Online invoicing can be a fantastic time saver for small business owners. I personally use several services and have come to rely heavily upon them to send out monthly invoices without any effort or intervention on my part. Most of the online invoicing services provide a free trial or even a limited version of the service that is free on an ongoing basis. Depending upon your needs, the free options may fit the bill or you may find that the paid versions provide just the bells and whistles that you need. Why not try a free trial of one of the following services to see if they can help you run your business smarter?
FreshBooks — In my mind, this is the premier online invoicing service, offering many features that you won’t find with the free services. They have a free version that is limited to 3 clients per month while the Solo package allows you to have 25 clients for $19.95 per month.
Free services generally limit the number of clients you can have in the system or the number of invoices you can send per month. A few of the free versions have “branded” invoices showing the name of the service. Completely free services include (in alphabetical order):
Billing Boss
BillingOnClick – free version limited to 1 user
CannyBill – free version limited to 3 active clients
CurdBee – free version has CurdBee branding on the invoices
Endeve – free version limited to 100 invoices
Intuit Billing Manager
InvoiceJournal
InvoiceMachine – free version limited to 3 invoices per month
InvoiceMore – free version limited to 3 clients
InvoicePlace – free version limited to 5 invoices per month
Invoicera – free version limited to 3 clients
LiteAccounting – free version limited to 5 invoices per month
Nett30 – free version limited to 5 clients
Ronin – free version limited to 2 clients
SimplyBill – free version limited to 3 invoices per month
SimplyInvoices – free version has SimplyInvoices branding on the invoices
WinkBill – free version limited to 3 invoices per month
WorkingPoint – free version limited to 5 clients
ZohoInvoice – free version limited to 5 invoices per month
Paid services, each with their own bells & whistles, include (in alphabetical order):
AcceptPay
Ballpark
BillingOrchard
Blinksale
Cashboard
Invoices Made Easy
Invotrak
PaySimple
SimplifyThis
Of course prices may change at any time. I encourage you to try out some of these services, especially if you have recurring invoices such as retainers or monthly fees. I personally use and can recommend FreshBooks, ZohoInvoice and Intuit BillingManager. I’d be interested in what you try and how you like it!
Recently passed legislation requiring a massive overhaul in the 1099 reporting system has met with passionate opposition from small business owners, the accounting community and even the IRS Taxpayer Advocate. In response, two efforts are underway in Washington to reduce the requirement or repeal it outright.
The least likely effort was put forward by Senator Mike Johanns of Nebraska, proposing an outright repeal of the new reporting rules. Unfortunately, the Democratic support is unlikely because the proposal would also repeal a preventative medical care fund for the uninsured.
By mid-September, debate should begin on a Democratic proposal put forward by Senator Bill Nelson of Florida. This version would add several exemptions to the new reporting requirements, including an outright exemption for businesses with fewer than 25 employees. Furthermore, the Treasury Department would be authorized to exempt payments for common purchases such as airline tickets and office supplies.
Everyone keep your fingers crossed that the two parties can come together to save our nation’s small business owners from this crazy new reporting requirement!!
The new 1099 reporting requirements recently included in the new healthcare bill have caused quite an uproar in the business community. Even the IRS’s own Taxpayer Advocate, Nina Olsen, expressed concerns in her latest report to Congress about the IRS’s new 1099 information-reporting burdens.
Already, the Department of the Treasury and the IRS have issued a proposal to exempt credit card purchases from the reporting requirement. Now, Senator Mike Johanns of Nebraska has sponsored a bill, the Small Business Paperwork Mandate Elimination Act, to repeal the new reporting requirements before they become effective in 2012.
The Senate is now considering a new bill aimed at helping home-based businesses … finally!
The State Small Business Credit Initiative Act (see more details at OpenCongress) has two major provisions aimed at micro-businesses and the self-employed.
In the House version, it would allow sole proprietors to take a one-year business deduction for health care costs. At this point, sole proprietors have been able to deduct their health insurance premiums as an “above-the-line” deduction against their income taxes but not their self-employment taxes. While only a one-year deduction, this could be the shot in the arm that is needed for the 23 million self-employed business owners in our country.
In the Senate version, the full deduction for self-employed health insurance seems to have disappeared, but another welcome change was introduced by Senator Barbara Boxer of California. She proposed an amendment that would create a standard home office deduction, dramatically reducing the complexity of claiming a deduction for an office in your home.
After months of bailouts and stimulus packages that seem to help Wall Street more than Main Street, it’s refreshing to see some legislation aimed at supporting the “solopreneurs” out there! Let’s just hope that these provisions remain in the bill as it’s signed into law!
So you’re ready to clock out of the corporate world and hang out your shingle as a solo-professional. You’ve figured out how much you can reasonably expect to earn and estimated your expenses for marketing, computer equipment, training and so on. You’re ready to go, right?
Don’t forget to include the extra tax burden that the self-employed businessperson faces each year, the self-employment tax. Back when you were on a company’s payroll, you had 7.65% of your wages withheld for Social Security and Medicare while your employer kicked in a matching amount. Now that you’re self-employed, you’ll be responsible for the entire 15.3% of your net business income … in addition to income taxes!
Not only are you going to be responsible for those self-employment taxes and income taxes, but Uncle Sam is now going to be expecting you to send in those taxes on a quarterly basis as “estimated tax” payments. Gone are the days when your employer withheld your taxes; you never saw the money and never had to worry about it. Now you need to set aside a little bit of your profit from every job or project and send in those taxes on your own.
