Accountant discussing financials with an E-commerce Business owner

Bookkeeping Tips for Your E-Commerce Business

Bookkeeping is an essential component of an e-commerce business. With an online store, your business’ products will be available 24/7/365 to a wide array of customers. With the internet, you can cast a wide net, reaching a large audience and fulfilling drop-ship orders while you maintain a small physical footprint. 

While setting up a website and store are critical steps, your store won’t gain traction if you don’t engage in financial planning. At Marshall Jones, we have compiled tips for bookkeeping to ensure your e-commerce business’ success. 

Essential Considerations for E-Commerce Bookkeeping

E-commerce bookkeeping can present challenges for business owners. When you understand how these challenges can affect your e-commerce bookkeeping, you can select the best solution for your business. 

1. How to Account for Alternative Payment Methods

While most of your customers will make their payments via credit cards, you may also decide to accept other payment types. If you go this route, you may want to equip your e-commerce platform to track these sales. Along with credit cards, payment types may include checks, cash and gift cards, especially if you sell in person, too.

Though this can make purchasing more convenient for your customers, accepting alternative payment forms may make your bookkeeping more complicated. Payments made via check or cash, for example, won’t appear in your books until you deposit this money in your account.  

2. How to Document Merchant Fees

When you choose an e-commerce platform to host your online store, you will likely need to pay merchant fees. Using one of these platforms for your e-commerce business can offer benefits from a quick startup to simple search optimization. However, in exchange for these perks, the platform will take a cut of each of your sales. 

That can complicate your bookkeeping, as deposits in your bank account will be net sales rather than gross sales. In your e-commerce bookkeeping, note the gross sale, then record the difference between the gross and the net to document your merchant fees. 

3.  How to Track Inventory Across Platforms

Another challenge you may face in e-commerce bookkeeping is tracking your inventory across platforms. Many e-commerce services offer built-in inventory tracking, making it simple to record and manage your online inventory. However, if you use multiple platforms for selling your product, these platforms won’t track your inventory changes from outside sales. 

As such, it is essential to have a central place for keeping up with inventory. An outsourced bookkeeper can use your information to establish an accurate record of sales, restocks and returns in your books.

4. How to Record the Cost of Third-Party Tools and Refunds

You may use third-party tools to process payments, which can also complicate your bookkeeping — particularly when it comes to exchanges and returns. If someone returns a product, for example, did the third-party e-commerce platform track it? Or, did your business bookkeeping record the return?

Additionally, you likely won’t recoup the merchant fee your business paid, even if a customer returns an item. The merchant fee then becomes a loss, which you must reflect in your books.

The Importance of Tracking Inventory Cash Flow

Cash flow is the amount of money that comes in and out of your business yearly, quarterly and monthly. Knowing how much money passes through your business will allow you to maintain a healthy profit margin.

A cost-effective, organized inventory is one of the most crucial aspects of accounting for e-commerce companies. Maintaining inventory means more than stockpiling the items you want to sell. It also entails keeping track of your cash flow. 

The costs listed on your document for inventory cash flow should exclusively relate to your stock. You may want to list expenses including the cost of purchasing a product in your inventory, the cost of manufacturing and the cost of maintenance. For example, if you have merchandise that needs to stay frozen, your expenses would include maintaining and running the freezer. 

You should be tracking your actual sales and any inventory losses. Losses may result from damage, spoilage and theft. Though you can take measures to prevent these, you should still be ready to deal with them if they occur. 

How to Master Bookkeeping for E-Commerce Businesses: What to Do Daily, Weekly and Monthly

You can master bookkeeping for your business by following our e-commerce bookkeeping tips for daily, weekly and monthly tasks. 

Daily Bookkeeping Tasks

Every day, take the following financial steps:

  • Maintain a paper trail, including your paper and email receipts.
  • Keep track of invoices.
  • Read and archive relevant emails.

To claim legitimate business expenses and get your full tax benefit, you must be able to support your business expenses via receipts, emails and invoices. 

