Author Archives: Administrator

5 Things to Know about the New Tax Laws as a Business Owner

What do you as a small business owner need to know regarding the tax changes that took effect with the passing of the Tax Cuts and Jobs Act? Well, lets break down the top 5 changes that you should be aware of.

Corporate tax rate has been lowered. If you have a C Corporation the tax rate has been set at a flat 21%. This does constitute an increase in the tax rate for those C Corporations that had income of $50,000 or less, for all the others it is a reduction from 25-35 percent.
Pass-Through Business Deduction. A Pass-Through business is one where the profits are passed-through to the business owner’s personal tax return, these include Sole-proprietorships, Partnerships, LLCs and S Corporations. This new deduction is a 20% deduction on qualified business income. But there are some factors that determine whether you can take this deduction. Those factors include:
1. Your income: How much you make will determine if you can take the full or only a portion of the deduction
2. The type of business you own: Service businesses such as attorneys, doctors, accountants may phase out of being able to take the deduction if they surpass the upper income levels. Non-Service business take the lesser of two calculations.
Entertainment expenses are no longer deductible. Taking clients to sporting events or golfing is no longer considered a deductible expense. The Client meal deductions are still being debated and it may depend on your tax preparer as to whether those make it onto your tax return. There has been no change to Office & Holiday parties, those are still deductible.
Business Interest deduction is now capped. You will only be allowed to deduct business interest up to 30 percent of the business’ adjusted taxable income. There are exceptions and the rules can be complicated, but it is a good benchmark to keep in mind. Especially if you were considering taking out a large loan to finance your business.
Net Operating Loss Deduction changed. Starting in 2018 if your business posts a Net Operating Loss you will only be able to use that loss to offset future taxes up to 80% in any given year. In the past, businesses could opt to use the loss to offset taxes from the previous two years. That is no longer an option.

This list is a very brief overview of a few of the changes that have taken place with the new tax laws. If you see something here that you think will affect your business, there is still time to adjust your tax strategy for this year. It is important to consult with your tax and financial advisors to make sure you are taking advantage of all the changes and not placing yourself and your business at a disadvantage come tax time.

Accounting & Bookkeeping Services in NH

If you need support with your accounting and bookkeeping the experts at Fournier Accounting and Bookkeeping Services are here to help. We serve small businesses throughout New Hampshire and the U.S. Contact us today!

5 Tips to Keep Your Side Hustle from Turning into a Major Headache!

It seems as if suddenly everyone has a side hustle. Your sister is selling essential oils, your brother-in-law is flipping houses, your cousin has a blog, and your kid’s soccer coach is on YouTube. Side hustles can be an excellent way to supplement income, to build a business without quitting your day job, or just to fulfill a dream. Many are doing it very successfully, but some are finding themselves in hot water because they didn’t realize that the government sees their “dabbling” as a business. So, let’s look at how to keep your side hustle from becoming a major headache.

Acknowledge that you are RUNNING A BUSINESS. Whether you are selling products at home parties, selling on Etsy, or posting affiliate links on your blog, you are running a business. Make sure you have met all your state requirements for your type of side business. Most states have a website where you can go to find out what you need to do–from registering your business name to getting a resale license, or registering to collect and remit sales taxes.
Separate your funds. Keep your side hustle funds separate from your personal funds. There are plenty of banks that offer free checking. Make sure you have separate accounts and use your side hustle account for side hustle business. If you have to pay for expenses and don’t have enough in the business account, “loan” yourself money by transferring funds from your personal account into the business account.
Keep Track! Not keeping track of what you make and spend on your side hustle is the number one way to get yourself into trouble! Your tracking system doesn’t have to be a full-fledged, feature-heavy accounting system. Just be sure to record your income and expenses. It can be as simple as an Excel Spreadsheet in the beginning, or a program like QuickBooks Self Employed or FreshBooks.
Set aside a percentage for taxes. Yes, you need to report your side hustle earnings and pay taxes on those earnings. Setting aside 25-30% of what you make is a good starting point. You will most likely have expenses to deduct, so this should be more than enough. However, as everyone’s situation is different, consulting your tax preparer for a more accurate estimate is highly recommended.
Talk to the professionals. If you have any questions about what you need to do to make sure your side hustle is on the up and up, reach out to the various professionals who can help. Attorneys, tax preparers and professional bookkeepers have a wealth of knowledge and can offer advice and guidance to keep you and your side hustle out of trouble. Their fees are well worth avoiding penalties, interest, and a host of other headaches.

