Provided By Charlie Miracle, CPA at Cordell, Neher & Company, PLLC
Virtual accounting is a carefully chosen blend of professionals selected to leverage their expertise to grow your business. Each firm does things a little differently, but there are a few fundamentals across the board.
- Remote accountants work in sync with technology to help you do more with less.
- Virtual accounting is a hybrid of traditional accounting and great software; in fact, virtual accounting is typically considered a software as a service (SaaS) option.
- Remote bookkeepers use customized software, cloud-based tech, and a human touch to provide optimal solutions.
The most successful engagements begin with the right expectations and proper setup. However, many businesses do not take the time to set their office up with the right considerations. Here are a few ways to make sure your virtual accounting office is efficient and successful.
- Virtual means virtual! If you want to go remote, you will need to establish procedures for sending items (scanning, email, etc.) to the virtual office. Likely, your CPA will have an implementation plan, but if you aren’t positioned to use the cloud, virtual service will be a learning curve. Make sure you have a conversation with your provider to determine appropriate technology integrations.
- Streamline invoices. Set up a “generic” email for the accounting department, so multiple people have access. All invoices should be sent to this email, which can then route to a billing platform, like Bill.com.
- Internal control. Establishing a system for the virtual approval of invoices and payments that will ensure the flow of information is accurate, on-time, and properly classified. Virtual accountants typically have at least two sets of eyes on each step and multiple levels of staff working on one account.
- Uniform procedures. Make it simple to issue invoices and payments and require the company to follow the procedures with no exceptions!
- Align communication. Designate an in-house contact person for your virtual team. Since virtual people are not in the office physically, assigning a point person will ensure minimal interruption of service.
- Easy, not absent. Owners must review financials regularly and set up monthly or quarterly meetings with their remote accountants to make sure that everyone is on the same page. Owners will often turn away from their financials after they delegate the responsibilities. This lapse violates the first rule of ownership – always have one finger on the pulse of your bottom line.
- Access. If you want your virtual support group to operate with efficiency, you must be ready to give them partial access to bank accounts, credit cards, payroll, and routine vendor accounts. As part of the set-up process, you will need to define permissions for specific accounts. Take the time to discuss these selections and levels of access with your contact before your engagement begins.
Virtual accounting is a tremendous value to business owners. For most, the arrangement is a good fit, allowing them to rely on the expertise of others so they can focus on their core business. Getting off on the right foot, with the right expectations, is critical to overall success. If you are interested in getting started with remote accounting, give our office a call today and ask for Charlie or Diane 509-663-1661.
Build Your Rainy Day Fund
Like an emergency fund, it can come in handy.
Provided By: Nathan Cacka, CPA at Cordell, Neher & Company, PLLC
Sometimes, life gets expensive. A little bad luck or a twist of fate can hit us right in the checkbook and challenge us to live within our budget. An emergency fund helps us handle major financial disruptions, but for minor disruptions, it’s important to have a rainy day fund.
A rainy day fund and an emergency fund differ in scale, but not purpose. Both funds are designed to fully or partly absorb sudden costs. An emergency fund contains enough cash to help a household through a sudden financial crisis that could last 3 to 6 months: a serious illness, a job loss. Rainy day funds are much smaller in that they are normally intended for expenses ranging from $250 to $2,000. A rainy day fund is created in anticipation of certain expenses, rather than as a response to unforeseen emergencies.
As an example, say you have a 2012 Ford Explorer with 100,000 miles on it, at that age and usage level you know there is a good chance that you are going to have a significant repair, you just don’t know when it will happen. Wisely, they start a rainy day fund to deal with the potential expenses that could arise from that impending rainy day.
Rainy day funds can address all kinds of financial inconveniences. Home appliances need servicing and repairs; a rainy day fund dedicated to your home appliances may help allay costs. Dental work can become expensive. Your child’s youth sports team costs. Veterinary bills for your furry family members. College textbooks seem to be pricier each year.
A rainy day fund can be built gradually, if preferred. Think $20 or $50 a month. Or, you can devote a lump sum to one. The cash can go into a savings account, a money market account that gives you the ability to write checks, or an interest-bearing checking account. You can fund your account by direct deposit by allocating a portion of your paycheck, utilize one of the many savings apps that round up your purchases and then have your change go directly into a savings account, or you could use the tried and true rainy day fund jar.
