Should I Hire an Outside Collection Agency For My Delinquent Accounts Receivable

Posted by on Apr 15, 2016 in Accounts Receivable, Small Business Management | 0 comments

Are you having nightmares with delinquent accounts receivable? The more an account ages the harder it is to get it back. Debtors generally give hard time, if you want to get back old accounts receivable. You might often need to put a lot of force on the debtor in order to get back that accounts receivable. But this is not always possible by the internal staff of a company. So it might become necessary to appoint an outside collection agency.

What is a collection agency?

Many a time it is seen that the consumer is not ready or unable to pay off a debt that has accumulated in your books. The older the debt, the harder it will be get it back. You can appoint a credit manager to help you to get back the credit. But in large businesses this does not work. You will see that the best option would be to get the help of professional from the outside. This is the work of a collection agency. A collection agency will be able to help you to get back the debt from any consumer. They are made up of a team of professionals who have expertise in the field of getting back debt.

How do they operate?

If you are facing trouble in recovering the debt that has been fostering in your books of accounts, then it is time to call in a professional collection agency. They will be contacting the consumers who owe you debt. They will charge you a portion of the debt they have recovered. The older the debt the more they will charge, since it is more difficult to get back old debts. You can even appoint them to handle customers who seem to take up a lot of time of the business. Always make sure that you do give time to your consumers but it should not be so much that your business gets hampered.

Is it beneficial to appoint an outside collection agency?

It is important to keep in mind that a collection agency will charge you a part of the amount that you collect from the consumers. If you feel that you can get the job done at your own expense without this external help, then it will be financially beneficial for you. It is important to keep a track of the ratio between the time you spend on a customer and the money you get from them. If you feel that you would rather pay someone else for the service and save the time, then it is a very good idea to appoint a collection agency to do the needful.

If you are planning on appointing a collection agency, make sure you appoint someone who has the adequate knowledge and lot of experience. This will help you to make sure that you get the job done effectively. You can even go online and search for the different collection agencies that have been rated highly for their jobs that they have already done.

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What Type of Entity Is Best For My Home Service Business

Posted by on Apr 10, 2016 in Small Business Management | 0 comments

When you are planning to start a new home business, the first thing that you need to consider is the type of setup you want for that particular business. The type of business set up you choose will reflect a lot on the capital investment and the tax structure. So you need to make sure that you choose the most appropriate type of business structure if you want your business to flourish. So the first important question in respect to this is – what are the different types of business entity?

  • Sole proprietorship business is the simplest type of business that is best for small businesses. When a business is owned by a single person then it is a sole proprietorship.
  • A partnership business is a made up of two or more people who share profits and losses, It can be a limited partnership or a normal partnership. The liability structure and the funding depends on the type you choose.
  • A limited liability company is a type of sole proprietary business with limited status of a partnership. They are a legal constitution that came into existence of late.
  • Corporation’s bad separate entities from their owners. These company is have their own set of legal rights and duties that it needs to follow. The board of directors takes the different decisions related to this corporation.

How to choose the correct type of business structure or entity while starting a home business?

You need to keep the following factors in your mind while you are trying to decide regarding the best type of business structure you want to use for your business.

Liability

This is one of the most important factors to consider when you are opening a business. The amount of personal liability depends on the structure of your business. A sole proprietor business or a partnership business carries the most amount of liability whole a corporation carries the least amount of personal liability.

Taxes

Each type of entity gets a specific type of advantage when it comes to tax. While you are trying to figure out the best type of entity, you need to make sure that you know what types of deductions will be available to you. Choose the entity that gives the deductions you can avail.

Control

If you are trying to open a house run business with your own sole control, then it is best to open a dole proprietorship as you will only be the one to control the ongoing process of the business. But if there are more people who will be legally in charge of the business, then you can need to make it a partnership or a LLP.

Capital Investment

If you need a higher amount of investment then you need to take in more people as investors. Thus it will automatically become a LLP or a partnership business.

Thus it is seen that when it comes to home service businesses, sole proprietorship or partnership is the best type of business entity to opt for.

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Is Contracting Out My Employee Payroll a Good Idea

Posted by on Apr 6, 2016 in Small Business Management | 0 comments

No, it is not a good idea. Contracting out your employee payroll system will be a great loss for you. After all handling the total system yourself will be a headache and will get tough as you go on. But if you still want to go on your own, then setting up a payroll system not only streamlines your ability to stay on top of your legal and regulatory responsibilities as an employer.

