(415) 418-0020 info@proteafinancial.com
Best Practices for Avoiding Wire Fraud in Your Small Business

Best Practices for Avoiding Wire Fraud in Your Small Business

While it is the large businesses who make the news when there’s financial fraud, the greatest amount of wire fraud happens to small business owners. Recent research indicates that 78% of small businesses suffer some kind of wire fraud each year. In fact, all businesses lose at least 5% of their earnings to fraud every year. Since it has become more difficult for criminals to break into large corporations due to their internet security, firewalls, and authentication practices, thieves target small businesses frequently because their security is commonly not as strong as that of a large company. The average fraud loss for a small business is roughly $250,000, which can put many small businesses in real financial trouble.

As a small business owner, how can you protect your company against wire fraud? How can you ensure your business is safe from fraud? Here are some suggestions you can use to keep your business safe.

Train Your Employees to Spot Fraud

Often, wire fraud for a small business begins when an employee opens an email with a link that opens the business up for wire fraud. Many small business owners believe all their employees are smart enough not to click on any link in an email. However, that may not always be the case. Surveys of small business employees indicate that over half of them admit to clicking on a link in an email. That type of attempt to gain access to business information is called phishing, and it occurs when criminals send links to hack into your business. Most phishing scams target the financial information for the business. Phishing scams are the most common scams in business fraud.

How should a small business educate their employees about fraud? Train your employees about email fraud and phishing scams. Employee training for fraud is fairly simple. If you don’t want to handle the training yourself, there are plenty of ready-made presentations and videos that can help. You need to provide training for your employees regarding all types of fraud. Some of the most common forms of fraud include:

  • Relative scam
  • Utility companies
  • Debt collection
  • Charities
  • Employment offers
  • Even online dating fraud

Once your employees can spot fraud, you will go a long way towards keeping your business safe from cybercriminals.

Check Your Vendors Thoroughly

Another prevalent type of wire fraud, and one that is newer than the phishing fraud, is vendor fraud. Vendor fraud occurs when a criminal uses your business accounts to set up a fake vendor account with regular payments. These payments to fake vendors may start as small transactions that are barely noticeable. Over time, the transactions can increase in value, and can steal tens of thousands of dollars from your business before you catch them.

As a small business owner or manager, there are steps you can take to ensure you are only paying vendors you do business with. You can begin this process by putting in place procedures for adding new vendors your business buys from. If your bookkeeping and finance employees follow the correct vetting procedure, your business will be less likely to experience fraud. Your bookkeeper can also check your current accounts payable vendors to ensure they are safe to pay invoices.

Another excellent idea for small business owners is to have your prospective vendors fill out a W9 so you can ensure they are not part of a scam. A W9 form is an official request for a business’ tax identification number. All small businesses, even a sole proprietorship, will have a Social Security Number or a tax id number. If you have a vendor who refuses to provide either a Social Security Number or a tax id number, you don’t want to buy from them.

Be Safe When Wiring Money

Some small businesses wire money regularly to vendors they do a large volume of business with, because it is safer than sending a check in the mail. However, financial institutions are seeing an increasing number of wire fraud attempts by cybercriminals. You can help keep your wires safe by thoroughly checking your wiring information before the wire transfer leaves your account.

You can also minimize this danger by practicing callbacks on your wire transfers, just to double-check the money is going to the right spot. Because cybercriminals will usually only target a business for a short time, and will move on quickly if they aren’t successful, you may be able to eliminate this threat through vigilant checking of your wire transfers.

Another step you can take to prevent fraud is to ask your payees to undergo an out of band authorization for large wire transfers to prevent fraud. An out of band authorization puts two checks in place for businesses to verify the legitimacy of your vendors before you pay them.

Do you use international wire transfers? If so, then you need to be extra careful. Many international transfers are wire fraud attempts to get into your system. You will need to put in extra protection to ensure all of your wire transfers are safe.

