What Does a Drop in Oil Prices Mean, Anyway?

Newspaper headlines, magazine covers and Internet homepages have been dominated recently by news of spiraling oil prices. Consumers are noticing the deflated prices at the pumps and enjoying keeping more money in their wallets after a fill-up. But, what is the greater impact of dropping oil prices? Because VAST is not invested in the energy sector and doesn’t profit from optimism or pessimism when it comes to oil prices, I’m hoping to provide an unbiased, simple look at these dropping oil prices and what the ripples might be.

Oil Prices are Low, Real Low

Since last June, the price of crude oil per barrel is down $60 (from $109 down to $49), according to the West Texas Intermediate, which is the market benchmark we generally use stateside. The reason behind the drop is multi-faceted, with the major causes being a spike in supply here in the U.S. and less consumption in major global players like Europe and China. It might seem impossible to have a dramatic rise in supply when talking about a finite resource like oil, but with the advent of new technology and practices, such as fracking, experts now are catapulting their estimates for how much extractable oil remains beneath us in major oil-field states like North Dakota and Texas. While fracking is making headlines because of the controversy surrounding the environmental soundness of the practice, it is currently one of the major reasons we are able to pull so much oil out of the ground--oil that was previously unattainable.

For more on the “why” behind the current drop in oil prices, check out this short video explanation on low oil prices published by CNN Money.

Low Oil Prices: Good or Bad for the U.S. Economy?

Arguments can easily be made to favor both sides of the low-oil-price coin. On one hand, a significant drop in oil prices hurts energy companies like Schlumberger Ltd. and Halliburton, which causes a dip in their stock prices and leads to layoffs. There are major-player corporations--such as Exxon Mobil--that primarily rely on pulling oil out of the ground and selling it for a significant profit. Therefore, when the profit margin is razor-thin, major oil corps have to cut jobs to stop the bleeding. A boost in lost jobs in a short period of time is a major hit to state economies with large oil dependence, like Texas.

On the other hand, a drop in oil prices benefits consumers at the pump. In fact, a report published by Citigroup “showed that a family will save more than $1,100 a year with today’s gasoline prices averaging $2.14 a gallon--about $1 lower per gallon than in early 2014. This is important because consumer spending accounts for two-thirds of the nation’s economic output.” To offer a comparison, production of oil and gas in our country accounts for less than 2% of our GDP, while almost 70% comes from consumer spending. So, by looking at the impact of low oil prices from this perspective, more money in the pockets of U.S. consumers is a good thing--both for consumers and for our national GDP. The impact of low oil prices goes a lot deeper and broader than this post can cover. However, with all the hub-bub out there about low oil prices, the team at VAST wanted to publish an easy-to-digest, unbiased look at the general implications of dropping oil prices. Experts believe oil prices are now close to the lowest they will go per barrel. However, when a rebound will happen is unknown--it could be quite some time before we see the $100+ barrel prices that were common throughout 2014.

Let's Have a Look Back: 2014, The Financial Year in Review

With 2014 all wrapped up, and 2015 in its infancy, we decided to take a look back at the calendar year that just passed and see how the U.S. economy (as a whole) did in some major areas. After looking through the numbers, 2014 was a significant year, helping our country continue to rebound from the Great Recession and set us up for a promising 2015 (and hopefully well beyond).

The Market

Stock and bond markets in the United States proved to perform better than was anticipated in late 2013 as 2014 approached. We saw quite a drop in October, but outside of that jolt, 2014 brought with it only “modest” periods of ups and downs.

  • At year’s end, the S&P 500 was up about 13 percent.
  • According to the Bloomberg U.S. Treasury Bond Index, U.S. Treasuries returned about 5.5 percent, which is the best in 3 years.

The big surprize in this area was the dramatic plunge in crude oil prices, which is good for consumers, but costly to the oil and gas industry, which will likely be cutting jobs soon as 2015 continues and prices likely stay put. The U.S. saw an increase in oil production, thanks to new technology, but this increase made for a larger supply without a jump in demand. Other markets, like China and Europe, dropped in demand, which also helped the price of crude oil drop. From an average high of $3.70 per gallon down to an average of around $2.40 at the year’s end, consumers were excited to fill up their tanks for less in 2014.

The Jobs

It’s an understatement to say 2014 was “good” for jobs ... if you compare the numbers to prior years. In fact, according to CNN, in terms of job creation, 2014 was the best year for our country since the turn of the century (1999 is the most recent year to have been better in this category). Other notes:

  • Our economy added more than 2.6 million payroll jobs throughout the year.
  • Our country’s unemployment rate dropped almost a full percent since the end of 2013.

