Medical Bills and Taxes – Can You Deduct Them?

Five Things Small Business Owners Always Forget to Include in Their Cash Projections

Posted by on Jan 19, 2017 in Uncategorized | Comments Off on Five Things Small Business Owners Always Forget to Include in Their Cash Projections

Whether you’re trying to grow or simply trying to remain sustainable, your company’s cash projections are the key to your financial future. Through cash projections, you can determine whether you have enough money to expand and whether you might encounter a shortfall. Cash projections are essential to the process of securing loans and finding investors — and they are important for your future business analysis as well. 

1. Maintenance and Repair Costs

Cash projections generally take the average costs of the organization and project them outward. But there are some costs that may not  be on an average chart that can still be projected. A company that has just purchased its equipment will often need to begin substantial maintenance and repairs on that equipment within a few years. Even if the company hasn’t experienced these repair issues beforehand, they will come up later and will need to be planned for.

2. Seasonal Changes

It’s always critical to compare months on a year-over-year basis rather than comparing current months with the month directly prior. This is because seasonal changes control the volume of sales in practically all industries. When you project out, you will likely be looking at September 2015 and September 2016, not September 2016 and October 2016.

3. Hardware and Infrastructure Upgrades

Every company needs to regularly upgrade its hardware and its physical infrastructure. Most organizations should plan ahead to determine exactly when this will be, as it will lave a significant impact on their budgeting analysis and cash projections.

4. Current Debts and Unpaid Invoices

Many companies operate on an accrual method of accounting, which means that they may have outstanding debts and unpaid invoices that they still need to factor into their future projections. This is especially problematic for smaller companies which may not yet know how many accounts they will need to send to collections or may never recover.

5. Training and Transition Costs

When projecting out an expansion, small business owners often forget that there will be costs associated with training new employees, re-training old employees, and transitioning the organization overall. Not only will there be a lot of employee time lost to the transition, but there will also be incidental issues such as contract negotiations, utility issues, and unexpected moving costs.

Though you can perform a budgeting analysis and cash projection on your own, it’s very easy to make mistakes that could be quite costly in the end. A professional accounting and bookkeeping service can provide you with all of the information you need to take charge of your company’s financial future. Talk to an accountant like Heller David  to learn more about the bookkeeping and budgeting services you could take advantage of.

Creating A Better Timekeeping System For Payroll

Posted by on Dec 22, 2016 in Uncategorized | Comments Off on Creating A Better Timekeeping System For Payroll

Payroll is all about timekeeping. When timekeeping is done inaccurately or turned in late, it’s very difficult for the payroll to be released — and that can lead to a waste of administrative time and unhappy employees. Creating a better timekeeping system is essential for keeping the payroll on time and avoiding employment-related issues.

Enforce Timely Entries

If your company has billable hours, it can become easy for employees to fall behind in their timekeeping. Rather than entering their time as they go, they may instead keep notes and try to enter in their time later on. But, though it may be a little distracting, it’s always better that employees be required to enter in their billable hours as they occur — or at least by the end of the day. The longer an employee goes without entering their hours, the greater the likelihood that they will forget critical things and end up billing inaccurately.

Create a Consolidated and Accessible System

For the purposes of payroll, you ideally want to be able to print out a single form that includes all of the information that you need. A consolidated, accessible system such as a cloud-based accountancy program will be able to both track your timekeeping and print out your payroll checks based on the data that has been entered. By creating a consolidated system that is accessible to employees, you avoid having to manually enter the data into another system yourself. This reduces your personal opportunities for error.

Find Ways to Automate Timekeeping Processes

If at all possible, the bulk of timekeeping should be automated. Rather than having employees manually enter data, you can instead have them swipe in with their employee card. Rather than having employees manually enter billable hours, you should have documents and files integrated into your timekeeping system so that the entries can be automatically recorded. The more you are able to automate, the more productive your employees can be. Automation should also be used to calculate things such as the taxes that need to be paid for each employee.

Some companies simply don’t have the time to run their own payroll. This is especially true for SMBs that may not necessarily have an accountant or HR professional on staff. For this reason, payroll is one of the most commonly outsourced services for small business owners. By outsourcing payroll, you can make sure it’s done correctly and on time each pay period. To learn more, contact a company like Blueback Accounting.

