Cheers to Female Entrepreneurs!

We’re writing this post in honor of Women’s History Month, which takes place each March.

In case you hadn’t guessed it before, we love the startup and entrepreneurial community. We love the vision, the innovation and the inspiration it takes to pursue your dreams and start your own business.

One thing we also love is how women are changing the dynamic of the startup community. Did you know that only 4.2 percent of Fortune 500 CEO positions are held by women (source)? Yet, between 1997 and 2015, the number of women-owned businesses grew by 74% (source). That’s a rate that’s 1.5 times the national average. Women now own 30% of all businesses in the U.S. That 30% market share equates to 9.4 million firms, which are adding an estimated 340,000 jobs to our economy.

And we’re just getting started. According to the founder of Women Entrepreneurship Day, women-owned businesses are set to increase by 90 percent in the next five years. “We need to change the status quo because lifting women creates economic opportunity and vitality, locally and globally” (source).

Now we know we just threw a lot of numbers at you. Can you blame us? Just look at what we do for a living! But in reality, these numbers illustrate a larger principle. Our companies are better when we incorporate diversity and openness at all levels of an organization. This openness of thought allows us to share new and different ideas and learn from one another in order to be more innovative and more creative.

Here are a few things you can do to encourage diversity and openness in your organizations:

  • Don’t just find the problem, find the solution. Did you know that women are underrepresented in tech jobs? Cue Girl Develop It and their fabulous Fargo team who are working to change that by creating a network of empowered women who are confident in their ability to code and build mobile and web applications. They saw a problem locally, and they are now working to fix it. When you see a problem in your organization, don’t just let it sit there. Identify the problem and work to find a constructive solution.
  • Advocacy and mentorship are not the same … and you need both. Mentorship and advocacy are not the same thing. Sure, we all need mentors who help coach us along in our professional and personal journeys. But we also need advocates who can stand up for us in higher levels. These are individuals who have sway in your organization and can bring forth new ideas (think partners in a company, your board of directors, etc.). Make sure everyone in your organization has the opportunity for not only mentorship, but has an advocate on their behalf.
  • Education is key. You don’t know what you don’t know. So take time to learn things. We are blessed in Fargo Moorhead with a ton of great opportunities for training and development. Take your staff to a Chamber seminar, or have them participate in 1 Million Cups or Startup Weekend. Foster an environment of learning, both with external events and internally as well. For instance you can start a women’s leadership training for young female professionals in your organization. Or, do a training course for all young professionals who are rising through the ranks of your organization and teach them key skills you think they’ll need to grow within your company.

 We’re super excited to share with you that Eide Bailly will be rolling out a new initiative with the Business Women’s Circle out of Minneapolis, designed to help area women business owners find a “circle” of advisors. Stay tuned for more information … coming soon!

 

 

 

 

 

 

Estimated Taxes

Doing taxes is fun. Especially when you have to pay tax estimates, which is our topic for today. Yes, you heard us right. Estimated taxes are a thing.

Estimated taxes refers to the method used to pay tax that is in excess of your withholding (read, the thing your employer takes out of your paycheck for things like income tax). Typically, this happens for income from self-employment, investments, prizes, awards, etc.

So who has these?

Typically, if you are a sole proprietor, partner, or S-corporation shareholder, you win. You get to pay estimated tax. But, there are a few things to consider.

You have to pay estimated tax if both of the following apply:

  1.  You expect to owe $1,000 or more in the following year after subtracting your withholding and refundable credits, and
  2. You expect your withholding and refundable credits to be less than the smaller of:
    1. 90% of next year’s tax (that would be your 2016 taxes); or …
      1. Fun fact … if at least 2/3 of your income is from farming or fishing, you can substitute 66% for 90.
    2. 100% of the tax on your current year return (we’re looking at you 2015 tax return, which is due on April 18, 2016).
      1. Another fun fact … if your adjusted gross income for the current year is more than $150,000, you must substitute 100% for 110%.  This is known as safe-harbor.

Anything else?

If you are a household employer (otherwise known as a person who has employees paid for a service within their residence … think babysitters or nannies), you must include household employment taxes when estimating next year’s taxes. Of course, there’s an if (did you expect anything less?). This is true if you have federal taxes withheld from wages, pensions, etc. or if you would be required to make estimates even if you did not include household employment taxes in figuring your estimates.

