Business Intelligence: The key to strategic business planning

SiSense writes: We live in a world of big data. It’s being collected constantly, from the purchases you make to the websites you visit to the GPS info gathered on your phone. But the fact that a lot of data is being collected isn’t what makes “big data” so impressive. Rather, it’s the ability to process and utilize this data faster, more efficiently — and in some cases for the first time — that makes big data so noteworthy.

And in terms of function, big data is benefiting businesses in truly amazing ways. High capacity tools that transform raw, unorganized data into something useable and useful is what stands behind the big data that makes up business intelligence (BI). BI gives companies big and small the upper hand by offering them the ability to analyze large data sets quickly.

But why is this important? And how can it be leveraged for your business? That’s what we will discuss here today.

Who benefits from Business Intelligence?

According to the most recent BI Scorecard, — a survey conducted in 2012 of BI and its impact on businesses — 24% of employees at a typical company now use BI or analytics tools. And the adoption rate for field staff was 43%, which is a 10% increase since 2009.

Which is all to say, more and more companies — and more and more staff within those companies — are recognizing the importance of using BI tools to collect, store, and analyze data to make informed decisions about business operations. These tools are being used for customer profiling and support, market research and segmentation, inventory, and statistical analysis.

Businesses across every industry are using BI to improve operations, efficiency, and ROI. For instance, since the intimate apparel brand Maidenform invested in BI in 2012, it has found itself capable of answering even the most complicated questions related to SKU supply and demand for retailers that send the company POS data. A massive amount of point-of-sale data has always been collected at the company, but it’s the processing of it that makes BI invaluable. Only with BI tools was Maidenform able to identify discrepancies between its supply and demand at the SKU level, according to an Apparel Magazine article.

What BI can accomplish

BI lets companies join data from multiple sources to gain a better understanding of where they stand and where they should go from here. These sources include anything and everything like spreadsheets, Google Analytics and Adwords data, CRM data, cloud applications, and more.

And once all of this data is compiled, it can be used in a variety of ways including:

Data visualization

When all of your data is processed and output into visual form, it’s a lot easier to comprehend than a list of numbers. And visual outputs can be updated in real-time. This gives business analysts and people across the entire hierarchy of a company the ability to see the big picture. And that’s important now that employees outside of IT are expected to derive information from big data. A visual aid is immensely helpful here, according to Phil Simon, author of The Visual Organization.

“Today more than ever, professionals are being asked to argue their cases and make their decisions based on data,” Simon said in a Forbes article. All the more reason to adopt BI tools that make this sort of analysis possible then, don’t you think?

Interactive dashboards

The best solutions in BI will allow you to customize interactive dashboards that let you see the information you want to see. Not only that – they’ll display this information, even from terabytes of data, in just seconds. When you can view and analyze data this fast, you’ll discover more answers.

You’ll also be able to monitor your dashboards live, or get notifications when the data updates. Up-to-the minute reporting and data interaction means companies can make better informed decisions.

The ROI of BI

The results attainable with a well-implemented BI solution can deliver a significant ROI every time. Once the system is up and running, you can readily measure your user base, site impressions, sales, word of mouth, ad impressions, conversions, and more. Then you can view real-time reports or visualizations of that data from which you can make any number of decisions about your business.

One recommended solution is SiSense, which provides companies with robust tools for business intelligence and analysis. Its services have benefitted companies like eBay, Wix.com, ESPN, Merck, and NASA. Thanks to SiSense, companies, both small and large, have figured out important site metrics.

An example of SiSense’s success is found in WeFi, whose data base team had been manually running SQL queries from large amounts of data. Before SiSense, the team was unable to generate meaningful feedback and analysis for management.

Fortunately, SiSense came in. Their solutions allowed WeFi to easily gather and study data on the behavior of millions of users, activities, and Wi-Fi performance by combining numerous tables of data, each with an average size of more than five million rows. Thanks to SiSense, management was able to gather crucial feedback to improve their business.

Getting Started with SiSense

Starting with SiSense isn’t complicated. Pricing depends on how many employees will be utilizing these services, but you can request a quote now to begin the process. And soon, BI tools will be working for you and your business.

Xero or QuickBooks Online – the People’s Choice

Margaret J Carey for Cloud Accounting Buzz writes: Last week Intuit published the results of a survey they had commissioned comparing the ease of use of QuickBooks Online (QBO) to Xero with the headline ‘The Numbers Prove It: QuickBooks Online is the People’s Choice’.

Discussions with Nicolette Maury, Managing Director of Intuit Australia provided the following additional details on the survey:

• 134 people from a range of small businesses participated in the research.
• The participants had not previously used either Xero or QBO
• They were each given some key business tasks with instructions to complete using both sets of software.

