Tag: finance

Why We Run Quarterly Payroll for Our Clients

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For many of our clients—especially those structured as S-corporations—quarterly payroll isn’t just a convenience, it’s a strategic and compliance-driven necessity. At Incline Business Essentials, we’ve developed a quarterly payroll model that aligns with IRS requirements and supports proactive tax planning. Here’s why we do it and how it helps your business.

S-Corporation Owners Must Pay Themselves a “Reasonable Wage”

One of the core requirements of an S-corp structure is that business owners who actively work in the company must be paid a reasonable salary through payroll. This salary is subject to standard payroll taxes, and it’s critical to stay in compliance with the IRS. Skipping this step can lead to audits or penalties.

By running quarterly payroll, we help ensure owners are consistently paying themselves a fair wage in a timely manner, while also simplifying the administration of payroll for smaller teams who may not need or want a monthly cadence.

Strategic Tax Planning: Avoiding Year-End Surprises

Another major advantage of quarterly payroll is the ability to strategically manage federal and state tax obligations. We work closely with you and your CPA to estimate the total amount you should be paying into the IRS and your state throughout the year—not just from wages, but including pass-through income that may affect your tax bill.

Once these estimated totals are calculated, we set up additional withholdings through payroll to help ensure you’re on track. This approach:

  • Helps smooth out tax payments over the course of the year
  • Reduces the risk of underpayment penalties
  • Minimizes the shock of a large year-end tax bill
  • Provides peace of mind for business owners who prefer to pay taxes incrementally

Our Process: Collaborative and Tailored

Each quarter, our team:

  1. Coordinates with your CPA (or uses our best estimates based on past tax performance and current year projections) to determine estimated tax obligations.
  2. Runs payroll to deliver your reasonable salary and any additional withholdings needed.
  3. Files and remits taxes to federal and state authorities, keeping your compliance on track.
  4. Monitors and adjusts withholdings as needed throughout the year to reflect changes in business performance or tax policy.

The Bottom Line

Quarterly payroll isn’t just about ticking a compliance box—it’s about using payroll as a tool to manage your cash flow, reduce surprises, and make smart, informed financial decisions. If you’re an S-corp owner, this cadence allows us to keep you aligned with IRS rules and on track for smoother year-end filings.

If you have questions or want to revisit your withholding estimates, let’s talk. We’re here to help make your financial systems work for you—not the other way around.

Accounts Receivable and Cash Flow: The Financial Love Story

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Accounts receivable (AR) and cash flow are two essential pieces in a business’s financial puzzle, but let’s be honest—they sometimes act more like a mismatched couple trying to figure things out. AR is all about patiently waiting for clients to pay up, while cash flow has no time for nonsense and just wants to keep the bank account full and happy. Here’s a humorous look at how these two frenemies work together to keep the business running smoothly.

Accounts Receivable: The Optimistic (and Slightly Naïve) Romantic 🌈💌

Accounts receivable is that friend who’s constantly loaning you $20 with a cheerful, “Just pay me back whenever!”

It represents the money your customers owe you for products or services they haven’t quite paid for yet. AR is like a hopeful romantic, always expecting clients will keep their promises to pay on time… eventually.

AR’s Motto: “I know they’ll pay soon! I mean, they said they would, and I trust them!” 😇

Why We Love AR: It boosts your company’s value by promising a steady stream of incoming funds… someday.

Biggest Weakness: Sometimes, it’s a little too trusting. It counts as an asset on the balance sheet, but if customers drag their feet paying, your cash flow might feel like it’s auditioning for a survival show.

Cash Flow: The No-Nonsense Realist 🚀💵

Cash flow, on the other hand, is that practical friend who’s all about action. Cash flow doesn’t believe in “eventually.” It’s the money moving in and out of your business, keeping the lights on and the rent paid. Think of cash flow as the “let’s get this done” type—focused, efficient, and slightly annoyed that AR is always so, well… hopeful.

Cash Flow’s Motto: “I’ll believe it when I see it in the bank account.” 💳

Why We Love Cash Flow: Positive cash flow means the business has enough money to cover expenses, invest in growth, and avoid borrowing. It’s the steady, reliable friend who keeps things together.

Biggest Weakness: Cash flow isn’t very patient. It gets nervous when too much money is tied up in AR, constantly reminding AR, “Good vibes don’t pay the bills!”

The Clash (and Cooperation) Between AR and Cash Flow 🤝🔥

AR and cash flow have a classic push-pull relationship, with AR wanting to “believe in people” and cash flow saying, “That’s great, but how about we get paid already?” If customers delay payment, cash flow gets grumpy, even though AR insists the check is “definitely in the mail.” 

Here’s how AR and cash flow work together when they’re not driving each other crazy:

Cash Flow Timing Delayed payments from AR can lead to cash flow headaches. Cash flow needs to buy groceries now, not next month!

Collection Strategies: With a strong collections policy (automated reminders, anyone?), AR can keep cash flow happy by bringing in cash more regularly.

Cash Flow Forecasting: Cash flow relies on AR for an accurate picture of future income. This way, it doesn’t get blindsided when there’s less cash in the account than expected. It’s like planning a party when AR actually RSVPs on time!

Tricks to Keep AR and Cash Flow in Harmony 🎩💡

1. Send Invoices Like You Mean It: The sooner you invoice, the sooner AR can give cash flow the boost it needs. And yes, that means no “gently nudging”—let’s make those invoices clear, assertive, and friendly.

2. Set “Encouraging” Payment Terms: Clear payment terms are your best friend. Offer a discount for early payments, or (politely) hint at late fees if customers take their sweet time.