When are estimated payments due?

Estimates are due in four equal installments on April 18, 2016; June 15, 2016; September 15, 2016; and Jan 17, 2017.  Of course the IRS will not object if you make the payments early. They’re nice like that.

I don’t want to pay quarterly estimates.  What are my options?

You can increase the amount of withholding from your paycheck, pension, or other income sources to cover the amount that would otherwise have been paid via estimates.

How about no?

You may be subject to a penalty for failure to make estimated tax payments.  The penalty is essentially simple interest on the underpayment amount for the time period of underpayment.  The rate is adjusted quarterly by the IRS, but for 2015, the rate was 3% each quarter. There are different methods to compute the required installment in calculating the underpayment penalty.

You will also be subject to the penalty if you make a payment late.  For example, if you forget to pay the second quarter estimate until July 15, you will be assessed the penalty for the month the payment was late.

I don’t get it.

Taxes are fun … and complicated. So save yourself some time and headache and meet with a qualified CPA who can help you navigate tax estimates.

 

 

Find the Critics

So we think you’re pretty awesome. We think the companies you’re forming and the things you’re creating are inspiring. We want to be your biggest cheerleader and help you along your entrepreneurial journey. Which is why we also want to tell you how important it is to have critics.

Now, we know, you’re probably thinking we’ve gone off our rockers. We promise that we haven’t (okay, we can’t 100% guarantee that). But hear us out. If you’re always surrounded by “yes” people, you never have the chance to grow into something even greater.

Starting a company is hard work and it takes a lot of courage and a lot of caffeinated beverages. So it’s important to have people to encourage you, to lift you up and to help you see your dream is indeed reachable. It’s also important to have people who challenge you to think differently and to question your goals and plans so they can become stronger and more solidified. “Pure optimism is poison, and the most savvy leaders know it. By purpose or by chance, the best management teams … challenge each other daily, the best board members couple every plaudit with a probe and the best investors want to hear about the bad even more than the good” (source).

This is why we encourage you (and sometimes harp on you) about having a trusted business advisor in your entrepreneurial journey. In case you need a refresher, look here and here. A trusted business advisor should be able to have a strategic conversation with you, to give you constructive feedback on your goals and strategies. This will further bolster your business. After all, who wants to go to market only to realize there was a competitor doing that exact thing already? Or find out there was a fatal flaw in your design? Or that there’s no market for the product in the geography you’re trying to sell in? These are things you may not be able to see yourself.

So what do we mean by a trusted business advisor? Well, a business can have any number of them. Here are just a few:

  • CFO – the strategic numbers person who helps you not only manage your current business finances, but also think through how to reach the next level in your business (or scale back when needed). This person is essential, even for small organizations because they help you think through more than just your current financial state. Good news for you … if you can’t afford to hire this person full time, you can outsource it.
  • Investors – these outside sources aren’t in the day-to-day of your business. So they can see bigger pictures (especially because it’s their money that’s helping you). Make sure they’re not just giving you resources, but also input and constructive criticism.
  • Employees – even as a startup, it’s important to surround yourself with people who are smarter than you, who can bring up new ideas and challenge your thinking. Hire wisely and look for people with different strengths than you. Then, open the lines of communication so people feel comfortable coming forward with challenges to the current structure and ideas for change.
  • Accountants, bankers, financial advisors – also known as your favorite people. In case you hadn’t picked up on it, we really really don’t think it’s a good idea for you to just go find the cheapest option. Rather, find the person who you can have a relationship with, who you can ask questions (and can understand their answers) and who will give you constructive feedback and honest candor.

Starting your own company, and growing it for that matter, is tough. It takes a lot of encouragement. It also takes open communication and the ability to give constructive feedback, to challenge and to think differently about how things are done. In order to do this, you have to surround yourself with more than just the “yes” people. Surround yourself with advisors (both internally and externally) whose end game is to make your organization better, not just boost your confidence.

Tax Records & the Statute of Limitations

Recently, we discussed a little thing called record retention (you can read about it here), otherwise known as when to keep it and when to throw it away. Today, we’re talking about the statute of limitations in regards to your taxes. No, they’re not the same thing.

