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eCommerce Business Stages – Profits $500,000 to $1 million Part 2

Remember that business plan from Phase 1?

This is the perfect phase in your growing eCommerce business to assess cash-flow forecasts to plan for your business goals as you move into becoming a $1M+ online seller. This is where you show your current financial state, which helps with securing funding (if needed) and getting that commercial space you have your eye on — because your house simply cannot take another delivery.

After you’ve acquired commercial space, you’re likely looking to hire additional people, if you haven’t already staffed up running out of your home.
Have you considered employment/ contractor agreements?
Benefits to keep talent motivated and working with your business?
Additional insurance needs?

These are all questions as you staff up from 2-10+ people helping you run your growing eCommerce business. There’s no better person than your CPA to advise you on how to go about setting up payroll — in a way that will allow you to expand without cutting corners or neglecting to follow employer regulations.

Tax strategy is another vital ongoing advisory service that your CPA can help with, as your profits are increasing rapidly.

A CPA also knows what kind of deductions you are able to take as a small business owner and is able to maximize those deductions for you, minimizing the overall amount you have to pay on taxes.

Without professional, on-going, forward-looking support, you can end up paying more taxes than you legally need too.

One great way that a CPA sets you up for success in this regard is to forecast cash-flow and determine estimated taxes to pay, deferred retirement options and personal wealth growth.

Speaking of strategy, strategic planning is the highest leverage benefit that a CPA will bring to your business at this phase of your business’ growth.

“In this third stage of the e-commerce lifecycle, the attempts to reinvigorate your company’s momentum and growth should always be strategic.”

This is an area that CPAs are experts in, and you want a CPA who knows your eCommerce business.

Depending on what your strategy is, or what direction your business is moving in, your CPA will make both short- and long-term predictions about your eCommerce future.

He or she will also provide advice specific to the Phase your business is in now, as well as the Phase(s) you want to reach. CPAs can also provide you with a general managerial accounting background, plus access to quantitative data that you need in order to make well-informed business decisions. This may include, but is not limited to setting profitability goals, creating acquisition strategies, and developing risk management processes.

As your business grows and you begin to move into Phase 4, a qualified and professional CPA team of experts will provide you with insight and wisdom that will be invaluable to your company’s goals. Statista predicted that retail eCommerce sales will hit \$4.2 trillion in 2020, up from \$3.5 trillion in 2019.

If your goal is to continue growing your e-commerce business into Phase 4, then you’re probably already looking for advisory and strategy help.

The right CPA firm is an invaluable expert to have on your advisory team that can help advise, coach and strategize with you, helping reach your goals.

For sellers with profits of $1 million+.

eCommerce Business Stages – Profits $500,000 to $1 million

Does this sound like you?

Your online business is outpacing your growth projections.
You may have (or be looking to add) multiple employees.
You want strategic advice on how to minimize your taxes before year end.
You may be interested in growing sales over \$1m and looking for efficient technologies and cash-flow forecasting to meet your revenue goals.
Your business is taking over your home and you’re running out of space.

At this phase in your business’ growth, you should take the time to pause and congratulate yourself.

Yes you may:

Want to grow your business even more
Have a to-do list that is the length of a novel
Have more responsibilities and stressors than ever

But that’s exactly why it’s so important that you stop to recognize how much hard work you’ve invested in building this company from the ground up. If you can’t appreciate your own hard work, why should anyone else?

That being said, you’re probably facing a whole new variety of issues, from how to save money on your taxes, to hiring employees, to cash-flow forecasting for the next Q4.

“You need to understand your data and keep an eye on key metrics to ensure the numbers are going in the right direction”.

A licensed CPA can help and become a truly integral asset to your businesses’ goals, your tax strategy, and your financial future.

For a business person, the opportunity to hire a CPA is kind of like being offered the opportunity to construct a financial “safety net” and place it securely beneath your holdings. It’s a form of business insurance that you can’t purchase from an insurance company.

But you’re not just gaining a procedural and technical knowledge base; you’re also expanding your “team” — you know, the people who have your back when you need financial direction and business advice.

