How to Reinvest Your Small Business Profits in a Smart Way?

There are two types of entrepreneurs- those who use their profits for personal use and those who reinvest the same into their businesses. Guess which of these eventually become powerful tycoons?

Smart entrepreneurs understand that a business is always hungry for money. So, if you want it to grow, you have to feed it frequently. Otherwise, working on thin margins and keeping reinvestments to the minimum can easily be a recipe for disaster.

While reinvesting your business profits is important, even more important is how you go about it. On that note, the following are some of the smartest ways of directing the revenue back into the business:

  1. Debt Clearance

If you have taken a business loan or have a debt of any kind then that should be your priority. The logic is simple- the longer you take for full repayment, the more money you will have to pay in the form of interest. So, by paying your debt sooner you can save that money and use it for growing your business instead.

  1. New Equipment for Faster/High-Quality Production

Many businesses start with a modest investment, which is why they have to compromise with used or less efficient machinery or equipment. However, to keep pace with your competition you must upgrade your equipment with time. This is especially important if you want to improve the rate of production.

So, for instance, if you are manufacturing a certain product then you can invest in newer machinery that is more efficient. In doing so, if you are able to automate some of the processes through the new equipment, then you can save the money on the salaries that you would otherwise need to pay to the workers responsible for those tasks.

  1. Marketing

Every successful businessman worth their salt know that the adage “let your work do the talking” is nothing but bogus. We live in a competitive world today where it’s nearly impossible to survive without blowing your own trumpet. Thus, quality marketing can go a long way.

You can reinvest your revenue into different kinds of marketing models- social media, blogs, YouTube, etc. You can even invest in an analytics system that will help you get a closer look at how well your business is doing on the Internet.

  1. SaaS Services

The majority of fast-growing businesses have adopted SaaS (Software as a Service). By following the same you can enjoy the benefits of enterprise quality software while paying only a portion of what the multi-billion dollar corporations pay. Moreover, you can get dedicated customer support, easy upgrading and scaling options, and automatable operations.

  1. Business Expansion

You can only so far with a limited line of products or services. If your business has been operational for a few years now, then maybe you can finally take the next big step and add more products to your catalog.

Now, there are two ways to do this: you can either get your in-house team to work on the new project, or you can simply acquire another company that’s already working in that sphere. So, for instance, if your business is only offering web based app solutions, you can acquire a decent mobile app development company and expand your business easily.

In a business, every single financial decision and every penny count. So, you must be really careful with what you do with the generated revenue. That being said, the options given above can definitely nudge you in the right direction.

Steps to Export GST Data to File GSTR 3B Form

With CBEC announcing GSTR 3B filing for the month of July & August, numberz is introducing a simple 3-step procedure to help you with filing easily and hassle-free.

Prerequisite steps to export GST Transaction data –

  • Account on numberz platform
  • Raw transaction data for the month of July 2017

Step 1: Log in to numberz account and click on ‘Reports’ located in left side bar. 

 

Pro-Tip: You can also download business reports from here such as – Cashflow & Invoice report etc.

Step 2: In the upper horizontal tabs, look out for ‘GST’ tab right next to ‘Business’ tab
Highlighted in Yellow

Pro-tip: Are you missing any reports? Click on ‘Don’t see the report you want?’ link to flag the issues and we will sort it out for you!

Step 3: Download GST transactions for July Period. You can do this by choosing ‘Start Date’ & ‘End Date’. Click on download button to get the file.

Step 4: Voila! You have now downloaded the raw GST transaction data in Excel format.

Step 5: You need to convert the downloaded data into a report or format as required by Form GSTR 3B

Note:
A) You can use numberz GST filing solution. Learn more here or call +91-9015446666
B) If you are using professional help (via CA) or a different tax filing solution, then the downloaded transaction file needs to be used to compute the reports for filing GSTR 3B

Step 6: File form GSTR 3B through GST Portal.  Click on ‘Login’ at upper right corner and proceed to returns dashboard. You can enter the data for each section from the downloaded transaction details.

