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With the new year quickly approaching, it can be tempting to start planning for your future goals and projects. However, it’s important to do a thorough year-end financial review before shifting your focus to the new year. This not only helps you understand the growth you’ve made and areas of learning that you can improve on, but it allows you to celebrate your accomplishments from the past year. In this blog post, we’re breaking down how to do a year-end financial review so you can plan strategically, identify opportunities for growth, and improve your financial management and health moving forward. How to Do a Year-End Financial Review Follow these simple steps and answer these guiding questions to conduct a thorough year in review for your business finances. SET THE STAGE: WHAT WERE THE FINANCIAL GOALS? To begin this process, revisit the financial goals of the business that were set at the beginning of the year. It’s important to look at factors such as revenue targets, profit margins, and expense management. These goals serve as the benchmarks that you measure your financial performance against, so reflect on how specific, measurable, and attainable these goals were. EVALUATE GOAL ACHIEVEMENT: DID WE MEET THOSE GOALS? After reflecting on the financial goals from the past year, analyze how well you performed financially against those goals. Did your business and team meet or exceed the revenue targets? Were expense controls put in place and made effective? Were there any shortfalls? If so, what reasons can you identify for those shortfalls? Celebrate the successes and growth that contributed to meeting or exceeding any financial goals. CELEBRATE SUCCESS: WHAT WENT WELL? It’s important to celebrate the financial successes and wins of the year with your entire company. Point out successful product launches, increased sales, or cost-cutting measures that proved effective for your company. Recognize the key players that made these goals a reality and provide insights into the strengths of your team’s financial strategies and operations. LEARN FROM CHALLENGES: WHAT COULD HAVE BEEN IMPROVED? Just as it’s important to celebrate your successes, it’s also important to acknowledge the challenges and areas that could have been improved. This may be budget oversights, unexpected expenses, or inefficient financial processes. By accepting and evaluating these challenges, you can make sound decisions for the future based on experience and use this as information to eliminate potential issues in the future. REFLECT ON YOUR HONEST FEELINGS Finally, put the numbers aside and reflect on your honest feelings about the past year. Where did you feel like you made the most growth? What challenged you to grow in positive ways? What caused you stress or overwhelm? What brought you the most joy and pride? How do you feel about your business currently and what are you excited for in the future? What do you want to continue in the new year and what do you need to let go to allow for other focuses? Answer these questions honestly as you wrap up your year-end financial review. It may also be beneficial to have each team member do this to learn how everyone is feeling in terms of the company and financial goals as a whole. Overall, conducting a comprehensive year-end financial review is a powerful tool for reflecting on the past, celebrating successes, learning from challenges, and making sound financial decisions for the future based on experience and data. This is about both the numbers and the feelings of you and your team. With this year in review complete, you’ll feel more confident moving into the new year with clarity! View full article

As the financial year draws to a close, it becomes important to have a well-organized and accurate year-end process. This ensures that you can close out the year and transition into the new fiscal year smoothly by giving attention to the key financial aspects that impact your bottom line and business as a whole. In this blog post, we’re breaking down the 7 essential steps to take to ensure a smooth financial year-end as well as sharing a Free Year-End Checklist that you can use in your own end of year review and planning. 7 Steps to Ensure a Smooth Financial Year-End STEP 1: RECONCILE ALL BANK AND CREDIT CARD ACCOUNTS The first step is to reconcile all bank and credit card accounts, as this is the foundation of a smooth financial year-end. Make sure that your records match the statements provided by the financial institutions that you work with so there are no discrepancies. By reconciling all accounts first, you can uncover potential errors and fix them quickly, maintaining the accuracy of your financial records. STEP 2: IDENTIFY AND RECTIFY DUPLICATE TRANSACTIONS If you’ve ever had duplicate transactions, you know just how much havoc they can wreak on your financial statements. This can also paint an unclear picture of your overall financial health. Thoroughly review your records to identify any duplicate transactions and rectify them quickly if you find them. Utilizing accounting software features can help you do this quickly and effectively, ensuring your financial data is accurate and reliable. STEP 3: GENERATE INCOME STATEMENT FOR THE YEAR A business’s Income Statement, also known as the Profit and Loss (P&L) Statement, summarizes the revenue, expenses, and profits or losses that a business experiences over a specific period