It’s astounding sometimes, to new entrepreneurs, that businesses can, and often are, built from the ground up by a very small, select number of people.

The reason you want a CPA to be one of those people is because of the value they bring to the table as a sound board as well as a strategist. And seeking out an objective opinion on your business’ state of affairs is one of the best ways to stay grounded and feel supported as you continue growing your eCommerce business.

"Look actively for mentors -- their advice can be priceless, even for little things like acquiring business licenses. One of the smartest decisions I ever made was finding someone who could show me the ropes."

Darren DeMatas eCommerce CEO’s founder

Even if you’re determined to figure out everything for yourself, having a CPA advisor to help guide you through uncertainty, complex processes and maximizing tax deductions doesn’t mean you’re giving up any of your authority over your business decisions.

An experienced CPA can simply provide strategic context for those decisions, ones which are still yours to make, and can have a significant impact on your financial future.

In addition to having a CPA in your corner as a strategic partner, there are a number of other complicated processes that a CPA can help you make sense of. When you’re running a successful eCommerce business, you need to track your business finances, as well as your own personal finances.

Just like your own health can be checked by a doctor, your personal and professional assets can be checked for general wellness by a licensed CPA.

The first thing you’ll want to do is determine your net worth, and see which way it’s trending.

Next, calculate your debt-to-income.

Once you’re armed with these numbers, you’ve completed the most painful step in the process.

You can then track what you’re spending as well as where your money is going. Then you’ll know if you’re spending more than you should be.

After that, you’ll be prepared to set up an emergency fund account and then focus on your investment strategy. But first, ensure your financial health is… well, healthy!

Assessing your current wealth is a vital step towards becoming more well-informed about how to manage your cash flow that helps grow your business.

A CPA advisor can help you to create a budget for your business and personal finances, figure out how much to pay yourself from your company, estimate your income taxes, and how much is available for potential tax deferred savings to minimize your current year tax burden as much as legally possible.

Keep reading…

Insogna CPA 3-Time INC. Award Winner

Insogna CPA Receives Award: Recognized as No. 129 on Inc. Magazine’s Fastest-Growing Private Companies in the Southwest Region

Companies on the 2022 Inc. 5000 Regionals Southwest list had an average growth rate of 154% percent.

Austin, TX, March 15, 2022 – Inc. magazine today revealed that Insogna CPA is No. 129 on its third annual Inc. 5000 Regionals Southwest list. It is the most prestigious ranking of the fastest-growing private companies based in Arizona, New Mexico, Oklahoma, and Texas. Born of the annual Inc. 5000 franchise, this regional list represents a unique look at the most successful companies within the Southwest region economy’s most dynamic segment–its independent small businesses.

“We are excited to be recognized, for the 3rd year in a row, by Inc. Magazine,” said Chase Insogna, Founder and President of Insogna CPA. “Our experienced team of professionals work diligently to serve our valued customers every day. This dedication to delivering great customer experiences has led to significant year-over-year growth at Insogna CPA,” he continued. “We are extremely proud of our team’s success and look forward to continue providing ongoing financial expertise to our valued customers.”

The companies on this list show a remarkable rate of growth across all industries in the Southwest region. Between 2018 and 2020, these 141 private companies had an average growth rate of 154% percent and, in 2020 alone, they added 10,563 jobs and nearly $10.9 billion to the Southwest region’s economy. Companies based in the Austin, Texas, Scottsdale, Arizona, and Fort Worth, Texas, areas had the highest growth rate overall.

Complete results of the Inc. 5000 Regionals Southwest, including company profiles and an interactive database that can be sorted by industry, metro area, and other criteria, can be found here.

“This year’s Inc. 5000 Regional winners represent one of the most exceptional and exciting lists of America’s off-the-charts growth companies. They’re disrupters and job creators, and all delivered an outsize impact on the economy. Remember their names and follow their lead. These are the companies you’ll be hearing about for years to come,” says Scott Omelianuk, editor-in-chief of Inc.

