Furthermore, 57% expect to create jobs this year. Also, 28% rate the economy as good or excellent—a 9% increase from three months ago. These are among the key findings of a survey of small businesses released by Goldman Sachs called 10,000 Small Businesses Voices. This study aims to reveal concerns about current economic headwinds. It also analyzes optimism for the future.

The Federal Reserve’s proposed Basel III Endgame would increase the capital holding requirements for larger banks, including regional banks. Small business owners depend on these banks for lending. The proposed policy would further squeeze small businesses. 

The Federal Reserve closed the comment period on the proposed Basel III Endgame rule on Jan. 16. Yet, small businesses continue to voice concerns about accessing affordable capital, such as business loans and lines of credit:

• If access to capital tightens further, 86% say it will impact their growth forecast. The Federal Reserve acknowledges this outcome if the proposed Basel III Endgame were enacted.
• Businesses reporting their growth forecast would be adversely impacted. They said they might be forced to take actions such as: 
  • Halting expansion plans (62%), 
  • Laying off workers (43%), 
  • Ending strategic investments ( 38%
  • Closing their business (21%)
• Given current interest rates, just 32% believe they can afford to take out a loan.
• Of respondents who applied for a loan in the past year (35%), 79% found it difficult to access affordable capital. Only 40% received all the funding they requested.
• Small business owners are desperate to access capital. 28% percent of loan applicants said they had taken out a loan or line of credit with predatory payment terms.

The nationwide survey of 1,459 small businesses was taken January 15-21, 2024. Respondents came from 48 U.S. States, Puerto Rico, and Washington, D.C. For more information on the survey, please visit www.gs.com/glass-half-full.

Employers must file their copies of Form W-2, Wage and Tax Statement, and Form W-3, Transmittal of Wage and Tax Statements, with the Social Security Administration by January 31.

The January 31 deadline also applies to Forms 1099-MISC, Miscellaneous Income, and Forms 1099-NEC, Nonemployee Compensation, that are filed with the IRS to report non-employee compensation to independent contractors. Various other due dates related to Form 1099-MISC, Form 1099-K and Form 1099-NEC, including dates due to the IRS, can be found here.

The IRS offers the Information Returns Intake System (IRIS) for free electronic filing of the Form 1099 series. This service allows electronic filing, preparation of payee copies, filing corrections, and extension requests.

New in 2024

Businesses filing 10 or more Forms W-2 must do so electronically. Extensions to file these forms are not automatic; they require submitting Form 8809 by January 31. Note that this does not extend the deadline for furnishing wage statements to employees.

The IRS has delayed the Form 1099-K $600 reporting threshold implementation until tax year 2024. For 2023 and earlier, only taxpayers who receive over $20,000 and have more than 200 transactions will be issued Forms 1099-K.

Penalties may apply for non-compliance. You can find more information on the IRS’ Information Return Penalties page. For detailed filing instructions, check the IRS website. The January 31 deadline is crucial for businesses. Employers working with at least one independent contractor must ensure compliance to avoid penalties. 

The CTA requires companies to identify their owners, controlling entities, or other benefactors by submitting a Beneficial Ownership Information (BOI) report. According to the Treasury Department, a “beneficial owner” is an individual or entity that meets one of the following criteria: they own at least 25% of the business, they command a position of authority over the business, or they exert a high level of control over the business’s equity. Despite its title, the CTA applies to both domestic and foreign-owned companies of all levels, including small businesses, limited liability companies, and independent contractors.

The CTA is intended to combat unlawful activity and plug loopholes in existing corporate legislation. One of the policy’s primary aims is to limit the use of shell companies, which, while not expressly illegal, are sometimes used to launder money, dodge taxes, or keep the identities of benefitting parties hidden from the government. As such, BOI paperwork is submitted to the U.S. Treasury’s Financial Crimes Enforcement Network division. There is no fee for submitting a BOI report, but failure to do so can result in fines and other penalties.

Small businesses may need to consult a financial advisor to ensure their BOI reports are submitted properly, on time, and without error. Although the CTA outlines comprehensive definitions of controlling entities, every organization is unique, making it difficult for company leaders to accurately determine whether an individual or group qualifies as a “beneficiary owner.”

This guide explains the key factors to consider when choosing the right card for entrepreneurs, including rewards programs, low fees, startup options, premium perks, and technology integration. It aims to help entrepreneurs make informed decisions for business success, ensuring financial efficiency and exclusive bonuses. 

Let’s begin learning to make informed decisions.  

1. American Express® Business Gold Card

Amex overhauled the American Express® Business Gold Card in October 2023, introducing updated bonus categories and additional benefits, along with an increased annual fee of $295 ($375 for applications received on or after 2/1/24). 