of time. Generating a comprehensive Income Statement for the entire fiscal year provides a clear overview of your financial performance, which is a valuable tool for making decisions for the future. STEP 4: COMPILE BALANCE SHEET FOR THE YEAR A Balance Sheet is a snapshot of your company’s financial position at a specific point in time which consists of 3 main sections: assets, liabilities, and equity. It’s important to compile and review a Balance Sheet at the financial year-end to help you get a clear understanding of the overall financial health and position of your business. STEP 5: EVALUATE ASSETS Once you’ve compiled your Balance Sheet, assess the value of your assets, including both tangible and intangible assets. Make sure they are accurately valued and organized into the proper categories. When evaluating assets, don’t forget to consider the depreciation of fixed assets and any changes in the market value of investments. STEP 6: REVIEW LIABILITIES At the financial year-end, it’s also key to review any liabilities you’re responsible for, including short-term and long-term obligations. This includes loans, outstanding bills, and accrued expenses. Ensure all liabilities are recorded accurately and present a true representation of your outstanding financial obligations. STEP 7: EXAMINE EQUITY The final step in ensuring a smooth financial year-end is to examine your equity in-depth. Equity represents the ownership interest in a business. By reviewing and analyzing equity accounts, you can take note of any changes in capital, dividends, or retained earnings. This is key for understanding the financial contributions of the business’s stakeholders. In order to have a smooth financial year-end and a solid start to the new fiscal year, it requires a systematic approach, careful consideration, and attention to detail on various elements of your overall financial picture. By following these steps, you’ll be able to get a clear picture of where you’re at, where you’ve been, and plan for where you’re going. If you’d like more support as you close out the financial year, you can grab our Free Year-End Checklist to get your bookkeeping organized for 2023 and end the year with confidence and clarity. View full article

Can you believe that another year is drawing close to the end? It really does seem like the older you get, the faster time goes! As we enter into the Thanksgiving season, we wanted to take some time to reflect on our achievements, the achievements of our clients, and express sincere gratitude for all of those who have made this year’s success possible. Read on for some of our thankful reflections as we celebrate financial wins from this year. Celebrating A Year of Financial Growth We’ve had the privilege of witnessing several auto shops see significant financial improvements over the course of this year. On average, clients who have been working with us for at least 1 year have seen an average revenue increase of 10.7%. That’s amazing! These financial wins are a testament to their hard work, dedication, and commitment to excellence. Our clients’ successes are our victories, so it is incredible to be able to celebrate these wins together. How Our Clients Are Seeing Success So, what exactly have our successful clients been doing to see these improvements in their business finances? Let’s take a closer look at the strategies and systems that have helped drive their financial growth. PARTS MATRICES Effective parts matrices are key for accurate pricing and inventory management. Our clients are taking advantage of this tool to optimize their pricing strategies, which directly impacts positive revenue growth. TRACKING LABOR EFFICIENCIES An auto shop’s bottom line is greatly impacted by its labor department, which is why tracking labor efficiencies is helping our clients increase profitability and identify areas for improvement. IMPLEMENTING NEW PAY STRUCTURES Our successful clients are also implementing new pay structures that work for the culture of their business, whether that is flat rate, hourly, salary, or a combo. INVESTING IN TRAINING PROGRAMS Investing in training programs for both techs and service advisors is key to the growth and development of their teams. These training programs have helped them elevate their skills and knowledge of their staff while increasing customer satisfaction and repeat customers. HIRING BUSINESS COACHES Many of our clients have also invested in industry-specific business coaches to help guide their companies towards success. Their guidance, insights, and external perspective has been a game-changer for their businesses. TRACKING KEY KPIS Lastly, many of our clients who are celebrating financial wins this year attribute their success to the tracking of key KPIs. Tracking and analyzing these KPIs has helped them make data-driven decisions for their businesses and adjust as necessary in the areas that needed more attention. Thankful Reflections From Three Rivers Bookkeeping To all the auto shops that we have the privilege of working with each and every day, we want to thank you and express our sincerest gratitude to you. Our primary goal is to see each of our clients grow and thrive. This year has been full of many financial wins, and we are honored to celebrate them alongside you. Your success is our success, and we are so thankful for the trust you have shown us. View full article