The Growth

While it was a less than favorable start to the year--with the first quarter actually shrinking at an annualized rate of over 2 percent--2014 proved to show resilience and bounce back rather heartedly. Both the second and third quarters of the year grew at a pace of right around 5 percent. According to most predictions, the fourth quarter grew by around 3 percent (official numbers will come out late this month). Overall, our economy looks to have grown around 2.5 percent, which is a welcome change to the dreary numbers clocked in over the past few years.

All in all, 2014 gave us reasons to be optimistic as our economy showed promising signs of growth throughout the year. Now, after looking in the past this whole post, let’s get back to the present; it’s a new year! Here’s to 2015 everybody.

Third Quarter Performance ... in 200 Words (or Less)

The last day of market activity for the third quarter in 2014 comes to a close this evening. Therefore, it’s only fitting to bring you the happenings of the past three months just the way you like it: short, simple and to the point.

Third Quarter Performance: 2014


The September labor report is expected to dominate this week’s headlines. Coming out this Friday, it’s estimated that at least 200,000 new jobs were created this month alone, ending the quarter on a positive note from last month’s upset with fewer than 150,000 new jobs.

Real Estate

New home sales rose 18% in August—over 504,000 new home sales across the nation. More growth around the nation prompts builders to believe our current rising real estate trend will continue.


Consumer spending rose over .5% in August, leading analysts to believe the rest of the third quarter will continue to see consumer spending on the rise.


46 economic analysts surveyed throughout August and September agree that the expected growth rate of the national GDP at 3% throughout the third and fourth 2014 quarters.

Stay in touch with VAST. 

(177 words - nailed it)

Amazon Local Register: New Sights on Retail

Amazon is expanding its horizons yet again, and industry competitors should (as usual) be concerned. Already dominating the worlds of online book sales, electronics and pretty much anything else that can be purchased, Amazon has set its sights on appealing to small businesses. How so? In a recent article by Forbes, the company led by CEO, Jeff Bezos, has developed a new product aiming to replace mobile point-of-sale systems offered by companies such as Square and PayPal. According to the article, “over 60% of Amazon transactions take place through independent small and medium sized merchants. This represents millions of successful merchants, many that operate retail stores.”


Amazon Local Register

Unfortunately for Amazon’s competition, many of these small and medium sized merchants give their loyalty to the company with the lowest price. Because Amazon is indeed Amazon, it can afford to offer prices-per-transaction that are lower than their competition’s. According to the Amazon Local Register website, their rates vs. competitors like Square and PayPal are as follows:





PayPal Here

Swiped Transactions

1.75% Limited Time Offer. 2  2.75%  2.7%

Manually Keyed

2.75% 3.5% + $0.15 3.5% + $0.15


As you can see, Amazon’s prices are significantly less than those of its competition. Even after their promotional pricing is over, they expect to set their price-per-transaction rate at 2.5% - the lowest on the market for any devices in the industry.

This is just one component of Amazon’s regimen to dominate the retail market like it did with the online market over the past decade. In addition to Local Register, Amazon offers one-step payment options for merchants. Plus, as the largest distributer of wholesale goods in the world, Amazon has the potential to further their relationship with these merchants far beyond in store transactions.

So, Square and PayPal should most definitely be concerned about Amazon’s moves in the retail market. This is just the beginning.

Comcast's Customer Service Debacle: What We Can Learn

Comcast has made headlines in business publications around the nation over the past month; unfortunately, it’s for remarkably terrible customer service. For those who haven’t had enough daily doses of business happenings, Comcast has been ousted for some truly absurd customer interactions.

Here's what happened:

In one viral instance, (the semi) well-known former Engadget Editor Ryan Block recorded being belittled and harassed during an attempt to cancel his service. A report by CNN Money mentioned another instance when former Comcast customer Tim Davis was told a clearly improper charge on his account simply couldn’t be reversed.

None, however, were as bad as Chicago photographer Aaron Spain’s experience, when he recorded himself being placed on hold for three hours when calling to cancel his service. Not only is the customer service terrible, this debacle just happens to be taking place merely weeks before an expected merge with Time Warner Cable. Ouch.

We We Learned as Virtual CFOs

As a virtual CFO and virtual accounting group, there are two valuable lessons the VAST team has taken away from Comcast’s unexcusable customer service.

The first lesson is that regardless of the industry and no matter how long a business has been in operation, the customer still always comes first. In our case, our virtual accounting services exist to make our clients' lives easier, giving them the superb accounting services regardless or their location.

The second lesson to be learned is to continue working as a team and never settle for "good enough." Learning new techniques, embracing new technology and consistently raising the standards of our business is encouraged around our workplace. Also, we want departments that are interdependent to still be informed on the services provided by other departments. Nobody can say whether or not providing a better overall service would have prevented customers from canceling their service with Comcast for sure; however, this entire debacle may have been prevented if Comcast aimed to increase the standards of their company and continue to offer better and better services to their clients.