The updated card offers rewards, providing four Membership Rewards® points per dollar on the two most spendable categories. For flights and prepaid hotel reservations made through Amex Travel, you earn three points per dollar, while other transactions accumulate one point per dollar. 

Additionally, it features a flexible business credit of up to $20 monthly statement credits for eligible purchases at FedEx, Grubhub, and office supply stores. Moreover, it provides a Walmart+ credit of $155 monthly for a membership. 

The card comes in two color choices: traditional Gold or Rose Gold. While some individuals might welcome these updates, others could be displeased with the higher pricing or the additional effort needed to employ their monthly credits fully.

2. Venture X Business

Capital One’s Venture X Business card, available in Gold or Rose Gold, stands as a premium business card priced at $395 annually. It offers credit, incentives, lounge access, and an annual bonus. Cardholders earn two miles for every dollar on all purchases.

They’ll also earn five points for every dollar on flights and ten points for every dollar on hotels and rental cars booked through Capital One Travel.

New cardholders can gain 150,000 bonus miles for spending $30,000 in the first three months. Benefits include a $300 annual travel credit, 10,000 annual bonus miles, and flexible redemption options with no blackout dates. Additional perks include TSA PreCheck®/Global Entry and access to over 1,300 lounges.

3. World of Hyatt Business Credit Card

The World of Hyatt Business Credit Card is a top choice for business credit cards, primarily due to its value from World of Hyatt points. With a $199 annual fee, the card offers rewards such as earning 9 points per dollar spent at Hyatt. Additionally, it provides four bonus points per dollar spent at Hyatt hotels and five base points per dollar as a World of Hyatt member. 

The card also grants elite status, giving the holder five Qualifying Night credits and automatic Discoverist membership for each $10,000 spent on the card within a calendar year. Furthermore, the card offers up to $100 in Hyatt statement credits and a 10% points rebate on award stays for the rest of the year. 

 Cardholders can now earn more points through the additional qualifying expenditure category, as the accelerator advantage continues beyond its original scheduled termination in 2023, until 2024. 

4. U.S. Bank Business Altitude Connect World Elite Mastercard®

 Introduced in early 2023, the U.S. Bank Business AltitudeTM Connect World Elite Mastercard® comes with several benefits at a reasonable cost. It offers incentives for travel, dining,  mobile phone services, and other purchases, including pre-paid hotel and rental car reservations. 

The card’s perks include a digital Priority Pass membership, providing four free visits annually.   There is no annual fee for the first year, but there is a $95 cost for the subsequent years. Cardholders who pay with their card for ridesharing or taxi services every three months will also receive a $25 statement credit. 

Apart from the numerous complimentary lounge visits annually, the card offers one of the best rewards programs for direct trip reservations. However, starting in 2024, the card will charge the annual fee, as the fee waiver only applies to the first year. 

5. Ink Business Preferred® Credit Card 

With a lower annual fee of $95, the Ink Business Preferred® Credit Card offers a rewards program comparable to that of the Amex Business Gold. Each account anniversary year provides three points per dollar on the initial $150,000 spent on travel and specific business categories, and one point per dollar on all other expenses. 

Users receive a 25% increase in point value when booking travel with Chase Ultimate Rewards®, offering an incentive for a trip redemption. It also includes coverages for purchases and trips, such as primary rental vehicle insurance, smartphone protection, purchase protection, extended warranty protection, and trip cancellation/interruption insurance. 

The Ink Preferred card allows a one-to-one point transfer with over a dozen travel partners, including American hotels and airlines. It may benefit businesses with high shipping expenses, considering the Business Gold card has removed shipping as an eligible bonus category. 

Benefits of Credit Cards

Credit cards serve as your financial backbone, keeping the money afloat while you await business revenues or profits. Having said this, the other benefits of credit cards are outlined below:  

1. Convenience: Credit cards offer a convenient and widely accepted payment method, enabling you to purchase online, in-store, and over the phone. 
2. Rewards Programs: Several credit cards have rewards programs that allow you to earn points, cash back, or miles for your purchases, providing additional value. 
3. Build Credit History: Using credit cards responsibly can help you establish and enhance your credit history, which is crucial for upcoming financial transactions like loan or mortgage applications. 
4. Security: Credit cards often provide more security than debit cards. If your credit card is lost or stolen, you can report it, and the card issuer can often protect you from unauthorized transactions. 
5. Emergency Expenses: With instant access to money, credit cards may act as a financial safety net for unforeseen costs or crises. 

Things to Watch Out for Before Applying for a Credit Card

With great powers come great responsibilities. You need to be cautious about these aspects when applying for a credit card; otherwise, you might end up facing the music.  