Happy GST
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Questions to Ask Before Taking a Small Business Loan

Businesses are built on capital. You need Funds for hiring employees, purchasing machinery and equipment, marketing, sales, and what not. This is the reason why so many entrepreneurs and even seasoned businessmen take small business loans from time to time to fulfill their financial requirements.

If you are planning to take one, be sure to ask yourself the following questions first:

  1. Do I Really Need This?

It is such an ordinary question, yet it is probably the most important of all. Debt is not always bad. However, the thing to remember here is timing and requirement.

What do you need the loan for? What’s the purpose? If you have tonnes of purchase orders that you can’t meet with your current revenue, then getting a loan will be a good idea. This is because it will help you increase the profits and expand your business. However, if you want a loan to get a better office space, or for buying equipment for future business expansion, then maybe you should reconsider.

  1. What’s my Credit Score?

Gone are the days when business loans could be availed on the basis of goodwill alone. These days lenders take all kinds of measures to minimize the risks. One of these is the credit history of the applicant.

No matter which bank or NBFC you will apply for the loan at, they are going to check your credit history. If it looks good, you will get the loan. However, if it’s not, then the odds are low. Best case scenario- you will get a loan at a high rate of interest. However, it can actually do more harm than good.

It’s highly recommended that you check your credit report before applying for a loan. If your score is below average and if you are not in a hurry, you can work on it first and make improvements. Once you have accomplished that you can get a loan easily and at an attractive interest rate too.

  1. How Much Money Do I Need?

There is a popular misconception floating around that a lot of money can solve all your problems, including the business problems. However, that is not really true. This is because the money you get in the form of a loan comes with several conditions. For starters, there is a high rate of interest linked to it which can make a big difference. Also, more money also means a longer term.

Ideally, you must get a loan that’s enough to increase your return on investments (ROI). If the loan is actually going to reduce your ROI then you should reconsider the entire idea itself. Also consider the fact that you will be paying EMIs every month which will be, of course, deducted from the cash flow. Plus, you need money for staff salaries, utilities, rent, inventories, and what not. The bigger is the loan amount, the bigger will be EMIs. So, be sure to see that you have enough left after dealing with all these expenses.

  1. How Long Would It Take me to Repay?

The term of the loan is something you must consider carefully. As long as you are in debt, you would need to take out a portion of the revenue every month. So, choose a term with regard to your business projections. Do you think you will be able to sustain your current cash flow after the loan, or would you need more time so as to prevent financial stress? These are some of the things to think about before making any decision.

  1. What are the Prepayment Charges?

Say, you obtained a loan for a term of 5 years. However, your business did well beyond your expectations, and in 4 years you have enough money to repay your entire debt. So, you go for it, only to find out that you have to pay a hefty fine in the form of prepayment charges.

Save for a few exceptions, banks usually charge you for repaying your loan prior to the actual completion of the term. It is best if you can find a lender that doesn’t have any such condition.

Business loans are often the best option for raising capital for your business. However, there are other options too, such as invoice financing, equity sale, etc. which you can also consider.

Overcoming the Financial Challenges of a Growing Business

A business expansion comes with its share of risks and responsibilities. It is no surprise that so many entrepreneurs dread the same despite the significance. However, the truth is that by preparing yourself in advance you can plan better and overcome the challenges easily.

The following are the top financial challenges that are set up against when expanding your business:

  1. Slow Cash Flow

In an ideal world, your business cash flow would keep pace with the growth. However, that’s seldom the case in reality.

When growing your business, you need to make sure that enough revenue is generated periodically so that your increased expenses can be dealt with easily. If you have any debt, then you must take that into consideration as well.

Many times, cash flow is not as speedy as you want it to be. So, you can enact some policies that can minimise the risks. For instance, you can create a “one-week-maximum” invoice clearance policy, as per which the clients making the payments after one-week grace period will have to pay an additional fine. Similarly, you can notify your vendors to supply the products/services on time to keep everything in sync.