The study measured:

• Time to complete
• Ease of Use
• Confidence in using the product
• Visual appeal
• Overall experience

The study is interesting because a large percentage of small businesses select accounting software based on recommendations from their accountant and I would not expect many accountants to be making a recommendation based on the above factors. Accountants frequently specialise in one small business accounting software package and recommend that to all their clients.

Whilst I am sometimes critical of this approach because the accountant may not consider specifics of the client’s business model, I too don’t particularly consider the above metrics when evaluating or recommending software. I do consider the user interface to be important but other features such as overall functionality, the reporting engine, bank reconciliation and BAS preparation are also important components of a total solution. I have certainly never directly compared the time taken to complete or ease of use of key business tasks between the two products – so time to look at the software with a fresh pair of eyes.

The dashboard that is displayed on initial log in is very different between the products and it all boils down to personal preferences and what you get used to. However for moving beyond the dashboard, QBO had the distinct advantage. There is a clearly and meaningfully labelled navigation bar on the left hand side so I could easily and confidently navigate to the area where I want to go. The navigation bar that runs across the top of Xero is nowhere near as intuitive, requires an extra drill down and has a number of more esoteric options.

QBO’s masterstroke in navigation is the little + sign at the centre top of the screen – click on that to see the Quick Create menu and from there you are off and running confidently and easily to any part of the software. There are also icons for Search and View of Recent Transactions. Xero does require a lot more perseverance to achieve the same goal.

One of the tasks for the survey participants was to set up a new customer, record a customer invoice and the cash receipt against it. Navigating to Customers in QBO, I was presented with a clear big blue button that said New Customer – an instant giveaway on how to set up a new customer. The Customer Centre clearly listed all existing customers, the amounts owing with nice red icons to show was late in paying some invoices. In Xero you had to think a little more to get to the right place.

However, once I was in the customer invoice entry screen, I couldn’t see a whole lot of difference between the two apart from the ability to save the payment terms against the customer in QBO which meant I didn’t need to re-enter that information on each invoice. I did find the Xero screen somewhat easier on the eye in that it used smaller fonts and appeared more succinct whereas QBO used all the real estate on the screen. I could email and print the invoice directly from both products. If I wanted to record the payment at the same time as recording the invoice – that was probably easier in Xero.

These findings played out across the rest of the scenarios, navigation was clearer and more intuitive in QBO but once into the nitty gritty of the task I couldn’t see any significant variances on any of the points measured.

So overall I would agree with the research that QBO is easier to use for the first time user and its excellent navigation features lend themselves to inspiring confidence. Xero seems to require a little more perseverance to find functions but once I have accessed a function such as entering a customer invoice there wasn’t  a lot of difference.

Whether or not Intuit can extrapolate the can claim of ‘Peoples Choice’ when looking at the total solution is open to question given the survey tested a fairly limited range of tasks. However Intuit is certainly listening to small business owners and taking comments on board which can only result in a better experience for users.

You can visit Margaret J Carey's website by clicking here.

THE BEST ONLINE TOOLS TO RUN A SMALL BUSINESS ON THE INTERNET / Finance & Accounting

Rahul Singh for Asitchanges.com writes: Over the years, many of our clients at Anant Corporation have asked us about our recommendations for different tools to help them grow their business. In this sixth installment, I will discuss some of the best online tools that small businesses can use for finance and accounting.

FINANCE & ACCOUNTING

1. Freshbooks – Cloud accounting service that makes invoicing clients and tracking time easy and efficient.
2. QuickBooks – Accounting software that does invoicing, accepts payments, tracks expenses, and provides bookkeeping services. A free trial is available.
3. Xero – Online accounting and bank reconciliation. 30-day free trial is available.
4. Indinero – Ideal software for managing expenses (accounting, taxes, and payroll)
5. Square – The “square” is a nifty device to read credit cards using smartphones. A free square is provided with a sign-up (which is also at no cost). They charge 2.75% per transaction/swipe.
6. PayPal – PayPal is by far the most convenient way to make payments. You can send money to anyone anywhere with just an email address or a phone number.
7. Google Spreadsheet – The functionality of this service is very similar to Microsoft Excel. Its quality is that it can be used for collaborative work since multiple people can access and edit the spreadsheet (with a Google account).
8. Mint – Mint is a useful tool for managing finances. It organizes and categorizes how the company’s money is being spent.
9. Harvest – Harvest allows you to track time using timesheets. You can access and edit the timesheet from the web (including your smartphone).
10. Excel – This is one of Microsoft’s most genius creations. You can organize information and create tables and graphs. It is also incredibly useful for accounting and finances because of its in-built mathematical operations.

