Petty Cash

Petty cash is often viewed as random cash with no real procedures. But shrewd business owners need to have as much control over petty cash as they do over the rest of their financials. A few simple rules will help you keep control of your petty cash. First, set an amount to be kept. For every withdrawal, fill out a voucher with the amount taken and attach a receipt of the expense. The amount of vouchers and cash should always equal the original set amount. It’s also a good idea to have one person in control of the cash, usually the bookkeeper, and keep it in a secure place. Make sure employees know what qualifies as a petty cash expense and require receipts for all withdrawals. Petty cash should never be used as personal loans to employees. Use a separate register in your books to account for petty cash and use JE’s to update them regularly. With a few simple steps, you can put into place a great system to protect every penny of your business’s funds.   

The Economy vs. Small Business

It may seem like an unfair battle. Looming increases in interest rates and lack of credit are an especially fierce opponent for small business owners. But there are some tactics that will put you at an advantage. One of the best ways to protect your business is to take a close look at your cash flow which will be key in navigating the tumultuous economic climate.  Now is the time to go through your bills and take an honest look at what you may be able to cut or lower. Even if some things are necessary for your business to function, it’s worth your time to get new quotes from competitors or call your current provider to see what they can do for you. Be aware of vendors that might have lured you in with low introductory rates and plans and gradually increase the fees. Business credit cards are exempt from the credit card laws that keep your interest rate from rising without notice so be aware of your interest rate at all times. Also take advantage of useful sites like www.billshrink.com  where you can plug in your information find the best options on services such as credit cards, cable providers and wireless plans.  It may take a few minutes, but you can find major savings which just may be what your business needs to prevail against the economy.  

Contractor vs. Employee?

Most small businesses are better off with contractors instead of employees since the overhead cost is lower. But beware of misclassifying. The IRS has rules that stipulate when a contractor has crossed the line into employee territory. This can be a costly mistake and also land you into quite a bit of trouble with Department of Labor. There are certain general guidelines, such as how much the company controls scheduling and compensation, which weigh in on the decision. But even the IRS will admit every situation varies. If in doubt, you can file a form SS8 with the IRS to have an official ruling. But be advised that this can take up to six months. If nothing else, a good rule of thumb is to document your relationship through signed written agreements and make sure all compensation is documented. And of course, rely on a well-trained bookkeeper for guidance!