  1. Funding

While optimizing cash flow is important to prevent potential obstacles that can hinder business growth, you also need more money for new equipment, marketing and sales instruments, extra staff, and more. For this, going the traditional way such as angel investors could be a good idea. However, you can benefit even more from alternatives such as:

  • Crowdfunding Campaigns: This can work out excellently if you are planning to launch a new and innovative product(s) that the people are likely to be excited about.
  • Invoice Financing: Invoice Financing has been around for decades and is a good option if your business is already doing great.
  • Peer to Peer Lending: You can get better interest rates at better terms for a business loan from a P2P firm in comparison to a traditional bank.
  1. Finance Management

Managing money in a business is difficult itself. However, when the business expands, then additional moving parts emerge on the surface and the structure becomes complicated. So, a smart thing to do at this point is to get a CFO onboard.

You need a finance expert to handle all the money if you want a smooth ride ahead. However, if that’s too “expensive” for the business at this point, you can hire a good accountant or someone from with similar skill set. At the very least you should have an enterprise-level accounting, finances, and expenses management software program to make money management easier and simpler.

  1. Staff Costs

As your business grows, you need more workforce, more staff. However, it can be difficult to pay all the employees full salaries without affecting the cash flow. So, you can take a smart approach towards it such as:

  • Outsourcing: More and more people are working remotely these days as crowdsourcing is becoming a popular trend in the recruitment industry. You can find all kinds of talents-accountants, programmers, designers, personal assistants, at what not, with different remuneration requirements and expertise. Moreover, it’s easier to find a decently skilled employee at a much lower rate on a contract basis.
  • Fresh Recruits: If experience is not really important to you, then you can also consider hiring fresh college graduates. The plus-side of this is that you don’t have to pay them full salaries. In fact, you can have them work for free in exchange for some quality experience.

Finance is at the core of every business. So, be sure to know your numbers at all times. There will always be problems- even more when your business is growing since they are a part of the journey. However, if you know your numbers and think clearly, you can overcome any kind of financial obstacle and move ahead.

Impact of GST on Wholesale Market in India

How will GST Affect the Wholesale Market in India?

India is one of the most popular destinations in the retail arena around the world. Thanks to high market potential and low economic risk it is considered as a highly profitable country for the retailers.

Although India provides an ideal atmosphere for doing business, more than 90% of the retail industry is unorganized.  GST regime is expected to change this but at a cost.

The following are some of the major changes that GST will bring in the Indian wholesale market:

  1. High Taxation

In the current taxation system, wholesalers usually buy in bulk and pay in cash. They sell the goods at extremely low profits (about 1% or so) but are still able to generate high revenues due to the scale itself.

One of the reasons why wholesalers are happy with their business in India is because most of them don’t come under the tax radar. They deal with next to no formal paperwork and use cash for transactions for the most part. However, GST will take that comfort away from them.

GST regime is a based on an interconnected system in which manufacturers, wholesalers, distributors, and retailers will need to work in sync to avoid penalties and enjoy the tax benefits it has to offer. So, wholesalers who will come under a tax bracket will have to pay their taxes, or they won’t get business at all. This is because the other entities (distributors, retailers, etc.) in the chain would want to stay compliant to claim input tax credits. Moreover, the GST council is especially determined to check tax evasion under the new taxation system to increase tax revenue.

  1. Stock Problems During Migration

The entire wholesale industry is based on small margins and large inventories. Thus, in an event of cash crunch, stock clearance can become a big problem. In fact, the same happened last year when the government launched the “note-ban” operation. Industry experts believe that the same can happen after GST implementation.

Wholesalers who still have stocks are supposed to pay VAT on them at the day of GST launch as per the existing laws. For their convenience, the government has made provisions that allow them to use the VAT paid as input tax credits in the GST scheme. However, they need to satisfy certain conditions to qualify, which is not possible for every business.

Another problem with the new tax regime is linked to excise duty. Wholesalers who have paid excise duty can receive 100% tax credit but only if they can furnish appropriate invoices. If that’s not the case, they will only get 40% of the excise in the form of tax credits.

  1. Increased Business Costs

To be GST-complaint and avail its benefits, wholesalers will need to maintain and record their transactions, furnish returns, and do a lot more.  Plus, the majority of them will also need to pay higher taxes. So, doing business is going to become an expensive affair.