Weekly Bookkeeping Tasks

Every week, take the following financial steps.

  • Note variable or new expenses: If you have variable or new costs, keep an eye on these monthly to ensure they align with your expectations.
  • Track your cash flow: Track how much money you have in the bank and what expenses you need to cover for your business.  

Monthly Bookkeeping Tasks

Every month, take the following financial steps.

  • Pay attention to expenses: Each month, review your spending, so you can think strategically about how it fits in your business and how you may be able to increase profitability and cut costs.
  • Look at your business as a whole: Evaluate your business from a holistic perspective to get an idea of the bigger picture and understand how everything is going. Review your sales, income, expenses and cash position for a comprehensive view of your business.

Looking for an Outsourced E-Commerce Bookkeeping Solution? Contact Marshall Jones

At Marshall Jones, our bookkeeping services involve recording, retrieving and storing financial transactions. We will help you handle billing, record and organize receipts, prepare financial reports, track and verify invoices, oversee accounts receivable, handle employee payroll and pay suppliers and vendors. 

While some businesses may attempt to learn bookkeeping themselves or use bookkeeping software, this can lead to inaccuracies and errors. Fortunately, outsourcing your bookkeeping to us at Marshall Jones can lower the risk of mistakes and help your business avoid lost business opportunities and audits. Contact us at Marshall Jones to learn more about our e-commerce accounting services. 



Accounting Tips Every Real Estate Company Needs to Know

Real estate is a unique industry. There is plenty of opportunity for growth that depends on how well you manage the array of transactions that go through your business. Organization is critical in making the most of your bookkeeping and maximizing your profits, regardless of the size of your operation.

Here are a few of our tips on how to perform real estate accounting.

1. Choose a Method

Some businesses are required to use one method over another, while others have the option of using accrual or cash-basis methods for their bookkeeping. Each offers a different approach to accounting for real estate development.

Cash basis involves recording one entry every time cash is exchanged, while accrual creates two equal entries and records them when the cost is incurred, such as during an invoice, as opposed to being received or sent.

2. Set Time Aside Each Week to Review Finances

Staying on top of your money is essential. Plan on spending some time to go over your records, reconcile your accounts and understand where your money’s going to be. Talk it over with your accountant or business advisors.

3. Separate Personal and Business Accounts

This task is a simple one that can make your life much easier. It will make tax season significantly less daunting and it helps you stay organized.

4. Know Your Laws and Codes

Different regions have different implications for a real estate business. Administrative codes can vary, as well as local tax laws. Study up on them and ensure you abide by the regulations that apply to your company.

5. Maximize Your Tax Deductions

It might sound straightforward, but if you have a thorough understanding of possible tax deductions and write-offs, you may be able to reap the benefits and gather more revenue for growth. Your home office, work computer and gas costs can all earn you a higher refund at the end of the fiscal year.

6. Know Your Workers

If you frequently work with contractors, office employees or repair technicians, you’ll need to know how their status fits into your bookkeeping. For employees, you’ll need to pay employment taxes, including the portion withheld from their paychecks. Contractors, on the other hand, are responsible for their own taxes, so you won’t pay these.

Knowing which category your workers fall under can save you from penalties, back wages and other adverse results.

7. Work With an Accountant

Let’s be honest — you’d probably rather spend your time managing your properties than managing the books, especially if you’re not well-versed in accounting for real estate transactions. Partnering with an expert can help you maximize your profits and stay organized so that you can grow your real estate investments further.

We can help with that last one. When you are running a company in Atlanta, your focus should be on the task at hand, rather than the bookkeeping. Let Marshall Jones handle your real estate bookkeeping services. Contact us today to start working with one of our certified public accountants and advisors!

Top 5 Trends in the Non-Profit Industry

Nonprofits have a difficult role to fill. They improve conditions for people, animals and communities, all while running an organization that tends to resemble a commercial business. That means, like profit-making companies, they must adapt to changes in the industry, too.