Accounting & Bookkeeping Services in NH

If you need support with your side hustle’s accounting and bookkeeping, or are ready to take the leap from side hustle to full time entrepreneur, the experts at Fournier Accounting and Bookkeeping Services are here to help. We serve small businesses throughout New Hampshire and the U.S. Contact us today!

Get To Know Your Financial Reports: The Profit & Loss Statement

The Profit & Loss or Income Statement is everyone’s favorite financial report. But do you really understand what is and isn’t included in it? And how should it be combined with the Balance Sheet for a clearer overall picture of where your business is financially?

The first thing to remember about the Profit & Loss Statement is that is shows the monies in and out of your business for a specific period of time, usually a month, quarter, or the entire fiscal year.

Understanding Your Profit & Loss Statement

To better understand your Profit & Loss statement, let’s break it down by sections:

1. Income

This is your sales or revenue for a specific period of time. But it can get a little tricky because there are two different ways to calculate your Profit & Loss, depending on the type of business you run:

Cash Basis: Tracks the actual cash you received (and paid out) for a certain time frame.

Accrual Basis: Tracks income and expenses as they are invoiced & billed. You may not have received the funds or paid the expenses, but you have “accrued” them.

The decision on which form of accounting you will use is an important one. Your tax preparer and/or accountant will help you make the decision that is right for your business.

2. Cost of Goods

These are the costs directly linked to providing your product or service. Even if you are a service-based business, you may incur what is generally known as Cost of Goods Sold. These can include material costs, labor costs, inventory purchases, etc.

Income less Cost of Goods will give you what is called a Gross Profit.
This is what your business earned after the expense of delivering your product or service.

You can also calculate your Gross Margin from here: Gross Profit /Revenue x 100

For Example:
Gross Profit = $145,000 and Total Income = $975,000
$145/$975 = .15×100 = 15%

This company makes $0.15 gross profit for every $1.00 of revenue.

3. Expenses

Sometimes referred to as Operating Expenses, General Expenses, or Administrative Expenses. Expenses include all the other costs of doing business, such as advertising, rent or leases, office expenses, administrative payroll, etc.

Gross Profit less Expenses will give you your Net Profit (you brought in more than you spent) or Net Loss (you spent more than you brought in). But remember, it is only for a specific period of time.

Profit & Loss Statement versus Balance Sheet

It’s important to note that there are some monies in and/or out that are reflected in your Balance Sheet, not your Profit & Loss Statement. For example, any funds deposited from a Line of Credit, Loan, or Investment from Owner will not be included in the Income section as these are not income. These will appear on your Balance Sheet as either Liabilities or Equity. On the Expense side, any payments to a loan balance, including credit cards, or to an owner/investor not through payroll will not be included as they are repayments or distributions from the profit, not an expense. You will also find these on the Balance Sheet as either a reduction in your liability balance or in your equity accounts.

Accounting & Bookkeeping Services in NH

To get a clear financial picture of your business you need to look at both your Profit & Loss Statement AND your Balance Sheet. Otherwise you are only seeing half the picture. If you need support with your company’s accounting and bookkeeping, the experts at Fournier Accounting and Bookkeeping Services are here to help. We serve small businesses throughout New Hampshire and the U.S. Contact us today!

Get To Know Your Financial Reports: The Balance Sheet

The balance sheet is a financial report that’s loaded with information, yet often overlooked by business owners who want to know How much money did I make this year? Month? or Quarter? While the income statement often gets the most attention, the balance sheet is where you need to look to truly understand where your business is financially.