• Interest Rates: Be aware of the credit card’s annual percentage rate (APR). A high interest rate can lead to higher costs if you carry a balance from month to month. 
• Fees: Check for annual fees, late payment fees, cash advance fees, and other charges associated with the credit card. Some cards may have expenses that outweigh their benefits. 
• Credit Limit: Understand the credit limit offered by the card. Exceeding your credit limit can result in fees and negatively impact your credit score. 
• Introductory Offers: Be aware of introductory offers, such as 0% APR for a certain period. Understand when the promotional period ends and the standard interest rate afterward. 
• Credit Score Impact: Applying for a credit card may cause fluctuations in your credit score. Consider your options carefully before making too many credit applications simultaneously, as this might backfire. 

However, opting for these options may feel slightly more challenging and confusing for many business owners. Fortunately, embedded finance provides more viable options for small businesses for financial support in economic distress.

There’s been a significant increase in the demand for Banking-as-a-Service (BaaS) services in the industry. The prime reason for this prevalence is the quality of services provided to business owners by fintech companies.

These companies are also providing substantial solutions to the companies, allowing them to expand their horizons and experiment more. Services like embedded finance have also become very popular in a brief period because of this approach. Businesses, big and small, are leveraging these methods for long-term business growth. Therefore, companies must know these payment methods and how to utilize them.

How Do BaaS Platforms Work?

BaaS platforms are much like API-first wholesale banks for small business owners and entrepreneurs. These services offer financial solutions needed to better meet and assess the market needs and assist with various requirements. These include:

• Debit cards
• Credit lines
• Cash management

Small business (SMB) owners can integrate these financial solutions into their SaaS products with little training and strategizing. This way, the software platforms have a more innovative approach to choose from. Embedded finance offers a variety of different approaches for business owners, allowing them to meet business goals.

These SMBs can partner with various providers working in the tech sector, offering embedded finance. It’s easier for companies to perform many financial tasks, including:

• Accessing debt more easily
• Determining the financial metrics
• Streamlining key finance acts, including
• Payroll
• Vendor Payments

How Small Business Owners are Leveraging Embedded Finance to Achieve Their Goals

Small business financing ensures the ventures have the necessary financial support for long-term success. By utilizing these embedded finance options, achieving goals becomes easier and more streamlined.

For instance, if a company faces payment issues for a long time, which slows its operations—embedded finance is the best option. It lets business owners get better, safe, and quicker vendor payments allow payroll management, and much more.

1. Embedded Payroll

Paying employees timely is a necessary yet challenging process. Small business owners face a lot of trouble while managing employee payrolls, causing undue pressure on their long-term performance. There are several technicalities involved in the process. For instance, the tax and wage compliance requirements are complex, and not all SMBs may fully understand them.

Small business owners and entrepreneurs may mess up these requirements, costing them their reputation. The requirements are more complicated because national and sub-national government laws differ based on your location.

Business owners have to regulate their payrolls accordingly. It gets more complicated if a business has offices and employees across different locations. Another complicated area is determining employee overtime. For instance, it can be for an employee working more than eight hours daily or more than forty hours weekly.
The payroll requirements become more complicated as we get into the more technical aspects. Nonetheless, all business owners have to consider their wage-and-hour laws leading to extensive paperwork in most cases.

Businesses should know how to handle this documentation—but that’s rare. The SMB owners also have to keep the pay rates for employees in mind, which is why they end up using accounting software. Some SMBs may even do this manually. However, it’s a legislative matter; a single error can land your business in serious issues.

How Embedded Finance Helps

Embedded payroll platforms provide automation for the complicated payroll process. It allows the SMBs based on a simple single pay rate (SPR), allowing the staff members to clock their arrival and departure company hardware or even staff mobile apps.

These embedded payment platforms can also determine specific employee hours and rate multiples based on various factors, such as:

• • Split shifts
  • Overtime
  • Night shifts Etc.

With the payroll issues handled, SMBs can better meet other business-related tasks and resolve them as required. For example, it can also help manage the request for every payroll period. The platform will automatically complete the transactions and streamline the process.

2. Embedded Accounts Payable

Some SMBs might have thin operational margins in the first few years of working. These lesser margins might lead to issues in supplier relations and other business tasks. As an SMB, you may consider these issues minimal. However, once they occur regularly, they can seriously affect your market stature and reputation.

For instance, your SMB could deal with evictions or closures because of poor cash flow management. Understandably, minimal industry exposure can be a root cause for this. However, that’s not a justification for this issue.