4 Ways You Can Avoid An Audit This Tax Season

Posted by on Nov 14, 2016 in Uncategorized | Comments Off on 4 Ways You Can Avoid An Audit This Tax Season

It feels as if tax season is always just around the corner. One of the biggest fears during tax season is that of the audit. Nobody wants to have their finances scrutinized, especially if it means they could end up paying more money. These tips will help you avoid an audit next year.

1. Keep close notes about side income.

Remember that you are required to note more than your salary when you pay your taxes. Accuracy is the key. This means that in addition to filing your W-2, you must also file a 1099 for each form of side income. If you do not receive the necessary documents in the mail, you can still include information as necessary.

2. Keep close records of business-related travel.

If you intend to file your taxes and include your vehicle as a deduction, ensure that you are keeping close records. It is also important that you recognize the rules surrounding deductions for your car. For instance, the mileage you use to get to work and home each day is not deductible. On the other hand, you may be able to use this deduction if you are a freelancer and you use your own car to visit clients or to fulfill work-related tasks. Keep a mileage log in Excel to be sure you are providing accurate information you can back up.

3. Keep scans of your receipts on the computer.

You no longer have to worry about losing receipts. You can now scan those documents and keep them in case you file for business or medical expenses. The earlier you do this, the better. Receipts can become difficult to read over time. Including only specific amounts can help you avoid an audit.

4. Work with a tax professional who files online.

You do not have to do your taxes on your own, and you certainly do not need to have them on paper anymore. A professional can file for you online with ease. Those who submit paper taxes are more likely to make mistakes, often because of the process of doing the math. It is easy for you or a tax professional to make an error in math, but submitting electronically allows the computer to do the math for you.

Ultimately, the chances of facing an audit are relatively low. If you are honest about your taxes and include as much accurate information as possible, you are not likely to face problems. A tax professional, like one from Vlasac John M & Co, will have additional solutions to keep you from facing a dreaded audit.

You Need To Preserve Financial Documents: Here’s How To Keep Them Secure

Posted by on Oct 10, 2016 in Uncategorized | Comments Off on You Need To Preserve Financial Documents: Here’s How To Keep Them Secure

In order to engage in adequate bookkeeping, you must keep the appropriate financial documents with you. However, with all of these documents lying around, there is a greater risk that some of these documents might be stolen or might end up in the wrong hands. In order to prevent this, you will need to know how to properly store and secure your financial documents.

Digitize Essential Files

One of the best ways to store and preserve financial documents is to have them digitized. Digital files do not decay or become illegible, unlike physical documents. There are also methods of securing digital files that are not possible if they are kept in their physical form. Digitizing your files involves scanning them and converting them into an image or PDF. This can be carried out using any scanner. The sooner the documents are scanned, the better because the ink will be less faded and the document will be easier to read. Make sure to review each document after scanning it to make sure that it doesn’t need to be scanned again.

Secure Digitized Files

Some individuals may be concerned that digitized files may be accessed by hackers. However, this can be prevented by having your documents stored on a flash drive or external hard drive. That way, the documents will not be accessible to hackers unless they gain physical access to the device. Then, various methods can be used to secure the device such as placing it in a safe or hiding it in a surprising location, such as in one of your socks.

Destroy Unneeded Documents

The best way to keep financial documents out of the wrong hands is to destroy them by shredding them or deleting them and using a file shredding program. When shredding physical files, us a cross-cut shredder. One way to further destroy files is to use the shredded documents as compost for your yard. The documents will decay in your yard and it would be impractical for an identity thief to search through your compost.

Consult With An Accountant

However, before destroying a document, it is important to verify that you will no longer need it. To determine which documents are best to destroy and which documents should be kept, consider hiring an accountant like Hoff John CPA PC as a consultant. This professional can be trusted to review your financial documents, file them and determine which documents can be safely destroyed.

Two Reasons Why Your Small Business Needs A Bookkeeper

Posted by on Sep 7, 2016 in Uncategorized | Comments Off on Two Reasons Why Your Small Business Needs A Bookkeeper

If you’re the owner of a small business that has relatively few employees, you may not see a reason why you should hire a bookkeeper. After all, you may reason that you’re able to save money by taking care of the bookkeeping responsibilities on your own. However, you could find that the benefits of having a bookkeeper far outnumber any financial investment that you make when working with one. Use this information to learn two reasons why your small business should request the services of a bookkeeper as soon as possible.

