Now that you’ve started down the path of entrepreneurship, there are a series of essential roles to fill, like CEO and marketing team positions. However, many people make the mistake of leaving the financial department last in the staffing queue.
Within the financial department, the most ignored position is that of Chief Financial Officer, also known as the CFO. The lack of a CFO is the reason many enterprises don’t make it.
At Gonzalez & Arrambide, we want to showcase the importance of hiring one of our vCFOs to help your business boom.
Duties of a vCFO
The CFO is responsible for managing the financial aspects of your business. Yet, a full-time, in-person, CFO can be costly. This is where hiring a virtual CFO (vCFO) could make a lot of sense for small businesses and startups.
A vCFO is a consultant or business that offers the services of a CFO, but does their job remotely, and usually on a part-time basis. The vCFO will focus on creating high-level financial strategies and putting them into action.
Our vCFOs at Gonzalez & Arrambide can provide financial services on a weekly, monthly, or quarterly basis. Our vCFOs are also ready to provide advice for a specific project. However, if you already retain the services of a full-time CFO, it would be redundant to get a vCFO.
Yet, if you have a new start-up, keep on reading to learn why a vCFO is the best option for you.
5 Reasons to Hire a vCFO
1. Customized Goal Setting
The first thing a quality vCFO will do is understand and lay out your business’ short and long-term goals. These goals will become the blueprint from which to build your custom strategy.
You get customized experience to your needs and goals. This cuts any expenses on services you don’t require.
2. Report Design and Problem Solving
The vCFO will design and set a standard report to help organize your finances. A vCFO will have seen many issues and situations in different companies, this allows them to organize your finances in the most effective way for you.
Their experience will help you get past your problems even before they happen. You’ll have the benefit of learning from others’ mistakes.
3. Technology Efficient
The vCFO will optimize any of your financial technology. This way they will maintain the financial organization within your business and cut expenses on software you don’t really need.
Virtual CFOs have experience with a wide range of different systems and products since they work remotely. They will be able to provide first-hand advice on different systems, and find one suitable for your needs.
4. Experience and Custom Balance Sheet Builds
Hiring a vCFO gives you a fresh pair of eyes that have seen many businesses before. A quality vCFO will analyze your balance sheet when they come on board. If needed, they will rework it.
By outsourcing your CFO services with us, you’re bringing instant experience. That experience could be vital, especially when it comes to a newly found business.
5. Streamline Financial Processes
Working with a vCFO, you’ll gain from their financial expertise and obtain help with developing and streamlining your financial operations. Since the vCFO will have worked with various clients across different industries, they have insight into operational improvements.
Find the Weslaco Financial Services You Need at Gonzalez & Arrambide
As your business grows, a vCFO can grow with you. Whether you only need the Gonzalez & Arrambide vCFO services one day a week, or part-time as you become more successful, we are here to support your business at every step.
When it comes to setting up and operating a startup, it’s hard to keep track of all the essential tax issues that may benefit and hurt your business.
There are quite a few tax benefits and problems to become familiar with. Today, your McAllen Virtual CFOs (VCFOs) at Gonzalez & Arrambide, Inc. will share five key startup tax issues that entrepreneurs need to be aware of.
Tax Issues Startup Owners Need to Know
One startup tax problem businesses face is sales tax, which is a tax applied to businesses and consumers from the sale or leasing of goods and services. How these goods and services are categorized and taxed varies from state to state and at times the city or county from where they’re sold and purchased.
The tax is calculated as a percentage of the sale price. The applicable tax rate will vary by region. You can find more information regarding sales tax categories by searching your specific state or city. With today’s modern business setting, sales tax can be especially tough for companies that retail their products through state lines, and/or with locations in several states.
The sales tax is expected to be collected by the seller from the person who bought it at the time of the sale. The seller will then transfer the funds to the state, city, or county when filing their business’ tax return.
