How to Better Track Your Carbon Footprint

You may already be doing your part to help save the planet. From recycling to driving electric cars, to avoiding the use of plastic bottles and carrying reusable bags to the grocery store, there are myriad ways for all of us to make a difference—both big and small. However, it may be important to stop and ask ourselves: Are we currently doing enough?   

If you have considered pursuing an even more sustainable lifestyle, guess what? There’s an app for that! Actually, there are a few different apps to help you accomplish the goal of tracking your carbon footprint. In doing so, you can physically see your carbon environmental impact.

Below, we have detailed some of these apps and their benefits. Take a look! If you have any questions, please don’t hesitate to reach out.

Capture

Capture is an app that calculates users’ monthly CO2 targets by asking a series of questions. These questions include things like, “How many flights a year do you take?” and “What kind of diet do you adhere to?” Capture also utilizes GPS tracking to predict emissions from transportation.

Specifically, the app was designed to not only make planet-friendly living possible, but also make the process easy—or, easier—for those interested. With the capture app, users can conveniently “track, reduce, and remove CO2 emissions from everyday life.”

Interestingly, the app can be used single-handedly or with colleagues. If you are a numbers person who likes measuring and tracking, Capture is for you.

Almond

UK-based, Almond’s mission is simple: to help as many people reach Net Zero carbon emissions as possible, and in just four easy steps:

  1. Understand your carbon footprint
  2. Discover responsible brands
  3. Earn offset coins when you make a switch
  4. Offset your carbon footprint

Almond allows you to scan products to not only learn about that particular item’s story but also see what’s in the product (i.e., if it’s environmentally-friendly). Then, you can earn money with crypto rewards to plant and protect trees, which offset your carbon footprint. The more you earn, the faster you can grow your forest to achieve a carbon-balanced lifestyle and reach your personal CO2 Net Zero.

Pawprint

Pawprint allows individuals to fight climate change in the palm of their hands. This online tool helps to measure, understand, and reduce your carbon footprint.

Known as the “Eco companion,” this app delivers the following:

  • Science-based data you can trust
  • Carbon-reducing tips and challenges that suit your particular lifestyle
  • Better insight into how your carbon footprint measures up to the rest of the UK (this app is also UK-based)

One factor that sets Pawprint apart from other carbon footprint tracking apps, is that all of its data is validated by Mike Berners-Lee’s Small World Consulting, an expert in the industry.

Of course, there are plenty of other smartphone apps and tools available to help you better track and reduce your carbon footprint, including The Extra Mile, My Planet, and Carbon Footprint. The trick is to find the app or tool that works best for you and your lifestyle.

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Five Accounting Reports You Don’t Want to Be Without

While we all have to keep our monthly books up to date for tax and other compliance reporting purposes, we should never stop there. Your books hold a wealth of information that you can use to run your business better.  Here are five reports you should never be without.

Budget-to-Actual Profit and Loss Statement

Hopefully, you’ve already seen how powerful the Profit and Loss Statement is. Let’s take it a deeper level and add budget comparison to it.  With this addition, you can plan your way toward the sales and profit figures you want. You’ll know every month whether you’re on track, ahead of the game (give yourself five stars!), or need to hustle to make it up next month.

Most accounting systems allow you to enter monthly budget numbers for your sales and expense accounts.  You can enter them at the beginning of each year and adjust them throughout the year. It’s kind of like having Google Maps on a cross-country journey. You will be able to see where there is construction and traffic, so you can take another route. You can also see where there are cool places to stop, so you can take advantage of the fun. Your numbers tell a story.

Actual-to-Prior-Year Profit and Loss Statement

This is an easy report to generate, assuming you have at least two years’ worth of information in your accounting system. This report allows you to compare your business’s results for this year with how you did last year.  Are you ahead? Behind? Have new products and services? New employees?  New expenses?

