Bootstrap

Cutting business expenses: Bootstrap customer interview

The poor state of the economy gets a lot of media coverage these days, but we were especially intrigued by an email we received from one of our customers, Terrell, a professional photographer from Las Vegas. He mentioned that using Bootstrap had helped him see where he needed to cut costs. Because we thought other entrepreneurs might be in a similar boat, we asked Terrell for some more information about his story:

Q. Can you tell us about your business? What do you do? How long have you been in business? Is this your first business or have you run others before?

A. I’m a lifestyle photographer based in Las Vegas. I’ve been shooting professionally for about seven months and I specialize in family and children lifestyle photography but I love shooting people in general. This is my second business. I used to own an apparel company which I sold. I still work a regular 9-5 as a Curriculum Developer for a wireless Internet company .

Q. What do you enjoy most about running your own business?

A. I truly enjoy what I do. I get to befriend so many individuals as a photographer. They become friends, people I talk to regularly via email, or phone…though many of my clients are on Facebook we use it to keep in touch, share photos, etc. It’s great when you can build a great relationship with clients. As for running my own business I really enjoy the people aspect of it and just being in control of my success or failure. I’m hoping and striving for success of course.

Q. What do enjoy least?

A. I have to be honest. I prefer to be out shooting rather than seating behind a computer editing hundreds of photos for hours. I’ve finally decided to focus on what I love doing-which is capturing images. I’m working on farming out the post-processing either hiring someone part time or working with a post-processing company.

Q. Have the economic troubles impacted your business? If so, how?

A. It has a little but it’s also made me more creative. When I speak with potential clients I let them know that what I do is custom photography which is a luxury and not some cookie cutter chain experience. It’s an investment in time and money. From that investment the client receives something so priceless…images of their children at an age they will never be again—being themselves in the images free of cheesy posing. It’s about capturing the essence of the person being photographed. The images that are created will last forever. Some people may gasp at the price tag but if they truly want portraits that capture the moment—it’s worth every penny.

Q. Do you expect to cut back on business expenses over the next 6 months? If so, do you have a specific amount or goal in mind?

A. Cuts are sometimes necessary. Since I’ve been using Bootstrap I’ve seen where I need to be more lean. I’ve made a few bad purchases that I regret but they were learning moments and move on. The old adage is it takes money to make money. I’ve also decided to go even more green and not print out my price booklets and to use final packaging materials from sustainable companies…we only get one earth you know.. I believe clients will respect a well designed digital experience and the more earth friendly packaging. Don’t get me wrong, I think packaging is very important but I want to make sure that I keep cost low and pass on the savings to the client.

Q. You mentioned that using Bootstrap has already helped you find places to cut expenses. Could you share some examples?

A. I need to reevaluate my spending with certain online sites, find more reasonable alternatives that offer me the bang for my buck. I’ve taken more time to thoroughly investigate my options rather than going with the one with all the flashy buttons. Just yesterday, I came across a studio management system that is half the cost of my current solution and offers the same if not more features with a solid design. Can I say their name…Tave Studio rocks! It’s really important to find companies that ‘”get it”. Bootstrap is one of them. The support is fast and friendly. I can’t wait to grow with you guys! Rock on!!

Dealing with Independent Contractors and 1099s

Let’s take a look at a very common practice in the world of small business - the use of independent contractors.

Many times, we small business owners need a little help to get our work done. So, we engage the services of an expert to help us. For instance, we used a couple of designers to help create the look and feel of the Bootstrap site. While this is definitely a lot easier than hiring an employee to do the work, there are still a number of complexities of which you should be aware.

First, make sure the person you use really does qualify as an independent contractor and is not an employee. See the IRS guide for more help.

Next, it’s a good idea, especially in the world of professional services, to use independent contractor agreements in addition to statements of work or other contracts. In addition to helping clarify the lack of an employer/employee relationship, it also helps to ensure that you own the rights to what the contractor produces for you. Odds are you’ve had to sign one yourself, but you can also find examples on Scribd and Docstoc.