Payroll tax is from the state and federal level, and is based on the compensation of employees. Generally speaking, payroll tax is calculated as a percentage of the salaries given to employees.
When payroll is being processed, these taxes are kept from employee pay, collected by the employer and covered on the side of the employee and the company. A federal tax deposit is often done within three days of processing payroll checks.
Companies that fail to pay payroll taxes can be charged with a federal offense by the IRS. The IRS can go after owners even if they’re limited liability companies.
If your startup is a C-corporation, you should know the advantage of Net Operating Losses, or NOLs.
In the timeframe where a company’s operating costs surpass revenues, an NOL has been formed. When a company has Net Operating Losses, it may be utilized to cancel out any taxable income in the years that follow.
A common error made by new businesses is forgetting to file a tax return within years where an NOL could be implemented and therefore used to nullify future cash flow.
- Employee/Contractor Predicaments
Most startups have a preference for hiring independent contractors instead of full-time employees to avoid having to pay for Social Security, Medicare, unemployment and health insurance. This is normal given the fact that budgets may not be where they need to be to maintain a full-time team.
Nevertheless, it is imperative to distinguish between the two. The IRS always keeps a close eye on companies that hire lots of independent contractors.
Whether an employee is actually an independent contractor depends on how much control the employer has over them. If the IRS were to claim it as a misfiling, it could bring problems for your company.
Take a look at the IRS publication 15-A for a helpful guide to distinguish whether you need W-2s for employees or 1099s for contractors.
- Documentation of Income and Costs
All businesses should have an organized record/bookkeeping system for each and every income and deductible expense. Quickbooks may be the most common method of electronic bookkeeping for startups and successfully keeps your books tidy.
The IRS suggests small businesses should keep the following records:
- Gross Receipts of Income: cash register tapes, deposit information, receipt books, invoices, and 1099 forms.
- Investments (items you purchase and resell to customers): canceled checks, cash register tape receipts, credit card receipts and statements, and invoices.
- Bills: Canceled checks, cash register tapes, account statements, credit card receipts and statements, invoices, and petty cash slips for smaller cash payments.
- Travel, Transport, Entertainment, and Gift Expenses: Refer to IRS publication 463.
- Assets (e.g. machinery and furniture): maintain all records, keep tabs on annual depreciation and gain or loss when sold; when and how you received asset, buy price, improvement costs, deductions taken for depreciation, deductions taken for casualty losses (fires or storm damage), the way the asset is used, when/how the asset is disposed of, selling price, and costs of sale.
- Employment taxes: maintain all employment records for four years minimum.
The Virtual CFOs at Gonzalez & Arrambide can be your guide to getting your business started financially.
At Gonzalez & Arrambide, our Virtual Chief Financial Officer (VCFO) services are intended to support startup businesses and help to keep them financially stable.
Educating yourself on these matters can save you and your startup money in the long run as you navigate yourself through these fiscally uncertain times.
If you’re a startup in need of guidance, let us help you break down every bit of tax information and come up with a financial plan tailored to your business needs.
There is a lot more to starting up a business than creating a product, drafting a business and marketing plan, and making a lot of revenue. The tax collector still needs to take their cut, and taxes–even outside of a business setting–can be complicated.
At Gonzalez & Arrambide, Inc. we want to help new entrepreneurs like you get up to speed on identifying what taxes may be applicable to their business by highlighting most of the ones that they may be responsible for paying down below.
Business Taxes in Texas
In contrast with other states, the low business taxes and lack of personal income in Texas gives the Lone Star State two advantages over many other states:
- Businesses keep more of the revenue they generate.
- Top talent individuals are attracted to the lack of personal income tax.
This is even better for small businesses. With the business tax rate already being low as is, it shrinks or decreases to zero for businesses whose revenues don’t exceed particular thresholds.