So, let’s get to know your balance sheet, which shows where things stand on a specific date. It’s made up of three distinct sections:

1. Assets

This is what your business owns. I often describe these as anything that can be liquidated to cash. Examples of assets include:

cash in the bank
properties
vehicles
equipment
inventory not yet sold
any monies owed to you by your clients or customer

These can be broken up into smaller categories, such as cash/bank, accounts receivable, current assets, and fixed assets.

2. Liabilities

These are the monies your business owes to others or what needs to be paid off if you liquidated everything from the asset section. Examples of liabilities include:

business loans
outstanding bills
credit card balances
vehicle or equipment loans

These are further classified as current liabilities and long-term liabilities.

Current Liabilities are things that typically will be paid off within a year, including credit cards balances, outstanding bills and balances to vendors also called accounts payable. Other Current Liabilities include short term loans, payroll and sales taxes collected but not yet remitted, etc.

Long-term Liabilities are things that typically take longer than a year to pay off, including vehicle loans, mortgages, small business loans, etc.

3. Equity

This is what would be left if you liquidated all your assets and paid off all your liabilities. You’ve probably done this in your personal life with a financial planner. Take the money you have, less your bills, and you get your “net worth.”

Often, sole proprietors will ask me where the money they paid themselves is. Unless they are paid through payroll, this is the section where those distributions appear. As a sole proprietor, they are listed under owner’s draws. In a partnership, you’d see partner distribution. Any net income or loss on your profit & loss report also flows into the balance sheet in this section.

The goal is to have your assets exceed your liabilities. This will give you a positive equity position. Another metric that can easily be figured out and tracked through the balance sheet is your business’ current ratio. Take your total current assets and divide them by your total current liabilities. This will show you if your business is in a financial position to pay the debts due the next year. You’re looking for a 1:1 ratio or better.

Understanding the Financial Health of Your Business

Becoming familiar with your balance sheet report as well as your profit & loss/income statement, will allow you to keep a watchful eye on the financial health of your business and be confident in the financial decisions you make to move forward.

Bookkeeping and Accounting Services in NH

Fournier Accounting & Bookkeeping Services provides personalized bookkeeping, payroll, and accounting services to a range of clients in New Hampshire and throughout the U.S. Contact us today to learn how we can assist you in your path to business success.

Choosing the Right Tax Preparer for Your Business

It’s that time of year again and many business owners are looking to their tax preparer to help them file their tax return, reduce their tax liability as much as possible, and offer advice and guidance on making more money and paying less taxes in the upcoming year. That is a lot to ask of one service provider, so you want to make sure you are working with the right one. Here are some tips on how to choose the right tax preparer for your business.

Remember, no matter who prepares your taxes, you are responsible for all information on your signed return. Working with the wrong tax preparer can cost you a lot of money in overpaid taxes or fees; and in really bad situations—large penalties and fees for under reporting or providing incorrect information on your return.

Tips on How to Choose the Right Tax Preparer for Your Business:

Don’t wait until April to find a preparer. If you don’t have a preparer already or are unhappy with the one you’ve used in the past, you need to start looking now. Well, a few months ago would have been better, but we can’t go back.
Check their qualifications. The IRS has a tool to help taxpayers find qualified preparers. For a searchable directory of registered preparers, visit The IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications.
Check their history. Search the Better Business Bureau for any complaints lodged. Search your State Board of Accountancy to see the status of their license. And for Enrolled Agents, you can email the IRS for status verification.
Ask how they charge. Make sure you choose a tax preparer whose charges are based on a fee structure, not a percentage of your refund.
Confirm they can E-File your Return. This means they are set up with professional tax preparation software.
Make sure they will be available after April 17. Ask if they will be around to assist you after tax day with future planning, any tax consequence questions that may arise, or helping you if the IRS has questions later.
Get a Referral. One of the best ways to ensure you are working with a qualified tax preparer who has your best interests in mind, is to get a referral from a trusted source. Your bookkeeper should be able to refer you to a tax preparer who will be a good fit for you and your company. If you do not have a bookkeeper, then another business associate should be able to provide a referral as well.