How about an investment account or a certificate of deposit? That idea could have more downside than upside. A rainy day fund is not only about saving money, but also easily accessing it. A CD gives you the chance to grow your invested assets, but if you want to quickly withdraw those assets, you may end up with a loss stemming from an early withdrawal penalty. Similarly, you could end up withdrawing less from a brokerage account than you put into it, due to investment underperformance.1
Rainy day fund is about peace of mind. When things breakdown and large expenses come, it can be very stressful, but it doesn’t have to be if you are prepared for those events. Instead, you will be able to feel a sense of relief and satisfaction in knowing that you wisely prepared for that moment.
1 – studentloanhero.com/featured/times-cd-work-for-your-savings/ [7/10/18]Call Nathan today!
Outsourcing Is Smart Business
Provided By: Charlie Miracle, CPA at Cordell, Neher & Company, PLLC
Have you ever stopped to think about the scope of the finance functions of your business? If you do, you will probably be surprised at the many activities they encompass and how vital they are to the success of your company. Your business thrives when these activities are in working order. When faced with the options, a business owner quickly realizes that either they will need to manage their organization’s finances or hire someone else to do it.
Financial planning, financial risk assessment, record-keeping, and financial reporting are critical and time-consuming activities that are best managed by someone who has the right qualifications. But the fact of the matter is, CFOs cost money, and most small businesses do not have forty hours of work for a qualified individual. Rightly dividing resources within an organization is a critical matter, which is why outsourcing CFO services makes a lot of sense.
An Outsourced CFO is a valuable partner that can provide budget guidance, prepare and analyze financial statements, forecast cash flow, provide strategic financial planning and advisement, evaluate current bookkeeping systems, and act as a negotiator. Beyond these vital finance utilities, an Outsourced CFO can deliver expert “back office” support to business owners so they can focus on important job of growing their business. The finance function can be broken up into three main activities, each with a series of sub-functions.
- Transaction processing – accounts receivable, customer billing, credit and collections, accounts payable, general accounting, payroll, tax accounting, cost accounting, fixed asset accounting, benefits administration, and internal and external reporting
- Control and risk management – budgeting, cash flow management, insurance risk management, forecasting, tax planning, performance reporting, treasury management, and internal and external audit
- Decision support – business performance analyses (ratio analysis, cost analysis, pricing analysis), business planning support, and finance function management
The Decision to Outsource
Determining whether to outsource requires a focused and deliberate approach. Below are six advantages that will help you decide whether outsourcing financial management would benefit your organization:
- Lower Operating Costs – Any change that will reduce costs without otherwise endangering operations will generally be positive. Many businesses are just too small to justify hiring a full-time, in-house CFO.
- Increased Efficiency – Inefficient operations harm your organization. A real advantage of outsourcing is that behind your outsourced financial planning expert stands an entire team of accountants, partners, consultants, and bookkeepers. When financial activities are outsourced and analyzed by an independent party specializing in that activity, efficiencies will result.
- More Flexibility – When a business owner wears too many hats, one is bound to fall off. Outsourcing CFO functions will allow your organization to become more flexible in its ability to deal with its environment and core activities. Changes that make an organization more agile will make it better able to excel.
- Reduced Risk – Outsourcing a function may reduce the risk an organization faces. Outsourcing payroll, for example, is likely to reduce risk, as experts will now do the job.
- New Ideas – Outsourcing CFO duties will bring new ideas to the table. Small businesses need to recognize that outsourcing an expert will give them a clear advantage with complex financial activities.
- High Growth Potential – Many organizations are limited in their ability to take on more activities because their current staff is spread too thin. Outsourcing financial activities can allow business owners and other staff to engage in better-targeted tasks.
Before determining whether to outsource financial management functions, there are many factors to consider including the size of your business, industry, number of employees, volume of transactions, and skill sets. As a business owner, you will also need to do a gut check. Accepting the “virtual” reality of outsourcing means adjusting your expectations. In this environment, you will not be your CFOs only client, but you will have access to exceptional quality. If you are involved in the authorization process and can extend trust beyond your four walls, then you will truly benefit from this arrangement. However, if you are hung up on signing checks and are not able to hand over responsibilities, you will hinder the process and negate the experience.