Beware of Returns

No business owner wants to process returns because returns take money out of your pocket. However, they are often a part of doing business. You want to be sure your client or customer’s refund requests are legitimate. If you don’t already have a refund or return policy, you need to create one as soon as possible. Have your refund policy spelled out for your business (ideally on your website), and on contracts and invoices (or at least a link to this page). If you sell items to customers, you need to ask for a receipt in order to process returns, and you need to limit the time period you’ll accept returns to 30 days or less. By having a strict return policy, you will be able to limit the chances of fraud in this area.

Upgrade Your Technology

You may have considered putting safety procedures in place to combat fraud, but have you thought about using technology for protection? If you upgrade your wireless technology, you may want to consider getting a virtual private network for your business. Virtual private networks create an island of safety for your business, even over public internet connections. Some business owners may be reluctant to spend money on technology, but investing in a little technology now may save thousands of dollars in fraud costs.

Not sure about upgrading your internet to use a virtual private network due to the costs? There are some other safety features you can buy that aren’t as expensive. For example, you can change your wireless access to private rather than public, so that your customers and employees can only access it with a password. You can also create cloud backups for all your technology, which means it will be available anywhere, whether your computers are down or not. Also, if you have more than one location for your business, you may want to create a firewall to keep your business information as safe as possible.

You can also set up two-factor authentication for your company before payments are processed. Two-factor authentication ensures the person requesting money must have multiple forms of proof they are who they claim to be. Meaning, if hackers have some of your business information, they cannot use it to open accounts and use your good credit without verifying who they are in relation to the business.

Put Everything in Writing

If you don’t have your business practices in writing, there is no time like the present to create safety procedures for your financial transactions. For example, make sure all your vendors understand how money is exchanged between businesses by sending them a copy of your business policies. While they may complain a little, many businesses are used to dealing with client contracts and procedures.

Do you buy a lot of materials and supplies from vendors? Your business needs a vendor contract. If you don’t have a vendor contract, it is time to make one. A vendor contract will spell out payment terms, methods of payment, a return or refund policy, and how to handle disputes over payments or merchandise. You can find examples of good vendor contracts on the internet, or you can hire a lawyer to draw up a vendor contract for your business.

Protea Financial Can Help You Protect Your Business from Wire Fraud

As a business owner, you have enough to worry about. You are constantly looking for ways to keep your employees happy, and reward your hardest-working employees. You want to keep your business fresh by coming up with new ideas and products. On top of that, you also need to effectively market your business to attract new customers. The last thing you want to worry about is ensuring your business is safe from fraud.

However, by taking steps to keep your business safe and secure, you are working to ensure the longevity of your business. You can educate your employees to watch out for fraud in scam or spoof emails. You can warn your employees against other types of financial fraud, such as fake utility payments. Also, you can thoroughly vet your vendors, and ensure that your payments are going to a legitimate suppliers of goods and services for your business. Use technology such as virtual private networks, two-factor authentication, and private passwords to keep your information safe. Finally, have all your vendor contracts in writing, so there’s no chance of fraud. By following these steps, you can work to keep your business safe from fraud.

Need additional information about financial security and hiring great people to keep your business finances running smoothly? We can help. Contact Protea Financial today. 

Learn More About Wire Fraud

Wire fraud is a massive problem if you do not know how to spot it before it happens, or stop it if it already happened. Turn to us here at Protea Financial for help spotting wire fraud today!

What is a W-2?

What is a W-2?

One vital task every business owner must do annually is generate and submit W-2 forms to their employees, the IRS, and other entities. These forms are important because without them, employees cannot complete their tax returns. However, while some parts of the form are fairly self-explanatory, some are not. Understanding what a W-2 is and how to fill one out is necessary. If you fail to send these forms out or make mistakes on them, you can be fined by the IRS or subject to an audit. Let’s look at the basics of a W-2, who needs to receive one, and what information is conveyed so you can always be compliant with IRS regulations and answer any questions your employees may have.

 

W-2 Basics

The W-2 is a form that the IRS requires every employer to file for every employee that has worked for them during the year. This includes employees who have left and employees who may have only worked a few weeks before the end of the year. Your employees need the information on the W-2 to accurately file their taxes. The IRS uses their copy of employees’ W-2 forms to ensure that the employees claimed the correct amount of income and deductions on their returns and that your company withheld the correct amount of taxes, social security, and other withholdings.