The best way to ensure long-term operations in the industry is to collaborate with the leading suppliers and ensure timely payments. Similarly, ensuring every supplier gets the right payment conveniently (depending on the payment method of your choice) can also contribute to better market performance. With this streamlined payment method, you can gain hundreds and thousands of dollars by the end of every year.

How Embedded Finance Helps

By incorporating embedded finance for accounts payable, the suppliers don’t have to wait for the payments manually or file checks for each transaction. It is tentative and can save the company and suppliers from unwanted trouble.

These automated systems can also make order placements if the current levels drop down from a certain limit. You can digitalize the invoices and route them using mobile alert. This way, all involved parties can receive a notification about the payment in a single go for higher visibility.

You can do, manage, approve, and even track all the payments via a single platform. The business can manage the expenses better and ensure long-term positive cash flow without unwanted instances.

3, Embedded Insurance

Small businesses are leveraging embedded finance through their insurance products for their clients. These insurance products have become more viable in recent years because of the increased demand for fintech companies and better payment methods.

Once businesses learn to diversify their product offerings, generating new revenue streams should no longer be a problem. With the inclusion of embedded insurance, SMBs can also reduce business-related risk.

The scalability of embedded finance makes it a great option for those who want to invest in it. It may take some time to fully deploy embedded insurance in business operations.

How Embedded Finance Helps

Embedded finance for insurance products can provide several benefits for the operators. For instance, a small e-commerce business can utilize embedded insurance. They have access to the tech platforms, as well as pre-set insurance plans for the products sold and offered on the website. You can easily sell and offer those plans when the customer cashes out of your website.

Moreover, the e-commerce SMB can claim insurance and coverage if the orders are damaged or lost during transpiration. Yes, the premiums for these insurance policies may differ, but it’s still a great option for those who wish to thrive. Additionally, you can use these insurance options for:

• Purchasing a revenue stream
• Disputing process for the insurance claim

Is Embedded Finance Beneficial?

We’ve discussed various applications for embedded finance, but it’s understandable if you’re still skeptical. It’s easy for SMBs to feel intrigued before deploying embedded finance in their venture. Fortunately, these automated methods are beneficial for your business. Here are the primary benefits embedded finance offers:

Resolves Consumer Pain Points

Understanding embedded finance based on the discussion above, you can see how easily companies can leverage use. For instance, consumers had to look for credit and financing with third-party financiers. However, with this option, customers will complete for better customer satisfaction. It’s a great option for brands seeking loyalty in a competitive market.

Financial Profitability

By deploying embedded finance in your business, there’s a higher chance of better profitability. With these options, more consumers can purchase or return an item problem free and have a positive experience.

Delivers Usable Business Insights

Convenience is a major benefit of embedded finance. However, that’s not all. Embedded finance can also help businesses gather better insight and improve accessibility. With these insights, consumers can track their spending habits and determine their needs perfectly. With automated data, businesses can also develop better products, services, and offerings in the future.

Adding embedded finance to a small business can benefit the venture. Small business owners and entrepreneurs can leverage these tools for the best results. With the right small business financing tools, you can optimize the process, automate it, and improve it in several ways. We recommend deploying embedded finance in businesses and gaining their finance.

A recent study from Intuit showed that 61% of small businesses worldwide struggle with cash flow, and according to a U.S. Bank study, poor cash flow management is to blame for 82% of business failures.

This article will provide an overview of the key strategies for managing cash flow effectively to help ensure the long-term success of your business.

Create a Budget

Creating a budget is one of the essential steps in managing cash flow effectively. It helps you keep track of your expected income and expenses and allows you to plan for the future. A budget also enables you to identify areas where you can cut costs and prioritize spending to make the most of your limited resources. Here are seven tips for creating an adequate budget:

1. Make projections frequently: It’s essential to update your budget regularly to stay on top of your cash flow and make adjustments as needed.
2. Monitor your net cash position: Your budget should show your net cash position, which is the difference between your available cash and the amount you owe. By doing so, you can see how much moeey you have available for spending and whether you need to bring in more money or cut back on expenses.
3. Plan for emergencies: No one knows what the future holds, so it’s a good idea to have an emergency backup plan in place. It could be a savings account set aside for unexpected expenses or a business line of credit you can use when needed.
4. Start with your fixed expenses: When creating your budget, start by listing your fixed expenses, such as rent, utilities, insurance, and loan payments. It will help you determine any areas that need adjustment in your budget and give you a good baseline to work from.
5. Be realistic with your projections: It’s essential to be realistic when projecting your income and expenses. Factor in seasonality, unexpected events, and other variables that could affect your cash flow.
6. Use financial software: Creating your budget with financial software can make the process easier and more efficient. Many financial software programs also have features that allow you to track your expenses and make updates in real-time.
7. Review and adjust your budget regularly: Your business and financial situation will change over time, so it’s essential to review and adjust your budget regularly to reflect these changes. Doing so will help you stay on top of your cash flow and make any necessary adjustments to keep your business on track.