Award Methodology

The 2022 Inc. 5000 Regionals are ranked according to percentage revenue growth when comparing 2018 and 2020. To qualify, companies must have been founded and generating revenue by March 31, 2018. They had to be U.S.-based, privately held, for-profit, and independent—not subsidiaries or divisions of other companies—as of December 31, 2019. (Since then, a number of companies on the list have gone public or been acquired.) The minimum revenue required for 2018 is $100,000; the minimum for 2020 is $1 million. The rigorous selection process ensures that only the most dynamic and rapidly growing companies are recognized, reflecting the vibrant entrepreneurial landscape across various industries and regions of the United States. As always, Inc. reserves the right to decline applicants for subjective reasons.

About Inc. Media

The world’s most trusted business-media brand, Inc. offers entrepreneurs the knowledge, tools, connections, and community to build great companies. Its award-winning multiplatform content reaches more than 50 million people each month across a variety of channels including websites, newsletters, social media, podcasts, and print. Its prestigious Inc. 5000 list, produced every year since 1982, analyzes company data to recognize the fastest-growing privately held businesses in the United States. The global recognition that comes with inclusion in the 5000 gives the founders of the best businesses an opportunity to engage with an exclusive community of their peers and the credibility that helps them drive sales and recruit talent.

The associated Inc. 5000 Conference is part of a highly acclaimed portfolio of bespoke events produced by Inc. For more information, visit www.inc.com.

eCommerce Business Stages – Profits Under $100,000

You’ve decided to take the leap and start an eCommerce business. Congrats!

You’re thinking about selling online.
You’ve started dipping your toes into online selling.
Your online selling business is taking off after your first “big” month and your profit is trending over \$30,000 this year.

This is the start of your hard work and investment into building this business to reach your goals. It’s time to nail down the big ideas, strategize over your growth targets, and develop a well, thought-out business plan. It’s time to clear out that storage shed or guest bedroom and begin accumulating stock. It’s time to take action so that you can live out your dream of building your own successful eCommerce business.

In the early days, you’ve probably done some homework and figured out what’s important: marketing your products, determining what capital to use to start, and getting those first sales in the door, especially during the fourth quarter. Achieving these three goals is usually crucial to kick-starting your success. You are likely doing all of your own sourcing, buying, pricing, and listing online, as well as managing fulfillment (or maybe utilizing a co-packer), customer service, inventory management, and sales taxes….and that is before you even think about completing all of the back-office tasks, such as accounting, inventory count and how to minimize your taxes.

Accounting 101

Getting accounting set up from the beginning is crucial with your eCommerce business, because the more this step is delayed into Phase 2 (or worse, Phase 3), the more mountainous the amount of work required to clean this information up – as well as the significant cleanup costs that come with this project work. And have you considered how you’ll provide your lender with financial statements if you’re seeking financing or a mortgage?

Accounting is not just syncing and categorizing your transactions. Are you properly recording gross revenues? Most merchants only sync net amounts to your books. If you value your time and would rather automate as much accounting work as possible, the costs easily outweigh focusing more of your attention on selling more of your products online. Maybe you manufacture or assemble your own products. What about recording COGS from inventory to match your revenues? Or maybe you’re reselling products by arbitraging? With all of the platform fees, do you have any easy way to determine true net profitability per product sold, with overhead included?

Then there is your business’ structure to consider. Many start out as a DBA (Doing-Business-As) with their county registration. Just remember this does not protect your business name with your state, so if you are building a brand or storefront name, it is possible someone could register this too and easily compete against you – or worse, legally claim your brand name. And if you’re selling on Amazon and/or other platforms, changing your business name and EIN# can potentially cause you to lose all of your reviews, causing you to start from scratch again (from a marketing viewpoint). So, setting up an LLC is likely beneficial in most cases when starting out. We can help advise on the best structure for tax strategy planning so you can maximize your tax savings with your eCommerce business.

"Insogna CPA has done our Amazon Business taxes for the last two years. They are the best accounting team that we have worked with to date and we plan to be long-term clients. Excellent staff who truly care about satisfaction and diligence. Great for All Amazon Sellers."