With this comparison, you can take action based on how you would like your business to perform this year versus last year. While this report is readily available, few businesses study it to glean the insights available, so be sure to spend some time analyzing the data in this report.

Sales by Item, Customer, or Division (or All Three)

Inside every business’s sales information is a treasure trove of possibility. Where are you seeing growth, and how can you capitalize on it? Where do you see a slowdown, and can you run a promotion to juice things up?

Choose the breakout – customer, item, division, or another – that is meaningful to your business type. If possible, arrange for a searchable database so you can drill down into the detail even more. What trends do you see?  What opportunities do you see?

Operations Reports   

To find out more about your profitability and to get into the details of how your expenses are matching up with your sales, you need to review your operational accounting reports. The exact report will depend on the type of your business.  If you are in services, you’ll need payroll reports and time sheets. If you are in retail, you’ll need inventory reports. If you are in construction, you’ll need job cost reports. And if you are in manufacturing, you’ll need cost of goods sold and other reports to evaluate assembly and production efficiency.

Cash Reports

The last report that is essential for good business management is all about cash. There is more than one option here, and these reports can include Accounts Receivable Aging, Accounts Payable Aging, cash flow forecasting, and various cash flow reports.

If you grant customers credit, you’ll want to actively make sure that money is collected on time from clients. If customer balances get too old, action must be taken. Even if you don’t grant credit, transactions such as returns, expired credit cards, and bounced checks need special attention.

The same is true for amounts you owe to vendors, with the Accounts Payable Aging report.

If you run tight with your cash balance, you may want to have a cash flow forecasting report on hand. This report gives you good warning as to when your bank balance may dip below your needs.  You can then delay vendor payments or find an infusion of cash to cover the shortfall.

With these five categories of reports, you will have dozens of opportunities to be proactive about running your business and improving your results.  And if we can help you find or generate them, please reach out anytime.

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Re-Imagining Your Chart of Accounts

The Chart of Accounts is the backbone of your accounting records. It is a list of all of the accounts – bank, loan, asset, revenue, and expense – in your General Ledger, which holds all of your accounting transactions.

Think of your Chart of Accounts as a collection of buckets that hold dollars of items related to your business. Each bucket should be meaningful and have a purpose. For example, if you have three checking accounts, you need three buckets on your Chart of Accounts to hold the transactions for each bank account.  It would not make any sense to have more or less than exactly one bucket for each checking account.

While it’s standard to have certain buckets or accounts for assets, liabilities, and equity, the number of buckets that you create for revenue and expenses can vary greatly from company to company.  It makes sense to create and design your accounts for what you need for tax, accounting, and decision-making purposes in your business.

Let’s say you are a hair stylist.  Do you want your revenue to be in one big bucket? That’s all that Uncle Sam requires. But for decision-making purposes, you may want to break out men’s and women’s services, or cuts versus color and other treatments, or both. In that case, you would have four revenue accounts: men’s cuts, men’s color, women’s cuts, and women’s color.  This type of detail would help you see where your revenue is highest so that you can better manage your supplies as well as target your marketing to that group.

Having certain expense accounts matched to the tax requirements can reduce extra work at tax time. For example, separating travel costs – hotel and airfare – from meals and entertainment is a common one, as is keeping meals and entertainment separate.

The goal is to get your Chart of Accounts working for you. If, when you first set up your accounting system, you accepted the default Chart of Accounts, it may be time to redesign and restructure the list so it serves your needs better. Here are some additional considerations.

  • What revenue or expenses do you want to watch more carefully? Should they be broken out in more detail?  You can also use subaccounts to group transactions.
  • Is there cleanup work to do due to misspelling or other duplication?
  • Have you interviewed all the financial information users in your company to see how they need the data organized?
  • What spreadsheets could be eliminated if the Chart of Accounts was better organized?
  • Does your Chart of Accounts support your budgeting process? If two people are responsible for controlling spending from one account, would it be useful to break it out?
  • Do you have too many accounts?  Or too few?  (Most people have too many due to poor data entry hygiene.)
  • Are you properly using other categorizing features in the accounting system, such as classes, divisions, and custom fields?
  • What reports could produce better information for taking profit-focused actions in your business if the Chart of Accounts stored the transactions differently?
  • How could key performance indicators be better linked to the Chart of Accounts?