For instance, smaller businesses with less than $1.18 million in receipts pay $0 in business taxes–known as the zero-tax threshold or no-tax-due threshold. Bigger businesses that have over $1.18 million to $10 million in receipts only pay around 0.375 percent, and if you’re a sole proprietor or in a general partnership, you are exempt from the franchise tax.
For startups and entrepreneurs, this can make the few early years a little less stressful.
It is, however, important to keep in mind that Texas refers to its tax on businesses as a franchise tax, but the state doesn’t have a corporate income tax. To clarify, the difference between corporate income taxes and franchise taxes is that corporate income taxes apply to profit while franchise taxes are basically a mandatory fee for companies who have the privilege of doing business in a city or state–usually determined by the capital held by or the net worth of the business organization.
S and C Corporation Taxes
The S Corporation is popular among small businesses. Texas still requires S corporations to pay its franchise tax depending on the business’s annual revenue. This tax can only be as high as 1 percent, and individual shareholders in the company aren’t obligated to cover state taxes on their portions of the company’s income.
This advantage offers benefits to small S corporations whose annual revenues don’t pass the zero-tax threshold. In a sense, they work tax-free since tax isn’t established on the business itself or on the individuals who gain money from the business.
As companies grow from LLCS to S corporations and then ultimately a C corporation, so too will they be responsible to pay franchise taxes where they will follow the same zero-tax threshold rules mentioned above.
Limited Liability Company Taxes
LLC is the other common choice for small businesses. In most states, LLCs are entities that provide protection to business owners from some legal liabilities but give their incomes to those owners, who take care of the personal income tax instead of business income tax on their proceeds.
With S corporations, however, Texas goes against the national trend and charges the franchise tax to LLCs, which applies to every business type.
It is worth emphasizing that the income that goes to the owners as personal income isn’t imposed on state income tax in Texas.
Partnership and Sole Proprietorship Taxes
Most of Texas’ small businesses are partnerships that pay the franchise tax, whereas sole proprietorships don’t.
However, if a partnership is a business that is directly owned by individuals, meaning that the business income is distributed directly to them, partnerships and sole proprietorships are treated the same and aren’t charged the franchise tax.
The business owners are obligated to pay federal income tax on this income but not state tax, given that Texas doesn’t tax personal income.
Most partnerships in Texas, including LPs and LLPs, are assessed with the franchise tax.
The Virtual CFOs at Gonzalez & Arrambide are Available to Assist You
At Gonzalez & Arrambide, we offer our clients Virtual Chief Financial Officer (VCFO) services designed to help businesses manage their financial obligations efficiently without having the need of a full-time CFO, all at a reasonable rate that can save you a lot on startup costs.
Every dollar counts when it comes to running a business, and having an accurate report of your cash flow and how it is affected by taxes is crucial to staying afloat.
If you’re starting up a business, let us help you sort out all of the tax information and create a financial plan that is right for you.
As we live through another year with the COVID-19 pandemic, the deadline to pay your taxes was extended last month by the IRS to May 17th in an effort to take some economic pressure off Americans.
To make your life easier for this tax season’s extension, your local Weslaco CPAs at Gonzalez & Arrambide can ease the process of filing your taxes by the deadline. Today, we will break down what’s expected for this payment extension, and how we can help.
What to Expect from the Tax Extension
This extension goes for all filers, including individuals, businesses, trusts, estates and more. It applies regardless of how much you may owe, and payments will not include extra penalties or interest up until the extended date. This extension is automatic, so taxpayers don’t have to file any more forms to take advantage of it.
The extension could offer great benefits for taxpayers seeking to save for retirement through an IRA. That’s due to the typical April 15 income tax deadline that also happens to be the IRA contribution deadline. With this, the updated May 17 due date would set back the 2019 IRA contribution deadline.
The 2020 standard IRA contribution limit exceeds $6,000, or $7,000 if you are 50 or older. If you’ve already used your contribution for the 2020 tax year, you can put it towards the 2021 tax year, where the limit is also $6,000.
Note that this extension does not apply to 401(k) retirement savings accounts.