Once you’ve agreed to use a contractor, you should get them to fill out form W9. This gives you the info you’ll need for your end of year reporting (more on that to come.)

Many states require that you report the “hiring” of independent contractors - so check to see if and where to submit to your state.

When you do pay contractors, make sure you track who you’ve paid and how much. Why? Because, for each person you pay more than $600 in a calendar year, you need to send both them and the IRS a copy of Form 1099MISC. You will need to enter the total amount paid in Box 7. With Bootstrap, we make this very simple - just use the “Contractors and freelancers” category for any payments to contractors throughout the year. We will be adding a new 1099 report that will list the contractors you’ve paid and the total for the year.

The fun really starts at the end of the year (or, to be technically correct, the beginning of the next year.) You need to send a copy to each contractor by January 31. You also need to file a copy for each contractor with the IRS by February 28 (or March 31 if filed electronically.) If you are going to file the paper copy with the IRS, you better make sure to get the official forms (the ones with the red ink,) either from the IRS or at most office supply stores. Why? Because the special forms are machine readable; printed versions (even with a color laser) are not.

So why is it important to file 1099s? I mean, what about paying folks under the table? Well, aside from being shady, the fact is, if you don’t file the 1099s with the government, you can’t deduct those payents. In this case, it really does pay to do the right thing:-)

Helping small business - DC style

Saw an interesting post today in the Wall Street Journal’s Independent Street blog on the Presidential candidates’ plans for helping small businesses.

One thing that seemed missing was help to push though legislation to make the home office deduction easier. In fact, it’s pretty funny to see candidates talk about assistance in covering health care benefits for employees, or lowering the tax rate on corporations. Given that almost 21MM small business in the US have no employees (out of ~27MM), and the vast majority are sole proprietors, it makes one wonder if the largest segment of entrepreneurs isn’t being overlooked. Oh yeah, and those 20.7MM non-employer businesses? They generated $970 Billion in receipts in 2006.

We can’t make the government give entrepreneurs a break, but at least we can help them write off their business deductions.

Track your FreshBooks invoices in Bootstrap

Since launching a few months ago, customers have been asking for the ability to track invoices in addition to payments received. In keeping with our goal to be the simplest and most open accounting and bookkeeping software for small businesses, today we released an easy-to-use integration with FreshBooks’ online invoicing application.

By simply entering two pieces of information about your FreshBooks account, you will enable Bootstrap to regularly download all of your invoices, payments and clients directly from FreshBooks. Now, you can not only track the money that you’ve been paid, but also keep tabs on money you’ve earned but haven’t yet received.

Just go to the settings tab and click on the FreshBooks menu item. Once you check the box to enable FreshBooks invoicing, all you need to do is enter your FreshBooks login ID and API token (just follow the on-screen help to learn where to find this.) That’s all there is to it.

Estimated taxes are due Monday, September 15

Ok all you entrepreneurs out there, time to give the government it’s cut of the action.  Third quarter estimated taxes are due this Monday, September 15.  This payment is for earnings through August 31, 2008.  And remember, if you’re self employed or run a business, you need to be paying self employment tax in addition to income tax.  For those who may not be familiar with self-employment taxes, you need to pay 12.4% of the first $102,000 of self employment income into Social Security and 2.9% to Medicare (which has no upper income limit.)

If you use Bootstrap to track your income and expenses, you can get a conservative estimate of what to pay for Federal estimated taxes by clicking on the “Taxes” tab.

Don’t forget to also make your state payments (which vary by state of course, so make sure to look up your requirements.)  We plan to offer help on estimated State taxes in the future, but won’t have it for this tax year.

To learn more about making Federal estimated tax payments, go to http://www.irs.gov/businesses/small/article/0,,id=110413,00.html 

For those who lost their IRS payment vouchers, you can print them out at http://www.irs.gov/pub/irs-pdf/f1040es.pdf 

Now, if you don’t expect to owe more than $1,000 in taxes for the whole year, then you don’t need to make estimated tax payments.  But we’re hoping everyone out there is making lots of money, which would mean footing some of Uncle Sam’s bills.