These questions can help you begin thinking about how your Chart of Accounts can better serve you.  After all, it’s your business, your accounting system, and your Chart of Accounts.

And if we can help you through the redesign process, please let us know.

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Clubhouse: The New Kid in Town

Are you familiar with Clubhouse? This social media platform is still pretty new, but currently picking up steam. Perhaps one of the easiest ways to describe Clubhouse is like this: When you were a kid, did you ever hold a glass to a wall with your ear glued to it in order to hear the conversation in the next room? Clubhouse is kind of like that, only scaled and organized.

Clubhouse is an audio-only platform where you can start a room based on a topic and others can join the room and conversation. You can bring people up to the “stage” who have raised their hand. The platform supports multiple languages, and at any one time, you can see rooms in Russian, Spanish, Mandarin, German, Japanese, English, and many more.

Think of Clubhouse this way: It’s like an interactive live podcast. The platform hosts both personal and business conversations, so there is a lot of noise to wade through, but that’s true of every social app. Many people love the lack of video that is so pervasive on other platforms.

The main newsfeed in Clubhouse shows active rooms that you might like. To join a room, just click anywhere on the room description. Once in a room, you should hear the speakers talking, or you might hear music if it’s a concert. You are muted until you are invited on stage.

In a room, everyone can see everyone else’s avatar. Clicking on other people’s avatars is encouraged and brings up a bio and direct links to the person’s Twitter and Instagram accounts.  You have lots of space on Clubhouse to build an extensive bio, and this is primarily how other people in the room can get to know you, along with hearing what you have to say if you participate.

Clubhouse is an entirely new and fresh way to market your business and let people know about your products and services.

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Cool Tech Tools: Airtable

When it comes to running a successful business, how important is it to be organized? In a word: very. Now, how would you rank your organization skills? Honestly, the answer really doesn’t matter. We can always get help from technology, and this is where Airtable comes in.

Airtable goes beyond spreadsheet solutions when it comes to tracking teams, projects, tasks, dates, and other information in your business. Cloud-based, Airtable allows you to organize information in a database – they call them bases – of tables. While databases can be complicated, Airtable makes it easy because it looks just like a spreadsheet.

Airtable allows users to create a flexible database that fits their particular needs. Some of the use cases include project tracking, product development, event management, team collaboration, lists, planning, pipeline management, calendars, and so much more. Templates are available to jump-start your project.

Because Airtable is like a spreadsheet, it has been compared to Microsoft Excel®. However, it is important to remember that Airtable is like a spreadsheet and like a database. Further, Excel can function only as a traditional spreadsheet, while Airtable gives its users more options, especially when it comes to customization.

Getting into the details of Airtable, fields can even be added for attachments, long text notes, checkboxes, links, and barcodes. It provides options for filtering, sorting, and grouping data.

Airtable also provides for integrations with other applications in case you need to move information from one place to another or add functionality.

Airtable has both free and paid plans.  You can find out more here: https://airtable.com/

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Financing Options for Small Businesses

All small businesses need cash to operate, and there are many ways to generate the required cash. The most common way that many businesses get started is when the owner makes an investment from their savings or other personal cash. But what if it’s not enough? In this article, we’ll take a look at some of the more common ways to finance a business.

Community banks

Most community banks are big proponents of small businesses, so this is a great place to start. Establish a relationship first by opening business checking and savings accounts. Then apply for a line of credit, which is a pre-approved loan that you can tap when you need it.