5 Nonprofit Trends in 2020

As nonprofit organizations adapt to the changing landscape of the economy, their challenges and goals can shift as well. Here are some nonprofit trends to watch in 2020.

1. Investments in Technology

Innovations in technology become tools for the sustainability of an organization. Whether competing for funding or keeping the organization moving, nonprofit technology trends can be a driving force for a lot of the work they do. Without the right equipment, they may struggle to provide their services or keep up with the public’s desire for modern, easy-to-use connections.

Another aspect of technological growth that many businesses are observing is in their cybersecurity practices. Large organizations may be especially wary of security breaches or hacks, and cybersecurity is a priority for them.

2. Joint Ventures

Many nonprofit organizations find strategic partnerships with for-profit or other nonprofit organizations or government agencies. A few organizations plan to pursue mergers, but many nonprofits say they are considering entering a strategic partnership with another nonprofit.

By joining with other organizations, groups can pool their resources and work toward a common goal.

3. Greater Focus on Mission and Priorities

As more and more businesses vie for attention, nonprofit organizations need to make sure their message reads loud and clear so they don’t get lost in the noise. They may need to revisit their focus or ensure their priorities include objectives that are beneficial and appropriate for the group to pursue.

4. Easier and More Fulfilling Donations

Again, donors have a lot of options. Making the experience of donating resonate more with them can help endear someone to your organization.

Some ways that nonprofit organizations manage this is by showing the real-life impact a donation can make. They may share success stories of people affected by the organization or send someone a breakdown of how their contribution gets used.

Another way to make donations a better experience is to make them easier. One popular method is to allow people to donate via text message.

5. Boosting Employee Engagement

Nonprofit organizations aren’t known for their high salaries, but many of them also struggle with other areas of employee satisfaction. Outside of concerns about compensation, many, non-profit workers find that they face a lack of opportunity for advancement. Other concerns include management, benefits and training and development.

Many nonprofit organizations are aiming to boost their employee engagement and create more satisfying workplaces. With this goal, they may be able to retain staff for longer and contribute to a more enjoyable workplace overall.

For More Trends the Non-Profit Industry is Seeing, Watch our Video

Focusing on What’s Important

No matter how your nonprofit adapts to 2020, it’s essential that you and your staff can focus on the big picture. Leave the bookkeeping to us. Reach out today to learn more about the services Marshall Jones offers for nonprofits.

Tips for meeting with the board

7 Tips for Meeting With the Board

Meeting with your boss for the first time in a new job can be nerve-wracking. When your boss is a group of people with unique backgrounds, agendas and expectations, the meeting becomes even more complicated. As an executive, you likely feel the delicate balance between understanding how to manage a board of directors meeting while also remembering that you answer to these individuals. By preparing for your first board meeting with the following tips, you can show you have what it takes to lead your company to the next milestone.

1. Practice With a Mock Meeting

Meeting with a board is a different kind of meeting than the investor pitch — a presentation many young entrepreneurs have already mastered by the time they meet the board of directors. There’s a new set of rules to follow and a larger group of people to impress.It can be valuable to get advice from someone who has experience with board meetings as you prepare. An investor or trusted ally with experience as a board member can tell you what board members might think, ask and expect. In a mock board meeting, you’ll be able to practice presenting and fielding questions. Take advantage of feedback from your mentors during your practice session to make your meeting plans as effective as possible.

2. Send Relevant Documents in Advance

Sending information two weeks in advance gives board members a chance to digest it. Everyone will have time to read documents in-depth and make notes of any questions or comments. Your board will expect all your documents to offer well-researched solutions to problems. Remember, board meetings offer precious face time. The more time you can dedicate to debating ideas, the better. Know that board members may not be able to provide insightful comments on the spot unless they’ve had time to consider the meeting topics.