Protea Financial What Is a W-2

 

Who Receives a W-2?

Any employee who is on the company’s payroll and paid a minimum of $600 during the year must be issued a W-2 by their employer. Again, it does not matter when the individual worked for the company during the year or if they are currently an employee. The only time the length of an employee’s time with the company affects the need to send a W-2 is if they did not earn at least $600.

You may have paid non-employees to do work for you during the year. These individuals are categorized as contractors or freelancers. Instead of a W-2, you may need to submit a 1099-NEC form. These forms are similar to a W-2 but are designed for non-employees.

Businesses need to submit W-2s in triplicate. One is sent to the employee, one to the IRS, and one to the state the employee pays taxes in (typically their state of residence, but not always). While employee W-2s were traditionally mailed, today companies can make them available online and can submit W-2 information to the government electronically.

 

When Are W-2s Sent?

W-2 forms are sent out early in the new year. Employers must have all W-2s postmarked or made available online by January 31 each year. Employees should have them in hand by the middle of February so they can file their tax returns before the April 15 deadline. Employers who do not mail out the forms timely can be fined.

Employees who have left a job can ask that employer for their W-2 at any time. The employer then has 30 days to generate the form and deliver it to them. If the employee does not request the form, the employer does not have to provide it until January, even if the employee left the job early in the year.

 

Why are W-2s Important?

Without a W-2, employees cannot correctly fill out their annual tax return. They need the information provided on the form to determine their gross wages, what was withheld, and other information. The IRS will use the form to make certain the tax return includes the correct figures.

 

Protea Financial W-2 Boxes

What is Reported on a W-2?

A W-2 form is composed of six lettered boxes, 20 numbered boxes, and several other spaces for information. Some of this is self-explanatory, but other boxes are not as clear. Let’s break down the form into sections and look at what information is reported there.

 

Boxes a-f: Employee and Employer Information

  • Box a contains the employee’s social security number.
  • Boxes b and c are for the employer’s EIN/FEIN and the business’s name, address, and zip code.
  • Box d lists the employer’s control number. Some companies have a specific control number to help identify items in their system. However, smaller businesses likely do not have this. Box d can be left blank in that case.
  • Boxes e and f contain the employee’s name, address, and zip code.

 

Boxes 1 through 6: Income and Withholdings

  • Box 1 includes all of the earnings paid to the employee by the employer. This includes wages, tips, and any other compensation. It does not include anything that is considered a pre-tax benefit like contributions to a 401(k) or life insurance.
  • Box 2 is the amount withheld from the employee’s salary for federal income tax.
  • Box 3 is the amount of wages subject to social security tax. Only a specific amount of earned income is subject to this tax. That amount is multiplied by a specific amount (6.2 percent in 2021) and reported in box 4.
  • Likewise, boxes 5 and 6 list how much of the employee’s income is subject to Medicaid tax and how much was withheld.

 

Boxes 7 through 14: Other Reported Income and Information

This section may not be as clear if you have not dealt with a W-2 before. This is where  having a bookkeeper assist in preparing W-2s can truly help because they understand what qualifies as allocated tips, deferred income, and the other items required here.

 

  • Box 7 is where tips are listed.
  • Box 8 lists allocated tips. These are additional tips given to the employee. Employers are only required to allocate tips in specific situations, so this box may be left blank.
  • Box 9, Verification Code, is no longer used. It should be blank.
  • Box 10 indicates how much was deducted from the employee’s check for insurance for their dependents. These deductions may include matched spending and other benefits.
  • Box 11 is for the total amount of money an employee received from a non-qualified deferred compensation plan.
  • Box 12 will contain one or more letters. These letters are specific codes for types of income. There are four available boxes (12a through 12d).
  • Box 13 is a check box the employer uses to identify if the employee is a statutory employee, contributed to a retirement plan, or received any sick pay from a third-party.
  • Box 14 is essentially a miscellaneous box. It is used to report any income or withholdings that do not fit elsewhere.