Remember, creating a budget ensures you always have enough cash to cover your expenses. By making projections frequently, monitoring your net cash position, and planning for emergencies, you can stay ahead of any cash flow problems and keep your business running smoothly.

Monitor Accounts Receivable

Accounts Receivable (AR) refers to the money a business owes from its customers for goods or services that have been sold but have yet to be paid for. In other words, it’s the money a business expects its customers to receive in the future.

Managing cash flow requires monitoring AR because it shows how quickly customers pay their bills and how much money is coming in. Businesses with thin profit margins need this information because slow-paying customers can quickly drain cash reserves.

Here are some strategies for keeping track of AR:

• Establish clear payment terms: When selling goods or services, it’s essential to have clear payment terms that outline when customers should pay their bills. It will help avoid confusion and ensure timely payments.
• Send invoices promptly: Send invoices promptly after a sale is made to ensure that customers know the amount they owe and the payment due date.
• Use automation tools: Automation tools can help streamline the AR process by automating the billing and invoicing process, reducing errors, and assisting businesses to get paid faster.
• Follow up on overdue payments: When payments are due, it’s essential to follow up with customers promptly to avoid further delays. It can be done by email, phone, or even in person.
• Monitor AR regularly: Regularly monitoring AR will better understand your current cash flow situation and allow you to make adjustments as needed.

By monitoring AR regularly and implementing these strategies, businesses can ensure that they receive payment from their customers on time and maintain a healthy cash flow.

Control Inventory

Inventory management is crucial in ensuring a company has enough money. It immediately affects the company’s cash on hand.

Therefore, when managing inventory, it’s essential to balance having enough products on hand to meet customer demand and having less cash tied up and unavailable for other needs. 

Here are some strategies for effectively controlling inventory:

• Manage inventory carefully: Be mindful of how much product you have on hand and how quickly it sells. It’s essential to regularly review your inventory levels and adjust accordingly to prevent overstocking or stock shortages.
• Consider running a sale: If you have a short-term cash flow problem, consider holding a sale to inject cash into your company. It can help eliminate excess inventory.
• Stay aware of business growth, marketing plan, seasonality, and vendor prices: These factors can affect inventory management, so it’s essential to stay aware of any changes and adjust your inventory accordingly.
• Keep detailed records: Maintaining accurate records of inventory levels, sales, and other data can help you make informed decisions about inventory management and prevent problems down the road.

Negotiate Payment Terms

Negotiating payment terms can be crucial in managing your cash flow. When you negotiate payment terms, you are essentially setting the terms and conditions for when you receive payment from customers and pay suppliers. It includes fee due dates, payment methods, and any discounts or incentives that may apply.

The importance of negotiating payment terms lies in the fact that it can help you better manage your cash flow by ensuring that you have enough cash available to meet your business expenses. A good cash flow plan can help avoid problems with cash flow and lead to better financial stability.

To negotiate payment terms effectively, you need to clearly understand your business’s cash flow, including the timing of your expected income and expenses. It would help if you also were flexible and open to negotiation with suppliers and customers. Some tips to help you negotiate payment terms include:

• Offering early payment discounts for customers who pay ahead of schedule.
• Negotiating longer payment terms with suppliers in exchange for better prices or discounts.
• Encouraging customers to use electronic payment methods, such as credit cards or e-transfers, which can speed up the payment process.
• Regularly reviewing and adjusting payment terms to ensure they are aligned with your current cash flow needs.

By following these tips and being proactive in your approach to negotiating payment terms, you can improve your cash flow management and help ensure the long-term financial stability of your business.

Plan for Unexpected Expenses

Unexpected expenses can be a significant challenge when managing cash flow. Having a plan for dealing with these expenses is critical, whether it’s an emergency repair, a sudden downturn in business, or an unexpected opportunity for growth.

Planning for unforeseen expenses is important because it helps you maintain control over your cash flow, even when things don’t go as planned. 

To effectively plan for unforeseen expenses, it’s essential to reserve a portion of your income. It is best to keep the reserve in a separate account that is easily accessible, just in case.

It’s also a good idea to regularly review your expenses and adjust your reserves as necessary. You’ll be better prepared to weather unexpected events, keep control of your cash flow, and seize new opportunities if you have a plan in place.

