Bad Spending Habits That Could Hurt Your Business

As a business owner, the challenge of how to increase profits is on your mind all the time. Improving the quality of your products and services or investing more in marketing are usually the first methods businesses think of to make more money. Yet, stopping bad spending habits is also a very effective way to grow your income. You can avoid losing money on unnecessary expenses and reallocate that cash to value-driving factors. 

This article will help identify the most common spending habits that harm your business. Hopefully, you can steer clear of them to build a healthy financial environment for your business. 

The 4 spending habits to avoid for your business  

Here are the most common spending mistakes that every business owner should be aware of:

Spending without a proper budget 

This mistake is commonly seen in newly established small businesses. They don’t think a budget is necessary when their companies only have a few financial activities. This is in fact incorrect. Not having a reasonable budget can lead to multiple painful consequences like overspending, a high chance of going into debt, a lack of savings, and less financial security. 

Additionally, when your business operates without a budget, it makes dealing with unexpected expenses, cash flow management, and meeting your financial goals way more challenging. In short, a budget allows you to allocate money more wisely, resulting in saving more money.  

If you don’t know how to make a budget yet, check out our 7-step guide to create a business budget.

Inconsistently and insufficiently recording spendings 

It’s disastrous when a business fails to record spending properly. This leads to being unable to keep good track of your expenses. You have no idea how much money was actually spent, making it impossible to determine your net profit. When you don’t have spending calculated accurately, you’re unable to evaluate your financial performance; hence no appropriate business strategies can be devised to create future growth. 

On top of that, poor spending records will guarantee that you have a miserable time when tax season comes. You’ll have no concrete data to file for tax deductions, meaning you’ll need to pay more than necessary to the IRS. That’s why you should always have your spending correctly recorded in your journals. If you don’t have enough time to do the recording, it’s best to outsource a freelancer or a professional bookkeeper.   

Another tip to avoid this bad spending habit is to keep your receipts. Every purchase goes together with a receipt. Keeping and organizing the receipts will help you better keep track of your spending and be ready to provide the IRS proof for tax deductions when required. 

Shoeboxed can help you do this with ease. Shoeboxed is a receipt scanner application that digitizes your receipts in just seconds. Your receipts will be safely stored in the cloud and easy to search whenever needed. Scanned documents from Shoeboxed are also legible and fully accepted by the IRS. 

Don’t lose money to Uncle Sam!  Get your receipts and bookkeeping records organized today! 

You might also be interested in: 7 Bookkeeping Practices Every Business Should Implement.

Not paying your purchase orders on time

Many businesses habitually pay their purchase orders as late as possible, which is fine as long as you pay them on time. This is because not paying on time can have serious consequences in the long run. The most obvious result is late payment penalties. 

While penalty costs may not be much for each purchase order if your payment is only a little late, those small penalty fees add up to hurt your profit. On top of that, late payments will severely harm your business reputation in the long run. Suppliers who may have heard about your history of late payments will be wary of doing business or offering you a good deal. 

Such problems won’t happen if you take extra care with your payment deadlines. Make sure you have the money/documents ready and processed at least a few days before the due date to have enough time to deal with any unexpected issues that arise. 

Using your personal credit card to pay for your business expenses 

Drawing a boundary between personal and professional spending can be confusing and difficult for self-employed individuals, small business owners, and freelancers. That’s why many of them end up using the same credit card for personal and corporate purposes for convenience. However, this habit may not be the best, and there are multiple reasons why. 

Using your personal credit card for business expenses will prevent you from building your business credit history. Without a good business credit history, you’ll find it challenging to apply for business loans, equipment leases, etc. because before lending you money, investors and lenders always check your business’s credit history. 

Additionally, a personal credit card has a lower credit limit than a business credit card. For that matter, your personal credit card will be of no use when you need to acquire something expensive for business purposes like machinery and equipment, office renovation, lease or rent, etc. 

