases can qualify as well.
Individuals who itemize deductions on Form 1040, Schedule A, can include state or local sales and excise tax as part of their deduction for taxes paid. If you don't itemize deductions, you can deduct the qualifying sales and excise tax as part of your standard deduction.
There are, however, a couple of limitations:
• The amount of sales and excise tax that you can deduct is capped at the amount that would be paid on a vehicle with a purchase price of $49,500. So, if you purchase a $100,000 motor home, only the sales and excise tax attributable to the first $49,500 of your purchase price is deductible.
• You're not entitled to a deduction if your modified adjusted gross income (MAGI) is greater than $135,000 ($260,000 if you are married and file a joint return). And you're only entitled to a partial deduction if your MAGI is between $125,000 and $135,000 (between $250,000 and $260,000 if you are married and file a joint return).
Note: For 2009, you already had the option to deduct general state and local sales tax in lieu of state and local income taxes--the new rules allow you to deduct the state or local sales and excise tax attributable to a new vehicle purchase in addition to state and local income tax. The new rules are also more generous in cases where your state imposes sales tax on a new vehicle purchase at a rate that's higher than the general sales tax rate: the temporary deduction rules allow you to deduct the actual tax paid (subject to the limits noted above) instead of limiting you to the tax that would have been paid under the general sales tax rate.
Monday, May 11, 2009
Commuter Tax Breaks Benefit Business!
Those who take public transportation can use pretax dollars for commuting expenses. Commuting benefits include mass transit costs, vanpools and certain types of parking arrangements. Employers save by paying less in payroll taxes, while reducing their carbon footprint, and boosting employee morale. The cost to administer the program is minimal making the program a win-win situation for all parties. For more information, go to www.exercisetheright.com
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