Finding the right tax preparer can take some time. Remember, it’s always better to file an extension and get the right preparer than to risk using the wrong one.

Once you’ve started working with a preparer, here are some things to think about:

Provide records and receipts. Your preparer should ask to see your records and receipts. They should ask questions throughout the process.
DO NOT Sign a Blank Return. Ever.
Review your return before signing. Check the numbers, ask questions if something doesn’t look or feel right. It’s your money, so you need to make sure the return makes sense before signing it. Remember you are responsible for the information contained in the return.
Watch the preparer sign and include their PTIN. All preparers are required to have a Preparer Tax Identification Number. If the preparer refuses to sign and include their PTIN, don’t sign the return.
Report Abusive Tax Preparers to IRS. The vast majority of preparers are honest and want only what is best for their clients. But as is true with every profession, there are occasionally bad apples that pop up. If you encounter an abusive preparer use form 14157 to file a complaint. If you suspect the preparer has committed fraud, use form 14157-A

Bookkeeping Services in NH

Tax season is just around the corner and Fournier Accounting and Bookkeeping Services is here to help you get your financials in order. We help small business owners, including many solo law practitioners and independent contractors, get ready to file their tax returns. If you need help with your bookkeeping or payroll, or need help selecting the right tax preparer for your business, contact us today!

Preparing your Business for Bad Winter Weather

Winter is upon us, and here in New England, that means snow and ice are just around the corner. Severe snow and ice storms, which can cut power for days, can wreak havoc on your business. In this month’s blog, we share tips on preparing your business for bad winter weather.

Plan Ahead

With a little advanced planning, you will ensure you stay in business, even during the worst winter weather.

To get started, take a little time to imagine a major snowstorm that completely shuts down your area. One day only? You and your business can probably just roll with it. But what if it’s for five days? 10 days? More? Think about what you and your employees will need if you have to work remotely and how you can mitigate the down time.

Consider the Cloud

You may want to consider the cloud for your document storage. If you move your documents to the cloud, you will have access to them anywhere, at anytime. Plus they are safe from whatever storm weather hits your region. There are dozens of cloud storage options available today. Some of the best know options include Microsoft OneDrive, Google Docs, and Dropbox. If you are planning to move sensitive or confidential information to the cloud, be sure to research your options carefully.

Back it up, Baby

Always have a backup of your important data. If you have moved your document storage to the cloud and are using QuickBooks Online or another cloud accounting platform, this may not be as critical. However, using a secondary backup can’t hurt.

Download Bookkeeping Data and Critical Documents

Consider downloading your important bookkeeping data, including your General Ledger, Trial Balance, and a copy of your registers, to an excel worksheet. Store it on a portable USB drive kept at a secondary location (e.g. home fire box, safety deposit box, or metal file cabinet). Doing this on a quarterly basis can go a long way in giving you peace of mind when disaster strikes. Take this a step further and add any documents that would take valuable time to recreate, including email contacts and important emails you may need to access in the future. This ensures that if you need to completely rebuild, your data is still accessible.

Prepare for the Unexpected

Remember, not all major storms come with a warning. By having a plan in place, and taking the appropriate steps outlined in your plan, you and your employees will have what you need to weather the storm.

What about our friends in the southern half of the country? No snow or ice, so no need to worry, right? Wrong! All businesses are faced with an occasional “storm” of some kind. Servers crash, laptops die, data is hacked or invaded by viruses, and injury and illness keep employees out of the office. By following the tips outlined in this blog, your business will be able to manage whatever kind of “storm” comes your way.

Accounting and Bookkeeping Services in NH and MA

Fournier Accounting and Bookkeeping Services helps small businesses by providing real time, 24/7 access to financial information from anywhere, on any device. Contact us today to learn how we can help you save time managing your bookkeeping and accounting so you can spend more time focusing on your business and the needs of your customers.