 

Boxes 15 through 20: The Remaining Boxes

The bottom line of the form, which includes boxes 15 through 20, is used for state reporting:

  • Box 15 – Employer’s state ID number
  • Box 16 – Employees wages subject to state tax
  • Box 17 – Amount withheld for state tax
  • Box 18 – Wages subject to city or other local/state taxes
  • Box 19 – Amount withheld for these city/local taxes
  • Box 20 – The city/state/other entity that received the taxes from box 19.

 

Other W-series Forms

In addition to the traditional W-2 form, there are a few special variations that some employees may receive. These forms are typically used to report income in U.S. territories. For example, the W-2AS is used by those who live and work in American Samoa. Other forms in the W-series include the W-2CM (used in the Commonwealth of the Northern Mariana Islands), the W-2GU (used in Guam), and the W-2VI (used in the U.S. Virgin Islands. There is also the form W-2c, which is used to submit corrections to a filed W-2.

One solution to avoid filing a large number of W-2c forms is to work with a payroll provider such as Gusto. This full-service provider does more than just ensure that your employees are paid correctly and on time. They also handle all of their clients’ W-2s, 1099s, and other tax forms. If you do not want to worry about filling out W-2s yourself, you may want to consider working with one of these services.

 

Differences Between a W-2 and a W-4

When an employer hires someone, one of the first things this new employee should do is fill out a form W-4. This form is what the employer uses to determine how much to withhold from the employee’s paycheck. The employee will enter their number of dependents on the W-4 plus indicate any additional amount they want withheld from each paycheck. The employee can make changes to their W-4 at any time. For example, it should be updated if the employee gets married, has a child, gets divorced, or if they determine they want to change their additional withholding amount.

 

The W-2 and W-3

In addition to submitting a W-2 to the Social Security Administration, employers also submit a W-3. This form summarizes the employee’s wages and the amount they contributed to social security. It is used by the Social Security Administration to reconcile the amount received. Employees do not receive a copy of this form.

Protea Financial Can Help You Prepare W-2s and Avoid Fines

If you are new to paying employees, you want to make certain your W-2s are generated correctly and made available to employees before the deadline. For that, you need a professional. Protea Financial can assist you in preparing W-2s and with any other bookkeeping need you may have. Contact us today to learn more about virtual bookkeeping and what we can do for you.

Call Protea Financial for Help Understanding Your W-2

For help understanding a W-2, how to fill it out, or what you need it for, please contact us. We are here to help!

The Benefits of Hiring a Bookkeeper with QuickBooks Experience

The Benefits of Hiring a Bookkeeper with QuickBooks Experience

Bookkeeping is not a new science. Historical records indicate bookkeeping existed as early as 6000 B.C. Ancient Babylonian kingdoms recorded inventory from crops. Bookkeepers in Greek and Roman societies counted and noted agricultural crops, as well as payments to farmers. While bookkeeping may have been around for thousands of years, they are just as important now as they were in the ancient past.

Not only do bookkeepers remain important, but they have branched into specializations.

In fact, there are many different types of bookkeepers with different specializations. While a general bookkeeper is great for a small business, you may reach a point when you need a bookkeeper with areas of specialization. One area of specialization that bookkeepers can have is with computer technology for bookkeeping, such as QuickBooks. Here is some information on why you want to hire a bookkeeper with QuickBooks experience for your business.

 

Protea Financial What Does a Bookkeeper do?

 

What Does a Bookkeeper Do?

The term bookkeeper is short for bookkeeping clerk. Bookkeepers keep the financial records of a business. In fact, bookkeepers are vital for the history of a business, because it is only when a business’ records are precisely kept can information help a business survive. For example, if you don’t have a bookkeeper, but you vaguely remember paying a vendor for your business, how can you prove it, if you don’t keep accurate records?

One of the most important tasks of a bookkeeper is to keep the accounting books of a business, which means they track the income that comes into the business, as well as outgoing expenses from the business. Usually, this means that a bookkeeper tracks the business’ inventory as well, because inventory can be related to outgoing expenses as well as income from the sale of inventory. Depending on the size of your business, bookkeeping may involve using accounting software, spreadsheets and databases.