A key aspect of managing any business is keeping accurate financial records. One of the most important tools you can use to ensure your financial data is well-structured and organized is a Chart of Accounts. When implemented correctly, a Chart of Accounts can significantly reduce the risk of transaction classification errors, which can be detrimental to your financial reporting. This makes it easier to track income, expenses, and assets. In this blog post, we’re breaking down what a Chart of Accounts is, why it’s important, and providing a few practical tips on how to set up a Chart of Accounts in your business. What Is a Chart of Accounts? Before we get into the nitty gritty of setting up a Chart of Accounts, it’s important that you understand what it is and what purpose it serves in your business’s financials. A Chart of Accounts is a comprehensive index of all the financial accounts used by a business to classify financial transactions. These accounts are categorized into different groups and subgroups, which makes recording, tracking, and reporting on financial activities much easier. WHAT IS THE PURPOSE OF A CHART OF ACCOUNTS? A Chart of Accounts serves many purposes, including organizing finances into different categories to allow interested parties to get a clear view and understanding of a business’s financial health. It also allows stakeholders to quickly locate specific accounts in order to see which transactions are occurring in each account from the general ledger. A well-organized Chart of Accounts is also helpful for comparing financial data from year-to-year. How to Set Up a Chart of Accounts When setting up a Chart of Accounts, there are a few things to keep in mind that will help you reduce transaction classification errors. A common mistake businesses make when setting up a Chart of Accounts is having too many categories and overcomplicating the entire system. CHOOSE SIMPLE CATEGORIES We recommend that you choose simple categories that are easy to remember, such as labor income, parts income, truck fuel, insurance, etc. The more simplified and easy it is to remember these categories, the less likely it is that you or your team will make transaction misclassification errors. Plus, this also helps streamline your bookkeeping process. UTILIZE CHART OF ACCOUNTS TEMPLATES Most accounting softwares come equipped with sample Chart of Accounts templates that you can use and customize to meet your specific needs depending on your industry. This gives you a solid starting point to build upon. By utilizing these templates, you can ensure the most key categories and data points are included, which will also help reduce the risk of misclassification errors or missing data altogether. Just make sure that you review the template and tailor it to match your business’s specific needs. Remove any accounts that don’t apply to your business and add accounts that are unique to your industry or company. AUTO INDUSTRY CHART OF ACCOUNTS If you are operating in the auto industry, you’ll need a specialized Chart of Accounts designed to meet the unique accounting needs of your automotive business. This automotive-specific Chart of Accounts can help you save time, effort, and frustration, as it is tailored to the unique categories, transactions, and financial data you deal with on a daily basis. If you’re looking to improve your financial data and reporting processes, implementing a well-structured Chart of Accounts is one of the first steps we recommend that you take. It will help you streamline your accounting and bookkeeping processes and gain better control over your financial data. Follow the steps in this blog post to set your Chart of Accounts up in a way that minimizes transaction misclassification mistakes and streamlines your financial reporting. View full article

Effectively managing your products and services list is essential for auto shops. Not only does this simplify and streamline your invoicing process, but it also ensures that your financial records are accurate and organized. In this blog post, we’re breaking down a simple and practical approach to setting up a products and services list for auto shops that maximizes your overall efficiency. The Common Pitfall of Auto Shop Products and Services Lists In our work with auto shops, we often see a common pitfall in their products and services lists. The mistake they make is creating an overly extensive and long products and services list. This happens when auto shop owners add a new product or service to their list each time they make a sale. This leads to a confusing list that’s a million miles long. However, you can avoid this pitfall by streamlining your products and services and using descriptions effectively. How to Streamline Your Products and Services List Instead of creating a new product or service for each transaction in your auto shop, consider setting up a small handful of products and services and use the description to enter specific part numbers or details on the service provided. For example, set up a “Parts Service” item which is linked to the “Parts Income” on the chart of accounts. Then, each time a parts sale is made on an invoice, put the part number in the description with the correct price. Here are a few key categories that we recommend you include on your products and services list. LABOR This category covers all labor charges for various types of automotive work, such as diagnostic labor, repair labor, or maintenance labor. PARTS This is the category where it’s important to create a “Parts Service” item linked to the “Parts Income” account on your chart of accounts to avoid a long and confusing parts and services list. Whenever a part is sold, enter the part number and details in the description along with the current price. DISCOUNTS/REFUNDS This category can be used to track any discounts or refunds that are offered to customers. This is important to track separately in order to make adjustments as needed. SUBLET If your auto shop occasionally subcontracts out work to other service providers, this is the category you’ll use to record the costs of these sublet services. TIRE Having a specific tire category for tire sales, installation, and other related services is a great way to keep these invoices separate. By having a streamlined products and services list, you can ensure your list is easy to navigate, which saves you time and reduces the risk of errors. You’ll also make financial reporting more accurate by using descriptions and properly documenting each transaction. Plus, it will make invoicing and filing receipts more efficient and give you financial clarity to help you make informed business decisions. View full article

Taxes are an unavoidable part of life, and for many individuals and businesses, it can be an overwhelming process and stressful financial burden. We often dread those spring months when tax season is in full swing and we’re rushing to gather the appropriate documents, financial statements, receipts, and more for tax planning and filing. However, by planning for taxes ahead of time throughout the year, you can reduce your tax liability and ensure you are well-prepared for tax season. Plus, you won’t feel so rushed and stressed come tax crunch time. Read on for a few tax planning tips that can help you get ahead on your taxes and make the entire process smoother and less stressful. Tax Planning Tips TIP #1: KNOW WHAT YOUR TAXES ARE BEFORE ASKING IF YOU NEED TO REDUCE THEM. When planning for taxes, it’s important to have a clear understanding of what your taxes are. This will help you effectively reduce your tax liability. In order to do this, you must know your income, expenses, deductions, and credits. Take the time to thoroughly review your financial records and calculate your tax liability accurately. This is a foundational first step to help you start your tax planning efforts with the most accurate information. TIP #2: PLAN FOR TAXES THROUGHOUT THE YEAR. The next tax planning tip is to plan and prepare for taxes throughout the year, not just once a year during the busy tax season. This is a common mistake that many people make. Then, they often find themselves in a rush, making errors, and struggling to get support from accountants who are already booked out with tax work. Tax planning should be an ongoing process that you do throughout the entire year. Review your financial situation and make adjustments regularly. This will help you avoid last-minute stress, feel more prepared, and can even lead to opportunities for tax savings. TIP #3: IMPLEMENT A 3 PHASE TAX PLANNING APPROACH. To help you plan for taxes throughout the year, implement a 3 phase tax planning approach. Here’s a breakdown of what each phase might look like. PHASE 1: WHILE PREPARING THE TAX RETURN FOR THE PREVIOUS YEAR. Begin the first phase of the tax planning process by reviewing the previous year’s tax return. Look at what your financial picture and overall financial health looked like. Ask yourself if there were any significant changes in your income and/or expenses. Check to see if this year’s trends are in line with last year’s. Take note of any projected financial growth or slowdowns, as this will inform your tax planning decisions. PHASE 2: END OF JUNE Around the end of June, take another look at your financials thus far for the year. This is a great time to get a solid estimate of where you’re at and what the rest of the year will look like. If you’ve experienced good growth so far, you may want to consider increasing your estimated tax payments to avoid penalties and interest. This also gives you time to prepare for higher taxes in the spring by saving more for taxes. This is also an ideal phase to assess if there have been any major gains or losses in your income or business investments, as these may require you to adjust your tax planning strategy. PHASE 3: OCTOBER OR NOVEMBER As the year progresses, continue to monitor your financial situation and take a look in October or November to see if any new opportunities for tax planning have emerged. This is the time when you may consider making significant purchases before the end of the year that will benefit your tax situation. By implementing these 3 simple tax planning tips throughout the year, you can set yourself up for a less stressful (and surprising) tax return. You’ll head into tax season feeling confident in your decisions and prepared for any tax liability you must take care of. It’s important to remember that tax laws and regulations can change, so be sure to stay informed and consult with an accountant or tax professional to stay up-to-date.

1099 is a tricky slope to manage in the auto industry. I agree with you that it's not a great way to go.

Well, you don't get quality techs who want to get paid "off the books". If the potential new hire wants the shop owner to pay them off the books because they're trying to fly under the radar for maybe unemployment, what kind of stunts would they pull on the shop owner?