Since manufacturers can’t do without someone selling their products, they are likely to try helping the wholesalers through better pricing and higher commissions, etc. Distributors, on the other hand, would have already adapted to the GST regime to protect themselves, albeit at a smaller cost. Thus, the manufacturers are likely to start leaning towards direct distribution rather than through wholesale networks- a misfortune for the wholesalers.

For the most part, the life of an average wholesaler is going to be tough under the GST regime. According to industry stakeholders, they will need at least a few months to adapt to the changes and get back on track. However, they will still benefit with an organized system, in the long run, that’s for sure.

Biggest Myths of Invoice Financing

4 Biggest Myths of Invoice Financing

Invoice financing has been around for a long time. Also called invoice discounting or factoring, invoice financing works on a simple principle but has its advantages nonetheless. During times of a cash crunch or to meet urgent investment requirements, it can often be the best possible option.

What’s Invoice Financing?

Invoice financing, as the name suggests, is financing on the basis of pending invoices. So, if a company has Rs. 10 lakhs worth of unpaid invoices then it can use them to receive a portion of that amount from a provider.

These invoices can be utilised as security by the lender, and they can disburse 70% or 80%, etc. of the total unpaid amount to the company. When the concerned customers pay off these invoices, the company can repay the amount to the lender.

Usually, the company has to pay a certain fee for this service which could either be a flat amount or a varying amount based on an interest rate.

Invoice financing is a good funding option. However, it has its share of misconceptions. On that note, the following are four biggest myths of invoice financing:

Myth #1: It’s Expensive

Invoice financing can be expensive- that’s true. However, in most cases, it is actually quite affordable. Since the lender gets security in the form of unpaid invoices, which are accounts receivable, the risk they have to take is not that high. If a company fails to repay the debt, then they can simply use the invoices as collateral.

Most invoice financiers charge a small fee for the service, especially if the company is linked to a long-term contract. So, in the big picture, the cost of service is relatively lower than other options such as loans.

Myth #2: It can Leave a Bad Impression on Customers/Clients

Invoice financing may be availed on a disclosed or undisclosed basis. In the latter, the invoice payments are made to the actual company, and the customers don’t get to know about the involvement of a third party. However, in the former, the customers know about the third-party and they have to make payments to a different account that belongs to the lender.  So, by choosing the first option you can prevent your customers from finding about the arrangement.

Myth #3: Invoice Financing is for Struggling Businesses

Invoice financing is often put in bad light. However, the truth is that not only it has numerous advantages it’s becoming one of the most popular forms of funding today.

Invoice financing allows you to meet your short-term liquidity requirements at a small price. So, you can pay the salaries of your staff, buy new equipment, or even plug the leaks in the cash flow with the quick funding.

Myth #4: Your Business is Locked in a Long-Term Contract

A financial institution, especially an NBFC, would want a client with long-term financing needs for sustained revenue. This is the reason why many invoice discounting service providers ask their customers to sign a 6-month or 12-month term contract. However, some lenders are more flexible and offer short term contracts up to a month or two as well.

Despite all the delusions regarding Invoice Financing, it still holds up to be one of the easiest and simplest funding option a business can go for. The key is to find a provider that offers lower fees and high flexibility

Salient Features of Goods And Service Tax

What’s new this July? A Curtain Raiser to numberz GST Feature

What’s new under the hood?
2nd July 2017 

We at numberz are just as excited as you are for coming GST days. We have worked hard on our product to keep your business GST compliant, and now is the time to reap what we sow. Unveiling the many features of our product – Made in India, with love!

GST Sales/Invoicing Flow – Prepare your audiences!