Bookkeepers also track all of the money, usually through postings to accounting software, on a daily basis. It is through posting each transaction daily that bookkeepers can regulate the amount of money a business uses to operate. Without a bookkeeper, many business owners would have no idea what their monthly expenses and income is, which prevents any business from growing, developing a budget, forecasting future expenses and income, or even securing additional financing.

While bookkeepers do not deal with hiring, onboarding, or other aspects of Human Resources (or HR), they may process payroll, and they will keep records regarding pay, taxes, and other employee withdrawals on payroll, such as Social Security and Medicaid, insurance and retirement benefits. No matter what the payroll deduction is, a bookkeeper can keep track of it.

Because bookkeepers are record keepers, it is essential that they are versed in how to keep the most accurate records possible. Bookkeepers who are excellent at their chosen profession already know all of the best ways to keep records. In the past, record keeping happened in large ledgers, leather-bound, that bookkeepers stored on shelves behind them for authenticity. Now, the best bookkeepers use accounting software to keep the most accurate records possible. One example of accounting software that bookkeepers use is QuickBooks.

 

What QuickBooks Does

In the early 1980s, two computer software programmers decided to move from designing an individual expenses and accounting program (Quicken) to designing double entry ledger books for small businesses—which became QuickBooks. QuickBooks is the predominant bookkeeping software for businesses, with a 95% saturation in the market.

QuickBooks is an important financial tool. Through the QuickBooks program, bookkeepers can keep track of a ton of business financial information—all in one program. QuickBooks can help businesses manage:

  • Accounting. One of the most important functions of the QuickBooks program is to manage income and expenses daily. With QuickBooks, each line of income and expenses are tracked electronically. The importance of having a daily income and expense tally can’t be overestimated.
  • Payroll. QuickBooks can help businesses track the amount of money outgoing for payroll, taxes and employee benefits. This is extremely important for the state and federal business taxes you owe, either quarterly or yearly.
  • Inventory Management. If you have a business where inventory is important because you are selling a product, you need inventory management. Even if you sell a service instead of a product in your business, you still have to manage inventory such as printer paper, ink, pencils, and cleaning supplies. QuickBooks can help you keep track of your inventory.
  • Taxes. QuickBooks keeps track of the taxes (state, local, and federal) that you have paid in, as well as tracking payroll taxes.
  • Invoices. You can make invoices and send them to client, accept payments, and even pay your invoices via QuickBooks.
  • Bank account tracking and balancing (reconciliation). You no longer need to balance your books, because QuickBooks keeps track of all of your incoming and outgoing expenses and income via your bank accounts. Bank reconciliations are no longer an issue.
  • Budgets and expenses monitoring. Because QuickBooks can manage your incoming and outgoing money, you will find budgeting easy to do electronically, and monitoring your expenses will be less taxing as well.
  • Managing accounts payable and receivable. QuickBooks allows you more control over your accounts payable and receivable by setting reminders and due dates for you to keep your money flowing smoothly.

 

Protea Financial Bookkeeper with QuickBooks Experience

Advantages of Hiring a Bookkeeper

With all of the advantages to a QuickBooks program, why would you need to hire a bookkeeper? The most important reason you need a bookkeeper is for financial record keeping. The larger your business grows, the harder it is to keep accurate, up-to-date records. When you hire a bookkeeper, you are able to turn over all of your financial recordkeeping headaches to them.

Another important reason to hire a bookkeeper is to give you an outside perspective on effectively managing the financial side of your business. You have tons of expertise when it comes to creating a business and making it successful, but the financial needs of your business may not be in your wheelhouse. Bookkeepers have tons of experience on financial record keeping and managing your incoming and outgoing expenses.

Although bookkeepers may cost you money up front, they will save you money in the long run, because they will be able to give you tips to save money on the expense side of your ledger. This may mean everything from trimming your office products budget to regulating the amount of inventory you keep on hand. Bookkeepers are invaluable for money-saving tips.

If you want to have time to really manage your business, concentrate on your clients, and focus on marketing and business growth, you need to hire a bookkeeper. While the bookkeeper focuses on the expenses and income side of your business, you can concentrate on making sure your business stays profitable.