Here are 7 steps to help you set up a payroll system for your small business:

Obtain an Employer Identification Number

Before hiring employees, you need to get an employment identification number (EIN) from the IRS. The EIN is often referred to as an Employer Tax ID or as Form SS-4. The EIN is necessary for reporting taxes and other documents to the IRS. In addition, the EIN is necessary when reporting information about your employees to state agencies. You can apply for an EIN online or contact the IRS directly.

Check Whether You Need State/Local Ids

Some state/local governments require businesses to obtain ID numbers in order to process taxes.

Independent Contractor or Employee

 Be clear on the distinction between an independent contractor and an employee. In legal terms, the line between the two is not always clear and it affects how you withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment taxes.

Take Care of Employee Paperwork

New employees must fill out Federal Income Tax Withholding Form W-4. Your employee must complete the form and return it to you so that you can withhold the correct federal income tax from their pay.

Carefully Document Your Employee Compensation Terms

As you set up payroll, you’ll also want to consider how you handle paid time off (not a legal requirement, but offered by most businesses), how you track employee hours, if and how you pay overtime, and other business variables. Don’t forget that other employee compensation and business deductibles such as health plan premiums and retirement contributions will also need to be deducted from employee pay checks and paid to the appropriate organizations.

Choosing a Payroll System

Payroll administration requires an acute attention to detail and accuracy, so it’s worth doing some research to understand your options. Start by asking fellow business owners which method they use and if they have any tips for setting up and administering payroll. Typically, your options for managing payroll include in-house or outsourced options. However, regardless of the option you choose, you — as the employer — are responsible for reporting and paying of all payroll taxes.

Running Payroll

Once you have all your forms and information collated, you can start running payroll. Depending on which payroll system you choose, you’ll either enter it yourself or give the information to your accountant.

Conclusion

Contracting out your employee payroll would not be a good idea as you can see there are lot of things to do and that can affect your working life and you would not be able to concentrate on other things.

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How best to manage Accounts Receivable

Posted by on Feb 3, 2016 in Uncategorized | 0 comments

Business owners know exactly how important it is to maintain a good cash flow. If you are a small business owner, then you rightly know the importance of cash flow management. A good cash flow management is very essential for a company’s survival. A company cannot have a long-term survival without a good cash flow. Cash flow shortages in company most occur due to poor cash flow management. To maintain a good system, you must follow certain specific ways. These ways can ensure an improved cash flow management. You do not have to worry about unplanned accounts management if you are following these simple steps.

accounts receivable

Steps to manage accounts efficiently

Some of the essential steps are mentioned below. To manage your account efficiently you should follow these following steps.

  1. Opt for the electronic system: If you want to hasten the management process, then you must go for an electronic system of maintaining the account. Send your bills via email instead of postal services. This can ensure you properly secured record of information. In this way, you can get instant access to all the records and information.
  1. Healthy work relationship: A healthy work relationship can ensure easy workflow. Happy customers will always love to pay the bills on time. If the customer is short on cash, then he/she will like to prioritize with those companies with whom they share a positive relation. Therefore, this is very important factor to maintain a good cash flow.
  1. Offer multiple methods: If you want a smooth payment system, then you should offer your customer with multiple payment methods. Instead of cash or check, you can offer various online payment methods to make it easy for the customers to pay their bills.
  1. Hire accounting company: Managing your accounts receivable can take a huge time and effort. For these reasons, you may often end up in poor account management. To avoid this factor, you must hire a counting company. Accounting company can maintain your account with utter efficiency. This can expedite the process. You can also opt for factoring or an Asset Based Loan to help manage your AR. Factoring has the advantage of accounts receivable management by the factoring company while an AR loan is less expensive and you still manage your own receivables. Either way, sometimes outside help and expertise can really help you manage your AR wisely.
  1. Clear credit policies: Setting clear credit policies is another vital factor which can ensure better management. If you are determined to offer credit to your products and services, then make sure all the terms and conditions are clearly mentioned. A customer should not be in doubt regarding the credit policies.

Expedite your business

To manage the account of your company you must follow these above-mentioned steps. It is a very serious issue for maintaining proper money flow in the business. A recent study has shown that one in four small businesses cannot run long due to inefficient account management. Due to this reason it often becomes difficult for the companies to meet the ends. Therefore to ensure a smooth business system you should have a proper account management system. These steps can give you the scope to manage your account and get the huge outcome of your business. So, hurry up and apply these steps to expedite the process of your business management.

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