Outsourcing services from your organization may enable you to operate more effectively. With our requisite knowledge of different types of organizational structures, we can help you create innovative changes in your organization. If you would like to learn more, please call our office to speak with Charlie or Diane and learn how a partnership with us can enhance the success of your business.
Charlie Miracle: email@example.com
Diane Forhan: firstname.lastname@example.orgCall Charlie or Diane today!
As you start a family, consider these ideas.
Provided by Kyle Meissner, CPA at Cordell, Neher & Company, PLLC
Being a parent means being more responsible than you have had to be before. That increased responsibility will also impact your financial decisions. You are now a provider and a protector, and that may make some or all of the following financial considerations necessary.
Think about a adopting a budget. As a couple, you may have lived for years without budgeting. As parents, this may change in light of the added costs of raising a child. You will face many new recurring costs: childcare, clothes, toys, diapers, and food to name a few. Keeping track of weekly or monthly expenses will make creating a budget easier. (The Department of Agriculture has an online calculator where you can estimate the total cost of raising a child to adulthood. The math may surprise you: the U.S.D.A. puts the average cost at $233,610 for a middle-income family).
Take care of health and life insurance. Your new child should be added to your health insurance plan as quickly as possible. Most insurance providers require you to notify them of a child’s birth within 30 days. You should get started before then; be aware that getting a Social Security number and birth certificate can take weeks to arrive in the mail. If you are in a group health plan, talk with the human resources officer or benefits administrator at work, and let them know that you want to add a dependent to your health care plan. If you have coverage through a private plan, your premiums may go up after you notify the carrier. Under the Affordable Care Act, a parent or legal guardian who has health coverage arranged through the federal or state Marketplace has 60 days from the date of birth or adoption to enroll a child as a dependent on their plan; once that is done, health care coverage for the child will apply, retroactively.
Term life insurance may be an affordable way for new parents to continue to provide for their family under a worst-case scenario. Disability insurance (which may be available where you work) covers you in the event of an extended illness or injury that stops you from doing your job. If you have a Health Savings Account (HSA), you can contribute more per year when you have a child. The maximum annual contribution for a family is currently set at $7,000.
Draft a will and review beneficiary designations. A will should do more for parents than declare who receives their assets when they die. It should also specify their choice of a legal guardian for their child in the event both parents pass away. Additionally, a will should specify a guardian of the estate, to manage any assets left to a minor child. While you may have named your spouse or partner as the primary beneficiary of your IRA or investment account, you should at very least add your child as a contingent beneficiary.
Start saving a little for college. The estimated cost of four years at a public university starting in 2036? $184,000, CNBC reports. That may convince you of the need to open a 529 plan or have some other kind of dedicated college savings account with investment options. Most 529 plans require a Social Security number for a beneficiary, so they are commonly started after a child is born, rather than before. A 529 plan allows investments to grow tax free provided they are withdrawn to pay for the beneficiaries qualified educational expenses.
Review your withholding status and income tax forms. Adding a new member to your family means changes to your federal income taxes. You may become eligible for some breaks, like the Earned Income Tax Credit, the Adoption Tax Credit, the Child Tax Credit, and the Child & Dependent Care Credit, so you should consider adjusting your withholding to reflect these items.
Keep the big picture in mind. You still need to build retirement savings and having an emergency fund is even more important. Becoming a family may make accomplishing those important tasks harder, but you cannot neglect them.
After reading all this, you may feel like you need to be a millionaire to raise a child. The fact is, most parents are not millionaires, and they are able to manage. Whether you are wealthy or not, you need to take care of many or all of these financial and insurance essentials.
Kyle Meissner is a Certified Public Accountant with Cordell, Neher & Company, PLLC, a Wenatchee public accounting firm. Kyle may be reached at (509) 663-1661 or email@example.com. www.cnccpa.com
Know the signals that could hint at theft or embezzlement at your business.
Provided by Brenda Alcala, CPA at Cordell, Neher & Company, PLLC
Weird things are happening at work. Power tools are missing. Something seems odd with your inventory. Bank reconciliations seem slightly amiss.
Follow up on your suspicions. You may have a problem with employee theft. Small businesses are more likely to have employee theft because 1) they are not large enough to provide the resources, controls and processes needed to decrease the risk; and 2) as a small business you know everyone and tend to be more trusting of your employees so, of course they would never steal, right? Wrong. Often those who end up stealing are the employees you trust the most.