Rahul Singh is the CEO and a Co-Founder of Anant Corporation. For more tips, subscribe to the Anant Corporation newsletter by clicking here: http://eepurl.com/npJmj

FrontAccounting – A web based free Accounting Software

The FrontAccounting is an open source web based Accounting cum ERP software that permits Double Entry Accounting and united with components that assist almost all common business processes. It is formulated for small and medium enterprises employing MySQL and written in PHP. The software has wide-ranging use, multicurrency as well as multilingual. The FrontAccounting is the part of Ubuntu and Debian Linux promoters and the software is initiated as WebERP fork. The software is given with standard elements like manufacturing, sales, items and inventory, purchases, dimensions, general as well as banking ledger and setup.

The functions of the application are suitable for organizing purchases, manage the stock, provide offers, register orders and launch invoices. The FrontAccounting enables to configure different types of sale and cash flow can be controlled without difficulty. Additionally, various instant reports give structures that are appropriate for many enterprises. The software is capable of taking the place of QuickBooks. The stable release of the software was on March, 2010 and it is written in PHP format. The software supports Linux, Windows, Mac OS X as well as UNIX. The application has been licensed under the Version 3 or later versions of GNU General Public License. The installation and advancement of documentation was done using Pm WiKi engine.

Visit FrontAccounting by Clicking Here
Download FrontAccounting Here

Download Information

From this website you can download FrontAccounting 2.3.21 Version for Windows, Linux, Unix and Mac OS X operating systems. To download latest FrontAccounting versions, you should visit home website.  From here you can download frontaccounting-2.3.21.zip installation file for Windows Server. Size of the zip file is 1.66 MB. Unzip the file and upload it to your webserver application folder and configure database to run it from your website. See installation guide for the step by step installation procedures.

Uninstall Information

You can uninstall  FrontAccounting by deleting it from your webserver app directory.

Browser Compatibility: Internet Explorer 8 and above, Firefox 3.5 and above, Chrome 1 and above, opera 10 and above, Netscape Navigator 9 and above, Opera 9.5 and above, Safari 4 and above.

This Version of software released under Free Software License:  GNU GPL V3. So it is available free from the manufacturer and thus we are distributing free of cost as it is GPL Software.

End User License Agreement with Us: EULA

File Name: frontaccounting-2.3.21.zip File Size 1.66 MB,

Source File Name: frontaccounting-2.3.21.tar.gz File Size: 1.2 MB

Support/Contact: FrontAccounting provides Wiki , installation guide and FAQ for the users for easy installation and working with the software. There is Forum and contact us page for the support and discussion regarding the software.

Developer(s)	FrontAccounting development team
Stable release	2.3.21 / May 21, 2014
Written in	Php
Operating system	Windows, Linux, Unix, Mac OS X
Type	Accounting, ERP
License	GNU GPL V3
Home Website	frontaccounting.com

Square Announces New Accounting and Inventory Integrations for Canadian Businesses

Square Introduces Partner Platform to Canadian Businesses With QuickBooks Online, Xero and Stitch Labs / Today Square, the company building the most complete register service, announced that QuickBooks Online, Xero and Stitch Labs are all now available to Square businesses in Canada. Through the integration on Square's partner platform, sellers can now seamlessly import and sync their sales and inventory data in real time.

Square's partner platform connects Square sellers with new applications that complement Square's register service. Continuing to build upon Square's powerful, affordable and accessible business solutions, the QuickBooks Online, Xero and Stitch Labs integrations are designed to simplify operations for businesses throughout Canada.

Syncing Square Register to back-office accounting and inventory management software helps sellers improve accuracy and save time inputting sales and tracking inventory.

"Being able to work with Square and QuickBooks Online allows me to sync my data with just one click, saving me valuable time I can now spend on making more sales," said Edina Beeby of Vancouver-based GumChucks Canada. "Working with Square has always been easy and just got even easier."

Today's integrations help sellers save time with the following new features:

• QuickBooks Online and Xero customers now have the ability to track their Square sales directly within their accounting software to get an up-to-date view of their business finances. Starting today, businesses can link their Square accounts to these accounting solutions to automatically import sales data, simplifying operations and improving accuracy.
• Stitch Labs streamlines inventory and data across multiple sales channels, so Square sellers can now track item counts and create purchase orders from one simple location.

Square is making sophisticated, big-business tools simple, easy to use and available to anyone. Merchants of all sizes are increasingly adopting Square Register at the counter for its intuitive interface, smart analytics, continuous updates and simple processing fees.