Around VAST, we believe in working to be the best company our clients have ever worked with, and if we acted as cable providers (which we don't), we'd have the same belief because it's at the root of who we are.

Beware the Spreadsheet

Microsoft sought to change the world of data organization in 1982 with the release of the computer software, Multiplan. Things, however, didn’t begin as smoothly as they hoped. Lotus, one of Microsoft’s competitors at the time, beat their market share with their own program, leaving Multiplan out to dry. After countless revisions, Microsoft’s Multiplan became the game-changer known as Excel, and, without it, the world of business would not be the same. Nearly every industry uses data-rich spreadsheets in one aspect of company operations or another; however, a recent study found that up to 94% of internal spreadsheets had errors. Therefore, beware of the spreadsheet.

Spreadsheets can be useful for everything from simple budgeting to complex data analyses. Unfortunately, flawed data means flawed results, which can lead to some pretty major issues down the road. This leads accountants (or those muli-hat-wearing employees doubling as accountants) to the question, "why is so much data so flawed?"

The answer lies in self-governing internal departments lacking a check-system. This can be especially true for entrepreneurs and business owners who are managing part or all of their own company finances but don’t have the resources for someone to check their spreadsheets.

So, what’s the solution?

In any regard, proofing your spreadsheets can be an invaluably important process. However, it isn’t always easy to find someone to sort through hundreds of line items to verify their accuracy.

Taking your time and checking your information as you go is one method of ensuring accuracy. Another is blocking your data entry time and then reviewing smaller blocks of spreadsheets at a time so you don’t have to check the whole file at once. Outsourcing your books to professional accountants in Reno is another great option to ensure your books are being kept accurately. Excel changed the game of the business world forever, and for the better. Don’t let foolish mistakes keep your company from the success it deserves.

4 Startup Accounting Tips for the New Entrepreneur

Recently named as 1 of 3 Alternative Tech Startup Cities by Entrepreneur.com, Reno, Nev. has rapidly transformed throughout the past decade to transcend its former personality of a shadier Las Vegas. Therefore, it only seemed fitting that in the midst of our hometown’s up and coming identity transformation, VAST would provide some startup accounting tips tailored for entrepreneurs. While entrepreneurs may be eager, ambitious and talented, most often they are not experienced accountants. Here are 4 simple yet effective startup accounting tips for new entrepreneurs.

Plan for Long-Term Expenses

Forecasting future expenses can be difficult; however, it’s really important. More often than not, they’re also really expensive. It can be nearly impossible to account for technology upgrades, new equipment and new employees without budgeting for them from the beginning.


Money is incredibly valuable when first beginning operations. So, when that money is stolen or misused, the repercussions of not acting fast can be detrimental to your business. Always check your financial statements for any type of fraudulent activity and act immediately in the event you find something out of place.


Track Your Marketing Efforts

It can be easy to gauge whether your startup is profitable, but it can be frustrating and difficult to determine which marketing strategies are worth continued investment or a kick to the can. Keeping track of online interactions through Google Analytics and social media software can help you determine what is actually worth spending your money on.


Use a Professional

This may be the most important startup accounting tip for entrepreneurs. While business is growing and profitable, convert your financial accounting to a professional team. The cost of employing an accounting service is far more affordable than many would think, and the benefit far outweighs the cost. Eventually the time will come to hand over the hat of CFO; do it before it’s too late.

VAST works with professionals to let them do what they do best: running their small business, and that includes letting entrepreneurs keep on dreaming of the next new thing. Take these startup accounting tips for entrepreneurs and continue making Reno the Biggest Little Startup City it has the potential to be.

Online Bookkeeping Services: The Wave of the Future, Now

Small business owners are exceptionally well known for their ability to wear more than one hat around the office. From entrepreneur to marketing director to the occasional role of office handyman, they seem to be capable of doing it all; without letting a twirling plate hit the floor. However, when your business’s accounting is one of the spinning plates, you run a hefty risk of major setbacks.

In this post, we’ve listed some of our customer’s most common frustrations with DIY small business accounting.

The Mixup: How to Keep Personal and Company Finances Separate

As a business owner you are responsible for both personal and company finances. While it may suffice for the first few weeks, months and sometimes years of operation, independently managing these finances may prove detrimental to your company’s financial well-being. Combine this common DIY-method accounting error with the rest of the responsibilities that come with owning a small business and it’s only a matter of time before financial errors begin to appear and spread inaccuracy.