Bookkeepers Offer A La Carte Services

One of the main reasons why you should hire a bookkeeper is because many of them offer a la carte services. This means that you’ll only pay for the services that you need, which is highly beneficial.

As your business grows, you may find that you begin to need a full charge bookkeeper. This person will likely be a member of your staff, with all of the perks that accompany full time employment.  However, while your company is still in the growing phase, a la carte services are likely to be more than enough to meet your needs. You may just need someone to do weekly or monthly payroll, or you need someone to keep an accurate ledger of payments and expenses. You can request these services from a bookkeeper and may just find that the rate is very reasonable.  

The time that you used to spend fulfilling the aforementioned duties can now be devoted to growing both your business and your profits.

Bookkeepers Can Generate Reports

Accurate report generation is a vital part of any thriving business. Reports give you a real time overview of the actual status of your company, giving you the opportunity to see which areas are in need of extra attention.

Your bookkeeper can generate reports on a daily or weekly basis at your request. They know how to operate the software that can pump out reports about everything from inventory, to time-off requests. This will give you the high-level viewpoint that you need so you’ll know how to properly address your team when you have meetings.

Getting a bookkeeper could prove to be an extremely wise decision. You can find them by contacting a local accounting firm, or by searching online.  Request the services of a bookkeeper without delay, so you can begin enjoying these benefits and many more.

Retiring From Filing Taxes — When And How?

Posted by on Jul 19, 2016 in Uncategorized | Comments Off on Retiring From Filing Taxes — When And How?

Retiring brings with it newfound freedom from many things people are used to from a lifetime of working. For many retirees, this includes freedom from filing taxes each spring. But, how can you know if and when you can stop filing taxes? And are there reasons to continue to do so nonetheless? Here are the answers to 3 burning questions about filing as a retiree.

Are You Required to File Taxes?

Generally, if Social Security benefits are your only source of income during any given year, you don’t have to file with the IRS. If you receive some other income, such as W-2 wages, Forms 1099 or taxable investments, you can complete a basic checklist in Publication 915 to determine if your earned income meets the threshold for filing. This formula involves adding all your earned income and half your Social Security income together and determining if it meets the minimum threshold for filing. In 2015, this minimum was $34,000 for single filers and $44,000 for married filing jointly. 

If you aren’t receiving Social Security benefits, you are subject to the same filing thresholds as everyone else. For 2015, these were $10,300 for most single filers and $11,850 for those over 65. 

Is there a Procedure for Stopping?

There’s not really anything special you need to do in order to stop — no need to notify the IRS or fill out any forms. The IRS does receive notification of any income you earn, so their computers can do the math and see that your income falls below the filing threshold. For proof that you can legitimately choose to not file, you should keep any tax documents you received in a file along with copies of prior year tax returns. 

Should You Still File? 

Even if you’re not obligated to file taxes for the above reasons, you can still choose to do so in a few special circumstances. These include:

  • Detecting identity fraud. If you’re concerned about identity fraud, you can help detect it by filing your own legitimate return early in the season. This is because duplicate tax returns are rejected by the IRS.
  • FAFSA. If you have a minor dependent, you may need to file taxes in order to help him or her complete the Free Application for Federal Student Aid.
  • Claiming tax credits. While you may not qualify for the Earned Income Credit after 65, there are other credits for which you may qualify — such as refundable credits if you have a student in the house.
  • Private benefits requirements. Some recipients of benefits from certain public or private agencies may need to provide proof of income or tax returns in order to continue receiving benefits.
  • Withholding Refunds. If you worked or had withholding taken from your Social Security benefits, you will need to file a tax return in order to claim a refund of this withholding. If you wish to avoid this in the future, be sure to contact the payee and request withholding be stopped.

Now that you have the scoop on when and how you can cease to file taxes, you can approach filing season with confidence. It’s one less thing to worry about as you begin your new chapter in life. If you need more help, contact professionals like HBE Becker Meyer Love LLP.

Four Things You Need To Know About Annuities

Posted by on May 24, 2016 in Uncategorized | Comments Off on Four Things You Need To Know About Annuities

If you’re looking for additional retirement investing opportunities and you have a large chunk of cash that you can invest all at once, an annuity might be the product you’re looking for. Give that money to an insurance company and get checks every month in return; sounds nice, doesn’t it? Depending on the type of annuity you choose, you could be adding a stable source of income to your life — or you could be tying up money and getting very little in return. Here are four things you need to know about buying an annuity for your retirement.  