About SquareSquare helps anyone take care of their business. Square's complete register service is a full point of sale with tools for every part of running a business, from accepting credit cards to tracking sales and inventory. Founded in 2009 and headquartered in San Francisco, Square is currently available in the United States, Canada and Japan. Square operates in Canada only through its wholly owned subsidiary, Square Canada Inc. More information is available at square.ca.

6 Tax-Saving Tips for Investors

Mike Brown for Dowling & Yahnke writes: Do you know how much taxes are eroding your investment returns? It could be more than you think.

Studies by the Vanguard Group suggest that taxes can erode the net returns of domestic stock funds by as much as two percent annually. That might not sound like much, but this small percentage can represent a huge hit.

Let’s take a look at what would happen over 25 years to a $250,000 portfolio, earning 6% a year, that gets dinged with an annual 2% tax hit. Without the tax burden, the portfolio would grow to $1.1 million. With the two-percent hair cut, the nest egg would end up with $678,00. That’s a difference of $428,000!

Luckily, there are ways to limit tax damage to your portfolio. Here are six ideas:

1. Direct more money into retirement accounts.

The beauty of retirement accounts, such as 401(k)s, 403(b)s and IRAs is their ability to ward off taxes. As long as the assets remain inside a retirement fund, you won’t be liable for taxes. What’s more, you will pocket a tax deduction for contributing to workplace plans and traditional IRA’s.

2. Pay attention to location.

Ideally, you’ll want to put the type of investments that tend to be tax hogs in retirement accounts where they won’t spin off taxable income and capital gains. In contrast, investments that are inherently tax efficient are better off sitting in taxable accounts which don’t enjoy the tax protections of retirement accounts.

Tax-inefficient investments

Investment that are typically better off in retirement accounts include:

• Real Estate Investment Trusts (REIT’s)
• Taxable bonds
• High-turnover stock funds

Tax-efficient investments

These investments are generally better off in taxable accounts:

• Tax-free municipal bonds
• Tax-managed mutual funds
• Equity index funds and exchange-traded funds
• Individual stocks

3. Understand the difference between tax efficient and inefficient mutual funds.

A tax-efficient mutual fund strives to limit capital gains distributions that are as welcome as termites and can seem just as hard to eradicate. When a mutual fund distributes capital gains, investors must pay taxes on this money, even though they haven’t cashed in their shares. And these “gains” are strictly ephemeral. Sure, you technically get to pocket gains, but the value of your holdings are reduced by the same amount so it’s a wash, except you pay taxes on this wash.

4. Check the tax-adjusted returns.

You can get an idea about whether a mutual fund is tax efficient by looking at the pretax and tax-adjusted returns of individual funds. You can obtain those figures for many mutual funds on the website of Morningstar, a popular investment research firm.

To show you what you can find, I pulled the performance figures for Vanguard 500, which is one of the nation’s largest mutual funds. This index fund, which invests in large U.S. corporations, is a tax-efficient fund. When you look at the 15-year pretax and tax-adjusted returns, there is only a .41 percentage point difference.

In contrast, take a look at Vanguard REIT Index Fund. REITs are tax inefficient because they tend to generate lots of dividends, which are taxed the same as the investor’s income rather than at more favorable capital gains rates. You can see from the figures below that the difference between the pretax return and the tax-adjusted return over 15 years was 1.67 percentage points larger.

5. Harvest Tax Losses

Another way to reduce your tax liability is to look for opportunities to sell investments at a loss to offset capital gains from your winners. For instance, if you sold a stock for a $5,000 loss, you could use that loss to offset a $5,000 profit when selling a winning stock. By doing this you would owe no capital gains tax on the stock that appreciated. If you don’t have any capital gains to offset, you could take up to $3,000 of your loss to reduce your regular income. Any unused loss can be carried forward to the next year and beyond if necessary.

6. Understand if any of this matters.

Keep in mind that pursuing tax efficiency is going to be irrelevant if you’ve got all your money tied up in tax-protected retirement accounts.

Similarities and Differences Between Predictive Analytics and Business Intelligence

Dean Abbott for Abbott Analytics writes: I’ve been reminded recently of the overlap between business intelligence and predictive analytics. Of course any reader of this blog (or at least the title of the blog) knows I live in the world of data mining (DM) and predictive analytics (PA), not the world of business intelligence (BI). In general, I don’t make comments about BI because I am an outsider looking in. Nevertheless, I view BI as a sibling to PA because we share so much in common: we use the same data, often use similar metrics and even sometimes use the same tools in our analyses.