If you plan to purchase a building or equipment, you should be able to get a loan by using the asset as collateral. Business expansion loans are possible too; you may be able to borrow against your accounts receivables or other contracts with guaranteed income.

Beyond community banks, there are also many online lending agencies, banks, credit unions, and community development financial institutions (CDFIs) to apply to for a loan.

When applying for a loan, you will likely need a good personal credit rating and either a strong business plan or audited financial statements to show the financial condition of your business.

Partners and investors

Investors such as angel investors or venture capitalists can provide cash in exchange for either a debt or an equity position in your business.  Obtaining financing this way is a big decision since you are no longer the sole owner of the company if you give away some of your equity.

Another option is to bring a partner into your business. Typically, the partner will provide cash as well as management or other skills that complement yours and be active in running the business with you.

Government support

There are many government programs to help with small business financing this year due to the pandemic. The Small Business Administration has loans and programs available to small businesses on a consistent basis. This year, they are also managing the forgivable Paycheck Protection Program (PPP) loans, economic disaster funding, shuttered venue operator loans, and restaurant relief grants, to name a few.

You might also want to see what’s available from your county, city, and community governments. Last, organizations like the Small Business Development Council (SBDC) can provide space, funds, and training to small businesses in their area.

Nonprofits and educational institutions

Your business may also be able to benefit from nonprofits and educational institutions that provide grants, scholarships, and other funding opportunities to businesses and business owners in certain categories. For example, your local chamber of commerce may have programs and funding options available for local businesses.

Factoring

Factoring is an option for businesses with accounts receivable balances. A cash advance can be made with the accounts receivable balances as collateral.  This type of loan is common in the retail fashion industry where items are ordered months in advance of when they are sold, causing a cash flow gap.

Crowdfunding

Crowdfunding has been made popular by platforms such as Kickstarter. A business can apply on these platforms for funding, and individuals can make contributions. Sometimes the business will promise goods or services in exchange for funding.

Credit card advances

It’s common for owners to put startup expenses on and use cash advances from their personal credit cards. This is one of the most expensive ways to fund a business and should be used as a last resort.

The fine print

All financing options come with fine print. Terms and interest rates vary significantly. Sometimes, there is a cliff, where you have to pay everything back all at once. Be sure to carefully read any agreements you sign and run them by a lawyer if you don’t understand them. Your personal financial situation could suffer greatly if you aren’t careful.

For example, businesses that got a PPP loan and later received a buyout offer may not be able to sell because the loan agreement prohibits them from doing so. If they didn’t read the fine print and sold the company anyway, they are now personally liable to pay back the PPP loan proceeds.

If you have questions or want to discuss financing options, please feel free to contact us anytime.

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What Is Internal Control?

In accounting, a key term to know is “internal control.” Internal control is the series of processes and procedures that are performed within the organization to ensure the integrity and accuracy of the financial information and reporting of that organization. Internal control is very important to consider in order to protect the business owners, employees, vendors, investors, and other stakeholders.

In a small business, maintaining good internal control is often a challenge since staff size is smaller and resources are limited. Yet, it is essential to understand so that the business owners understand what risks they are taking every day in their businesses.  A good system of internal controls can help the organization reduce the risk of fraud, safeguard against loss, and demonstrate good business practices.

Key Concepts

Segregation of duties is the first of three key concepts of internal control. It means that tasks should be assigned to different people when there is a risk that having everything assigned to one person could hide errors or even theft.  For example, the person who opens the mail and receives checks should not be the same person who applies the check to the correct customer in Accounts Receivable.

Delegation of authority is the second key concept of internal control.  While the owner has ultimate control, they cannot do everything. They must delegate to staff. Staff have the responsibility to maintain internal controls in their area of responsibility.

System access is the third concept of internal control. Access to documents, rooms, computers, applications, and other items should be on a need-to-know basis to reduce risk. While one person might have system access to enter a transaction, they should not also be the one to have system access to review or approve that same transaction.

