Looking to get started with Wave?
Look no further! Our Wave Pro of the Year, James Krener, will be hosting regular free webinars to give you all of the information you need and more!
James grew his own business from the ground up with Wave and he is passionate about helping others do the same. With his accounting and bookkeeping background, you can get all of your complicated questions answered in a snap!
To register click here!
We are excited to announce that Wave has been named a top rated accounting solution in TrustRadius’ first Buyer's Guide to Accounting Software.
A big thank you goes out to all of our Wave Pros who have been so generous with their time in providing honest and detailed reviews on TrustRadius. This is an important part of how we shape the future of Wave’s products and help our small business owner customers find the tools that they need.
Take a look at what accounting professionals have to say about Wave and find out if it's a fit for you and your business.
You can also download a free copy of the Buyer's Guide to Accounting Software: click here
Having worked as a CPA in public practice for about two decades, I'm constantly shocked to see how many businesses rely on spreadsheets to manage their bookkeeping.
With the introduction of cloud technology, it's easier than it's ever been for a company to manage their finances easily. With Wave offering free accounting to small business owners, it's never been easier for them to stay on top of their finances.
When it comes to managing your business, you'll need the most useful information possible — which means information that's both relevant and reliable. For information to be relevant, it needs to be communicated to you on a timely basis. That's why it's so important not to let your finances slide over the summer!
Here are four reasons to stay on top of your finances this summer:
One more task on your to-do list is distracting. When you categorize your transactions on a regular basis, it's one less thing to worry about. This will free you up to focus your energy on running your business.
Wave imports all the transactions from your business bank account and business credit card account. Instead of logging into your bank account, you can see a more elaborate financial picture by signing into Wave.
Wave can produce a balance sheet for any date and can generate an income statement for any period you choose. If you manage your finances in Wave on a regular basis, this information will help you to make informed decisions more promptly.
It may seem counterintuitive, but when you keep your finances up to date, you'll spend less time managing them. That's because you may find yourself misclassifying some transactions when trying to quickly sort through a backlog of information, or even forgetting what certain transactions were, making classifying them difficult.
On the other hand, if you are monitoring your finances on a daily or even weekly basis, you'll not only save time, but also be better informed, allowing you to make the right decisions at the right time.
If your bookkeeping is messy, your accountant is going to have to spend more time sorting through your records for tax preparation. This extra time adds money to your bill.
However, if you've done a great job in keeping your records organized, not only will your fees be lower, but your CPA will also be able to add more value to your business by providing the right advice.
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.
Follow these 5 tips to preserve the financial health of your company:
S Corp vs LLC Illustration
For example, in 2012, your income was $200,000 and expenses were $100,000. This will result in a net income of $100,000. Under the LLC tax structure, you will pay tax on your taxable income (all business and personal income) and self-employment tax of 15.3% on your net income. The formula is Net income x .9235 x 15.3%. Your self employment tax will be $14,130. The only difference between an S Corp and an LLC is that you will not pay self-employment tax under the S Corp tax structure. Although there is no self-employment tax under the S Corp, you are still required to pay a reasonable salary (payroll taxes will be paid under a salary) if you are profitable. As a general rule, it is a good idea to pay a reasonable salary of 40% of your net income. In the scenario of the company with $100,000 in net income. The company would pay the owner a salary of $40,000. This will result in payroll taxes of $6,120. Typically you would pay approximately another $200 for state unemployment tax and $56 for federal unemployment tax. As a result the total tax paid by the S Corp would be $6,376.
The end result is a tax savings of $7,754.00
In conclusion, surround yourself with a good solid network of professional advisors, including a CPA, attorney and financial advisor. A CPA will provide several services related to tax and accounting, including tax prep, tax planning, bookkeeping, budgeting, entity restructuring and offering general business advice. An attorney will prepare and review all of your contracts and some attorneys specialize in setting up trusts for asset protection. A financial advisor will help you invest your money through short-term, mid-term investments as well as set you up with a retirement plan. Retirement plans are a good way to not only save for the future, but can provide you with significant tax savings for your business. These professional advisors often work together to accomplish the same goal in mind in protecting you and your business, discovering ways to reduce your tax liability and in preserving and growing your wealth.