Nick Ehle

Owner

You may be selling through eBay, the Amazon Marketplace , Etsy, and/or perhaps your own website.

Your customers have mostly stumbled upon you or found you through word-of-mouth, and you wish you could focus more of your time and efforts on marketing and growing, instead of worrying about educating yourself in legal and CPA stuff. Expertise is developed over many years in business. So, the value you pay to a professional will help you alleviate any unnecessary time figuring this out for yourself and hoping you made the right decisions. The potential of losing your customers is a real concern. We have seen this before, where someone quickly set up shop on a marketplace and did not think through the long-term consequences, such as their business evolves.

Choosing the right legal structure (LLC or Inc) is not only important for liability protection and taxes but is also very important to set up when initially creating your Amazon store online.

In order to sell on Amazon, for example, you are best off having an Employer Identification Number (EIN) rather than using your Social Security Number as a DBA (doing-business-as) entity. Setting up your entity from the start is recommended because switching after you are already established on selling platforms can be very costly and time-consuming. These small details are exactly what an experienced CPA can help advise you with, and why many eCommerce business owners look to partner with a CPA early in their business growth.

Though you want a CPA who can deliver the best advice to your business, you’re also probably working with a limited budget – and are interested in getting the most bang for your buck. That’s why it’s essential that you join forces with a licensed professional, like us, from the beginning to avoid costly ‘catch-up work’ in the future as you grow.

There is a host of what we like to refer to as “craigslist bookkeepers” out there; people who advertise their services as though they are a professional, but do not actually hold a license. They also cannot provide you with the state board protections that a licensed CPA can, the same protections that provide greater transparency and allow you to trust that your information will not just ‘disappear’ one day when you are not able to get a hold of your ‘craigslist bookkeeper.’ If you decide to spend your hard-earned money on professional services, be certain that you’re getting the best professionally trusted advice and expertise.

Keep reading…

eCommerce Business Stages – Profits Under $100,000 Part 2

Not sure if someone is a CPA?

Just search your state board of public accountancy and look up the person’s name. Most people who advertise themselves as “accountants” or “bookkeepers” are not usually licensed CPAs providing you with greater transparent protections.

A reliable, knowledgeable CPA is just one part of the equation; the other part is making sure your CPA understands eCommerce and its nuances. “Firms that can provide a differentiated value – beyond traditional compliance services – will have the upper hand as the industry continues to revolutionize.” The kind of CPA you’re searching for should have the same priority as you: helping you reach your goals.

Getting Started

The first item on your agenda is to create a solid business plan. The U.S. Small Business Administration (SBA) agrees: “A good business plan guides you through each stage of starting and managing your business. You’ll use your business plan as a roadmap for how to structure, run, and grow your new business.”

Moreover, your business plan is the initial document you can introduce to your CPA. A comprehensive traditional business plan usually includes the following sections:

• Executive summary

• Company description

• Market analysis

• Organization and management

• Service or product line

• Funding requests

• Financial projections

But, hey, let’s be honest—how many people actually do one of these business plans before starting a business? We’d say we’ve met very few in all of our years starting businesses who actually had one of these things. The most important is keeping an updated cash-flow forecast.

So, while it’s a good idea to have a plan, putting all of this work together is not necessarily needed to get your first online sale. Sometimes eCommerce businesses just happen. You buy some products, list them online for sale, and — boom! You’re now a business making money. Just don’t forget to now also get a CPA.

Also, don’t forget about taking advantage of a third-party application that will help you to manage your multiple online selling channels; again, this is an area that we can direct you through. Many eCommerce businesses move quickly through the four growth phases, and you’ll want to be in the best position to succeed as your business expands and your needs increase.

For sellers with profits of $100,000 – $500,000

Record-Breaking Tax Refunds by Insogna CPA

The entire Team at Insogna CPA is excited to announce we helped our clients grow their revenues totaling $2,357,000 in 2019. This is from all returns prepared as of Dec 31, 2020.

A special thank you to all of our valued clients. We are excited to continue working with you, year-over-year, and looking forward to a successful 2021!!