Manage Debt

Managing debt is an essential aspect of operating cash flow for small businesses. It refers to reducing the debt owed and improving the ability to repay it. Debt is critical for managing cash flow as it helps minimize the cost of borrowing and reduces the financial burden of high-interest debt.

Factors that demonstrate the importance of managing debt for cash flow include:

• High-interest debt can be a major drain on cash flow, as a significant portion of revenue is used to repay debt rather than to fund other business operations. For example, if a small business has $100,000 in credit card debt with an interest rate of 20%, it would need to pay $20,000 in interest alone over a year.
• High debt levels can also make it more challenging to get additional financing, as lenders are often hesitant to lend to businesses with high debt levels. This can limit the ability of the company to grow and respond to changing market conditions.
• Interest payments on debt can reduce profitability and the business’s ability to reinvest in itself, as a portion of profits is used to repay debt rather than to fund other business operations.

To effectively manage debt, small businesses can follow the following strategies:

1. Minimize the use of credit: By reducing the amount of debt owed, businesses can reduce the cost of borrowing and improve their ability to repay debt. Customers can qualify before credit is extended, and deposits can be required.
2. Make early payments on loans: By paying off debt early, businesses can reduce the interest paid over time and improve their overall financial situation. However, it is important to check for prepayment penalties, as some financial institutions charge fees for early debt payments.
3. Refinance high-interest debt: For businesses with high-interest debt, refinancing can be a cost-effective way to reduce the cost of borrowing and improve their overall financial situation. For example, refinancing $100,000 in credit card debt with a 20% interest rate to a business line of credit with a 6% interest rate could save a business $14,000 per year in interest payments.
4. Use a business credit card with an interest-free grace period: For businesses struggling to get financing, a small business credit card can be a cost-effective way to support short-term financing needs. A credit card can also provide valuable insights into spending trends and help optimize cash flow.

Small firms must manage debt to lower borrowing costs and improve repayment. Small businesses can manage debt and improve finances by adopting the above measures.

Make Smart Investments

Seeking professional advice is important in managing cash flow as it provides valuable expertise, knowledge, and experience that can help you better understand and optimize your financial situation. With the proper guidance, you can make informed decisions that will positively impact your cash flow and overall financial health.

Cash flow is a complex and critical aspect of managing a business, and it’s easy to make mistakes without the proper guidance. By seeking professional advice, you can reduce the risk of financial errors and increase the chances of achieving your financial goals.

Types of professionals to consider for help with managing cash flow:

1. Accountants: They can provide valuable advice on tax planning and preparation, financial reporting, and other financial matters that impact your cash flow. They can also help you set up an accounting system that makes it easier to track your financial performance.
2. Financial Advisors: They specialize in helping individuals and businesses manage their finances. They can help you create a budget, develop a financial plan, and make informed investment decisions to improve your cash flow.
3. Business Consultants: They can provide expert advice on various topics, including operations, marketing, and finance. They can help you identify areas where you can improve your cash flow and provide guidance on achieving your financial goals.
4. Bankers: They can provide guidance on financing options, loan structures, and interest rates that can impact your cash flow. They can also help you understand your financial statements and advise on managing debt.

How to find and choose the right professional for your business:

1. Ask for referrals: Talk to other business owners and ask for recommendations for professionals who have helped them manage their cash flow.
2. Check credentials: Look for professionals who have certifications, such as Certified Public Accountants (CPAs), Chartered Financial Analysts (CFAs), or Certified Financial Planners (CFPs). These certifications indicate the professional has met specific standards of competence and education in their field.
3. Schedule consultations: Talk with several professionals and ask questions about their experience, approach, and qualifications. This will help determine which professional best fits your needs.
4. Consider fees: Evaluate the fees charged by each professional and compare them to your budget. You want to choose a professional who provides value for your money.

Takeaways

Managing cash flow is a critical aspect of running a successful business, especially as the corporate tax deadline approaches.

Having the right strategies in place can help businesses maintain control of their finances and ensure long-term financial stability. The key strategies for effectively managing cash flow include:

• Automating the billing and invoicing process.
• Following up on overdue payments.
• Regularly monitoring accounts receivable.
• Controlling inventory.
• Negotiating payment terms.
• Planning for unexpected expenses.
• Managing debt.
• Making smart investments.

You can ensure that your business has the financial stability it needs to succeed by taking the time to understand your cash flow needs and implementing these strategies. Having a good handle on cash flow management is critical to running a successful business, and taking the time to develop a plan and make wise investments can help you achieve your financial goals.

