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Posts by TFOSLLC

Could I Get an Interpreter Here?

Do you ever feel like you’ve been to a foreign country when you leave your CPA’s office? I mean, really, they seem to speak in an altogether different language.

It’s like you need an English-to-CPA dictionary. Or at least a phrase book. Now there’s a thought.

Instead of immersing yourself in a whole ‘nother culture and language of numbers, how about you learn a few key terms and notions that will help you navigate the financial landscape between you.  That is, the balance sheets, income statements and tax returns that describe your company in financial terms.  After all, you know your company best—they just know the numbers better.  It is, really, up to you to put two and two together…oh, sorry, I couldn’t resist.

Here are a few key words, phrases and concepts to keep top of mind when next you visit with the green-eyeshade monster:

  • Accounting period
  • Cash flow
  • Cost of sales
  • General ledger
  • Gross profit
  • Income statement
  • Liabilities
  • Liquidity
  • Return on investment (ROI)
  • Working capital

While this doesn’t cover everything, it will, in the continuation of the travel metaphor, at least keep you from missing your (financial) train. You don’t need to know all of these concepts in great detail, but you should at least have a passing definition and some examples in your mind for each one.  Over time and as your relationship builds with your financial team, you will become more literate in the language.  And they, in turn, will become more knowledgeable about your business and industry.

For more on how to speak the language of finance, call or write to us.  TFO Solutions is dedicated to helping entrepreneurs and business owners with their financial strategy from the back office to the boardroom.

**photos courtesy of Unsplash (Ivan Shilov and Waldemar Brandt, photographers)

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What’s Mine is Mine and What’s Yours is Mine

OPM. Other people’s money.

In the world of investments that’s usually how an enterprise gets funded.  The days of banks being the leading (or only) source for loans and funds for investing have been waning for quite some time.

Have you taken advantage of using funds from private investors to fund and grow your company? If you have, you know that it can be an adventure, but it can also be a positive way to grow and expand.  But if you take this road, what should be considered in handling other people’s money?

Here’s a list of considerations:

  • Involve a third party, like an attorney or money manager, to accept, handle and return money.
  • Set up separate accounts just for the private lending cash; also consider not co-mingling the cash from multiple investors.
  • Consider assigning each loan a specific role—i.e., operational improvements or warehouse expansion.
  • Be sure and follow your state’s regulations on reporting and filing any reports.
  • Repay your investors promptly and to the plan agreed to. Continue to pay interest until their portion of the investment is paid off.

Whatever you do, start with a clear plan and then stick to it.  As the saying goes, “those who fail to plan, plan to fail.”

For more on how to work with investment groups and individuals and handling investor’s money, call or write to us.  TFO Solutions is dedicated to helping entrepreneurs and business owners with their financial strategy from the back office to the boardroom.

**photos courtesy of Unsplash (Allef Vinicius and Sharon MCutcheon, photographers)

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Welcome to the Hotel Cali-Texas…

Out of sight, out of mind, right?

Used to be, the boss could call an all-hands meeting in the company cafeteria and look everyone in the eye and interact.

Well, in the age of COVID, having off-site employees might mean they are out of sight, but they really aren’t out of mind. And when it comes to payroll and other basics of human resource management, they really should be top of mind.

They might be in California when HQ is in Texas.

Having a remote workforce, particularly one that that spans multiple cities and states—and maybe even countries—is more the norm than it has ever been.  However, when it comes to payroll and other things that impact them, things change dramatically if they are in L.A. and you are in Dallas.

Here’s a list of considerations:

  • Payroll
  • Income and other taxes
  • Hiring rules
  • Wage and hour requirements
  • Immigration rules

Just because someone works for your company doesn’t mean the rules of your corporate home state (or even city and county) apply.  The fact is they reside some place else.  This means the rules where they are doing the work apply.  If an employee works for a Dallas company remotely in Atlanta, then payroll and income taxes for Georgia apply to them and must be paid to the state of Georgia.  Ditto the rules on the conditions of their employment and how their work hours are governed.

For more on how to manage your people, payroll and other important assets, call or write to us.  TFO Solutions is dedicated to helping entrepreneurs and business owners with their financial strategy from the back office to the boardroom.

**photos courtesy of Unsplash (Chris Montgomery, Keem Ibarra and Jamie Lopes, photographers)

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Demystifying that Five-Letter Word: “Audit”

The very utterance of the word makes even seasoned businesspeople cringe and cower in fear.