 

Why Your Bookkeeper Needs QuickBooks Skills

Hiring a great bookkeeper is essential to growing your business. If you hire a bookkeeper, you need to make sure your newly-hired employee has QuickBooks skills. There are several reasons your bookkeeper needs to have QuickBooks experience.

First, one of the most important skills a bookkeeper can have is computer literacy. Although bookkeepers used to keep ledgers on income and expenses in ledger books, financial management has been working in the digital age for decades. Your bookkeeper needs to be literate in computers and computer programs, such as QuickBooks. If your new bookkeeper has knowledge of QuickBooks, and uses it regularly, you’ll know they can handle other skills on the computer as well, such as documents and presentations.

Bookkeepers must have numerical literacy as well as computer literacy. In fact, numerical literacy may be just as important as computer literacy for bookkeepers. Because bookkeepers need to have extensive attention to detail, numerical literacy is critical for budgeting and forecasting expenses and income. Your bookkeeper who has QuickBooks knowledge will have the skills to go into the program and problem solve when a mistake occurs with either income or expenses to quickly correct the error.

Bookkeepers sometimes use financial calculators for their business, in order to project future income, expenses by the month or by the year. These calculators will help you forecast when you could make changes to your business, such as adding new products or services, or adding new employees. Although QuickBooks has a ton of features to help business owners, bookkeepers with QuickBooks experience are vital for businesses. Along with financial tools, QuickBooks allows bookkeepers to utilize spreadsheets. Spreadsheets have been a part of a bookkeeper’s experience for decades, because they allow bookkeepers to lay out both past and present expenses. If your bookkeeper has QuickBooks experience, he or she will be able to keep your books accurately.

 

Protea Financial Has a Bookkeeper with QuickBooks Experience for Your Needs

Hiring a bookkeeper is one of the most important hires you will ever make. Be sure that the bookkeeper you hire has QuickBooks skills in addition to the requisite financial recordkeeping knowledge. Not sure how to hire a bookkeeper? You can begin by posting the job on job search websites. You can also ask friends or colleagues for recommendations as well. When you’re ready to hire a bookkeeper, be sure they have all the skills you’re looking for. That way, your business will continue to grow and thrive.

To find out more, reach out to us here at Protea Financial. We can help set up QuickBooks, or we can work with an existing account. Let us know how we can help!

 

Options If You Want To Move Away From Paper Checks

Options If You Want To Move Away From Paper Checks

Researchers have noticed a shift in the last two or three years in the business check writing habits of managers and owners. While the number of people using other forms of payment besides checks has been increasing, the number of businesses relying on paper checks as payment has steadily declined.

There are many reasons why paper checks for business use are continuing to fall. First, paper checks take a long time to go through the banking system. While electronic payments can hit a business’ bank account in a day or two, paper checks can take up to 10 business days to process. That is a lifetime for many small businesses. Second, paper checks are easy to duplicate given today’s technology. This means businesses that are still using paper checks are leaving themselves open to fraud because the account number is clearly written on the check. No one wants to lose money from their business due to fraud.

If you are tired of worrying about paper checks as a business owner, there is software available to help you move paperless payment systems. This has become even more important because many companies have a brick-and-mortar business as well as an online business. You need a payment system that can handle both. Here is more information and ideas for moving away from paperless checks.

 

Things to Consider With a Payment Processing System

When you begin thinking about moving to a paperless payment processing system, there are some criteria you need to consider before making the switch. First, how much will the paperless system cost your business? If the cost is too high, it does not make sense to switch from the system you already have. 

Second, will you have to sign a contract? Many business owners prefer software that allows them to try the service for a few weeks or a month for free. That way, they can decide if they like the service before they purchase it. 

Third, what kind of equipment will you need to operate the service? The less equipment your business needs to move to paperless checks, the better for your business.

Fourth, is there a customer support feature? You will want a service that allows you to contact customer service quickly if a problem arises. Finally, you need to know what forms of payment the system accepts. It needs to match the forms of payment your customers are familiar with.