1. Assets: These are resources that a business owns or controls that have monetary value, including cash, property, inventory, equipment, etc. Assets can be classified into current assets that can be turned into cash within one year or fixed assets that provide value to the business for more than one year.
2. Liabilities: These are amounts a business owes, including loans, accounts payable, accrued expenses, and more.
3. Equity: This represents the value of a business, and it is measured by calculating the difference between assets and liabilities on the balance sheet. Equity also shows the worth of the owner’s interest/ownership of the business.
4. Income statement (Profit and loss or P&L): This is a financial statement that shows a company’s expenses, costs, and revenues during a specific period of time. The statement starts with revenues earned, and then expenses are deducted until we get either a profit or loss.
5. Balance Sheet (statement of financial position): This financial statement reports a company’s assets, liabilities, and equity at a specific moment. A balance sheet is based on the Assets = Liability + Equity accounting equation.

   Further Reading

   • Business owners set ambitious hiring goals despite challenging labor market
   • U.S. economy defies expectations in Q4, spending outpaces inflation
   • 2024 is a make-or-break year for small businesses, says Slack survey
6. Cash flow statement: This financial statement reports how much cash is coming in and out of the business over a specific time.
7. Accrual: This is the recognition of revenues or expenses before cash is exchanged. Revenues are recognized when earned, and expenses are recognized when incurred, not when cash is paid in a financial period.
8. Depreciation: This is the decrease in the value of a fixed asset over time due to wear and tear or obsolescence. Depreciation affects assets like machinery and equipment, but land is not subject to depreciation.
9. Amortization: This is the process of spreading the cost of an intangible asset over its useful life.
10. Audit: This is a review of a business’s financial records and practices by an independent auditor to ensure accuracy and compliance with accounting standards.
11. Generally Accepted Accounting Principles (GAAP): These are sets of accounting rules, standards, and principles that companies are required to follow when preparing and reporting financial data.
12. Bookkeeping: This is the process of recording financial transactions and maintaining the financial records of a business. Bookkeepers often do this.
13. Accounts receivable: This is the amount of money a company is owed by its customers from the sale of goods or services that have yet to be paid for. It is reported as a current asset on the balance sheet.
14. Accounts payable: This is the amount of money a company owes to its creditors or suppliers for goods or services received/provided but still needs to be paid for. It is reported as a current liability on the balance sheet.
15. Inventory: This refers to assets manufactured or purchased by the business for sale to its customers but are still located in the store.

    Did you know? ASBN America’s Small Business Network is now available to stream in over 70 million broadcasting households for users with Roku, Firestick, AppleTV, and mobile Android [download] and Apple IOS [download] devices.

16. Cost of goods sold: These are expenses that directly relate to the manufacturing of a product or the provision of a service, such as the cost of materials or direct labor in service provision. However, this doesn’t include other costs of running a business. These additional costs are called overhead and include rent and salaries, among other things.
17. Liquidity: This refers to how quickly an asset can be converted to cash. For example, stocks are more liquid than land because selling stocks and converting them to cash is easier.
18. Credit Purchase or Account Purchase: This term refers to buying something on credit that will be paid for in the future.
19. Trial Balance: A trial balance is a list of all accounts in the general ledger with their closing balances. It includes both debit and credit balances, and the two must equal each other.
20. Credit (CR): Credit is an accounting entry that decreases an asset or expense account or increases a liability, income, or equity account.
21. Debit (DR): Debit is an accounting entry that increases an asset or expense account or decreases a liability, income, or equity account.
22. Insolvency: Insolvency is a state where a business can no longer meet financial obligations with lenders when its debts become due. This means that the company cannot pay its debts and obligations as they fall due. This often leads to bankruptcy applications.
23. Limited Liability Company (LLC): A limited liability company is a separate legal entity or person from its owners. This means that the owners cannot be held responsible for the company’s debts and liabilities.
24. Return on Investment (ROI): ROI is a measure of a business’s financial performance relative to the amount of money invested in the business. ROI is expressed as a percentage, and it is calculated by dividing the net profit by the cost of investment.
25. Certified Public Accountant (CPA): A CPA is a professional designation for accountants who have passed the CPA exam and meet the mandated work experience and education requirements. These requirements vary in different states and countries.

There are many more accounting terms out there, but these are the most common ones. Knowing these terms can give you a solid foundation of accounting terminology and help you communicate effectively with accountants or handle your taxes and finances.

While artificial intelligence has proven to be a game-changing technology, many are concerned about the impact it could have on employment, especially for those who work in small business accounting. As more use cases are discovered for tools such as large language models and image generation, more workers are feeling a sense of unease about their job security.

On this episode of The Small Business Show, host Jim Fitzpatrick is joined by LJ Suzuki, small business expert, serial entrepreneur and the CEO of CFOshare. Suzuki is an expert in the field of small business accounting and has created success for both his clients and his own enterprises through quantitative research and data-driven solutions. Now, he joins the show to share his thoughts on artificial intelligence and the trends workers and small business owners should keep an eye on as the technology sees wider adoption.