Of course, the key to calculating your net profit each month, and your corresponding tax liability, is to have a reliable accounting system. If you’re not comfortable with bookkeeping or just don’t have the time to devote to it, consider hiring a virtual accounting consultant! Every day, we set up accounting systems and maintain accounting systems for clients just like you!
According to a group of Democratic senators, the IRS needs to reduce the paperwork burdens that will fall on small businesses from the new 1099 reporting requirements due to hit in 2012.
The new requirements may place a hardship on small businesses by creating an extra paperwork burden. … We insist that the IRS develop ways in which small businesses can reduce expected paperwork from this requirement.
So, thanks go out to Senators Ben Nelson of Nebraska, Mark Begich of Alaska, Jeanne Shaheen of New Hampshire and Evan Bayh of Indiana for recognizing the obvious nightmare coming down the road and making efforts to halt the tide of paperwork about to hit small businesses nationwide!
We’re well past the April 15th filing deadline and you’re taking some time to clean out your files. After running your business for several years, the paperwork really starts to pile up! So how long is long enough to keep your tax docum
ents?
The IRS has three years from the date you filed your taxes (or the due date, whichever is later) to audit your return information. In the case of small business deductions, travel and entertainment expenses top the list of expenses most likely to be audited. For this reason, you should keep your records in a readable, searchable condition for at least three years from the year you filed your return.
Certain financial records, though, should be kept forever. These include any legal documents such as articles of incorporation or organization, trademark and copyright documents, and payroll information.
Here’s some quick guidelines to start with:
Business Records – Keep for One Year
- Deposit slip duplicates
- Purchase Orders
- Correspondence with customers and vendors
Business Records – Keep for Four Years
- Bank statements
- Petty cash vouchers
- Employees’ time cards
- Expired insurance policies
Business Records – Keep for Six Years
- Accounts Receivable and Accounts Payable records
- Cancelled checks
- Employment tax records
- Expired leases
- Invoices you’ve sent to customers
- Payroll records (W-2, W-4, Earnings Records, etc..) for terminated employees
- Sales records
- Travel and Entertainment records
Business Records – Keep Forever
- Articles of Incorporation & bylaws
- Cancelled checks for any tax payments
- Corporate documents & minutes
- Documents and receipts related to fixed assets you’ve purchased
- Deeds
- Depreciation schedules
- Year-end financial statements
- Legal records & correspondence
- Mortgages and note agreements
- Property records
- Stock records
- Tax returns and corresponding worksheets
- Registrations for trademarks, copyrights or patents
- Sales & use tax returns
Ready to start shredding? Check with your insurance company and creditors first, as they may require you to keep some records longer than the IRS does.
ShredCorp has a great online Document Retention Schedule at www.shred-corp.com.
The IRS has issued a proposed regulation to help deal with the flood of paperwork associated with the new 1099 reporting requirements that are set to take effect in 2012.
Under the proposed regulation, any business purchases made with a credit or debit card will be exempt from the new reporting requirement because those purchases are already reported by banks and other payment processors.
Do you have any brilliant ideas for how to reduce the avalanche of paperwork even further?? The IRS would like to hear your thoughts! They have invited public comments on how to most effectively carry out the new law. To give the IRS your opinion, send an email to Notice.Comments@irscounsel.treas.gov and be sure to include “Notice 2010-51″ in the subject line.
According to the National Association of Tax Professionals, IRS auditors are now being instructed to obtain a copy of the taxpayer’s QB file for audits for any taxpayer that uses QuickBooks. If the taxpayer refuses to provide the database and the auditor deems it necessary, they can issue a Summons for the file!
There is definitely a trend that’s a direct result of so many small businesses using QuickBooks.
Whether you’re starting a business or growing a small business, you want to avoid those critical mistakes that could mean the end to your entrepreneurial effort. A recent article, “8 Mistakes That Devastate Business Owners” by Susan Schreter for Entrepreneur.com, lists some of the critical mistakes that could be catastrophic for your business:
1. Keep your retirement savings intact.
2. Avoid the lure of sole proprietorship.
3. Read the fine print.
4. Get insured.
5. Get an employment contract.
6. Protect your innovations.
7. Don’t promise what you can’t promise.
8. Check the books.
Of particular interest to me, of course, is #8: Check the Books. As a Virtual Accountant/Bookkeeper, it’s amazing to me how many business owners turn over all of their financial information, including account numbers and passwords, then wash their hands of all things numbers-related. This is a recipe for disaster, folks! I’ve worked hard to earn the trust of my clients, but not all bookkeepers out there are quite as scrupulous. What can you do to protect yourself?
- Pay attention! Review the checking account register every now and then, looking for suspicious charges. Be the person who opens the checking account statement and look for irregularities. Pay attention to statements from your vendors; are there charges there that you thought you paid? By paying attention to your own financial activity, you will greatly increase your chances of catching fraud before it causes serious damage.
- Review vendor statements. Fraud doesn’t always come from internal sources. Be sure that your vendors are charging you as agreed and aren’t sneaking in new charges without your approval.
- Review revenue statements. As Ms. Schreter points out, “Are you sure your company is really collecting all of its internet-search-related revenues, or is your web developer rerouting your internet earnings for some extra beer money each week?”
- Segregate duties. If you have a professional bookkeeper handling your books, it’s a good idea to have a separate tax professional helping you at year-end. Having a separate set of eyes to review your information can be invaluable in catching errors or out-and-out fraud.
Bottom line: Pay attention to the financial health and well-being of your small business to prevent the kind of catastrophic fraud that could lead to going out of business.