The federal government recommends that taxpayers file their taxes as soon as possible, especially those who are awaiting a tax refund. Earlier this year, U.S. Treasury Secretary Steve Mnuchin mentioned that he wanted people to be able to access their refunds as soon as possible. This flow of cash would lift some of the financial weight of the pandemic.
Gonzalez & Arrambide Can Help You This Tax Season
While you might be able to file your taxes by yourself without any assistance, you’ll never be aware of how much money you’re leaving on the table. An accountant will have the knowledge and expertise to make sure you’re not overpaying, and that you’re making accurate claims to all the deductions you deserve.
Handling taxes on top of the stress of the ongoing pandemic can feel overwhelming and difficult to navigate through. The most minor mistake in this financial circumstance can leave an impact on both you and your business. If doing taxes alone feels like too much pressure, our skilled CPAs can show you the process, step by step.
We can sort out the process of filing taxes and simplify the intricate process for a reasonable rate. You don’t have to file your taxes by yourself. Be proactive and consult with Gonzalez & Arrambide!
To learn more about how this tax extension affects you or your business, or for help filing your taxes, speak with our certified public accountants by scheduling a consultation with us today.
Tracking your organization’s sales pipeline metrics is important, but understanding how to optimize them is just as crucial to building more leads and continuing to move prospects through the sales funnel, which results in closing deals.
Monitoring these metrics lets you evaluate your team’s performance, and lends insight into specifics within the organization that need to be adjusted and optimized to ensure a healthy sales pipeline.
Tracking Qualified Leads
Good leads equate to closed deals. Evaluate your inbound and outbound leads to assess pool size and ensure your sales team has enough to prospect and close necessary deals to grow your business.
If your assessment results in a small number of qualified leads, this will require your immediate attention. Solutions may include investing in increased marketing strategies to bring in more leads, instructing your team on ways to maintain an updated contacts list, and using prospecting tools to receive real-time alerts that identify prospects’ role changes.
Services exist that analyze criteria, including location and engagement, that may shorten your list to laser focus on more promising prospects. Analyzing the quality of your leads will ensure time and energy are exerted into more fruitful efforts.
Conversion Rate of MQL to SQL
Are you able to identify how many of your marketing qualified leads become sales qualified leads? Increased drop-offs indicate sales and marketing teams may be working from different playbooks.
This signals an important measure to correct course by strategizing ways for sales and marketing teams to become better aligned. A simple solution may entail cross-department meetings involving both teams. Working in tandem to identify strategies and goals as a single entity can make it easier for teams to quickly become familiar with a shared goal.
Your Organization’s Win Rate
Simply stated, a win rate is a measure of the number of qualified leads that turn into customers. Measuring changes can be done by tracking this number over periods of time, such as from one quarter to another.
If you notice a drop in win rate, redirect focus to improve training, streamline sales processes, and use more reliable sales enablement tools. If in your evaluation you observe closing at a high rate, but total sales not aligning to where you anticipated they could be, consider looking at creating marketing solutions.
If you’re able to determine a marketing problem, rather than a sales problem, it could be time to consider a more tailored marketing approach to help bring in more leads.
Evaluating the Sales Cycle
A sales cycle identifies how long it takes a team to close a deal. Knowing the length of a sales cycle helps find ways to address deals that have become stagnant within your organization’s pipeline.
Focus on these deals that aren’t moving and try to assess what went wrong, and how to find solutions for having them progress quicker down the pipeline. Slow sales cycles may benefit from an automated process to follow up with your lead. A stagnant prospect may have resulted from something as simple as a missed opportunity to reach out.
Gonzalez & Arrambide Offers Sound Financial Insight For a Healthy Financial Outlook
Our team of trusted financial experts offers a range of services to help you move forward with confidence toward business and personal success. Contact us today for a free consultation and to learn more about how our experience and trusted full-service accounting firm can help you with sales performance and improved financial wins.