4 / 2015
Today’s small business owners are incredibly lucky to have easy-to-use accounting tools like Wave at their fingertips. Throughout the year Wave does so much of the work for you, like importing bank and credit card transactions, it makes it easier than ever to get your financials organized for tax deadlines.
For some, their Wave records may need some attention before the balance sheet and income statement reports are complete and ready for income tax purposes.
Don’t worry – you’re not alone. Here are four easy steps to getting your balance sheet and income statement reports in tip-top shape!
A big time saving benefit of using Wave is the ability to import your online banking, credit card and payment transaction data. Once the information for your business accounts are imported, all you need to ensure is that Wave matches your account statements and transactions are present in both places.
The best way to start this process is using the ‘reconciliation tool’ found on the transactions page.
Amongst the filters, choose a payment account to reconcile and the date filters for the period you want to reconcile and then the reconciliation tool begins to work.
Once done, simply check mark each transaction to verify and the reconciliation tool will add the transaction balances.
Now you can determine if the balance found on your account statement and Wave match.
It’s important to review your transactions to ensure they all pertain to your business. While doing this, you can also categorize each transaction. Two birds, one stone – everyone’s favourite!
To do this, simply click on the down arrow next to the transaction description. In the column under ‘category’, you can choose form your chart of accounts to categorize the transaction.
Handy Tip #1: Clean up double transactions, for the same transaction. When money comes out of one account i.e. chequing and is applied against another account i.e. credit card, you end up with two transactions in Wave. One will be an uncategorized income and the other will be an uncategorized expense.
To create a transfer and link these two transactions you’ll need to click on the small square box far left of each transaction. At the top of the transactions list click ‘transfer’, this will categorize the transaction as a transfer and will no longer be income or expenses transactions.
Handy Tip #2: Avoid doubling your revenue. If you use Invoice and Payments by Wave, the amount of sales revenue indicated on these invoices accumulates in sales revenue on the income statement report.
When this invoice income is deposited, it also appears as an uncategorized income transaction. To avoid double counting revenue, simply select the down arrow next to the transaction and choose ‘create invoice payment’. This will provide a menu of open invoices you can apply the payment towards.
Not all Wave users need to capture VATs for each transaction. Some countries have VATs for which the small business owner can recover the amount they spend in the year on VATs.
Handy Tip #3: It’s always a time saver to set up your VAT on the sales taxes page in Wave.
However, in Canada our VATs are GST or HST depending on the province. To capture the VAT on expenses simply click on the transaction to show details. A white box will appear, and then you can choose the VAT to apply to that transaction.
Once you have reconciled and categorized all your transactions, you can now confidentially use your small business financial reports.
Two key reports to use during tax season are the balance sheet and income statement.
On the balance sheet, double check the date is set to the last day of your fiscal accounting period and then review. The balances showing should match your account statements for the same time period. If they don’t match, take another look in your transactions for further reconciliation.
On the income statement, also double check the date is set for the first day to the last day of your accounting fiscal period. Now you can see if all the amounts listed are categorized and that no uncategorized income amounts or expenses remain. If some amounts and expenses remain uncategorized, revisit your transactions page to categorize.
By following these 4 easy steps, you’ll have accurate and reliable reports you can proudly use to help complete your income tax submission before the deadline. Or happily provide to your accountant for further value this tax season.
If you’re already kicking off 2015 in high gear, it’s easy to find a Wave Pro that can help you get your records up to speed and ready for income tax filing.
Wave Pros have helped tens of thousands of Wave users get set up properly for the current fiscal year providing assistance with your small business tax and financial planning, forecasting and goal setting.
4 / 2015
It may sound crazy but your current phone system (or lack thereof) may be costing your small business a lot of money. As a business owner, you have the latest technology when it comes to payment processing and handling accounting. So why do many small business owners choose to neglect their phone systems?
It’s simple. Traditional phone systems are difficult to setup and costly to maintain. But the bottom line is, you don’t need a phone system that is overly complex to be successful.
You single biggest phone system expense is not the monthly bill or even the phones themselves. It is the act of letting calls go to voicemail and missing potential sales.
Voicemail is literally the kiss of death for small business phone sales. If a caller has a pre-sales question or if they are looking to place an order with you, answering that call has to become your top priority.
Unless you are the only source for your product or service, 85% of callers that go to voicemail never leave a message. And do you know what they do next? That’s right! They're likely dialing your competitors until they find someone who is willing to speak with them.
Simply removing your voicemail message is not enough. Callers will still be disconnected after a set number of “rings”. You need to implement a proper hold queuing system. This gives you the ability to keep an unlimited number of callers on hold until you are ready to answer. Even if you are taking calls from a single cellular phone. Best of all, your callers will never receive a busy signal again.