  • With GST, we have nicely separated Payment Terms & Terms & Conditions section, so the payment details are clear to your customers besides T&C.
  • As per GST rules, you need to maintain unique invoices for the financial year. You can find this feature in our migration wizard.
  • Customer, Item & Tax models are enhanced to include GST related fields such as customer GSTIN, item HSN and GST tax rates.
  • Under customer panel master, update Customer GSTIN (if you have GST registered business) along with the Place of Supply. If you are a pure services business, you can select billing address as shipping address for us to pick the Place of Supply.
  • Now included is smart HSN lookup service – just start typing your product category and we will do the rest. That’s not all, we will also pre-select the corresponding GST tax rate for you.
  • We have provided multiple templates for invoicing. If you are the supplier of Goods or just Goods and Services, choose the default template. If you are a pure service business, choose the service template.
  • Full support for GST advances & receipts – you can also link these advances to the corresponding invoices to save on taxes already paid. You can also print your invoices to have 3 copies (or 2 for service providers).
  • We have also added debit and credit note. Recurring invoices are updated to be GST compliance and you can even cancel invoices at any given time.

GST Transition – Change the costumes, with a click ? 

  • Now migrate your entire company/business to GST.
  • Migrate your customers, items & vendors – say no to manual segregation

GST Compliant Purchase/Bill Flow – Maximize your Input Tax Credit & stay GST compliant 

  • Create a quick, detailed bill for GST.
  • Create and send purchase orders hassle-free.
  • Convert purchase order to bill – save your valuable time.
  • Every bill now acts as Input Tax Credit – ensure maximize tax credit.
  • GST compliance such as Purchase Type, Reverse Charge handling, and purchase from Composition vendor is also supported.

GST Enhanced Reports – More than applause 

  • Invoice reports and client statement with GST tax details.
  • You now have total control over purchase report.

Other Features – The show must go on! 

  • You can now capture email ID from the send mail and update customer master so you don’t have to enter email ID every time.

Happy GST!

GST Bill’s anti-profiteering Clause

GST Bill’s ‘Anti-Profiteering’ Clause: Things You Need to Know

The Goods and Services Tax Council has made several revisions of the Goods and Services Tax model on the basis of the representations provided by the industry stakeholders. These include simplification of work procedures, allocating lower tax slabs to certain goods, elimination of taxes on securities, etc.

One of the most important changes made in the GST model law is the introduction of the “anti-profiteering” clause.  As per Clause 171 businesses are required to pass on the benefits of reduction in taxes and refunds received through input tax credits or otherwise to their customers by lowering the prices of their goods and services appropriately.

Importance of Anti-Profiteering Clause in the GST Regime

Earlier, when Goods and Services tax was introduced in other countries viz. Australia, New Zealand, Canada, etc. they observed a high surge in inflation, albeit for a limited period. This was mainly because of the gaps between the concept and its execution.

GST can only serve its purpose when the entire chain of a business works in sync. So, manufacturers must lower taxes to benefit retailers which must again revise the rates to benefit the consumers.

Even though GST is meant to eliminate the cascading effect of taxes and thus reduce costs of goods and services for the end consumers, the responsibility lies with the manufacturers, traders, and service providers that are a part of the business cycle. The anti-profiteering clause was created to keep this in check and punish those who engage in unfair business practices.

GST Anti-Profiteering Panel

The government has set a five-member anti-profiteering panel with a sunset date of two years. This committee will ensure that the businesses pass on the benefits of tax reduction to their consumers. It will also have the authority to take appropriate action on the non-compliant taxpayers.

The government has released the anti-profiteering rules under the GST regime which will empower the anti-profiteering panel so that they can:

  • Order reduction in prices in accordance with the lowering of taxes under GST.
  • Charge penalties on those found guilty or even cancel their registration on reasonable grounds.
  • Seek return of the undue profits earned from not passing on the benefit of reduced taxes to the consumers along with an 18% interest rate.
  • Recover funds that are not claimed through returns by eligible taxpayers, or in case the taxpayers are unidentifiable. As per Section 57 of SGST and CGST Acts, the recovered amount has to be deposited in the Consumer Welfare Fund.

What Should You Expect?

In the words of India’s revenue secretary Hasmukh Adhia, the government wants the companies to cooperate and hopes that it doesn’t have to use the anti-profiteering “weapon”.