Doing your board meeting preparation two weeks in advance is a good discipline for a first-time or new executive. You’ll have to summarize and organize the information you plan to cover, which can help keep you on-task in the meeting. If your board meets once a month, you can start preparing for the next meeting immediately after each session. This can also help you stay focused on a strategic direction and won’t give you a chance to let action items from the previous meeting fall by the wayside.

3. Create an Agenda and Stick to It

A plan keeps the meeting on track and gives your entire board an overview of what you plan to discuss. It can be helpful to have a standard structure for all your board meetings, and your first meeting will set the tone. If you’re the new executive at an established company, ask your board members if they already have a format for meetings. While planning the board meeting, make sure you address essential items first and save items that could wait until the next meeting for the end. You’ll be thankful you did if the discussion runs long.By formatting the meeting the same way each time, you make it easier to prepare for each session. Board members will know what to expect every time. Assign action items if any are required, and be sure to note any expectations for the next meeting. Close the presentation by allowing each board member to give their parting thoughts.

4. Know Who You’re Meeting With

Before meeting with your executive board for the first time, do some research. Getting to know each members’ background can help you understand their perspectives. Try to figure out the issues most important to each board member so you can answer their questions insightfully. You should also make a point to introduce yourself. When you reach out to your board members, be sure to give each one the chance to ask any initial questions and add items to the agenda.If you can build a one-on-one relationship with each person, it will feel less intimidating when you meet with them as a group. Discussing individual members’ interests and concerns can also save you from facing these tough questions for the first time in front of the whole group.

5. Discuss Future Growth

One of the most critical board of directors meeting tips to keep in mind is to prepare a statement about future growth. Especially at the first board meeting for a new company, board members want to be confident in your ability to lead the company to success. Be ready to discuss the demand for your products or services using specific research, reports and relevant news articles. Lay out your vision for prosperity and your plan for how you expect to get there.

6. Be Confident

Projecting confidence is essential as your board is developing first impressions. Those who display high levels of confidence are rated more favorably by their managers in overall business leadership effectiveness. Managers consistently say that confident leaders are more likely to challenge the norms, be a champion for projects and make strategic changes.

Here are a few ways you can demonstrate confidence in the board room:

  • Know your facts: Whether you’re laying out a strategic plan or discussing your revenue streams, you need to back up what you say. You should know metrics, such as profit margins, and be able to explain them in-depth. If you say there is increased demand for a product in a particular area, you should be able to point to the research that proves it. When you don’t know something, be honest and take the initiative to look into it.
  • Take a leadership approach: One mistake many new executives make is using their board as an advisory council. Board members want to see you have the confidence and leadership experience to solve problems. Board meetings are a forum to present solutions, not to ask hard-to-answer questions. During your first few months, seek outside advice for challenges. As you progress at the company and get to know your board members, you can start to seek council from them. Still, try to ask these questions outside of the board room.
  • Be prepared for resistance: Not every idea you present will be met with instant approval. You’ll likely face some healthy debates, especially for plans you haven’t already discussed with your board members. You should always speak to your board members individually about new ideas to get their takes on them. Then, you can adjust your strategy accordingly and gather helpful supporting data before the meeting.

7. Have Accurate and Up-To-Date Financial Statements

Your financial statements are both an indicator of success and an overview of what your business is doing. Every board meeting should include some time to review these numbers. You should demonstrate that you understand these numbers and be prepared to defend your expenditures. You should send out financial records 72 hours in advance to ensure everyone has a chance to read them and prepare comments.

Financial statements, especially revenue streams and profit margins, provide an easy metric to track growth. By having up-to-date numbers at every meeting, you always know how your company is doing, and so do your board members. Be prepared to field questions and discuss how you plan to bring costs down and increase revenue.

Outsource Your Accounting to Marshall Jones

Having board-ready monthly financials to discuss is essential to coming to your board meeting prepared. That’s why an outsourced team of certified public accountants and advisors from Marshall Jones can make such a big difference for first-time CEOs and new companies

You get professional accounting services at a lower cost than hiring an in-house bookkeeper and an accessible accountant you can reach out to at any time. We provide accurate and up-to-date financial statements that you can discuss with your accountant before a meeting so you can understand and present all the details to your board.