“Audit? Why do we need to do an audit?”

OK, before you go into hiding and crawl into the fetal position in a corner, let’s stop and realize just what an audit is, the kinds of audits there are and that an audit can actually be a good thing.

“Really? Oh, pray tell, please continue,” she said.

Actually, there are nine different types of audit.  And they all play a role in the success—or failure—of your business:

  • Internal
  • External
  • IRS tax (the one we all think of)
  • Financial
  • Operational
  • Compliance
  • Information system
  • Payroll
  • Pay

Audits are a way to objectively examine and assess a company’s performance—operational, financial, and other aspects of the company—to ensure things are working and where there might be room for improvement.  They all involve:

  • A review
  • Assessment of findings
  • Recommendations

In many cases, audits are a legal requirement.  But in the end, they all are about measuring performance and compliance with some entity’s rules. While having the IRS look at your books is daunting at the very least, if you are complaint and have kept up with your books, it will be a valuable exercise and worthy of lessons learned.

For more on how to manage your finances and use audit to your full advantage, call or write to us.  TFO Solutions is dedicated to helping entrepreneurs and business owners with their financial strategy from the back office to the boardroom.

*photos courtesy of Unsplash (Stephen Dawson, Markus Winkler and Mwangi Gatheca, photographers)

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“First you take two from four…”*

We all know two times two is four.  Is there ever a time when it isn’t?

Maybe when you’re selling online?

If you think business is business is business, look again.  Brick-and-mortar businesses operate differently than online, virtual stores or e-commerce concerns. And, as such, there are differing financial considerations. The differences lay in these areas and, consequently, impact your financials:

  • Pricing.
  • Shipping and handling and inventory.
  • Payment processing (collections).
  • Store build-out and “rent.”
  • Sales commissions and compensation.
  • Equipment.
  • Online sales and marketing.

If your overhead is different (among other things), then your pricing model will change. Inventory and shipping and handling becomes all that much more important as goods move differently through your supply chain (no storefront). Payments are collected and processed all online or through alternative systems from a traditional storefront. Where you sell from (your own site or sites like Amazon) changes your expense model dramatically. Payroll and commissions also change because of how your sales are accounted for and who makes them. Instead of a sales floor and a traditional point-of-sale unit, everything from fulfillment to inventory to the final transaction has to be done by something—meet the new age equipment. And how you go to market is vastly different that having walk-up customers.

For more on how to manage your finances for your online enterprise, call or write to us.  TFO Solutions is dedicated to helping entrepreneurs and business owners with their financial strategy from the back office to the boardroom.

**photos courtesy of Unsplash (Mark Konig, Chris Liverani photographers)

*With apologies to Tom Lehrer and his song, “New Math.”

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When You Need The Whole Pie But Can Only Afford A Single Slice

“I can’t afford it,” are some very dreaded words.  But we aren’t talking about a new car or special outfit here, or even a gourmet pie.  This is about your company’s finances.

What do you do when you can’t afford a high-dollar CFO but you need one?

You’ve come to the conclusion you need help with your company’s finances.  It’s grown beyond your ability to handle it and your current staff’s capabilities.  However, you still need to keep a handle on it and need to be able to delegate the responsibility. You’ve made a list of what you need in this new super hero with a green eye shade—but you’ve also looked at your budget. And you want them to either do, manager or oversee:

  • The accounting function.
  • Bookkeeping
  • Payroll.
  • Human Resources.
  • Other tactical things related to your company’s finances.
  • Oh, and throw in some strategy…

Hmmm…it works out that if you hired a W-2 employee with that skill set it would cost you easily $200k.  Here, let’s go diving in the couch cushions to see if you have that lying around…

Wait…what about outsourcing?  For a fraction of the cost (and without the overhead) you could have a talented, experienced and strategic CFO sitting next to you.

By outsourcing you buy that fraction of the talent you need and not the  whole person.  That’s not to say you will only get a fraction of the service.  Most fractional service providers (contractors) work by the project or offer specified services for a fee or packaged price.  That allows for a smaller company to have access to extreme talent for a fraction (and an affordable) price.

For more on how to manage your finances fractionally, call or write to us.  TFO Solutions is dedicated to helping entrepreneurs and business owners with their financial strategy from the back office to the boardroom.

*photos courtesy of Unsplash (Hugo Aitken and Ibrahim Boran, photographers)

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