The choice to go with a toll free or local number is 100% based on the type of business you own. If you run a local business, like a pizzeria, a toll free number will actually work against you. Local businesses thrive on being, well… local.
You’re much better suited to have a phone number with a proper local area code that tells your customers you are apart of the community. Because residents take pride in supporting their local businesses.
If you are an internet based company, national chain, or sell your products and services world-wide, a toll free number is a good option to consider. However, there are no studies that prove businesses that utilize toll free numbers instead of local numbers are more profitable.
Vanity numbers are usually a poor choice for any business and only lead to confusion for your callers. Here is an example of what a typical vanity number looks like: Example: 1-888-BUY-STUF
When you first look at this vanity number you may think, how can a customer forget us? Look at how memorable it is! Surprisingly you'd be wrong. Without looking at a keypad on a phone, tell me what number button corresponds with each letter.
Even though the letters are listed under each number on most keypads, vanity numbers are still 7x more likely to be misdialed then any other number. If a caller doesn’t realize they dialed the number incorrectly, they may just assume you’re no longer in business and call your competitor instead.
Unfortunately, most traditional phone systems require that you purchase new phones, routers, switches, and even upgrade your internet service provider. Not only is this equipment expensive, you will most likely be paying someone to install and maintain it for you.
It's always good to consider providers like Talkroute. We work with any phone and service provider. As long as your phone has active service, you have everything you need to start receiving business calls immediately.
Unless you are a 24 hour business, there are times when your business is open or closed. Your small business phone system needs to also follow this same schedule. There is no reason your cellular phone should be ringing with a business call at 9:00 PM at night when your business closes at 5:00PM. Not to mention, if your customers are calling and no one is answering, it sends the wrong message.
We solved this problem by allowing our users to establish time parameters for when your phones are available to receive calls. When your business is closed, Talkroute will play an after hours message that you designate and route the call accordingly. This allows you to have much needed time away from your phones and also lets your callers know that they are not being ignored.
Pre-Sales calls are the inquiries you receive by phone when a customer is either preparing to buy or ready to purchase from you. As a business, these calls are your top priority and a large percentage of these calls will convert to sales. One of the most difficult and aggravating issues you will face is being stuck on the phone dealing with a Post-Sales question, instead of answering a Pre-Sales call.
Post-Sale calls are the types of inquiries you received after the sale is complete. While ongoing customer support is paramount to the success of your business, these calls need to be delegating properly.
Instead of thinking about how you can answer every phone call, let’s talk about how you can prioritize your calls. We have clearly identified that your Pre-Sales calls are the priority for answering immediately. This is why we highly suggest implementing a call menu (IVR). A call menu is the fancy prompt you hear when dialing a phone number and you are greeted with “press #1 for… press #2 for…”
By correctly implementing a call menu into your phone system, you can start to delegate where your calls are being routed. For example:
“Press #1 for Sales related questions or to place an order”
“Press #2 to Check the status of an order”
“Press #3 for Help with an existing order”
If you have several employees that you rely on for sales support, you can route calls from option #1 to their phones. Now your staff members, that specialize in sales, will no longer be fielding support calls and missing sales inquiries.
The average small business misses 40% of sales related phone calls. These are calls that are not leaving you a voicemail. Instead, they are calling your competitors until they find someone willing to speak with them.
You don’t have to spend a fortune to have a proper phone system that will both increase profits and give you personal freedom as you grow your business.
Talkroute has helped tens of thousands of small business owners grow their business. Talkroute's service is 100% free to try for all Wave users. You can sign up for a trial here.
3 / 2015
Thanks to guest blogger Mike Michalowicz for sharing his advice with the Wave community. Mike is the entrepreneur behind three multi-million dollar companies and he is also the co-founder of Profit First Professionals, an organization that certifies accountants and bookkeepers in the Profit First method. If you're a Wave Pro, be sure to join this awesome group to help your small business clients put the Profit First method into practice. A big thanks to Mike for the work he does to educate and liberate business owners around the globe.
The Simple Method To Make Any Business More Profitable, Permanently
by Mike Michalowicz
The formula for profitability has been established for ages. Every business owner, CEO, freelancer and entrepreneur knows it. It is even required, in the US by Generally Accepted Accounting Principles (GAAP), which in turn is enforced by the SEC in the United States and the International Accounting Standards Board internationally.
Using GAAP or not, the fundamental profit formula is the same:
Sales – Expenses = Profit
There is just one problem… The formula doesn’t generate profits. There is a reason that 21 million out of 28 million small businesses in the US are surviving check to check. It’s not that 21 million people are smart enough to start and build a business, yet not smart enough to turn a profit – its that they are relying on a flawed formula. Sales – Expenses = Profit is a lie. The formula prohibits profit.