Learn more about our outsourced accounting services today to see how we can assist your company.

construction workers looking at a blueprint

Accounting Tips for Your Construction Company

If you’re in the construction industry, you understand how important it is to be reliable. Your clients hold you accountable for your work. Solid construction begins with the foundation of a sound, financially stable business.  So when it comes to bookkeeping for construction companies, every detail counts.

Accounting can be a challenge for construction companies due to the large, often transient workforce and varied duration of contracts. But proper bookkeeping and construction accounting methods can go a long way in setting your business up for success.

5 Construction Bookkeeping Tips

There’s no standard accounting guide for construction companies. The best practices in the industry may not apply to every company because every construction company has different needs. However, it’s a good idea to keep these accounting tips in mind if you’re managing your company’s finances in-house:

1. Back Up All Relevant Records

Receipts, invoices and other documents are essential when it comes to managing your company’s finances. If you keep hard copies of these records, you’ll need to organize them so that it’s easy to find the documents you’re looking for. But you should also have a backup plan in case your documents are lost or damaged. Maintaining a digital record of these files is the best way to ensure their safety.

2. Record All Job Costs

Construction bookkeeping has many complexities, including keeping track of multiple jobs at the same time. Projects may differ greatly in length and size, which in turn leads to varying expenses. Your bookkeeper should maintain a record of every transaction that takes place during a given job. A breakdown of income and expenses for each project ensures that your company is making a profit.

3. Track Employee Hours Accurately

Another challenging aspect of accounting for construction companies is the large workforce. Your company’s team might include employees, contracted workers or a combination of both — and the construction workforce is often transient by nature. Your bookkeeper should diligently track the hours of everyone on your company’s payroll to ensure that you’re compliant with any applicable regulations.

4. Keep an Accurate Inventory of All Materials

It’s not uncommon to begin working on a construction project and realize that the job will require more labor or materials than originally anticipated. This is a normal part of the construction process. But if you’re constantly taking materials out of your inventory, your company can quickly go over budget. Keeping an accurate inventory of materials makes it easier to see where your resources are being used and budget accordingly.

5. Report on Projects in the Works

At any given time, your construction company might be taking on a variety of different projects. You should be reporting on completed projects as well as any project that is still in the works. This is essential because of the frequency of change orders and unexpected expenses that can occur during the course of the job.

Contact Marshall Jones Outsourced Accounting Services

When you manage a construction company in Atlanta, your focus should be on the project at hand. Outsourcing accounting services can save valuable time and ensure that your business is in a position for growth and financial success.

Let Marshall Jones handle the accounting side of your business. Contact us today to start working with one of our Certified Public Accountants and Advisors.

Paycheck Protection Program Loan Forgiveness Overhauled… Again!

On June 3, Congress passed another Paycheck Protection Program (“PPP”) forgiveness Act that gives much-needed relief to many small businesses that were not able to take complete advantage of the relief intent of the original bill.

The new PPP bill does the following:

  1. Extends the period from 8 to 24 weeks during which the borrower must spend the loan proceeds.
  2. Reduces the percentage of the funds spent on payroll from 75 % to 60 %. It should be noted however that if the payroll costs go below 60%, the entire loan will be ineligible. Previously a partial reduction of the forgiveness was permitted.
  3. The “covered period” is the earlier of the 24 weeks or December 31, 2020.
  4. The “safe harbor” regulations passed recently allowed borrowers to rehire employees up to June 30, 2020. This was intended to help borrowers who received PPP funds but were unable to open their business during the 8-week period. The new bill extends the re-hiring period to December 31, 2020.
  5. If a borrower was unable to rehire employees in good faith from February 15, 2020 to December 31, 2020, the requirements for documenting these efforts have been relaxed.
  6. To the extent a PPP loan cannot be forgiven, the loan term for payback has been extended from 2 years to 5 years.
  7. The new law permits a borrower to BOTH receive PPP funds AND take advantage of the Deferred Payroll Taxes program.
  8. The Employer Payroll Tax Deferral provision of the CARES ACT allowed businesses to defer paying some payroll taxes (FICA and Medicare) up to an employee’s first $5,000 of wages paid due in 2020, by paying half of the deferred amount until December 2021, and the other half until December 31, 2020. BUT, if an employer took advantage of this provision, under the original legislation the employer could not receive a PPP loan. This prohibition has now been removed.