In the world of business, cash flow management is a key element of financial success. A business’s ability to effectively manage the cash coming in and out of the business will ultimately determine whether it remains successful and profitable or struggles to keep its doors open. One of the most widely used strategies for cash flow management comes from the book Profit First by Mike Michalowicz. This strategy helps business owners transform the way they manage their finances in order to ensure stability, growth, and confidence knowing they’ll always get paid. Read on to learn more about this strategy and how it can help you master cash management in your business. What Is the Strategy for Cash Management? The Profit First strategy that Mike Michalowicz teaches is more than just a financial concept. It’s a true mindset shift around how you manage your money and operate your business. This mindset prioritizes profitability over everything else. In fact, it’s so powerful that the Profit First method has been copyrighted, as it is so well known for helping business owners transform the way they look at and manage their finances and make decisions. The core principle of the Profit First strategy is to set aside an allotted percentage of revenue as profit to pay yourself first before you pay off any expenses or set money aside for taxes. Instead of the traditional profit formula of Sales - Expenses = Profit, this strategy flips the equation, making it Sales - Profit = Expenses. It might seem like a small, simple shift, but it can have a huge impact on your business’s overall financial health and the health of your personal finances as a business owner. The Power Of Separate Accounts One of the key ideas behind the Profit First strategy is to have separate bank accounts for different aspects of your business in order to manage cash flow and divide money appropriately. This is the bread and butter of the strategy and is where you’ll see the most positive impact on your cash flow management. By separating out your accounts, you’ll be able to see exactly what’s going in and out of each account, allowing you to make sound financial decisions and take control of your business finances. The two most important accounts to have are taxes and payroll. How this works is the business owner transfers a certain percentage of revenue into these separate checking accounts, and payroll and taxes are then paid from their specific accounts. By having these separate accounts, you can ensure that you are consistently saving money for taxes so you never have to scramble at the last minute to scrape together enough money to cover your tax obligations. Your employees are the heartbeat of your business, so it’s essential to set aside funds in a payroll account to ensure you can always pay them on time. Benefits of The Profit First Strategy There are many benefits of using the Profit First strategy for your cash management. First, by having separate bank accounts for each aspect of your accounting, it creates clarity in your finances, allowing you to see where your money is going, which makes it easier to make informed decisions based on the numbers. It also can greatly reduce the stress on the business (and owner) by knowing that you always have funds set aside to pay your taxes and your employees. With this strategy, you never have to worry about your obligations come tax time or pay day. With the focus on profit, your business will increase profitability and be able to grow sustainably. Your spending will be under control and you’ll be able to make sound business decisions that drive you towards growth. Plus, in all of this, you’ll actually be able to pay yourself! So often, business owners put paying themselves on the backburner, especially in tough times. With the Profit First strategy, paying yourself a wage before expenses or taxes is a priority. If you’re looking to implement the Profit First strategy in your business to increase cash flow, I highly recommend getting a copy of Mike Michalowicz’s Profit First book. It teaches the tried and true, straightforward process for putting this strategy in action.