3. Use Automated Reminders (Cash Flow’s Favorite): AR might feel a little awkward nagging customers, so let an automated reminder system handle it. This way, cash flow doesn’t lose sleep over unpaid invoices.

4. Consider AR Financing: AR can occasionally fast-track cash flow by using AR financing or factoring (where you get an advance on AR, but with a slight fee). Cash flow loves this idea—as long as you don’t overdo it!

The Happily-Ever-After

When accounts receivable and cash flow finally learn to work in harmony, it’s a beautiful thing. By actively managing AR, businesses can boost cash flow, avoid emergency “cash shortage” panics, and focus on growing with confidence. Remember: AR might be a dreamer, but cash flow is the real deal—keep both in check, and your finances will live happily ever after.

1099 Procedure

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1099s are forms that need to be issued in January to your vendors and subcontractors. Please watch the video or read below for more info.

Who Should Be Issued 1099s?

Your company is required by law to issue 1099s to any subcontractor who performed a service for your company within the calendar year they were paid more than $600, and the individual or a company that you paid is not registered as an S corp.

Subcontractors

Subcontractors can vary wildly. Fo example, maybe you hired a person to help you with your website, and you paid that person more than $600 in a year. Or if you hired someone to come in and help you with some carpentry, so they were acting as a true subcontractor. This is another example of someone who would need a 1099. Again, these, these would be issued to companies or individuals who are not an S corp who were paid more than $600 within a calendar year for a service they performed within your business.

Rent and Lawyers

In addition to this, we are also required to issue 1099s to an entity that you are paying for rent. So if that entity or individual is not an S corp, we will issue a 1099 to that entity or individual. We are required to issue 1099s to lawyers regardless of how much you’ve paid them

1099s Only For Checking Account Payments, Not Third Party or Credit Cards

One other piece of clarification is that 1099s are required to be issued for payments that have run through your checking account. For example, if you’ve written a check to a subcontractor or you’ve paid cash to a subcontractor.

We will not be issuing 1099s for subcontractors that you paid via credit card or any other third party payment platform. So like PayPal, for example, if you’ve paid someone through PayPal, we will not be issuing a 1099.

We cannot issue 1099s to your subcontractors that you’ve paid through a third party app because the third party is required to give some reporting to the IRS and if we were to issue a 1099 to those vendors, then the income would end up being double reported.

So it’s very important that we not issue 1099s for these kinds of third party apps. So again, if you have any questions about this, feel free to reach out, but just know this is how we will be handling it. As we approach end of year, please again, assist us with any W9s that we may need to collect on your behalf.

Why You Need Bookkeeping

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If you run a business, the act of bookkeeping is essential. Let’s start by defining bookkeeping. What exactly is “Bookkeeping?”

Bookkeeping is the process of recording the financial transactions of your company. Bookkeeping categorizes the money coming into your business as income. Expenses refer to money that your business spends in order to operate. The act of bookkeeping organizes your expenses into categories that are used to file your taxes.

Now let’s talk about why this matters.  

File Your Taxes

As a business owner, you will likely hire a CPA to file your taxes. You will need to provide the CPA with your income and your expenses. Your taxes cannot be filed without this information. This leads to the next important reason for keeping an accurate set of books.  

Pay Fewer Taxes

This is probably the most attractive reason to have a bookkeeping system in place. Bookkeeping identifies all of your transactions so that nothing slips through the cracks. You must categorize each and every transaction that goes through your bank account. By keeping an accurate set of books, you will know exactly what you spend on gas or office supplies, or advertising. When you are gathering your data at the end of the year, you aren’t trying to remember how much you spent on that new computer or which client you took to lunch in May. Without a clear bookkeeping system, you will invariably miss out on deductions. You must have a plan and a process to ensure that deductions are captured.

Your expenses must be organized into categories approved by the IRS in order to be considered “deductions”. Without deductions, you will pay taxes on the entire income of your business. With deductions, you will rightfully cut this tax bill thereby saving you and your business money. For example, if your business brings in $100,000 without deductions, you might pay the IRS upwards of $25,000. But, if you can clearly show business expenses of $60,000, you might pay $10,000. This is a tax savings of $15K — not just nickels and dimes!

Track Your Profit

Profit is a key indicator of your business’s success. You can only determine your profitability if you are tracking your income and expenses.

Make Decisions About Your Business

Bookkeeping can help you make decisions about your business. Is it a good time to hire? Should you be increasing your prices? Are you spending too much on utilities? These decisions are guided by your business’s financial health.

Financing

In order to get financing for your business, you will need to provide the lender a set of books showing your income and expenses. Banks will require you to show your expenses vs. your revenue, otherwise known as your Income Statement or Profit and Loss. Bookkeeping will provide this report.

Catch Mistakes

Were you overcharged or charged twice for a service? Are you paying for a subscription that you are no longer using? You will catch these transactions through your bookkeeping because you are looking closely at every transaction.

Where Is Your Money Going?

Through bookkeeping, you will understand where your money is going.  This will help you budget and plan cash flow for the development of your business.

Bookkeeping will save you money by saving on taxes, cutting down on mistakes, guiding you through financial decisions, and improving your cash flow.  Business owners often want to do this on their own. Sometimes this works. But often the books are the piece of the business that well-intentioned owners plan to do and just don’t have enough time in the day.  

Bookkeeping is essential but it does take time, pulling you away from your actual business and preventing you from focusing on your clients.  As a business owner, you wear so many hats.  This is one that you can easily outsource with confidence. Reach out for a complementary consultation to see if our services would be a good fit for your business.