As you can see, the PPP program is in a constant state of flux.

While we do not expect to see any further legislation, there will be a significant amount of regulations and interpretations over the next several months as PPP borrowers begin the process of applying for PPP loan forgiveness. As always, Marshall Jones is ready to help you in any way we can. Contact us using our online form or by calling (404) 231-2001

What Is Working Capital?

In simple terms, your company’s working capital is the money you have available for day-to-day operations. Your working capital factors in accounts payable, accounts receivable, cash, inventory and other short-term accounts to measure the liquidity and overall health of your business.

In accounting, working capital is one of the basic indicators of the financial state and operational efficiency of your company. Whether you outsource your financial services or handle accounting in-house, it’s a good idea to understand the importance of working capital and how to calculate it at any given time.

How Is Working Capital Calculated?

If you’re unsure of how to calculate the working capital of your organization, you are not alone. Fortunately, there is a simple working capital formula. To find it, all you need to do is subtract your company’s current liabilities from your current assets.

Here’s a further breakdown to make things even clearer. At a given time, your company’s liabilities might include:

  • Accrued expenses
  • Long-term debt
  • Accounts payable
  • Notes payable

On the other hand, your current assets may be:

  • Marketable securities
  • Inventory
  • Cash
  • Accounts receivable 

The difference between these totals is equal to your working capital. If you come up with a positive number when you subtract your liabilities from your assets, your working capital is positive.

The reverse is also true. Your working capital is negative if your current liabilities are greater than your current assets.

Now you have an understanding of how your working capital can be calculated. But what does it mean for your business?

Why Working Capital Is Important

Your company’s working capital is an indicator of your overall financial health. If you have positive working capital, your company has the ability to pay off your short-term liabilities at any time. This also suggests that you have sufficient funds to put towards the growth of your business.

If your company has a negative working capital, the opposite is true. You would not be able to pay off your company’s current liabilities immediately if the need should arise.

Negative working capital may indicate to analysts and investors that your company is collecting receivables at a slower rate than is ideal, struggling to grow or maintain sales or becoming overleveraged. Your company may need to take on debt to grow or even to fund day-to-day operations.

While negative working capital may be a cause for concern, your company can continue to operate with negative working capital. Whereas positive working capital is an advantage for your business, negative working capital is an opportunity for improvement.

Good or bad, knowing your working capital is important when it comes to making smart financial decisions.

Contact Marshall Jones Certified Public Accountants and Advisors

Whether your working capital is positive or negative, the right team of financial advisors can help put your company in the best position for growth. For more than 30 years, businesses and individuals in Atlanta have counted on Marshall Jones for outsourced accountingtax compliance and a variety of financial consulting services. Contact us today to learn more!

Financial Advice for Working with the Intercountry Adoption Accreditation and Maintenance Entity (IAAME)

The Intercountry Adoption Accreditation and Maintenance Entity, or IAAME is an organization designed to accredit, approve, monitor, and provide oversight of intercountry adoption services provided by adoption service providers, in order to protect the most vulnerable among us: the orphan.

The staff of IAAME has widespread knowledge and experience in providing welfare services for children, which helps them administer standards, contracts, licenses, and monitoring domestic and international adoption services.