The statute of limitations does not refer to the amount of time you hang on to your tax records. Rather, the statute of limitations refers to the length of time you and your pals at the IRS can make changes to your tax return. In other words, this is the length of time when the IRS can assess additional tax, or you can claim a refund.

There’s no one set rule related to the statute of limitations and the IRS (shocking, we know). Rather, it depends on a few things:

Did you file a return?

The following assumes you did (if you didn’t, we have a bigger problem). In general, the statute of limitations for the IRS is three years from the due date of the return or the date of filing (whichever is later). We say in general because there are a whole bunch of “ifs” related to this. Here are just a few.

If you had a substantial omission (more than 25 percent) of your gross income on your tax return, the IRS extends the statute of limitations. How long? Six years from the time the IRS makes its assessment.

If the IRS files suit against the taxpayer to collect previously assessed taxes, the statute of limitations is generally 10 years. In other words, once the IRS issues an assessment, the IRS has 10 years to pursue legal action and collect on tax debt. They do this through a variety of mechanisms, including garnishing your wages.

If you paid late or failed to pay the full amount of your taxes, you can incur interest fees and additional penalties. These vary, obviously, based on the severity of the situation. We will say this, though: missed filings or errors in filing can actually be considered a crime with criminal ramifications. So it’s best to get your taxes paid on time and in full.

Be aware that other tax authorities (a.k.a. state and local governments) set their own statutes of limitations.

Did you attempt to file a fraudulent return? Or not file a tax return at all (intentionally)?

Then congratulations, there’s no statute of limitations. No, this doesn’t mean the IRS can never audit you. Rather, what it means there is no deadline for the IRS if it can establish that you, the taxpayer, have: 1) filed a false or fraudulent return; 2) willfully attempted to evade tax; or 3) failed to file a return.

In other words, if you have intentionally not filed taxes, or filed them fraudulently, the IRS always has the option to come after you. Further, they raise the interest and penalties related to these transactions. And we really shouldn’t have to say this, but we will. Tax evasion and tax fraud are CRIMES. So if you mess up, it’s best to come forward voluntarily and work with the IRS to establish a payment plan and resolve the issue.

 

CRM: Why Entrepreneurs Need Salesforce

Guest Blog by Ron Lee, Eide Bailly Salesforce Consulting Manager

As an entrepreneur, you have quite the job description: owner, manager, risk taker, innovator, product developer and marketer. You also face daily realities of deadlines, budgets, sales, finances, cash flow, hiring, purchasing, networking – oh, and keeping clients happy.

So, just how are you supposed to juggle all of those responsibilities and grow an idea into a solid, profitable business? One answer is by using a customer relationship management (CRM) solution, such as the Salesforce “customer success platform.”

If you are considering adding a CRM solution to your business, here are five top considerations to help you on your journey.  

1. Cloud or On-Premises

Cloud solutions are generally faster, more cost-effective, and easier to implement and personalize than traditional on-premises systems. For startups, scalability is often essential when selecting a business tool, and the flexibility offered in the cloud is a tough feature to beat.

2. Across Device 

As an entrepreneur, when was the last time you spent the full day at your desk? No doubt you – and your customer – are more mobile today than ever. Consider using a platform that allows you to run your business from basically anywhere, on any device.

Fast Fact: More than 70% of small businesses say that keeping sales and service employees connected on the go is important to their success, according to recent Salesforce research.

3. Beyond Contacts

A CRM system should be more than just a place to manage contacts. Think of it as a total platform for customer success with solutions for sales, service, marketing, communities and analytics.

4. Is There An App For That?

A CRM systems is best utilized when it is built on a scalable, customizable platform, meaning you can adapt it to fit your needs as you grow. For instance, Salesforce was developed on an open ecosystem of partners and independent software vendors, so you have access to a wealth of existing tools. The Salesforce AppExchange offers more than 2,600 pre-integrated, ready-to-go applications – almost half of them for free – for areas such as project management, inventory control, shipping and tracking, email integration, proposal approvals, customer surveys, online ad analytics, and more.

5. Play Together

Ideally, your CRM tool should integrate seamlessly with your other business-critical systems, particularly the email provider or distribution system you’re currently using — whether that’s Gmail, Outlook, MailChimp or Silverpop. Tools that play together, stay together – and drive success for your business.