I was interviewed by Victoria Garment of Software Advice on the topic of testing accuracy of predictive models in January, 2014 (I think I was first contacted about the interview in December, 2013). What I didn’t know was that John Elder and Karl Rexer, two good friends and colleagues in this space, were interviewed as well. The resulting article, "3 Ways to Test the Accuracy of Your Predictive Models" posted on their Plotting Success blog was well written and generated quite a bit of buzz on twitter after it was posted.

Prior to the interview, I had no knowledge of Software Advice and after looking at their blog, I understand why: they are clearly a BI blog. But after reading maybe a dozen posts, it is clear that we are siblings, in particular sharing concepts and approaches in big data, data science, staffing and talent acquisition. I've enjoyed going back to the blog. 

The similarities of BI and PA are points I’ve tried to make in talks I’ve given at eMetrics and performance management conferences. After making suitable translations of terms, these two fields can understand each other well. Two sample differences in terminology are described here.

First, one rarely hears the term KPI at a PA conference, but will often hear it at BI conferences. If we use google as an indicator of popularity of the term KPI,

• ' “predictive analytics” KPI' yielded a mere 103,000 hits on google, whereas
• ' “business intelligence” KPI' yielded 1,510,000 hits.

In PA, one is more likely to hear these ideas described as metrics or even features or derived variables that can be used as inputs to models are as a target variable.

As a second example, a “use case” is frequently presented in BI conferences to explain a reason for creating a particular KPI or analysis. “Use Cases” are rarely described in PA conferences; in PA we say “case studies”. Back to google, we find

• ' "business intelligence" "use case" ' – 306,000 hits on google
• ' “predictive analytics” ”use case” ' – 58,800 hits on google
• ' “predictive analytics “case study” ' – 217,000 hits on google

Interestingly, the top two links for “predictive analytics” “use case” from the search weren’t even predictive analytics use cases or case studies. The second link of the two actually described how predictive analytics is a use case for cloud computing.

The BI community, however, seems to embrace PA and even consider it part of BI (much to the chagrin of the PA community, I would think). According to the Wikipedia entry on BI, the following chart shows topics that are a part of BI:

Interestingly, DM, PA, and even Prescriptive Analytics are considered a part of BI. I must admit, at all the DM and PA conferences I’ve attended, I’ve never heard attendees describe themselves as BI practitioners. I have heard more cross-branding of BI and PA at other conferences that include BI-specific material, like Performance Management and Web Analytics conferences.

Contrast this with the PA Wikipedia page. This taxonomy of fields related to PA is typical. I would personally include dashed lines to Text Mining and maybe even Link Analysis or Social Networks as they are related though not directly under PA. Interestingly, statistics falls under PA here, I’m sure to the chagrin of statisticians! And, I would guess that at a statistics conference, the attendees would not refer to themselves as predictive modelers. But maybe they would consider themselves data scientists! Alas, that’s another topic altogether. But that is the way these kinds of lists go; they are difficult to perfect and usually generate discussion over where the dividing lines occur.

This tendency to include fields are part of “our own” is a trap most of us fall into: we tend to be myopic in our views of the fields of study. It frankly reminds me of a map I remember hanging in my house growing up in Natick, MA: “A Bostonian’s Idea of The United States of America”.  Clearly, Cape Cod is far more important than Florida or even California!

Be that as it may, my final point is that BI and PA are important but complementary disciplines. BI is a much larger field and understandably so. PA is more of a specialty, but a specialty that is gaining visibility and recognition as an important skill set to have in any organization. Here’s to further collaboration in the future!

The author Dean Abbott can be reached at his website by clicking here. 

You can follow the author on twitter here.

What Is Business Intelligence 3.0?

Tracy Watson,  for Business 2 Community writes: Like the web and other technologies before it, business intelligence has evolved. Today’s business intelligence solutions are nothing like their predecessors.

 

For example, early incarnations of business intelligence software were tool-centric and designed for IT- and data scientist-level users. Reports tended to look back, be highly detailed, and be generated on a monthly basis. The primary use case of first generation business intelligence software and its batch-processing reporting was for operational reconciliation. Let’s call this era “Business Intelligence 1.0.”

Business Intelligence 2.0 evolved, opening up business intelligence to the aptly called “data explorers.” Rather than being installed in a client-server configuration, these solutions moved to the Web. Highly scalable, Business Intelligence 2.0 was widely embraced by enterprise organizations. Instead of looking back, BI 2.0 allowed users to explore and predict. Rather than generating detailed monthly reports, this generation was better suited to generating summary reports on a daily or weekly basis.