In 2008, standards were set by Hague Adoption Convention and the Intercountry Adoption Act, and IAAME has been the accrediting agency since 2017. As an accrediting entity, its responsibilities, as set forth by 22 CFR 96 Part F, include:

  • Determining agencies eligibility for accreditation
  • Determining persons eligibility for approval
  • Monitoring and oversight of accredited/approved agencies/persons compliance with applicable requirements
  • Investigating and responding to complaints about accredited agencies and approved persons (including their use of supervised providers)
  • Taking adverse action against an accredited agency or approved person, and/or referring an accredited agency or approved person for possible action by the Secretary
  • Determining if an accredited agency or approved person is eligible for renewal of their accreditation/approval
  • Collecting data from accredited/approved agencies/persons, maintaining records, and reporting information to the Secretary, State courts, and other entities
  • Assisting the Secretary in taking appropriate action to help an agency/person in transferring its intercountry adoption cases and adoption records

One item from this list includes the approval of persons. Mainly, this is referring to attorneys that are involved. Attorneys need to look closely at their practices to determine whether they are providing adoption services as defined in the regulations in addition to legal services. If an attorney is providing adoption services s/he must be accredited, approved, or act under the supervision of an accredited or approved adoption service provider. Agencies and/or persons who provide intercountry adoption services without being accredited or approved may face criminal and/or civil penalties such as those outlined in section 404 of the Intercountry Adoption Act of 2000.

Part of this accreditation are requirements for financial data including:

  • Budgeting
  • Annual internal review
  • An independent audit every 4 years
  • Tax returns
  • Control documentation
  • Cash Reserve documentation
  • Risk assessment documentation
  • Compensation policies
  • Insurance documentation

There are many other requirements set forth in the application and renewal process. 

We know that it can feel like you have the weight of the world on your shoulders by giving your time and energy to helping an orphan child. Do not let the financial requirements add to that stress as well. At Marshall Jones we can help relieve those worries by helping you appropriately prepare for the financial requirements. Contact Marshall Jones by calling (404) 231-2001 or reach out to us online.

New Clarity Around Preparing for PPP Loan Forgiveness

On May 15th, the U.S. Department of the Treasury issued a press release that the Small Business Administration, in consultation with the Department of the Treasury, released the Paycheck Protection Program (“PPP”) Loan Forgiveness Application along with detailed instructions and clarifications around the loan forgiveness process.

Read about the updated loan forgiveness program created by the Act passed by Congress on June 3, 2020.

Here is a summary of the highlights and changes brought by the press release and the official forgiveness application.

Alternate 8-Week Covered Period

There is now an alternative covered period in which to disburse funds from the PPP for companies with payroll frequencies of biweekly or longer.  These companies may begin their covered period beginning the first pay period after receiving the PPP loan funds.  This simplifies the determination of the amount of payroll costs incurred against the loan by creating a clean cut-off.

The SBA provides the example that if a borrower “received its PPP loan proceeds on Monday, April 20, and the first day of its first pay period following its PPP loan disbursement is Sunday, April 26, the first day of the Alternative Payroll Covered Period is April 26 and the last day of the Alternative Payroll Covered Period is Saturday, June 20.”

We recommend using the Alternate 8-Week Covered Period, if possible, for your business.

Flexibility in Basis of Accounting for Forgiveness

Previous interpretations of the CARES Act allowed only for expenses that were incurred AND paid to be considered in the calculation of loan forgiveness.  This criterion has been loosened and allows companies to consider costs that are incurred OR paid (for payroll and other costs), as long as incurred expenses are paid by the next normal payroll or billing date.

The Full-time Equivalent (FTE) Calculation has been Defined

The new guidance instructs borrowers to calculate FTEs by entering the average number of hours paid per week per employee, divide by 40, and round the total to the nearest tenth. The maximum for each employee is capped at 1.0.  This is contrary to previous interpretations of the CARES Act which assumed a 30-hour work week as contemplated by the Affordable Care Act.  This is an important calculation as any reduction of FTEs during the eight-week covered period that is below the lower of the average weekly FTEs during the period of EITHER February 15, 2019 through June 30, 2019 OR January 1, 2020 through February 29, 2020, results in a reduction of loan forgiveness.  A safe harbor exception to this rule applies as long as you restore your FTEs before June 30, 2020.

