Yes! The profit is the difference between the revenue and expenses of your business. The bank balance could be reduced by making payments on loans, credit cards, owner draws, etc. Cash flow and profit are not always the same.
Choosing a business structure depends upon your unique situation. Below is a list of the four types of business structures the IRS recognizes. (Please note that a LLC is a state designation and is not a recognized business structure by the IRS, so you will still need to select one of these four when creating your business.)
Sole-Proprietor: This is a single-member owner business. This business cannot pay the owner's payroll. This business is reported as part of the 1040 tax return, Schedule C.
Partnership: This is a multi-member business structure. A Partnership is considered a pass-through business, as the business does not pay any taxes, all taxes are paid by the individuals who are members of the business. This business is reported on a 1065 Tax Return and produces K-1 forms for each of the partners. Those K-1s are then added to each 1040 tax return to show income.
S-Corp: This can be a single or multi-member business. As a member of this business, you are required to take a “reasonable” salary per the IRS. An S-Corp is considered a pass-through business, as the business does not pay any taxes, all taxes are paid by the individuals who are members of the business. This business is reported on an 1120S Tax Return and produces K-1 forms for each member of the business. Those K-1s are then added to each 1040 tax return to show income.
C-Corp: This is a large corporation. (Think Microsoft, Google, Amazon, etc.) This business gets reported on an 1120 Tax Return. This is not a pass-through entity, so no K-1s are generated. Instead, the business will pay tax itself, and then the owners are taxed on the dividends that they received during the year.
The answer is… maybe.
There are some definite advantages to being an S-Corp vs Sole Proprietor, but not every business can utilize those advantages. There are also several requirements for an S-Corp that a Sole Proprietor will not have, and sometimes there is absolutely no difference when it comes to the amount of taxes being paid. It is best to discuss the situation with someone who is knowledgeable and can give you the information and work with you to make the best decision.
Believe it or not, there are thousands of grants available for all types of non-profits (some for-profit grants are available as well). There are federal, state, local, and even private grants that can be applied for by organizations. Grant writing can be a very specialized skill, but finding the grants you would like to apply to takes some time and knowledge of where to look. We can guide you through this process.
A CPA has a certification for working in the public accounting area, which includes taxes and auditing. While a CMA is more focused on private business accounting. So, it depends on what kind of financial services you are looking for as to which certification may be best to assist you. However, do not think that each cannot do the other’s job—many CFOs running companies are CPAs, and there are plenty of CMAs out there who prepare tax returns. When it comes to selecting the accountant to work with you and/or your business, the letters behind their name should not be a main consideration. You need to spend some time talking to the person, get a feel for them, and how they will work with you and your organization. Finances are very personal, and you should select someone that you feel comfortable working with personally. It’s essential to choose someone you feel comfortable working with, beyond their certification.
I am asked this question so often, and my answer is always the same:
“Did you want to give the government an interest-free loan all year?” Because that is exactly what a refund is. Would you overpay your electric bill and then get excited when they sent the money back to you? Probably not. The goal is to break even—paying enough taxes without overpaying. It's better to keep more money in your pocket all year.
So, all foundations are non-profits, but not all non-profits are foundations. A foundation is a non-profit organization that provides grants to charitable causes, while a non-profit is an organization established to operate for collective, public, or social benefit.
Some clues are more obvious than others, but I will list a few here:
The right accounting software can depend on many factors. There are hundreds of software platforms available. Selecting the one that works for your business is very important. Yes, many small businesses choose QuickBooks, because it is relatively simple to use and understand, the price point is easier for small businesses to work with, and they can be up in running in a matter of hours vs weeks or months.
This is a fantastic question and I wish more companies understood and asked this question. The short answer is YES! Not every company needs a CFO full time, but every company can benefit from what a CFO can offer. A CFO can assist you with building a 5 year plan for your business, helping to work up a strategy for how to increase revenue, or how to set yourself apart from your competitors. All of these will help your business to grow and position your business into the future.