Three Major Time Wasters for Business Owners

Time Management = Cash Management

We’ve all heard the saying “Time is Money.” This is especially true when it comes to running your own business. As the main income producer in your business, it is essential that you work efficiently and effectively. Spending too much time on non-income producing tasks can have a negative effect on your bottom line. By managing your time wisely, you are in effect managing your cash. In this month’s blog, we share three major time wasters for business owners and strategies for avoiding them.

Time Waster #1: Reading emails as soon as they hit your inbox.

When you see an email notification on your screen, are you compelled to stop whatever you’re doing to read it? If you read every email as soon as it comes in, you’re interrupting your workflow and momentum. Ask yourself, how often are those emails truly important? How many emails do you receive that MUST be responded to the moment you receive them? Chances are, they can wait.

Solution: Schedule set times to read and respond to email.

Many time management experts suggest scheduling set times every day to read and respond to your email. Most of those I’ve seen suggest checking email first thing in the morning, right before or after your lunch break, and just before leaving work for the evening.

Help for Chronic Email Readers

If you’re a chronic email reader, it can be extremely difficult to restrict yourself to checking it only three times a day, especially if your tasks and calendar are also linked to your email. If this sounds like you, consider using a strategy that one of my clients has implemented with great success:

Every one to two hours, schedule 10 minutes to scan your emails and a longer period twice a day to answer those that require a response.
During the 10 minute breaks, sort your emails and answer those that need an immediate response.
Create three sub-folders to your inbox: Read Today, Read Later, and Respond Today.
During the time you’ve scheduled to handle emails, read those in the Read Today and Respond Today folders, taking the necessary actions.
If you have time, start on the Read Later folder.
Make it your goal to empty the Read Today and Respond Today folders by the end of your work day.

Time Waster #2: Getting Sucked into Social Media.

When I talk to business owners, it seems that social media–Facebook, LinkedIn, YouTube, Twitter, or any of the other platforms–is a huge area where time is wasted. How many times have you logged in to post an update on your business page, research an idea, or just “check in,” only to realize an hour or two had flown by without your accomplishing anything?

Solution: Use a Social Media Scheduler.

Social Media is here to stay and can be a very effective tool in staying current and in front of your clients, customers, and referral partners. But as with handling email, you need a schedule and to hold yourself to a time block. If you post often during the day or week, using a social media scheduler like Hootsuite or Buffer can help you avoid getting sucked in when you really don’t have the time. Writing and scheduling your posts at the beginning of the day or week and then scheduling specific blocks of time to check in and respond to any comments will allow you to stay on track and focus on the projects at hand, while still being connected to your followers.

Time Waster #3: Doing it All Yourself.

When we start out as business owners, it’s easy to feel like we have to do it all ourselves. There isn’t enough work or money to justify outsourcing. But once you begin to grow your clients and customers, trying to do everything by yourself can take time away from managing the critical aspects of your business and serving your customers.

Solution: Outsource non-income producing tasks.

Outsource your non-incoming producing tasks like bookkeeping to professional service providers. This will free up your time to handle more clients and more customers and develop new products and income streams. Your job as a business owner/entrepreneur is to make sure your business is running efficiently and effectively. Quite often, when business owners compare the costs of an outsourced professional to the gain in income-producing time, they find that what they will spend is less and sometimes far less than the potential income they will realize.

Accounting and Bookkeeping Services in NH and MA

The professionals at Fournier Accounting and Bookkeeping Services can take care of your accounting or bookkeeping needs so you can focus on running your business and serving your clients. Contact us today!