While the government may have noble intentions with its anti-profiteering clause, the end result may be far from the expectations. The authority set for exercising this clause is meant to ensure that businesses don’t generate unfair profits by increasing the prices of goods and commodities arbitrarily. However, it also makes it easier for them to interfere with the businesses unnecessarily. They may force a taxable person to reduce prices at their discretion even if it results in an undeserving loss. Moreover, they can create unnecessary hurdles and affect the flow of business operations with tedious formalities and investigations.

In the past, Malaysia also tried an anti-profiteering and price control law which turned out to be an utter disaster. The initiative backfired and was abandoned shortly as a result. Thus, we can’t rule out the possibility of something similar happening in India too.

Conclusion

For now, the impact of the anti-profiteering clause is open to interpretation and speculation. However, as a business owner, it’s in your best interest to comply with GST regulations and reduce the prices of your goods and/or services in accordance with the provision of input tax credits and reduction in taxes as applicable.

How To Use numberz GST Calculator?

numberz GST Pricing Calculator makes businesses help understand tax estimates under GST. It is for:

  1. Traders
  2. Manufactures
  3. Service Businesses
  4. and Hybrids (both goods & services)

Prerequisite steps for using GST Pricing Calculator –

  • Since numberz GST Pricing Calculator is for understanding your profit and loss, you must know the exact amount of units/quantity of your products (or services) and their respective rates per unit.
  • You will have to manually select all the tax rates.

Step 1: Click here to visit GST pricing calculator. This is your welcome screen. Insert your company/Firm name*, your email – you can use either your business email address or personal email address here, and your phone number to proceed to the next step.

 

Step 2: Once you have submitted your information, you will be prompted to choose your business type. Here are what they mean:

  • Trader – A trader is one who first buys and then sells the product or currency.
  • Manufacturer – A manufacturer is one who manufactures the products or commodity.
  • Service Providers – A commercial enterprise that provides work performed in an expert manner by an individual or team for the benefit of its customers
  • Hybrid – Those who indulge as service providers and trader/manufacturer. 

Step 3: Once you have selected your business type, there are different panels for different tax calculation. The path defers, but the end result is same! We are going to take ‘Traders‘ for this tutorial. This estimates your total turnover.

  1. For Traders

Enter the number of units or quantity to be sold. Use to the next panel to input the rates (yes, you can write in decimals as well). Next, enter the tax rates for Goods turnover.

 

Step 4: Under ‘Purchase’ block, enter the number of units for the item your purchase, insert subsequent rates as well. Tab all the rates mentioned in the calculator, this will help you estimate the sales cost. You also need to add the service charges, these are the kind of charges that included because of your non-operating expenses.

Step 5: This is it. You can now calculate net margin, saving and savings%, along with End Customer Price.

 

Happy Calculating.

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How to use numberz GSTIN Collector Utility?

Prerequisite steps for using GSTIN Collector –

  • You should have GSTIN.
  • You should have email ID’s of your customer/vendors.

Step 1: Click here to visit GSTIN Collector utility. You will have three options here. You can create a new stand-alone account or sign-in with your existing Google account. If you choose to create a new ID, you can sign-in from the upper right corner.

 

Step 2: Once you have logged-in, fill in your details. While entering your email id, make sure you differentiate between register GSTIN email ID and the ID you used to log-in. Click ‘Next’ when you are done entering your information.

 

Step 3: Now comes the next step. This is the place where you can create and send emails to your vendors and customers. Do note that this is the mail that will be sent from your account. We have already created a template for you, however, if you wish to, you can edit it as well.

Step 4: Hit send to start inserting email addresses of your vendors/customers. You can even add Google contacts or upload excel sheet to insert contacts. Click on ‘TRACK’ on the upper slab to move on to next step.

Step 5: In this step, you can track your vendors/customers GSTIN. Your email ID’s are already shown on the panel. Check the contacts you wish to send the reminder and hit ‘Send Reminders’.

Step 6: In your in final step under ‘COLLECT GSTINs’, you can download GSTIN’s you received from your vendors and customers.

 

Voila, you are now all set to send and track invoices! Do send in your reviews and suggestion at support@numberz.in