Cheers and may you have a profitable fourth quarter!

How do you handle clients who don’t pay?

We received a great question from a user today - how does Bootstrap handle situations where a customer hasn’t paid and likely won’t. In the customer’s words, how do you “take a loss?”

Unfortunately, for this situation, you can’t take a loss against other income or enter a deduction for the lost time using Bootstrap. Here’s why: Bootstrap is based on the cash method of accounting (yes, we’re using more of that accounting mumbo jumbo here, but better here than in the actual program:-) That means that you only report income when you’re received payment. And you only report expenses when you’ve spent the money. This is the preferred way for most entrepreneurs to handle their tax records - how many people want to pay taxes on money they haven’t yet received?

Well, in this case, if you haven’t been paid, it means there’s no income to report. There’s a good writeup in the Ernst & Young Tax Guide that better explains the details.

What are the largest write-offs for entrepreneurs?

In doing some research for Bootstrap, our simple online accounting software application, we came across a great report in The Small Business Economy for Data Year 2006: A Report to the President. In it, there was a very interesting table outlining total business deductions for non-farm sole proprietors for the 2004 tax year (more than 20.59 million returns filed.) The top 3 were not very surprising: “Cost of sales and operations” accounted for almost 42% of all deductions (the vast majority of which were purchases), followed by “Other business expenses” at 11% and then
“Salaries and wages” at 8%.

But the next cluster of deduction categories were of much more interest:

• “Car and truck expenses” came in at #4 with 6.6% of all deductions. How much is 6.6%? Try $59 Billion!
• At #5 comes “Depreciation”, accounting for 4.8% of deductions (or $42.9 Billion)
• The next two slots go to “Rent on other business property” and “Supplies”. But coming up close behind is “Contract labor”, where these businesses spent $24.7 Billion! That, my friends, is a lot of 1099s!

I highly recommend that anyone who provides products or services to very small business read this report - it’s a very good summary of a lot of government statistics.

And the Mac user base continues to grow!

When Apple reported earnings earlier this week, one of the first things we looked for was information on Mac shipments and market share. Why? Because Mac users have long been underserved when it comes to accounting software solutions. The lack of quality financial record keeping options on a Mac is one of the primary reasons we started Bootstrap. So when we hear that the Mac now has 8.5% market share in the US (up 2.1% in the last year) and is the #3 U.S. PC maker, we see many more potential entrepreneurs whose lives we can simplify by providing the easiest to use bookkeeping software around.

Nice job Apple (no pun intended). Keep up the good work.

Is there global demand for Bootstrap?

After some very early inquiries about supporting multiple currencies, I pulled up the following chart on our Google Analytics account.

In the first 5 days (through part of today) since we opened the site up to the public, we have had visitors come to Bootstrap from 63 different countries. So naturally this begs the question - what can we do (besides offering support for different currencies) to make Bootstrap more useful to non-US entrepreneurs and businesses? Please send your requests to support@gobootstrap.com. We’re listening!

Bootstrap is now open to the public

For entrepreneurs, self employed individuals, and small businesses that file a Schedule C at year’s end - there’s now a simple online bookkeeping web site designed to make running your businesses easier. After a couple of months in “invitation-only” mode, we have officially opened up Bootstrap to the public: www.gobootstrap.com. It’s still in Beta mode (meaning it’s not 100% complete) and remains completely free.

Here are some of the key features:
• Easily track income and expenses, using lots of shortcuts to minimize time
• Quickly see how your business is doing at all times
• Be reminded about estimated tax deadlines and get help calculating how much you owe
• Keep track of how much you pay contractors and freelancers - this will come in handy at the end of the year for sending 1099s
• Export your data in comma-separated format (which can be read by Excel and most financial applications)

You can see for yourself at our product tour. Enjoy and please send us your feedback on how we can improve the site.