Accounting for Small Businesses
LEMON COLLECTIVE MARKETING
Jaclyn and Julie founded their own marketing agency, Lemon Collective Marketing, in the summer of 2017. They saw there was an opportunity to help businesses rebrand and re-strategize their marketing efforts online as a means to target their ideal customers (Check out their site- it’s really cool!).
So they set up shop and got to work in 2017. They got their first client in no time and after that they never looked back.
Their first year was a huge success but when tax time came around, they were a little put off at how much in taxes they had to pay. Figuring there must be a way to reduce the amount of taxes they were paying, they decided to set up a meeting with us to go over their situation.
When we first sat down to meet Jaclyn and Julie, they told us all about their business, how they help other businesses, and also the reason why they wanted to meet with us- to discuss their tax problem.
Our first question was whether they had incorporated when they started their business. Like any entrepreneur, you just want to get your business launched and off the ground and then worry about the technicalities and structure later. By incorporating, the first $500,000 of business income their business earned would only be taxed at roughly 13.5%, as opposed to earning the income personally and paying taxes at a lot higher rate. Also, if they only wanted to pay themselves a dividend of roughly $50,000, doing so through their corporation would be tax free to them.
We laid out a ton of options and routes they could take, and we all decided it would be best to set up articles of incorporation right away. They also suggested we do their monthly bookkeeping and year-end reporting as well as they didn’t want to spend countless hours inputting numbers when they could be working on growing their business.
LEMON’S TAKE OFF
We now give Lemon Collective immediate numbers on a monthly basis so they can see how their business is performing in real time and check to make sure they are hitting their forecasts.
By completing their bookkeeping and also filing their year-end tax return, the process of doing both of these things is a much more seamless one as opposed to two different organizations doing it when the year-end rolls around. Once their year-end comes due, we can access all the information we need without waiting for the numbers from an outside bookkeeper. No hassle no fuss.
INVESTMENT PAYS DIVIDEND
Now that Jaclyn and Julie are getting up-to-date information about their business, they can have confidence to make big decisions that will improve their business in the long term.
They learned that when it comes to outsourcing the accounting and receiving business planning help from an accountant, it is definitely an investment that pays dividends.