Lastly, this spending habit makes your tax filing process painful. Trying to find business costs by going through your personal credit card accounts takes time, can lead to mistakes, and may even result in an audit. Keep these costs in one place – your company credit card – to make things easier for yourself.

You might also be interested in: Which Small Business Credit card is Best for Your Biz?

Want to read more about business? 

If you’re interested in entrepreneurship stories, business tips, or productivity tools, find more posts like this on the Shoeboxed Blog. Shoeboxed is a well-trusted tool to help businesses, freelancers, and DIY accountants store and organize their receipts. It quickly and efficiently digitizes your receipts and documents, then automatically extracts, categorizes, and human-verifies important data from your receipts. You can scan their receipts, manage expenses, store business cards, and track business mileage easily, helping you boost productivity and bring in more revenue. 

Go paperless with Shoeboxed for FREE today! 

5 Good Financial Habits to Build in 2022

If you’re looking for the key to financial success, then we have the answer: financial habits ? good financial habits to be exact. Financial habits are the values, standards, routine practices, and rules people rely on to handle their day-to-day financial lives. They help you manage your money properly and respond quickly to financial decisions or issues.

If you want to know how to manage your finances more wisely, read on to find five good financial habits to build in 2022. 

1. Review and update a financial plan regularly

The first thing to consider when building good financial habits is a financial plan. It’s a document that contains information on an individual’s present financial situation, long-term monetary goals, as well as strategies to achieve those goals.

Your financial plan helps you assess, plan, and improve your present and future financial situations. It provides a snapshot of your present finance and your goals to develop an action plan that you can use to navigate financial decisions with ease.

Creating a financial plan, though, isn’t enough. It’s fairly important, if not more important, to evaluate and update your plan on a regular basis. 

A regular check at least once a month is a must to make the most out of your plan and enhance the chances of reaching your goals. It’s also recommended to update any important information at least every three to six months. It’s also important to update your plan when a major life event occurs, such as buying a new house, getting married, or finding a new job.

2. Set financial goals 

The most crucial step toward financial success is to set goals. You will not be able to measure your progress unless you have goals. When forming goals, it’s recommended to follow the “S.M.A.R.T” goals strategy: specific, measurable, achievable, relevant, and time-bound.

Here are a few examples of SMART financial goals: 

  • Pay off $20,000 of debt in 6 months 
  • Create a $15,000 saving account this year
  • Buy a $100,000 property in 7 years 

As you can see, these examples closely follow SMART principles, with each goal being measurable and time-bound. As a result, you can easily keep track of your progress and be able to reach your goals within the expected time. The SMART principle is specifically useful for making a goal as it points out any relevant factors associated with your goals. For example, a SMART goal “Pay off $20,000 of debt in 6 months” is definitely more powerful than a vague goal such as “pay off debt soon.”

3. Create a budget

Making a budget is another good financial habit to build because it ensures you’ll be spending money efficiently and not spending more than you can afford. A personal budget lets you know how much money is going in and coming out of your account every month. Without it, you may be spending more than you make — leading to a paycheck-to-paycheck lifestyle. 

When making your budget, keep in mind to include the amount of money you bring in every month from your paycheck, the money you typically spend on “needs” such as living expenses and groceries, and the expenses you allocate for “wants” like eating out, travel and shopping.

If you’re not sure where to start, consider these budgeting tips to help you get started.

4. Utilize an expense tracking app

A budget lets you know how much money you’ll get and spend each month. An expense tracking app, on the other hand, allows you to compare if the amount of money you expected to use is lower, higher or equal to what you actually spend.

Expense tracking apps are becoming more popular and are likely to completely replace manual expense tracking. It’s because by using an expense tracking app, you can improve productivity and reduce paper waste. Moreover, with expense tracking apps, you can scan and store your receipts on the cloud, which is more secure than keeping them in the physical form.