As an auto shop owner, one of the most important aspects of managing your business and ensuring it is profitable is effectively organizing and analyzing financial statements in order to make sound decisions for your shop and employees. As an accountant for auto shop owners, I often see financial statement issues arise that cause frustration, overwhelm, and discrepancies in a shop’s finances. In this blog post, I’m breaking down 6 of the most common issues with auto shop financial statements and offering quick tips on how to fix them. Financial Statement Issues In Auto Shops Not Understanding Your Financials The first issue I see with financial statements is auto shop owners simply not understanding their financial statements. They don’t know what they’re looking at, what the numbers mean, or how to navigate QuickBooks. This can make it really hard to make sound financial decisions if you don’t know how to use them to increase profits and make sound financial decisions. Solution: The solution to this issue is to set your financial statements up in a way that you can easily access, organize, and understand them. We recommend using QuickBooks for all of your financial statements, as this makes it easy to organize and analyze them. Shop Management Software Doesn’t Match QuickBooks The next common financial statement issue is having discrepancies between your Shop Management System (SMS) and your accounting software, such as QuickBooks. This can lead to a lot of confusion and inaccurate financial reporting. Your SMS may offer one figure, but what QuickBooks shows is the most accurate financial recording. Solution: The solution to this issue is to make being consistent in your financial reporting a priority. Calculate and record your financial data in the same way each month, at the same time of the month. Err on the side of being conservative with your figures to ensure your shop remains profitable and your financial statements reflect the actual performance of your shop as accurately as possible. Parts and Labor Income Are Not Split Out Failing to keep parts and labor income separate in your financial statements is another big issue, which makes it difficult to see where your actual revenue is coming from. With labor, there are so many factors to consider, such as employee wages, paid time off, benefits, etc, so it’s important to keep these aspects separate. Solution: The solution for this financial statement issue is to organize your income into separate categories for parts and labor. This will give you clarity in your finances and make it easier to analyze how profitable each aspect of your business is. This will help you make more informed decisions for your business. Parts and Labor Cost Of Goods Sold Are Not Split Out Similar to the last problem, if you fail to split out parts and labor costs of goods sold, you can create discrepancies in your gross profit margin. This is a key indicator of the overall financial health of your business, so it’s important that it is as accurate as possible. It’s important to note that technician pay should be classified as a labor cost of goods sold for the most accurate financial reporting. Solution: When setting up your accounting software, make sure to create a clear separation between parts and labor costs of goods sold. This will help you see the profitability of each side of your auto shop, allowing you to lean into the revenue streams that bring in the most money for your shop. Be sure to classify technician pay as a labor cost of goods sold. Not Tracking Warranty Work Warranty work is where a lot of financial statement issues arise. When you are looking at your financial statements, you must account for warranty work, otherwise, your income will look skewed as well as your expenses. Solution: To ensure warranty work is classified and tracked properly, create a simple system to track this work and any transactions related to warranties. This will keep your financial statements accurate. Misclassifying Transactions The last common financial statement issue in auto shops is misclassifying transactions. When you set up your QuickBooks, do so in a way that allows you to easily classify each transaction properly right away. This is an issue with a simple fix, but it can drastically skew your financial statements. Solution: After setting your QuickBooks up in a way that works for you to keep everything properly classified, make sure to regularly review your transactions to verify they’re accurately classified. This will help you catch any outliers or misrepresentations before it becomes a huge issue. All in all, by knowing what financial statement issues to look out for in your auto shop business, you can ensure you are set up for success and have your QuickBooks laid out in a way that works for you, that makes it easy for you to manage and understand. View full article

As a business owner, hiring the right people to work for you and serve your customers is a critical aspect of running a successful company. As you look to grow your team, there are two different categories of workers to be aware of: employees and contractors. Both of these types of workers serve essential roles, but it's vital to understand the differences between employees and contractors, as there are different legal compliances, tax obligations, and nuances to both. In this blog post, we’re diving into the key differences between employees vs contractors so you can make the best, most informed hiring decisions for your business. Key Differences Between Employees and Contractors Definition and Role Clarity The most fundamental difference between employees and contractors is their relationship with your business. Employees are individuals who work under your direct control and management, performing tasks assigned by you that are integral to your daily operations. On the other hand, contractors are external workers or individuals who are hired to complete specific projects or provide specialized services, working independently and autonomously from the business. Work Schedule and Degree of Control The degree of control that a business has over its workers is another defining aspect between