3 Bookkeeping Tasks You Should Automate

Staying on top of your bookkeeping and knowing where your finances stand is one of the keys to running a successful, thriving business. Did you know there are some bookkeeping tasks that can be set to autopilot so you can spend less time worrying about your books and more time running your business? Here are 3 bookkeeping tasks you should automate:

Invoicing – If you issue invoices to the same customer for the same amount on a regular basis (i.e. monthly or quarterly), let your accounting software do this for you. All major accounting software programs allow users to create invoices that can be automatically sent via email on scheduled intervals. Be aware, with QuickBooks Desktop, you need to keep your software up to date, within the three-year active period for each version. Once a Desktop year is “sunset,” this functionality is no longer available.
Recurring Customer Payments – Do your customers pay you the same amount of money every month? Every quarter? Why not set them up on a recurring payment system? That way you know exactly when the money will be in your account and your customers know exactly when their funds will be deducted from their accounts. QuickBooks Payments, PayPal, Square, and many other merchant services companies have this option available. While there is a fee associated with this payment option, you will never have to wonder when a check will be received or if it will clear once deposited.
Paying your Vendors – By automating your payables, regularly recurring bills can be paid directly from your account on pre-set intervals. This will free up time during your work week. In addition, you’ll never need to worry about missing a payment or incurring late fees or additional interest. Note that once you’ve set up your vendor payments, you’ll also need to set up these recurring charges in your accounting software so you have an accurate reflection of what has been paid.

Outsourcing Your Bookkeeping

If you want to take things a step further, consider outsourcing your bookkeeping. Doing so will give you access to an experienced professional for advice, insight, and knowledge; and alleviate the feeling that you’re “going it alone.” Your bookkeeper will be able to answer your questions, explain your financial reports, and assist with managing and improving your cash flow. And most importantly, outsourcing your business’s bookkeeping operations frees up valuable time that can be put into bettering your company.

Accounting and Bookkeeping Services in NH and MA

At Fournier Accounting and Bookkeeping Services, we give you real time, 24/7 access to financial information from anywhere, on any device, WITHOUT your spending the time updating. Contact us today to learn how we can help you save time managing your bookkeeping and accounting so you can spend more time focusing on your business and the needs of your customers.

4 Things to do This Summer to Make Tax Time Easier

Summer is not the time when most business owners are thinking about taxes. We tend to be more focused on vacations, barbecues, beach trips, employee outings, and all the amazing things that we love about summer. However, if you are willing to take a little time, there are a few things you can do now to set yourself and your business up for an easier year-end and tax season.

1. Review Your VENDORS:

Take some time to review your vendors by answering these questions:

Have you started working with any new contractors this year?
Do you have their insurance information on file?
Did they remit a Form W9 so you have the information needed to send a 1099-MISC at the end of the year?
Could you pay them via a credit card or debit card instead of a check so you don’t have to send a 1099-MISC?
Does the money you’re paying them still make sense?

2. Review your INCOME:

Take a look at what you’ve earned over the past six or seven months:

Are you on track with your goals?
Have you had some setbacks, making it unlikely you’ll reach these goals?
Have you exceeded your estimated income for this year?

Either way, now is a good time to talk to your accountant and bookkeeper to make adjustments to the estimated tax payment for the last half of the year.

If you found you are not having as good of a year as hoped, you may want to reduce your payments to allow for a little extra cash in the coffers, rather than “lending” it to the IRS interest-free until you submit for a refund. Your tax accountant and/or bookkeeper can help you analyze these numbers to see if these adjustments make sense.

If you are having a better year than expected, first CONGRATULATIONS! That is excellent. And second, you will want to increase your estimated tax payments to avoid an unpleasant IRS bill in April. In this case, new equipment, personnel or capital improvements may also make tax sense.

3. Review your BOOKKEEPING PROCESSES:

While reviewing your bookkeeping processes, answer these questions:

Are your books up-to-date?
Do you feel confident in the numbers you’re getting?

If you answered “no” to either of these questions, now is the perfect time to make changes to the process.

4. Ensure your BOOKS are accurate and up-to-date:

To succeed in business, you need access to accurate, timely financial information. Reviewing your bookkeeping processes is helpful in identifying any road blocks to keeping your books accurate and up-to-date. Here are a few common road blocks:

Irregular posting and reconciliation of transactions. Has your business grown to a point where you can no longer fit this process into your day? Consider hiring an outsourced bookkeeper.
Your bookkeeper isn’t proficient in your software. When it comes to working more efficiently and accurately, a little QuickBooks training can make a huge difference! Contact Fournier Accounting and Bookkeeping Services regarding its QuickBooks training and consultation services.