Protea Financial Move Away from Paper Checks

New Payment Systems

In the past, payment processing systems came in the form of software you could download onto computers. While some payment systems have software downloads, many others are available as an app or as a subscription that is available via cloud technology. Small businesses find apps on phones or tablets helpful because they are able to view their balance sheets and payments from anywhere.

Here are three of the most popular payment systems for businesses if you want to move away from paper check writing.

 

Braintree Payments

One of the popular payment systems for small businesses is Braintree Payments. Braintree Payments began as an independent company, but they have since been purchased by PayPal, which gives them immediate name recognition and PayPal’s good security features.

There are a lot of positives if you choose to go with Braintree Payments for paperless check payments. First, Braintree Payments allow small businesses to take many forms of payment, such as PayPal, ApplePay, AndroidPay, Venmo, and Bitcoin, which puts this service ahead of many paperless payment services. Another great benefit of Braintree Payments is that the system can accept a monthly subscription payment, direct sales, service calls, online sales, and brick and mortar sales. No matter what kind of business you have, Braintree can handle the payments.

The paperless payment plan doesn’t charge a monthly subscription fee, and there are no minimum transactions your company must make monthly. Braintree charges a flat 2.9% fee plus 30 cents per each transaction. Braintree has the same amount of fraud protection as PayPal has, which is great for small businesses. One of the only downsides to Braintree is that the service does not accept American Express as payment.

 

Melio

Another payment system that is popular with businesses is Melio. With Melio you can pay invoices, but you can also receive payments from customers. Melio accepts credit or debit card payments for your invoices or sales, as well as ACH payments available as bank transfers. There are no setup fees for businesses that use Melio, and the payment system can be integrated with the Quickbooks system. You can see both incoming and outgoing payments with your phone or tablet as well as your laptop.

Melio allows you to grow the number of people who have access to your payment system as your business grows. This is great when you have multiple people handling your accounts payable or receivable. Melio charges the standard $2.90 fee per transaction. One of the reasons Melio is so popular is the ease of use. If you cannot figure an aspect of Melio out, customer service is around 24/7 to help you out. One of the only negatives about Melio is that it is not integrated with Zapier, which is a popular workshare application.     

 

Protea Financial Move Away from Paper Checks

Bill.com 

Bill.com is also very popular with businesses. Bill.com works well for both small and medium-sized businesses. The software to use Bill.com works through the cloud, so it is available to download onto a laptop. Like Melio, Bill.com allows you to pay your bills and receive payments for products or services. Bill.com has a budgeting program that gives you the ability to get credit for your business and continue to grow it. Bill.com takes ACH payments as well as international payments for products or services and requires a monthly subscription based on the size of your business. The company is tailored for companies who charge for professional services, such as bookkeeping, counseling or therapy, nonprofit organizations, and other service-oriented businesses. Bill.com can integrate with Quickbooks, Xero, Oracle, Sage, and Microsoft, which gives business owners a lot of options for integration as their businesses grow.

One of the downsides to Bill.com is the amount of the monthly subscription plan. However, if you need specialized accounting software for a consulting or other service-oriented business, Bill.com may be perfect for your needs.

 

Let Protea Financial Help Guide You Away from Paper Checks

No matter which paperless option you choose, you need to get with the future. Because businesses are constantly growing and changing, adding paperless check writing options is a great way for your business to advance with the times. To find out more about how going paperless could help your business, reach out to us here at Protea Financial today!

What is Gross Margin and Why is it Important?

What is Gross Margin and Why is it Important?

As a business owner, you understand how important bookkeeping is. The information a professional bookkeeper can provide will allow you to make informed decisions about your business. One piece of information your bookkeeper can provide is your company’s current gross margin or gross profit margin. Gross profit margin is a good yardstick for measuring how efficiently your company makes money from your products and services because it measures profit as a percentage of sales revenue. You can use your gross margin to compare your company’s profits to others that have different sales revenues.

 

Gross Margin Defined

Gross margin is the profit you’ve made after you subtract the direct costs of your products and services. It’s typically calculated as a percentage. A positive gross margin indicates that you have made back your costs and then some. A negative gross margin, on the other hand, means that it cost more to make your products than you made from selling them.