Today, business intelligence has entered its third generation. Just as other technologies moved from client-server configurations to the Web and now to mobile devices, the same is true of Business Intelligence 3.0. BI 3.0 can be accessed across multiple devices, and it is extremely user friendly and collaborative. Today’s business intelligence users do not need an advanced degree in computer or data science, nor do they need to have a driving interest in exploring data. Business Intelligence 3.0 appeals to business users of all abilities and from a myriad of functional backgrounds. From accountants and C-level executives to warehouse supervisors, purchasing managers, sales and marketing staff, and beyond, the entire team can find the information needed to move forward. Business intelligence 3.0 has a collaboration focus and is ideal for social workgroups. Instead of generating monthly, weekly, or daily reports, BI 3.0 is capable of generating real-time reports on any number of processes.

According to InetSoft, a developer of business intelligence software, “With Business Intelligence 3.0 in demand, you’ll want to have the ability to connect to relational databases, multidimensional databases, column-based data warehouses, and software such as Google AdWords and Analytics, Salesforce.com, Microsoft Excel and more.” Big data has also become a trend over the last year or so. Companies are using big data to become more efficient, strategic, and responsive to ever-changing customer needs (Source).

At the same time, Business Intelligence 3.0 allows for the functionality of its predecessors. For example, if you want to look back at a detailed report covering the last 20, 60, 90, or 365 days, you can certainly do so. With enhanced functionality, real-time reporting, ease of use, and collaborative tools, this new generation of business intelligence builds on the gains made over the years.

According to an article posted on YellowFin, Defining Business Intelligence 3.0, the latest generation of business intelligence software enables an organization’s decision-makers to explore, create and analyze data quickly without having to master a complex tool or getting IT involved. BI 3.0 empowers business users to explore, collaborate, and understand visual data.

Business intelligence and the data visualization and real-time reporting tools that accompany it have evolved. We are now entering a new generation of business intelligence. Are you ready?

XERO: US Payroll API live with first integration

Oliver Furniss for Xero writes: We’re pleased to announce the general availability of the API for US payroll. This extends the reach of the payroll API to Australia and seven states in the US that covers approximately 40% of the US population.

US Payroll API

The US Payroll API covers the main use cases including employee information, creating and updating timesheets, and processing pay runs. This is the first release of the US Payroll API and there are extra end points that we’ll address in future releases including time off and holidays. Developers will be familiar with the same pattern being used as the other Xero and payroll API endpoints. The same OAuth process is utilised, but with the addition of granular permissions.

The Xero Developer site is the best place to learn more about all the endpoints and the finer points of the US Payroll API. If you have any questions the Developer Community is a great place to find answers.

The US Payroll API follows our open API and self service approach allowing individual customers to use the API too. The .NET library has also recently been updated and it includes support for both the AU and US Payroll API.

US Payroll and Deputy

We’re also pleased to announce that the first integration with the US Payroll API is complete and is available from Deputy.

Deputy is an all­-in­-one scheduling, time & attendance, tasking and communication platform that seamlessly integrates with Xero. The Deputy Kiosk iPad App is used to track time and attendance in retail, healthcare, hospitality and many other industries . These timesheets can then be seamlessly transferred to US Payroll in Xero via the API. Deputy syncs Xero Employee details along with pay rates to provide accurate overtime reporting.

Don’t forget, if you use an add-on, share your experience and help others find the right add-on for them.

We look forward to seeing your products integrated with the new US Payroll API.

Understanding Tax Deductions for Your Business & Tax Considerations When Setting Up Your Business

Tina Orem writes: Understanding Tax Deductions for Your Business.  There are numerous reasons why it’s important to have good bookkeeping practices when conducting business, not the least of which is to make tax preparation easier and more accurate. Businesses pay a variety of taxes, one of which is a tax on their profits, more commonly known as the income tax. 

Your profit is the revenue remaining after deducting expenses. Accordingly, the higher a business’s expenses are, the less tax it pays on its profits. This is a big reason why keeping track of business expenses is so important. 

If the expense appears on your company’s income statement, it’s a general indication that the expense might be tax-deductible. There are lots of rules and exceptions, however, so be sure to get professional advice before you attempt the deduction. One of the best guides to deductible expenses is IRS Publication 535 (“Business Expenses”). In general, however, the IRS says a business expense must be “ordinary and necessary” to be deductible. 

Below are some of the most important tax deductions for your business. 

1. Cost of Goods Sold 

This is the largest expense for many businesses. It might include the cost of your raw materials, the cost of storing those materials, the freight costs for those items and even the direct labor costs associated with making the materials. For more information, see IRS Publication 538.

2. Payroll 

This is another major expense for most businesses. This deduction generally includes wages, but it can also include what you pay for employees’ healthinsurance or retirement plans. 