The moral of the story is that a CRM can work for your business, regardless of size. CRM systems are no longer limited to larger firms with big budgets. Instead, they are being leveraged by entrepreneurs and small business owners alike to streamline work, increase sales and provide a better customer experience.

And in full disclosure, we like Salesforce. We help implement it and oversee it for clients. Why? Small firms — even one-to-two person shops — are finding that Salesforce offers an economical, flexible and centralized “hub” to manage all of their customer data. Rather than buying software to install and then worrying about purchasing and managing servers on-site, Salesforce is cloud-based “software as a service” via a monthly subscription, eliminating additional infrastructure expenses and maintenance needs. Once licensed, Salesforce can be easily configured right out of the box to get you up and running fast, quickly scaling as your business grows and customizable to your evolving needs.

So, unless you want to add “developer,” “programmer,” “analyst,” “network specialist,” and “IT manager” to your entrepreneurial business card, consider a CRM system.

 

 

 

5 Steps to Protect Your Business

By: Liz Johnson, Eide Bailly’s Forensic Accounting Department

You have a novel business idea. You hem and haw over whether you should risk it all and take on a new business adventure. You decide to go for it. You invest your time, money, heart and soul into this idea. You then come to find out one dishonest employee has jeopardized it all and you now teeter on the edge of losing your business from this unfortunate situation.
According to the Association of Certified Fraud Examiners (“ACFE”), 30% of employees will commit fraud if given the opportunity and 5% of revenues are lost to fraud annually.

How scary are these stats?

Don’t let “your story” sound like this. Consider the following five steps to help protect your business from becoming victim to employee theft and fraud, from that “one” dishonest employee:

  1. Establish the tone at the top.
    Create an environment and culture emphasizing ethical behavior. Do this FROM THE BEGINNING.
  2. Have policies and procedures in place.
    Implement accounting processes and procedures as well as a fraud policy. (The ACFE has a sample fraud policy available).
  3. Set up internal controls.
    Involve more than one person in accounting functions. Also make sure that you are actively involved in reviewing accounting and financial information such as bank and credit card statements.
  4. Review your insurance policy for employee dishonesty coverage. 
    Consider the cost benefit of the increased premiums for protection from losses if something does happen.
  5. Implement an anonymous third party reporting system.
    The ACFE has found that 40% of frauds are uncovered by anonymous tips.

5 Tips for Preventing Fraud

Lessons from #SWFargo

Startup Weekend just happened in Fargo. It was pretty inspiring, full of creative ideas to answer real problems facing our community and region (check out the winners here). There was also a raging after party sponsored by some pretty sweet accountants (cough us cough).

Through all the creativity and the party, there were also some lessons learned that we feel the need to impart (we’re nice like that).

Validation is key.

Shane, the Startup Weekend leader/facilitator, made a point of this throughout the presentations. You have to validate your idea before you ever continue in your business. Read, if no one cares about or needs your idea, it doesn’t matter how good your business plan is.

Build a great community.

The beauty of Startup Weekend is how complete strangers can come together around an idea and end up creating a company. Each individual brings their own unique strengths, which contribute to the overall success of the team.

In the same way, this can be applied to our community. Mayor Mahoney recently talked about Fargo with Emerging Prairie (check it out). He discussed how building communities where people want to live, builds a better economy. In other words, when we all do our individual part to create the community we want to live in, we contribute to the overall success of our economy.

Seek innovation.

The creation of new ideas and different ways of thinking is essential for business growth. By challenging the status quo, we begin to think in new ways and expand our sights. The problems presented at Startup Weekend weren’t new (nonprofits, for example, have been looking for funding sources for a long time). But the innovative answers the teams created were new and, hopefully, will change the way we approach things.

We’re seeing this pattern of innovation not only at Startup Weekend, but on a local and state level. In their annual look at innovation across the United States, the Consumer Technology Association named North Dakota an innovation champion for its growth in 2015. We ranked first in the country for entrepreneurial activity. In other words, great things are happening here.

These are just a few of the things we learned at Startup Weekend, and we were only there for the presentations! We continue to be amazed by what’s happening here. So keep reaching, keep innovating and building. With a little validation sprinkled in, we’ll be on the right path to grow our business climate.

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