Essentially, the percentage is how much of a dollar you make as profit. For example, if your profit margin is 42%, you are making 42 cents for every dollar spent as profit. In other words, you spend $1 to sell your products, then make $1.42 from each sale. This means you paid back what you spent and made 42 cents in profit.

 

Protea Financial Gross Margin Outsourced Bookkeeping

Calculating Your Gross Profits

To calculate your gross margin, you first need to determine your gross profit. To do that, first add up all of your sales income. Next, add up all of your costs that are associated with manufacturing, procuring, and selling your products. Now that you have your gross profit, you can divide it by your total revenue. The resulting percentage is your gross margin.

Here’s an example. Say that your company made $100 million dollars in income. After subtracting out all of your expenses, you get a gross profit of $32 million. Divide 32 million by 100 million, and the result is 32%. That’s your gross margin.

 

Gross vs Net Profits

One important fact to remember is that gross margin is not your total profit. There are some indirect costs it does not take into account, such as taxes, licensing fees, and other expenses. Net margin or net profit deducts all of your expenses and costs from your revenue. It represents your true profit. Net margin, like gross margin, is very useful to business owners. Both percentages are useful when making decisions about your company.

 

What Information Can a Business Owner Gain from their Gross Margin?

Gross margin can provide business owners with a number of key insights that can be applied to maximize profits and minimize loss. First, it can tell you if your prices are too low, your costs too high, or both. If you have a very, very small profit margin, then you may not be charging enough for your products to fully offset your costs. You may also be paying too much for raw materials or for the manufacturing process.

Some businessowners make the mistake of assuming that just because their sales are good, they are profitable. Others may believe that their high gross profit margin indicates that they have good sales. Both of these statements can be true, but that’s not always the case. You may have thousands of sale transactions within a quarter yet still not be making a profit because your prices are too low or costs are too high. On the other hand, you could have a good profit margin yet not be making as many sales as you could be.

Knowing your gross margin will help highlight these issues. You may discover that you are making a very small profit even though it seems like your sales are good.

 

Protea Financial Calculate Gross Margin

How Gross Margin Can Help in Calculating Prices

When calculating your gross margin, you’ll also calculate your overall product costs. By looking at these numbers, you will be able to determine if you are selling your product for too little or too much. High sales but low profit margins may indicate that you are under-valuing the product. Low sales but a high margin could also indicate that your prices are too high.

A good bookkeeper will remind you that you cannot look at gross profit margins in a vacuum. There are many factors that can affect pricing, and you need to take all of these factors into consideration. The market sets the prices. If the market dictates lower prices, you will need to adjust your costs in order to meet those prices.

 

Gross Margin Also Provides Insight into Labor and Material Costs

In addition to looking at price, you can also use your gross margin to see what you’re spending on your products and services. New business owners may be surprised at how much they spend. If your gross margin is low but you feel that your prices are fair, there are two factors to consider. One factor is marketing, but that is a separate area of discussion.

In relation to gross margin, the factor you will want to focus on is your overall costs. Are you spending too much? You may want to consider alternative materials, new partners, or renegotiating current contracts to lower these costs and grow your business.

 

Who Should Pay Attention to Gross Margin?

All business owners should consider their gross margins on a regular basis, whether that’s monthly, quarterly, or annually. Small business owners can use gross margin to help them determine if they are pricing products correctly or if they could potentially save on costs. Marketing experts can look at gross margins to see if their marketing plans are meeting their goals. Even experienced business owners and bookkeepers can use gross margin to compare previous fiscal years and project their company’s growth over the next few periods.

If you have a bookkeeper, they can calculate your gross margin and help you understand what it means in terms of your profits, expenses, and sales. However, if you don’t have a bookkeeper, you run the risk of miscalculating your margin or not fully understanding how to use it to make financial decisions.

If you’re in need of a bookkeeper, Protea Financial is here to help. We provide bookkeeping, payroll, compliance, and inventory management services to wineries of various sizes. Contact us today with any questions or to discuss partnering with us