Logically, of course, the formula is sound. A business must first sell in order to generate inbound cash flow. Then the business deducts the expenses utilized to deliver its product or service and to run its operations. What remains is profit. Profit, effectively, is a leftover.
While the GAAP formula makes logical sense, it ignores the fact that it is managed by people. We are, first and foremost, emotional beings, prone to ignore (or even defy) logic.
Cyril Northcote Parkinson, in his famous bestseller Parkinson’s Law, proposed that “work expands so as to fill the time available for its completion.” His theory has been generalized to state “The demand upon a resource tends to expand to match the supply of the resource.”
Arguably, money is the ultimate resource. In GAAP’s “Sales – Expenses = Profit” formula, the business owner sees the cumulative deposits (resource) from sales and has a propensity to conclude that all the money is available for expenses (the demand expands to match the supply). The new equipment purchase is justified because the money is there. A new hire starts, because the money is there. Profit? It is an afterthought. Therefore, there rarely is any.
Now consider a new formula, where a business takes profit first:
Sales – Profit = Expenses
Mathematically the formula is identical to GAAP’s. But from the perspective of human behavior, the Profit First formula is radically different. In the Profit First formula a preset percentage of deposits generated through sales are first allocated to profit. The remainder is used to pay expenses.
In practice, as deposits from sales come in a predetermined percentage, for example 15%, is immediately transferred to a separate profit account. The remainder is available for the business leader to run business as usual. The business owner will see his available cash (which has had the profit already deducted) and make decisions accordingly. The new equipment purchase may be delayed, or a more cost effective alternative may be found. A new hire won’t be made because the money is not there, and perhaps the entrepreneur will conclude was unnecessary in the first place.
While I have co-founded, built and sold two multi-million dollar technology service firms, admittedly they were never truly profitable. Every increase in revenue seemed to be matched with an even greater increase in expenses. Every day I checked (and still do) my bank balances. As the balances would climb and fall, so would my confidence and my spending. I lavishly incurred new, unnecessary expenses when my bank account was fat. I panicked when it was thin.
This behavior, I have found, is not unique to me. In fact, of the hundreds of entrepreneurs and business owners I have asked, the vast majority also do “bank balance accounting.” It was with this realization that I started doing Profit First for myself five years ago. That is when I applied the “pay yourself first” principle to the operations of my businesses. I became my own guinea pig for Profit First.
Every quarter since, I have posted a profit. Every business I have invited to flip the GAAP formula, has also posted a profit or, unfortunately in some cases, decided to give up the system because it put “too much downward pressure on expenses.”
GAAP offers so much more in business insights than most entrepreneurs could imagine, but it does fall short on working with an entrepreneurs “bank balance” habit. I have become an advocate for the Profit First approach to cash management, because of the one thing it does do extremely well. It works with the natural habit of business owners. And, it functions as a “plug-in” to all the GAAP accounting systems and processes I have place. It doesn’t change GAAP, it simply sits on top.
Profit First has transformed my own businesses for the better (if you consider consistent profits, better). Admittedly, Profit First is not the panacea to all cash flow problems, but it surely makes profit a habit.Continue Reading
24 / 2015
Wave customer Wayne Ford was one of our lucky premium services winners in our February Invoice to Win contest!
After about ten years of producing celebrity oriented video content, Wayne found that he was no longer inspired by his subject matter. Working in an office just wasn't working for him any more, and he wanted to change things up!
That's when he decided to follow his passion, and make a change. A lover of architecture and interior design, Wayne launched Wayne Ford Films. Now, he creates cinematic videos, eye catching photos and modern websites for luxury real estate in the Los Angeles area.
Now, Wayne gets to set his own schedule — which means in addition to a career that inspires him, he also has time to spend on his passion projects.
In the busy Los Angeles real estate scene, time is a huge concern for real estate agents. That's why Wayne stands out from the competition by making it faster and easier for his customers to pay by credit card. His customers can pay right from his emailed invoices, and he can send those invoices from his iPhone while he's on location!
Wayne also loves how simple Wave's accounting features are — he connected his bank accounts, and now uses the reports in Wave to gain a clear picture of where his money is going, and what he needs to do to optimize his business.Continue Reading
10 / 2015
In January, our grand prize contest winner was Melissa of Blackbird Photography!
Now, you could win this February!
This February, our grand prize is $250 — which you'll have a chance to double to $500! You can put it towards your business, or even use the unexpected money to treat yourself.
That's it — you're entered. Good luck!Continue Reading