Member Since: Jul 22nd 2016
Michael Abrams is the Owner of Abrams Business Management Services ("ABMS") and has spent over 25 years working with small- to medium-sized businesses and entrepreneurial startups. His honesty and integrity are beyond reproach. He has experience in many different areas of small business management including financial reporting, budgeting, HR & Payroll (including administering retirement plans, workers’ compensation and safety programs). His experience and wide industry exposure allow him to quickly assess a situation and take appropriate corrective action. He is also experienced in project managing the acquisition and implementation of accounting and bookkeeping software. Additionally, Michael is a proponent of World Class Customer Service and offers customer service training, both internal and external. Customer service, after all, is really the only thing that differentiates one business from another.
He started ABMS in 2018 with the goal of helping SMBs and startups avoid the common financial and operational pitfalls of starting/running a SMB.
Owner Abrams Business Management Services
May 13th 2020
Excellent article and points made!
One thing I might add, however, is frequently monitoring inventory for unexplained adjustments - either up or down - and comparing the resulting COGS against the sales. It's not just the cash drawer involved; it's sorta kinda easy to skim physical inventory by having your friend come in and "pretend" to make a purchase and then settle up with you after hours.
Apr 29th 2020
Thank you for a very informative article highlighting an important issue. I do have a question:
I am organizing a bookkeeping/tax/consulting business from my home (just one user...me) and all my applications are/will be cloud-based.
I've heard varying opinions on whether or not I should deploy a VPN, which opinions are stronger once I start doing actual tax work due to stringent IRS data security requirements...What are your thoughts??
Apr 29th 2020
While I can appreciate the mechanics of how to handle things in QB, personally this seems much more involved than necessary.
Regardless of if the PPP loan is forgiven, actual expenses should still be recorded for future comparison. Any forgiven amount is simply Other Income (particularly for those states with a Gross Receipts tax). Finally, the Excel sheet implies that the payroll portion of PPP proceeds is limited to 75% of the loan amount as evidenced by the "Remaining" column.
In my opinion, PPP proceeds are nothing more than a loan when received and either taken in to income when forgiven or continued as a loan for any un-forgiven amount. I would set up the original proceeds as a Short Term Liability since the intention is to have all the loan proceeds forgiven, presumably.
Some would argue that for whatever portion of the proceeds will be forgiven, no operating expenses should be booked - that is, "offset" by the free moneys. I disagree and don't think that approach is sound bookkeeping/accounting. The nature if the inflow has no impact on the character of the outlow.
Apr 27th 2020
It sounds like your client is old-school OPM - Other People's Money. My dad was that way. When the tax rates were higher and the write-offs more numerous, it may have made some sense back in the day. But not now. As Dave Ramsey puts it:
"Cash is king, debt is dumb and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice."
Apr 24th 2020
While I generally agree with everything in your article because you have to do what you have to do in certain situations, I think there is one huge elephant in the room that is generally ignored by most business advisors:
This is a wake up call to improve liquidity.
In my opinion, it's the perfect time to re-think debt and tax avoidance and focus more on having appropriate cash reserves available - six to 12 months depending on the business - to cover basic operating expenses: Payroll, benefits, rent, utilities, etc.
Banks aren't really interested in your business; they're interested in how much credit they can provide that you don't need (try getting a loan when you actually NEED it!!)
In reality, with proper planning and execution, most SMBs shouldn't need any sort of debt save for maybe a standby line of credit for seasonal anomalies.
Aug 10th 2019
Great points made! Especially #2 & #3.
Excel is a great tool but unfortunately, it does so much a lot of people would prefer to show off their Excel programming skills instead of utilize a more efficient solution. Excel has it's place but it's not the most stable/secure solution for many of the applications for which people deploy it - in my opinion/experience.
Also, whenever I source software I look for something that handles upwards of 75% or so of the way the business is currently operated and I'm willing to modify practices/processes to accommodate the software rather than modifying the software. I try to avoid software modifications like the plague as modifications impact future updates/upgrades financially, sometimes significantly.
Thanks again for the article!
Jul 23rd 2019
Actually, a better strategy for small businesses (in my humble opinion, of course) would be to teach the owners to be debt-free and use cash from investments to fund growth, if necessary.
Jul 4th 2019
So essentially, because of your experience you created an environment whereby the gathering of items required by the IRS would take longer, thereby giving the attorney more time to prepare the case? Smart move, I'd say except that I do have one question:
Do you think the additional time afforded would have an sort of favorable impact to the client in this case? And, if not, would you still have proceeded the same way?
Jul 4th 2019
I'm glad you put the payroll and related taxes first. In my experience, many small start-ups are wwwaaayyy under-capitalized and use payroll taxes as a "loan" source to get by in the beginning.
Which makes cash flow forecasting/management that much more critical for startups so that they don't get in trouble with the tax folks which, in certain circumstances, can become a criminal matter.
Jan 19th 2019
While I agree that helping the client get organized is mutually beneficial, I don't have a problem charging a client $75/hour for bookkeeping to straighten out their records. The fee is high enough to get them to think about being more organized and high enough for it to be worthwhile to me.