To Zig or to Zag: Accrual vs. Cash-Based Accounting

How hard can it be to differentiate which accounting method to use? Surprisingly, very. At-a-glance differences may appear to be minimal, but the accrual and cash-based accounting methods vary indefinitely. While one accounts for services at the time of operation, the other accounts for revenue when cash has been collected, regardless of the time of service. When choosing the DIY method of small business bookkeeping, selecting the wrong method can cause confusion and ultimately lead to damages.

Is it a Case of Tomato/Tamato?: Differentiating Between Cash Flow and Profit

Off the top of your head, can you name the difference? If not, you may need to reevaluate your current bookkeeping situation. Although the two appear to be similar, confusing cash flow and profits is one of the leading complications small business owners face when handling their own bookkeeping. Having positive cash flows does not mean your business is profitable, but many small business owners make the mistake of thinking so every day.

The Solution: Online Bookkeeping

So, how do we recommend resolving these issues? Through a convenient and secure service brought about by advanced technology: online bookkeeping. Whether you are just opening doors or your business has been operating for years, an online bookkeeping service is beneficial to business owners of all types. As a vital component to your company’s health, bookkeeping and accounting is not an area worth cutting corners. DIY style bookkeeping for small businesses is a way of the past; online bookkeeping is the way of the future. At VAST, the future is now.

Stuff We Love: Swizznet

Swizznet - Cloud Hosting

These days everything is moving to the cloud.  But some cloud providers are better than others. Enter Swizznet – a top winner in the Stuff We Love category!

 Swizznet can host your Quickbooks on the cloud.  And I’m not talking about the stripped down excuse for an accounting system known as Quickbooks Online.  I’m talking a fully functioning, robust 100% complete Quickbooks platform.  If you have multiple companies, you can host them all under your user name.  And this comes with unlimited storage, continuous backup and free tech support all for one low monthly fee per user.  Interested in migrating your files to Swizznet?  At VAST, we offer a no charge Set-It-and-Forget-It package where we get you set up on Swizznet.  We transfer your files, set up your users and get you off and running.  Contact us today for details.

Making Sense of Profit and Loss Statements (P&L Statements)

One of the most valuable tools in the small business owner’s belt is an accurate profit and loss statement. It provides exceptionally beneficial information about the progress of your business and allows you to make projections about the future. A P&L Statement, when prepared correctly, measures the profit accrued by a business against the loss. This, basically, indicates whether your business is gaining profit or losing revenue over a specified period of time. Usually done monthly, quarterly and/or annually, P&L Statements keep you informed on the financial state of your company. With accurate tracking of where and when the business is performing strongly, coupled with opportunities for improvement, you can make valuable decisions about what is working for the company and what is not.

At VAST we hear murmurs here and there about business owners either not receiving clean P&L Statements or not paying much attention to them at all because they are unclear what they are viewing. But, with our virtual accounting services, we handle the difficult work for you. We will track your income and your expenses automatically. Depending on our agreement, we will provide a full Profit and Loss Statement as frequently as requested; we can even consult on how often you should be reviewing your P&L Statements based on your type of business. Our reports are complete and easy to read, making your job simpler and more manageable.

Gain an edge with your business’s financial future with hassle-free and timely P&L Statements provided by VAST. Our services always keep your busy schedule in mind, handling all possible details to streamline your day and free you to focus on more pressing business matters. Virtual accounting has never been easier than with VAST. We provide the services that make accounting reliable and powerful; it’s the VAST solution

What Is Virtual Accounting?

Tax season has again blown by and we are certain that it resulted in the loss or graying of at least a few hairs on every business owner’s head. Well, maybe not those proactive entrepreneurs who take advantage of our virtual accounting services, as we’ve made the process of keeping accurate books and accessing valuable accounting information as easy and efficient as possible for our clients. VAST’s system puts to work industry-leading accounting professionals to make your bookkeeping simple and reliable throughout the year so your business is prepared for tax season. It is a frequent occurrence for many business owners to face extra charges from tax preparers to “clean up” their books before processing annual tax information. It is understandably frustrating considering that many of these business owners employed professional accountants to manage their books.

With VAST, our expertise can reduce the necessity for these extra charges. Typically, for less than the cost of having an on-staff bookkeeper, we can handle your accounting with the expertise of high-level professionals. This makes our system the choice of many business owners across the nation because it allows them to free their time from managing an in-house professional if they choose. However, our flexibility also allows them to keep their accountant if they wish and work with us to provide better tools and techniques to enhance their accounting.

By the time tax season rolls around next year, we could have your books fit to impress even the most stringent tax preparer. We are committed to offering services that are custom tailored to your needs, but no matter how many services you would like VAST to take care of, you can expect unsurpassed excellence and attention to detail. Our financial professionals are of the highest caliber and endure constant checks to ensure their work is precise.

Save your hair, VAST is only a phone call away.