If this sounds like just what you need, start using an expense tracking app now! Shoeboxed is an expense tracking app that lets you turn your receipts into data and then organize, make reports and analyze your current financial position at any time and anywhere. It’s an ideal tool for individuals and businesses. Check out Shoeboxed and start your free trial today!

5. Build an emergency fund

In contrast to fixed expenses that recur every month with an amount you can anticipate and set aside, there are also unexpected expenses. This type of expense sometimes is impossible to foresee. For example, a leaking roof, a broken dishwasher, or even a surgery for your pet are situations when you have to let your money come out of your pocket without planning for it.

That’s why you have to build an emergency fund. An emergency fund is a safety net that ensures you don’t have to delve into other cash set aside for everyday needs. If you don’t have one, chances are you’ll have to “touch” the money set aside for credit cards or other bills to cover the emergency expense. 

Experts recommend creating an emergency fund that covers three to six months of living expenses. This is especially true if you only have one source of income. 

If you haven’t started working towards this financial habit, start putting money aside for emergencies, even if it’s just a tiny amount from each paycheck. You’ll be grateful in the long run!

The bottom line

There are many good financial habits you can start adopting this year. Some can be easy — like reviewing and updating your financial plan regularly while others are more demanding. And if you’re new to working towards these habits, it can be a little time-consuming and laborious. But it’ll pay off in the long run. 

If you’re interested in entrepreneurship stories, business tips, or productivity tools, find more posts like this on the Shoeboxed Blog. Shoeboxed is a cloud-based software that helps individuals and businesses turn their massive paper receipts into digital data. With Shoeboxed, you can accomplish a variety of tasks: scan, store and organize receipts, manage expenses, store business cards and even track mileage for business travelers. It’s simple to install and easy to use. Try Shoeboxed today!

Your Complete Guide to Online Accounting Jobs

While the fallout of Covid-19 continues to affect large portions of the world’s economy, working remotely is becoming a new work trend. Online accounting jobs are no exception. Fresh-graduate accountants, those with a CPA certification, and people returning to work should still be able to find opportunities for remote and virtual accounting jobs. Instead of working in an actual office, virtual accountants work from home or another location outside of the office. 

However, finding those opportunities may take some additional digging to understand which professions and industries are best situated for remote workers. Check this article for the complete guide to online accounting jobs! 

What does a virtual accountant do?

Virtual accountants are in charge of a wide range of responsibilities, depending on their profession. Like the duties of their traditional counterparts, a remote accountant’s responsibilities may include:

  • Examining and verifying financial statements
  • Calculating, preparing, and filing tax returns and other tax-related work during tax season
  • Helping business owners reduce costs and/or improve profits to run more efficiently
  • Keeping the books and financial records up to date
  • Ensuring that accounting procedures adhere to best-practice standards
  • Overseeing payroll operations

Though an outside auditor is usually brought in to review the accountant’s work, for smaller companies an accountant may double as an auditor around tax season. Some other common duties of virtual accountants may include: 

  • Documenting individual expenditures
  • Reviewing financial statements for quality assurance
  • Verifying transaction compliance 
  • Identifying potential internal and external risks for fraud
  • Estimating and evaluating the efficiency of financial operations and decision-making
  • Making best-practice budget recommendations to increase the financial efficiency of their clients

With the given duties, it’s common for employers to seek experienced virtual accountants who are familiar with accounting software and cloud computing. Additionally, some software-based companies like Shopify, Stripe, and TaxJar require their candidates to have technical skills.

See more: What Are the Differences Between a Bookkeeper and an Accountant?

How much do online accounting jobs pay?

Since a virtual accountant is involved in several different tasks on any working day, the salary possibilities for online accounting jobs are wide-ranging and often based on the applicant’s accounting experience, not the job location. 

According to ZipRecruiter, a virtual accountant’s annual salary currently ranges between $44,000 to $63,000, with top earners making $86,500 annually across the US. The average annual salary for a Senior Regulatory Accountant that works from home is $98,833. 