What are the signs that you might have a thief at work? If enough items vanish from the office, the problem is clear – but some subtle clues may appear beforehand. Employee theft is not a one-time event by an employee, but usually involves stealing small amounts over a period of time that can add up to thousands, if not millions, of dollars if not caught in time.
Watch for an employee who consistently stays late – especially one with access to a warehouse or financial records. If he or she never wants to take any vacation time or frequently comes in over the weekend to “finish up a project,” that may also be another hint. In the same vein, watch out for workers who volunteer to collect receivables or make weekly cash deposits for you. On a more sophisticated level, picture two or more of your employees (one who can greenlight expenses among them) creating a phony supplier (vendor fraud), with checks being authorized and written to that shell company. In an article by CNBC, 14.7% of thefts were due to vendor fraud (money theft was #1 at 34.5%). While less common, it accounts for the largest loss of funds compared to any other form of theft.
What could tip you off to employee theft? Consider the person’s life away from work. Is this person dealing with financial hardship or a divorce? Does he or she like to live extravagantly? Is he or she close with certain suppliers, customers, or clients?
Who is the typical embezzler? Not some young new hire, but more likely a mature and trusted manager or financial officer. In a 2016 survey of firms impacted by white-collar crime, specialty insurer HISCOX arrived at a portrait of an embezzler: median age of 49, with a 56.3% chance of being female. Unsurprisingly, 40% of such crimes were committed by those working in finance and accounting departments.
HISCOX also found that 80% of embezzlement happened at firms with 150 or fewer workers. Notably, the embezzlement rate at companies of this size was ten times higher than at firms with 250-500 employees.
Why is embezzling from a small company easier than stealing from a large one? For one, many small businesses are started by friends or family; the principals trust each other and can readily access company finances, intellectual property, and sensitive employee information. Then, the business grows and outsiders are gradually able to enter this circle of trust – and the internal checks and balances do not keep pace with the growth.
By the way, non-profits are especially susceptible to theft. Why? You can cite a couple of factors. One, leaders of non-profit organizations tend to be good-hearted and altruistic and may not want to acknowledge that they could have embezzlers or thieves coming to work. Criminally minded individuals can sense this optimism and act on it. Two, internal controls at non-profits are often lacking or minimal; the leaders of these groups devote resources, time, and effort primarily to the mission of the organization. Whether you are a for-profit or non-profit organization, it is important to set clear policies and expectations of your employees and the consequences of committing employee theft.
Are you insured against any of this? Your current insurance policy may provide your business with fidelity coverage, also known as fraud insurance. If it does not give you that coverage, find one that does. You have enough things to deal with at your business. When fraud and theft occur, you don’t want to be left financially liable or distressed.
How do you recover? Recovering from employee theft is hard, and for some companies, can take years. The best thing to do is tell the police so others are aware of such person, and communicate with your employees what happened so they are aware of the consequences of such actions and implement improved controls to make sure it does not happen again in the future.
Brenda Alcala is a Certified Public Accountant with Cordell, Neher & Company, PLLC, a Wenatchee public accounting firm. Brenda may be reached at 509-663-1661 or firstname.lastname@example.org. www.cnccpa.com
Cordell, Neher & Company, PLLC adds to team
Wenatchee, WA.- Cordell, Neher & Company, PLLC has announced the addition of Diane Forhan as Client Accounting Services Manager. Forhan brings 18 years of experience to the Firm.
In this role, Forhan manages and further develops the rapidly-growing Client Accounting Services Department. She also manages the internal accounting and budgeting processes.
In addition to her deep professional experience, Forhan holds a BS in Accounting and is a member of the Washington Society of CPAs.
“I’m delighted to become a staff member at CNC, with their reputation of top-notch client and community service. I’m also excited for this opportunity to further develop CNC’s Client Accounting Services Department,” she explained.
Cordell, Neher & Company, PLLC, is one of the largest Certified Public Accounting firms in North Central Washington with individual and business clients spanning the globe. The Firm has been providing businesses, not-for-profit organizations and individuals with financial and tax planning assistance for more than 30 years. The Firm is comprised of experienced, dedicated professionals with widely diverse backgrounds and areas of technical expertise. Because business and personal accounting today is so broad in scope, specialized expertise is needed to offer a full range of accounting services.