3. Rent 

Businesses that operate in brick-and-mortar locations know that rent can be costly. Thankfully, it’s usually tax-deductible. Just be sure to remember that rent is the amount you pay to use property that isn’t yours, which meansequipment rental can be tax-deductible as well. 

4. Professional Fees 

This includes what you pay a third party to do your payroll, your taxes, yourlegal work or any other professional service. Consultants are also included in this category. In general, you deduct the work in the year in which it occurs; however, if the work is for future years, you may have to deduct that work over the useful life of the work. 

5. Interest

If you’re making payments on a bank loan that’s related to starting or running your business, that interest is probably tax-deductible. This can be tricky, though, especially if interest is accruing on the loan but you’re not making payments yet (this may be due to the terms of the loan or something you’ve negotiated with the lender). Be sure to consult an accountant to understand exactly what you can and cannot deduct. 

6. Insurance 

It’s very important to have insurance, and it’s even better when that insurance is tax-deductible. This includes liability insurance, director and officer insurance, commercial property insurance, product liability insurance and others. Be aware, though, that some life insurance and annuities are not deductible; neither is insurance that you buy in order to secure a loan. The IRS offers more insight here. 

7. Your Home and Your Car

You can indeed deduct some of your mortgage, rent, utilities, homeowners insurance, house repairs and car expenses if you use these things for business. For example, if you’re a freelance writer who works from home and uses the car occasionally to meet sources for interviews, you may be able to deduct a portion of your home and car expenses (the deduction is related to the proportion of your home and car that you use for business). 

Use the actual-expense method to deduct car expenses if you’ve kept track of every business-related auto expense; otherwise, use the standard-mileage-rate method and deduct a flat amount per business-related mile driven. You also have the option of taking a flat home-office deduction (rather than itemizing those expenses), but again, this is only if you use your home for business. Expenses associated with personal use aren’t deductible. For more, see IRS Publication 587 and IRS Publication 463. 

8. Bad Debts 

Most businesses have the unfortunate experience of selling to customers who end up being unable to pay. Some customers are slow payers or work out repayment terms that are longer than normal, but sometimes the check just never comes, and the business takes the loss. Consult IRS Tax Topic 453 for more information about deducting bad debt. 

9. Travel and Entertainment 

Businesses frequently incur these costs by sending employees to conferences or conventions, or when meeting with and entertaining clients. The catch here is that meals and entertainment expenses are generally only 50% deductible. Consult IRS Publication 463 for more information. 

10. Taxes 

For example, let’s say that you pay $1,000 in personal property tax to your state on assets you use in your business. This may be tax-deductible, as would be employment taxes and many others. The catch is that you generally can only deduct taxes in the year that you pay them. 

11. Advertising 

Billboards, commercials, online ads, print ads, business cards and sponsorships are all usually deductible as long as there’s a clear connection between the purchase and your business. For example, if you sponsor a local school event or festival, the acknowledgments should reference the business rather than an individual. 

As you can see, lots of things are tax-deductible in business. Some people have even used businesses to lower their taxable income, although unless you have substantial wealth, this “strategy” will probably not apply to you. The bottom line is, as a business owner, you must educate yourself on the items and expenses you can and should deduct. Not doing so could have two negative consequences. First, you could be paying higher taxes than necessary, and two, you could be exposing yourself to a tax audit, which is an even bigger problem.

Bridgette Austin writes: Tax Considerations When Setting Up Your Business

After much debate and consideration, you’ve decided to take the leap and start your own business. While you may have a lot of startup costs to consider, there are numerous tax advantages that help offset the expenses of setting up and operating a business.

Like many new entrepreneurs, deciding on the right business structure for your product or service may seem confusing and daunting. Further complicating matters are the federal tax implications and IRS requirements you must consider when forming your company.

Before diving into the legalities of creating and running an organization, hire a qualified accountant or attorney to help steer you through the complex legal requirements of establishing a business. The following is a brief overview on the most common types of business structures, as well as some of the tax considerations unique to each entity.

Sole Proprietorship

A sole proprietorship is by far the simplest and most common type of business structure. Sole proprietorships are popular primarily because they’re the easiest and least expensive to establish.

However, as a business owner, sole proprietorships leave you the most legally vulnerable. Any business debts and liabilities will be the owner or sole proprietor’s responsibility. In addition, all company profits must be accounted for on your personal tax return. The same applies to any eligible write-offs andhome office deductions. Although your business and personal assets are more vulnerable with a sole proprietorship, keeping all necessary paperwork to file and back up deduction claims can help you minimize potential risks.

Tax Implications

• Sole proprietors are taxed at their own personal tax rate, which might be lower or higher than the corporate tax rate.

