Scale CPA September Newsletter

New 2024 Small Business Reporting Requirement

Effective January 1, 2024, certain small businesses are required to submit a “beneficial ownership information” (BOI) report to the U.S. Department of the Treasury's Financial Crimes Enforcement Network (FinCEN).

This is the result of Congress passing the Corporate Transparency Act a couple of years back, with the intention to make it harder for bad actors to hide or benefit from shell companies or other opaque ownership structures.

The report will be due by January 1, 2025 for businesses in existence prior to 2024. But for new businesses, this report will be required within 30 days of formation.

The report will include information on each owner of the company, including name, DOB, address, and a photo identification (e.g. drivers license, passport, etc.).

Nothing to do here just yet, as the form doesn’t go live until next year, but we wanted to begin getting this on your radar.

More to come on this new reporting requirement.

And if you’re interested in reading more, here is FinCEN’s small business guide surrounding this.

Interest, Interest, Interest

In a high interest rate environment, like we are in today, while debt becomes more and more expensive, savings rates become more and more attractive.

However, this is not the case for a typical checking/savings account — there are specific “high-yield” savings accounts that are offering 4-5% interest right now.

On a balance of $200k, a high-yield savings account can earn your business (and you personally), an extra $8-$10k per year versus a traditional bank account. Plus you are able to maintain the same level of liquidity and FDIC insurance as a typical checking/savings account.

One of our favorite business high-yield accounts: Live Oak Bank

Unit Economics

When evaluating profitability, it is helpful to perform a “Unit Economics” analysis.

Strip away the nonsense and analyze the sale of one unit.

Sales price of that unit less the expenses that go into producing and selling that unit.

Expenses would include the applicable variable costs associated with that one unit (e.g. cost of goods) and an allocation of fixed costs (payroll, marketing, rent, etc.).

If you’re not profitable on the sale of one unit, it is very difficult to be profitable overall. When this is the case, something needs to change — be it pricing, volume, or costs.