Make Tax Time Easier

Tax time is always going to be stressful and there is no getting around that. But by investing a little time this summer, you can take some important steps to at least reduce unnecessary stress at tax time.

Accounting and Bookkeeping Services in NH

Getting caught up, finding and fixing any accounting mistakes, and setting up processes to stay up-to-date will help you make effective decisions about your business and where it is going for the next half of the year. Fournier Accounting and Business Services can help you improve your systems so that you succeed in your business. Contact us today for a free consultation.

Are You Enjoying a Hobby or Running a Business?

Many successful businesses began as a hobby and grew to be a business. But some businesses also become hobbies. Why? Because their owners stop treating them like businesses. Are you enjoying a hobby or running a business?

How a Hobby Becomes a Business

First, let’s take a look at how a hobby becomes a business. An example of this is a photographer I know. She started out just taking pictures. Then a friend asked her to take engagement shots for their “save the date” cards. More and more requests came in, so she started charging for her photo shoots. Then she decided to open a studio, set up a website, advertise, and register herself as a business in her state. Now she is a professional photographer, running her own business. But she started out just taking pictures for fun.

Hobby or a Business: How the IRS Decides

The IRS determines if you are a business or a hobby by asking nine questions, a few of which include:

Do you carry out your activity in a business-like manner (and keep accurate books and records)?
Do you depend on your income from this activity for your livelihood?
Have you made a profit in the past and can you expect to make a profit in the future?

No one question is the deciding factor, but it basically boils down to this: Are you operating in a business-like fashion with the intent of making a profit?

Is Your Business in Danger of Becoming a Hobby?

Most people know when their hobbies have become a business. They are working at them, improving their systems, spending time and money on marketing, and seeing sales increase. The more difficult thing to recognize is when your business is in danger of becoming a hobby.

This happens most often with businesses that are run by “solopreneurs” out of their home offices. To see if your business is sliding towards being a hobby, ask yourself these questions:

Are your business and personal funds separated?

Maybe they were at one time, but business slowed down and you stopped being diligent because money was really tight. Keeping business and personal funds separate is a key component of running a business. Business income and expenses should be paid from business accounts, and personal expenses should be paid from personal accounts.

How do you get personal income?

If the answer is that you’re paying yourself on a regular basis from your business, whether it is a set dollar amount or a percentage of your income, that’s a good sign.

Have you set your prices?

When someone asks how much your product or service costs, do you have a ready answer? Or are you just making it up each time? Knowing what you charge and how many sales you need to survive is one of the benchmarks of a business.

Do you know how much your business made, or lost, last year? Last quarter?

Are you using accounting software to keep track of funds brought into the business and the expenses paid out of the business? Or is everything just listed in your checkbook register? Business owners need to be able to access and refer to financial reports on a regular basis so they know what is and isn’t working and to make appropriate changes and adjustments throughout the life of the business.

Do you choose to work or play more often?

When you have a home office, it can become tempting and very easy to say, “Today’s fairly quiet, I think I’ll just read today.” Or perhaps you’ll choose to take an extended lunch, go shopping, or clean the house–almost anything other than work. Of course, one of the benefits of working for yourself and from home is flexibility with your schedule. You don’t have to work 8 hours a day, 5 days a week, in your office to be a business. But you need to make sure that you aren’t playing more often than working. Hobbies can be picked up and discarded as often as we want because they don’t affect our livelihood. Businesses are work and to be successful we need to treat them seriously, and not just work when we feel like it.

Accounting and Bookkeeping Services in NH

Not sure if you are running a business or a hobby? Afraid that your business may be sliding toward the hobby side of things? Contact us today for a free consultation. Fournier Accounting and Business Services can help you improve your systems so that you succeed in your business.