• Sole proprietors can protect personal assets and income from a tax audit by deducting only legitimate company expenses.

For additional information on tax implications for sole proprietorships, refer to the Sole Proprietorships page on the IRS website.

Corporation 

Corporations are the second most common business structure after sole proprietorships. In addition to being versatile, corporate structures are also popular because they’re considered separate legal entities from the owner. In other words, if you’re sued for unpaid debts, only your business assets are legally vulnerable (your personal assets remain separate). In rare cases of fraud or co-mingling of personal and business assets, this separation of liability can be legally breached; this is called “piercing the corporate veil.”

Although corporations can raise capital through the sale of stock or equity financing, the financial reporting requirements are more complex than a sole proprietorship. Accounting processes can also be expensive to establish.

Tax Implications

• Corporations can be subject to a double tax, since dividends are paid to shareholders after taxes (i.e. any profit earned by the corporation is taxed). Shareholder dividend payments are then taxed a second time, since they’re recognized as income distributed to individual shareholders.

• In addition to taking the same deductions as sole owners and proprietors, corporations are eligible for special deductions since the IRS views corporate structures as separate taxpaying entities. 

Corporations may be liable for taxes such as Social Security and Medicare. For a complete list, see the IRS tax guidelines for corporations.

S Corporation

S corporations, or “S corps,” are similar to regular corporations, but can only have a maximum of 100 shareholders. Furthermore, shareholders can only be individuals, estates and certain trusts. 

An S corporation must be based in the United States and contain only one class of stock. Some business sectors, such as certain insurance firms, financial services companies and domestic international sales corporations, are ineligible to claim subchapter S status. 

These restrictions are not meant to make it more difficult for startups to set up S corporations, but to prevent large, publicly held corporations from taking advantage of this alternative business structure. Likewise, S corporations must operate for a set time period before converting to a C corporation. The same is true for C corporations looking to convert to an S corporation.

Tax Implications

• S corporations “pass through” taxation of profit, losses, gains and deductions to their shareholders. This means that shareholders are taxed only once, which allow S corporations to avoid the traditional “double taxation” on corporate profit.

• At the entity level, S corporations are responsible for paying taxes on certain built-in gains and passive income.

Refer to the S Corporations page on the IRS website for further guidance on tax forms and filing requirements.

Partnership

A partnership involves two or more individuals who form a legal business entity. The individuals become co-owners of the company. When setting up a partnership, it’s best to consult a qualified attorney to draft a legal agreementdetailing the business arrangement, partner responsibilities and ownership interests.

Tax Implications

• Since each partner contributes financial capital and business resources to the partnership, each partner also shares responsibility for any profits or losses.

• Because partnerships are not taxable entities, profits and losses are “passed through” to the company’s owners and reported on each partner’s individual tax return.

• Partnerships must file an annual information return reporting the company’s income, gains, losses and deductions.

Refer to the IRS website’s Partnerships page for further guidance on the tax forms partners are required to file with the IRS.

Limited Liability Company

Often posed as an alternative to regular corporations, a limited liability company (LLC) operates like a partnership but limits owners’ liability risk for company debts (and shields their personal assets). Any profits and losses are passed to company investors depending on their level of ownership. 

While both provide liability protection, an LLC offers more flexibility than a corporation. There’s no requirement regarding the type or number of owners within an LLC, and it offers simpler taxation that a corporate structure. Certain companies, such as banks and insurance companies, are ineligible to form an LLC. Generally, eligible owners can form one of two types of LLCs:

• A single-member LLC, which is owned by one individual or corporation and treated as a sole proprietorship for taxation purposes.

• A multiple-member LLC, which is owned by two or more members. Thus, the LLC is treated as a partnership, unless it elects to be taxed under a different status.

Tax Implications

• LLCs are allowed by state statute and must be filed with the Secretary of State.

• By forming an LLC, you’re allowed pass-through taxation. Profits are taxed at the member (i.e. investor) level rather than at the LLC level, thus avoiding double taxation.

• As an LLC, you have wide flexibility when it comes to tax status elections. For example, LLCs can be classified as a sole proprietorship, partnership, corporation or S-corporation.

• Owners assume no personal liability for company debts.

Your filing requirements will depend on what entity classification you choose for your LLC. Refer to LLC Filing as a Corporation or Partnership on the IRS website for further information.

Conclusion 

The considerations listed here are by no means an exhaustive list of the legal and tax ramifications of setting up a business. If you’re ready to establish your business entity, work closely with a qualified attorney and tax professional who can advise you on the best practices for building a solid foundation for your company. Finally, refer to tax resources, such as the article “Choosing a Business Structure” on the IRS website, for additional information on tax requirements for business owners.