Business Operations

Every aspect of the business should be considered while setting up the company’s policies and procedures.  In a small business, an easy way to develop internal controls is to review each major transaction flow and implement the controls needed.

On the customer side, this includes receiving the customer order, sales contracts, shipping, invoicing, managing accounts receivables, collections, bank deposits or merchant reconciliations, and cash management. It can also include customer service, pricing, and promotional activity.

On the vendor side, the process includes adding controls for vendor selection, purchase orders, receiving, bill pay, managing accounts payable, payments, managing travel and expense accounts, and company credit cards.

Depending on the company, additional areas that need to be reviewed for internal control include inventory and supply chain management and government contracts, if any.

When hiring, the process of hiring, onboarding, training, evaluating performance, and payroll should be considered.  Safety is also an important consideration.

A very large part of internal control development should focus on the information technology operations of the company. Areas include user access and controls, password management, naming conventions, physical security, disaster recovery, and network and applications development, updates, and change control. Data entry should also be considered and is best included when developing controls for the customer, vendor, and employee functions.

Additional functions that need internal control processes include treasury and financing; financial reporting, budgeting, and planning; records storage, access, retention, and destruction; asset management; and insurance.

Internal controls can be applied to small businesses as well as large organizations. It’s all about being able to feel confident that your business is operating with financial integrity, accuracy, efficiency, and a reduced risk of failure. If you have questions about how internal control applies to your business, be sure to reach out to us any time.

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Getting to the Next Level of Your Business

Sometimes it’s hard for business owners to know how to take their businesses to the next level of growth and profitability. If you’ve been stuck at the same revenue or profit level for a while, it could be because knowing how to scale your business is not a skill in your skillset — yet.

Enter a classic management book on scaling: High Output Management by Andrew Grove, ex-chairman and CEO of Intel. While it was written in 1983, it has made a recent comeback in Silicon Valley but is still not well-known outside of the Bay area. Many people who have read it say it’s the best management book they have ever read, life-changing even. It is certainly a timeless and invaluable read for business owners and managers.

In the book, Grove applies the principles of engineering and manufacturing production to management. It’s all about process: developing processes and procedures so that you can track what’s going on and measure the results, or output, every step of the way.  Only then can you improve the process so that it leads to high output.

Measurement is an important concept in the book. No matter what business you’re in, you can apply the ideas of developing processes, measuring them, and improving upon them in your business.

Grove gets into how managers can motivate their team members and affect production outputs. He talks a lot about leverage, which enables scaling both positively and negatively, and how it can affect employees’ output. One example of positive leverage is when managers can add a “nudge” activity to enable their employees’ work. A negative example is when managers meddle and get in the way of the employee making progress.

In the section on meetings, Grove breaks them down by purpose and lends his ideas on how to run each type better. He touches on other key topics such as decision-making, planning, motivation, performance reviews, and values.

One significant highlight from the book is that if you’re motivated to become a better manager, and wish to improve the output of your organization, then there is nothing more important than training yourself.

Reading this book is a wonderful way to spend time learning new business skills you can use and benefit from immediately.

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5 Tips to Spice Up Working from Home

We’ve been in a pandemic for what seems like five years now, right? All joking aside, if you’ve been lucky enough to work from home this past year, then it’s possible that you are in the process of going stir-crazy. Or maybe you’re simply ready to shake things up a bit.

Working from home has its benefits. Yet, if you are someone who enjoys going to the office every day, chatting with co-workers in person, attending meetings that aren’t all virtual, and having a little spontaneity each week, then we’re here to help. Here are five tips to boost your WFH (working from home) environment.

  1. Take Short Breaks

Taking regular breaks throughout the day is so important, and more so now than ever before! Without a doubt, these breaks will help you mentally (that is, keep you from going stir-crazy), but they can also help your work productivity and quality. These breaks don’t need to be—and shouldn’t be—long or strenuous.