Key Takeaways

1. Artificial intelligence poses special risks to accountants and CFOs due to its ability to compile and analyze data.

2. There are limits to what artificial intelligence can do for small business accounting. Suzuki notes that platforms such as ChatGPT not only struggle to make accurate mathematical calculations but are gradually becoming worse as time goes on.

3. Artificial intelligence is never going to be reliable for judgment or for ethics. Both are used heavily for financial management and small business accounting.

4. AI tools such as Intuit’s QuickBooks can reduce labor and increase productivity for CFOs and accountants.

5. Entrepreneurs should use artificial intelligence as a complementary tool but never as a supplemental crutch for their small business accounting needs.

The revisions to the nation’s tax code, originating from the Biden Administration’s Inflation Reduction Act (IRA), have expanded cost-cutting options for small businesses and made important benefits programs more accessible to employers. As part of its participation in the nation’s annual Small Business Week, the IRS compiled a list of updates for business owners to research before they file for 2023.

New tax breaks include:

1: the Clean Commercial Vehicle Credit, giving companies that purchase zero-emission vehicles for their work up to 30% back on their purchase
2: credits for using solar to power business operations, covering 30% of installation expenses, and
3: credits for the use of energy-efficient technology in buildings, which offer $5 per square foot.

Business owners can also posthumously claim The Employee Retention Credit (ERC), which ended after 2021, by submitting an amended federal payroll tax return. However, the IRS is urging companies to exercise caution when searching for tax assistance due to a high number of ERC-related scams.

The government has also changed the rules surrounding educational assistance programs. Companies can now pay up to $5,250 for their staff member’s student loans. Financial assistance over this amount can still be provided but will be taxed as wages. Although these benefits are only available for the next two years, ending December 2025, the IRS is asking business owners to consider opening a program, as they “can help employers attract and retain good workers.”

While the IRS has not revised any income tax rules, it will require more companies to submit a Form 1099-K. Starting this tax year, businesses that are paid over $600 from third-party settlement organizations or which receive income through payments apps like Venmo or Paypal will now need to submit these documents with their returns. The forms, typically used to cover business transactions, cover a variety of non-wage earnings, such as those from asset sales and self-employed work. Most can expect to receive these documents in January 2024.

While it is important for small business owners to stay updated on tax regulations and benefits, it is arguably even more critical to keep accurate financial records. To learn more about the government’s latest tax policies, visit the IRS’s small business week page here.

Although Small Business Month is drawing to a close, many financial institutions are stunned by the sudden boom in entrepreneurialism seen over the course of May. On this episode of The Small Business Show, host Jim Fitzpatrick is joined by Michele Grace, head of business banking for the southern region at JPMorgan Chase, to discuss what larger banks are doing to support the wave of new companies.

In her position at JPMorgan, Grace supports the small business community at all stages of growth, from startup to mid-size company. While large banks are vital to entrepreneurs as a source of funding and credit, big financial institutions owe much of their growth to the patronage of successful startups, who themselves are responsible for the overall health and tenacity of the American economy. Grace notes that Small Business Month is one of her favorite times of the year, as it allows her team to promote the products and services of these enterprises even more.

“I think small businesses went through a lot over these last few years,” explains Grace. From labor shortages, supply chain issues and recession worries, the community has struggled to navigate the economic turmoil caused by the COVID pandemic. In spite of these challenges, she notes that two-thirds of American small businesses are thriving. The strength of entrepreneurial commerce is so strong that the pace of business loan applications has risen to an astonishing rate. At JPMorgan Chase, these submissions have increased as much as 50% in Pheonix, Denver and Miami, remarks Grace. 

Studies have also found shown 72% of small business owners are optimistic about the economy’s future. This does not come as any surprise to Grace, who has personally seen how adaptive and strategic these individuals can be. “Small business owners are a resilient group to start with,” she states. “They’ve put their heart and soul into their businesses…they plan for good and they plan for bad.”

For small business owners looking to finance, Grace recommends they start by obtaining their full financial picture. “I would make sure you know your credit score, know what the future looks like for your business so that you can anticipate whatever needs you might have,” she advises. Banking institutions such as JPMorgan Chase have extensive options to accommodate entrepreneurs at any stage of development, and many are refocusing their investments into small business clients as the economy begins to regain its pre-COVID form. Although Small Business Month is ending, now could be the best time to turn your idea into a company. Consider checking out the other resources on ASBN for guidance and advice on your entrepreneurial journey.