Further exceptions to this FTE rule have been added which allow that for a) any positions for which the borrower made a good-faith written offer to rehire an employee during the covered period which was rejected by the employee; and b) any employees who were fired for cause, voluntarily resigned, or voluntarily requested and received a reduction of their hours during the covered period, no reduction of forgiveness will apply.

Allowable Wage Reductions

Wage reductions are allowable under the PPP and will not impact forgiveness unless wages (calculated on a per employee basis) are reduced below 25%.  The calculation compares the average ANNUALIZED salary or hourly wage by employee during the eight-week covered period and compares it to the average ANNUALIZED salary or hourly wage during the period from January 1, 2020 through March 31, 2020. If the average during the eight-week period is less than 75% of the average during the previous quarter, a reduction of the forgivable amount of the loan applies, ONLY if the wages are not increased to less than a 25% reduction by June 30, 2020 (safe harbor rule).

How Marshall Jones Can Help

We have had many requests to help businesses and nonprofits navigate the complexities and hurdles of the PPP Loan.  The AICPA has empowered firms like us with special guidance, tools, and calculators to help make sure we can be effective at providing the guidance and assurance you need.  If you have concerns about your PPP loan and the forgiveness calculation, please do not hesitate to reach out to us!

PPP Loan Forgiveness Application Here

Accounting and Financial Reporting for an Advertising Agency

The marketing and advertising industry is one of the fastest-growing sectors in the world. But with this growth comes a new set of challenges ⁠— especially when it comes to financial reporting.

Accounting for ad agencies doesn’t have to be complicated. You can simplify your advertising agency’s financial management and accounting with the strategic use of financial reports.

Types of Financial Statements for Marketing Companies

There are four key financial reports that advertising and marketing agencies need to be aware of:

Profit Analysis Report

As the name suggests, this report provides insights as to how profitable your advertising agency truly is. A profit analysis report offers a comparison of estimated costs and actual costs, along with billable amounts and actual invoices. The report can be as specific as you want it to be with the addition of filters to show the names of clients, a range of dates spent working on projects and more.

Staff Utilization Report

Keep track of available staff hours, hours already worked and billable hours organized by each staff member and role at your agency with a staff utilization report. This report lays out the details of staff hours within a given date range, billable or otherwise.

Efficiency Report

An efficiency report is essential when it comes to understanding the efficiency of your marketing company’s active staff members. This report includes the number of jobs worked on by each staff member, along with a breakdown of their billable and non-billable hours worked in a given time. You can also weigh the value of the payroll cost of an individual against their billable hours.

WIP, or Work in Progress Report

A work in progress report also offers valuable insights about the day to day operations of your agency. A WIP report will include job-level details along with financial data, such as a breakdown of which values are actual or estimated and which are invoiced or un-billed.

Accounting Tips for Your Advertising Agency

If you want your advertising agency to continue to grow in the coming years, proper accounting is essential. Keeping your financial reports up-to-date is one tip. Here are a few more:

  1. Keep track of all of your cash flow and expenses. That includes receipts, contracts, deposit slips and more.
  2. Set time aside for upkeep. If you’re handling any aspects of your accounting in-house, you need to schedule a designated time to do so on a weekly or monthly basis.

Accounting can be complex, especially as your business grows and you have more staff members and clients to keep track of. When in doubt, you can’t go wrong by outsourcing accounting and financial management to an experienced firm.

Are You in Need of Accounting Services? Marshall Jones Can Help!

Our team of Certified Public Accountants and Advisors has been serving businesses and individuals in Atlanta for over three decades. Let us handle the financial aspect of your business so you can focus your attention on creative advertising! Contact us today for expert assistance in managing your advertising agency.