employees vs contractors. Employee-employer relationships typically involve a higher degree of control and direction from the employer. As an employer, you dictate an employee's work schedule, the tasks they perform, and how they accomplish them. Contractors differ because they generally have more independence and control over how they complete their assignments, when they work, and where they work. Ownership of Tools The ownership of necessary tools needed to complete a job is another distinguishing factor between an employee vs contractor. An employee will be supplied with the necessary items, tools, and softwares necessary to complete their job. A contractor must supply their own tools and softwares, as they are likely used for more than one client. Tax Implications There are vastly different tax implications when hiring employees vs contractors, and understanding these is crucial. When you hire an employee, you are responsible for withholding and remitting income taxes and Social Security from their wages. Hiring contractors is different in the tax sense because they are considered self-employed and are responsible for their own taxes. As the employer, you don’t withhold taxes for contractors, but instead, they summarize their earnings on a Form 1099 at the end of the year. Employment Benefits As a business owner hiring employees, you may be required to provide employee benefits, such as health insurance, retirement plans, paid time off, and other benefits, depending on your company policies and legal requirements. Since contractors are self-employed, they do not receive these benefits from your business. Long-Term Commitment and Dependence Hiring an employee for your business implies there is a more long-term commitment with the expectation of ongoing work. Employees are likely dependent upon the business for their income and benefits. With contractors, these commitments may be more short-term and have a defined scope and timeline. Of course, contractor contracts can be renewed or terminated depending on the business’s needs or the contractor’s desires. Contractors likely have a roster of clients, so they are less reliant on one single client or business for their income. Ensuring Legal Compliance Classifying employees vs contractors correctly is critical for legal compliance. Misclassifying employees as contractors and vice versa can lead to an array of legal issues and expensive penalties. Stay up-to-date on the specific worker criteria set out by the IRS, Department of Labor, or other state authorities in order to ensure you are differentiating the two and classifying your workers properly. Knowing the differences between employees and contractors is vital for managing your team effectively and ensuring compliance with tax and labor laws. As you expand your business and hire new team members, take the time to assess the nature of the work and the relationship with the individual to make the appropriate classification. Understanding these differences is key for making informed financial decisions. View full article

Thank you! Well, you're in luck. I happen to know a few of those people

Running an auto repair shop is a rewarding career and an integral part of a community. However, it also comes with its fair share of financial challenges. As an auto shop owner, you must understand the importance of implementing the necessary systems and processes to keep your business profitable and sustainable long-term. In this blog post, we’re uncovering a few of the most common auto repair shop financial mistakes to avoid so you can stay successful and improve your bottom line. Top Auto Repair Shop Financial Mistakes To Avoid Neglecting Proper Inventory Management Inventory is one of the most significant expenses that an auto repair shop has. Failing to manage your inventory efficiently can lead to issues such as overstocking, which ties up valuable capital, or understocking, which leads to a loss in revenue and dissatisfied customers. In order to avoid this financial mistake, implement a robust inventory management system that tracks parts usage, orders, and replenishment schedules. This will help you find the right balance and optimize your cash flow. Ignoring Preventative Equipment Maintenance Another common auto repair shop financial mistake to avoid is not putting the proper preventative equipment maintenance procedures in place. An auto repair shop relies heavily on specialized equipment to deliver quality services to its customers. Neglecting to maintain this equipment regularly can lead to expensive breakdowns, emergency repairs, and force you to cancel customer appointments (which also leads to a loss of revenue). To avoid this, create a maintenance schedule for all tools and machines, ensuring they remain in excellent working condition, reducing unexpected expenses, maintaining safety, and improving efficiency. Overlooking Employee Training and Development Skilled and well-trained auto repair shop technicians are the key to running a successful shop. They are the ones doing the daily manual labor, therefore, you should invest in continuous training and development for your staff to help them improve their skills, enhance customer service, and reduce the likelihood of errors or costly mistakes. Incentivize your team to seek certifications and stay up-to-date with the latest advancements in automotive technology. An auto shop that values innovation and constant growth will see the benefits both in customer satisfaction and in their bottom line. Inadequate Budgeting and Financial Planning Many auto repair shop owners are great at the actual manual work and labor involved in running a repair business, but when it comes to creating a comprehensive budget and financial plan, they’re not as skilled or confident. Without a clear financial roadmap, it’s challenging to track expenses, identify areas where you can cut costs, or allocate resources effectively. To ensure your business is running like a well-oiled machine financially, develop a detailed budget that takes into account all overhead costs, labor expenses, marketing efforts, and savings for future investments. Ignoring Marketing and Customer