Salaries in certain cities can be significantly higher. For example, in California, the annual salary for virtual accounting jobs varies from approximately $63,000 to $70,000.  

Again, the pay rate isn’t affected by the location of the job but is usually influenced by supply and demand, cost of living, job requirements, and whether the position is full-time or part-time.

Where can you find online accounting jobs?

Given that work situations have changed for so many people and businesses, virtual accounting jobs are available all around the country.

Cloud-based enterprises

Cloud-based companies were thriving before the pandemic hit, and they will likely continue to grow once the pandemic ends. These companies are finding innovative ways to reach new clients, expand their employee base, and transition office environments to remote work. Staff in these companies can work from anywhere across the country, as they serve clients through cloud-based applications, software, or online platforms. 

E-commerce companies

Many e-commerce companies have grown dramatically during the pandemic as buyers have turned to shop online while staying home. Online shopping has become a new global trend that helps consumers avoid going to a physical store and dealing with reduced capacities, empty shelves, or the general anxiety that can arise from catching Covid-19.

E-commerce companies often have a flexible working environment. This allows their accountants to work from anywhere and connect virtually through meeting software. 

Financial institutions

When most people think of a financial institution, they likely think of physical locations such as ATMs, bank tellers, and loan officers. Though most of these locations have stayed open for customers to handle their day-to-day tasks, most of the back-office work of financial institutions can be done remotely. This makes them an ideal option for accounting professionals looking for remote opportunities.

Some popular financial institutions hiring online accounting jobs are Citizens Bank, JPMorgan Chase, and USAA. These financial institutions often hire accountants for various roles, such as audit managers, home lending specialists, and loan underwriters.

Recruiting platforms or agencies

There are plenty of recruiting, hiring, and job-placement platforms and agencies which can help accountants find remote work that fits their job needs and skillsets. Some platforms even focus on specialized roles, such as accountants, financial experts, etc. This helps avoid a one-size-fits-all recruiting partner who sometimes feels like they’re looking for a sale and not the right fit.

Accounting Principals, Kforce, Randstad, ZipRecruiter, and Robert Half International are some notable recruiting platforms for remote jobs. 

Even if a recruiting agency can’t find the right online job opportunity for an accountant, it can still offer many job-seeking benefits. For instance, these agencies can help applicants become aware of available types of work, as well as help match their knowledge and experience level with the best-suited job. This allows the job seeker to make an informed decision about their next place of employment.

Startups

The term “startup” refers to a company’s current status rather than the industry in which it operates. However, startups are often ideal places to look for remote work, especially online accounting jobs, simply because most startups transition the traditional office setting for a more flexible working environment.

Startups also need financial professionals to help them better understand where they are and how stable their finance is. For example, if a startup seeks IPOs (Initial Public Offerings), they’ll need help ensuring their financials pass the audit. 

The bottom line

Many companies found out that they don’t need an actual office to continue running and growing their businesses. On the other hand, they still need accountants to manage the financial aspects of their business. So now is the time for job seekers to be aware that online accounting jobs are out there. You just need to find the right fit.

Shoeboxed is the complete receipt tracking and expense management solution for freelancers, virtual accountants, or small business owners who are looking for the most versatile accounting app. Shoeboxed helps users scan paper receipts into digital data, create comprehensive reports, and prepare for tax seasons. 

What’s more, Shoeboxed offers exceptional features that allow users to track mileage for business, store business cards, and there is even a receipt scanning service. All you need to do is send your paper receipts to Shoeboxed’s facilities in our postage-paid Magic Envelope™. We’ll then scan your receipts and turn them into organized and actionable digital data. Our human-data verification function will double-check to ensure that your receipts are human-verified, audit-ready, and accepted by both the Internal Revenue Service and the Canada Revenue Service. 
Sign up now and claim your limited offer!