Walk the dog. Stand up and do some light stretches. Run up and down your stairs. Go outside into your backyard. Dance to a song. Do a quick chore, like emptying or loading the dishwasher. Call a friend. Or choose your own favorite break activity.  The goal is to get the blood flowing and the fog cleared from your mind.

  1. Switch Up Locations

Get creative and switch up your location. If you have a yard or patio of some sort – and good weather — that allows you to sit outside and work, perfect! If not, try working from the living room, the dining room, the kitchen, even the bedroom. The idea here is to change your surroundings a couple of times a week so that you don’t feel stuck or get lost in the monotony of a daily routine.

  1. Treat Yourself with Lunch

Everyone needs something to look forward to, and what is better to look forward to than food? Depending on your budget, treat yourself to a special lunch once a week, every other week, or monthly. Consider trying new restaurants, different foods, places that you’ve always wanted to eat at but haven’t had the opportunity to do so. Not only will this be fun for you, but you will also be supporting small, local businesses. Win-win!

  1. Dress for Success

We can probably all agree on one thing: sweatpants are comfortable! As such, it can be difficult to trade in the sweats for jeans or dress pants every day. After all, if you’re working from home and there’s no dress code to enforce, it can be hard to dress for success. Yet, doing so can give you a little burst of inspiration to get through the day. You can keep your outfits casual just as long as you have fun getting dressed. For example, you could have Sandal Mondays or Blue Shirt Fridays. Again, just have fun with it!

  1. Create a New Playlist

Does music motivate you? Are you able to work and listen to music at the same time?  If so, create different music playlists to listen to throughout your day. Try listening to various genres or new artists, anything that keeps you alert and stimulated, even excited about your workday. Depending on the type of music you enjoy listening to, you can even get up periodically and take dance breaks (Tip #1)!

Keep your day fresh, and boost your productivity and mood by using your imagination and trying the tips above.

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Mix Up Your Revenues for More Profits

Many small business owners focus on generating more revenue every year, and that’s a wonderful goal.  But not all revenue is created equally since some items are more profitable than others.  If you sell more than one product or service in your business, then you may benefit from looking at your revenue mix.

While it’s fun to watch revenues grow, your business profit is what really matters.  If your expenses grow faster than your profits, then you have a lot of activity going on, but you don’t get to keep as much of what you make.

An insightful exercise to try is to take a look at your revenue mix.  Then you can ask “what if?” to optimize your profits.

Your Revenue Mix

Let’s say you offer three different services: Services J, K, and L. Your revenue pie looks like this:

J:  $700K or 70% of the total
K:  $150K or 15% of the total
L:  $150K or 15% of the total
Total:  $1.0 million

In this example, Service J is clearly the service making you the most revenue in your business.  But is it making you the most profits?

The profit you receive from each of these service lines is as follows:

J:  $80K
K: $10K loss
L:  $30K
Total:  $100K

While Service J is generating the most profit volume for your business, it’s actually Service L that’s the most profitable.  Earning $80K on $700K yields 11.4% return on Service J, but earning $30K on $150K yields nearly double the return at 20%.  Service L generates the most return.   And if possible, Service K may need to be discontinued or turned around.

Optimizing Profits

Your strategy for a more optimum revenue mix might be to sell as much of Service L as possible, while eliminating or fixing the problem around Service K.

It’s fun to experiment with different revenue mixes.  And of course, there are many more variables besides profit, such as:

  • What services/products do you prefer to work on/sell?
  • Are you able to sell more of the most profitable service or are there marketing limitations?
  • Is one service a loss leader for the others?
  • Are you able to adjust price on the lower margin services to increase your profits?

There are many more questions to ask and strategies to consider to make you more money, which is why we love being accountants.

A New Mix

We hope you’ll spend some time analyzing your revenue mix and having fun asking yourself “what if?”   If we can help you expedite the process or add our perspective, please reach out anytime.

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