Relationship Management While marketing is an ever-changing field, it's so important to embrace modern marketing technologies, such as digital advertising, social media, and targeted promotions in order to grow. Word-of-mouth marketing is great, but it should not be your sole reliance. Additionally, you must prioritize customer relationship management by collecting feedback, addressing concerns promptly, and offering loyalty programs to retain existing customers and attract new ones. Not Complying with Tax Obligations Finally, the last auto repair shop financial mistake to avoid is not complying with tax obligations. Tax regulations for businesses, including auto repair shops, can be complex and ever-changing. Failing to comply with tax obligations can lead to penalties, hefty fees, and legal issues. To avoid this mistake and ensure you are fulfilling your tax obligations properly, consider hiring an accountant or tax professional who understands the automotive industry to help you navigate tax requirements and maximize deductions. View full article

It’s been 3 years since the onset of the global Covid-19 pandemic, and we are still feeling the side effects when it comes to accounting, taxes, and tax refunds. In both 2020 and 2021, the IRS issued notices under the Tax Code, giving them the authority to postpone deadlines and due dates related to filing tax returns due to the federally declared disaster. However, these notices did not pertain to the IRS lookback period for refund claims filed after April 15th. Therefore, many taxpayers who file yearly after April 15th will not be able to claim a refund as it falls outside of the lookback period. Now, in 2023, a new notice has been issued by the IRS, extending the lookback period for refund claims. Here is a rundown of everything you need to know about this IRS extension. What is a Lookback Period First off, it’s important to understand exactly what the IRS lookback period for refund claims is. In general, a taxpayer must claim a refund on their taxes within 3 years from the date the related tax return was filed or 2 years from the date that the tax regarding the claim was paid. This IRS lookback rule allows taxpayers to request a refund in amounts paid within the lookback period. The Extended IRS Lookback Period Since the IRS failed to extend the lookback period in 2020 and 2021, many taxpayers who filed after April 15th have been left unhappy and without an option to request refund claims on those payments. In an effort to remedy this problem, the IRS has issued a new notice regarding the lookback period, Notice 2023-21. This notice disregards the time periods from April 15, 2020 to July 15, 2020 (2019 tax returns) as well as from April 15, 2021 to May 17, 2021 (2020 tax returns), when determining the start of the lookback period. This notice comes in an effort to realign the lookback periods with the formerly postponed due dates for filing tax returns due to the pandemic. What Does the Extended IRS Lookback Period Mean for Taxpayers? While the IRS’s extended lookback period is a positive move for taxpayers, it does not fully fix the problem created 3 years ago. This should be taken as an opportunity to look deeper into tax law and how we can create a permanent solution and prevent this type of misalignment in the event that future disaster filing postponements are made. People are already weary of the IRS, filing taxes, and making refund claims, and this situation definitely does not help their confidence. It is our hope that necessary changes are made to ensure that all taxpayers have the opportunity to claim credits or refunds moving forward without being denied. All in all, taxes and dealing with the IRS and lookback periods can be stressful, but the best way to ensure your tax filing and refund claim experience is as positive as possible is to keep your bookkeeping and financials up to date and organized so you always have what you need and can file on time. If you need help getting your bookkeeping and finances organized and ready for tax season, I’m happy to help with our bookkeeping and financial services. Feel free to browse our services and book a free consultation call with us today! View full article

Have you ever walked into a room and stopped because you couldn’t remember what you were trying to do? Forgetting is easy. Especially when it’s something that we don’t actively engage with on a regular basis. When it comes to the reasons for what we do and the decisions we make as a business, remembering the “why” behind our actions is important. How It Started ThreeRivers Bookkeeping started because I wanted to help small automotive businesses overcome a challenge I observed while working with them. I started my career working with mechanics and automotive specialists in a related industry, but I realized that my passion was for helping those small businesses in a different way. Managing Bookkeeping’s Challenges Bookkeeping is boring and tedious. Keeping everything properly organized takes so much time, effort, and specialized knowledge that everyday business owners can’t easily handle it. And errors in bookkeeping, which are quite common, can financially ruin businesses. Errors can make it harder to budget correctly. But worse is the damage caused by errors that impact taxes. My goal in creating Three Rivers Bookkeeping was to help remove bookkeeping as an obstacle for small businesses. Even as I am coming up with new services (coming soon), my goal is to help businesses eliminate obstacles and run their businesses more efficiently and effectively. Build Wealth Through Business How much money do you want to make? In other words, what do you want to do outside of business? This is a question we ask our clients when we start working with them. What you want to do with your time, will require a specific amount of money. And in order to make the amount of money you want, your business will need to make a certain amount of money as well. While there are many people who work on books and do bookkeeping, the key difference between them and Three Rivers is our desire to help our clients build wealth through their businesses. View full article