Simpler Is Better

Some annuities are straightforward and stable, like souped-up certificates of deposit. For example, with a fixed-rate annuity, you deposit the money with the insurance company, and each month, the company pays you part of the principal along with some interest. No matter what happens in the world, you get that interest rate every month. You can have the money distributed now, or place it on hold until you’re closer to retirement.

Other forms aren’t so simple. Some annuities are linked to equities and have rates and returns that vary wildly. These might be good if you have cash to burn and are purposefully looking for a financial thrill ride. But if you’re trying to supplement your income, a steadier, albeit potentially lower, fixed rate would be better.

Age Matters

Distributions from the annuity typically lower the annuity’s principal amount. In other words, the annuity can run out, depending on how you have it set up. If you’re relatively young, taking payments now could mean that later in your retirement, you would see the annuity income stream end. Waiting until later to take distributions or even buy the annuity in the first place could be a better choice.

You’ll Still Owe Taxes

Annuities aren’t tax-free. They can be tax-deferred, meaning you wouldn’t pay taxes on the gains until you actually got them, but you’d still have to take taxes into account when calculating your income from the annuity. You wouldn’t be able to use everything you got, and that could really affect your bottom line.

Death Benefits Aren’t Guaranteed

If the annuity outlives you, it isn’t guaranteed to go to your beneficiaries. You can add a death rider that states the remainder of the annuity will go to your heirs, but you have to specifically discuss that with the insurance company. Often a remaining annuity will go to the insurance company after you die. This can also vary by the state the annuity is in; for example, an annuity that you’re taking distributions from might go to the insurance company, but an annuity that’s on hold and waiting for you to authorize distributions could go to your heirs if you die before you start taking the funds.

If you’re interested in annuities, you should talk to a financial advisor to find the best combination of riders and rates for you. Annuities can be a very handy place to park some money, but you want to be sure that you’re getting the best — and safest — possible return on the money.

Three Reasons To Outsource Your Payroll

Posted by on May 17, 2016 in Uncategorized | Comments Off on Three Reasons To Outsource Your Payroll

Business owners have a ton of tasks on their plates. They are responsible for everything from making sure there is enough inventory to employing the right people. Many of these tasks can be outsourced or delegated to ensure the business owner does not get too overwhelmed. Payroll is a large task that all businesses have to deal with when they hire employees. It can be very confusing for those who are inexperienced in payroll processes. With the laws changing all the time surrounding taxes and wages, the task of payroll processing can require a lot of work. Additionally, you could encounter large fines from the government if done incorrectly. This is why many business owners choose to outsource their payroll. Here are some reasons why you should consider doing it as well.

Frees Up Time

As a business owner, you have a lot to worry about. If you can outsource something that is taking too much of your company’s time, it can be worth the investment. This leaves you and your employees to focus on what your skills are best matched up with. Additionally, you do not have to worry about hiring someone specifically for payroll processing. Instead of hiring someone to handle just one job, it is always a good idea to have someone with multiple skills so you can utilize them in various areas. Since payroll can be so time consuming, your employee may not have time to work on other jobs. When outsourcing the payroll, many payroll processing companies do all the legwork for you so all you have to do is sign into a portal and its all ready. 

Saves You Money

It is always a good idea to have a certified public accountant handle your payroll. Hiring a CPA can be very expensive as the average annual salary for a CPA runs about $73,800. For a fraction of the cost, you can hire a payroll processing company to handle your payroll tasks. As a result, you could put the savings back into the company to help you grow your business. 

Avoid IRS Fees

About 40% of businesses incur an average of $845 a year in penalties from the IRS for improper payroll processing. This can accumulate into quite a bit of money and create a hardship on a business that is already struggling. With the tax and payroll laws constantly changing, you could end up doing your payroll wrong without even knowing it. Staying on top of the laws can be very time consuming and requires a lot of continuing education. When you outsource it to a payroll processing company (such as Waggoner Frutiger & Daub CPA’s), you can skip the continuing education courses and feel confident they are handling your payroll according to the law. 

Portfolio Diversification: Fixed Income Investments And Other Methods To Strengthen Your Investment Strategy

Posted by on Apr 29, 2016 in Uncategorized | Comments Off on Portfolio Diversification: Fixed Income Investments And Other Methods To Strengthen Your Investment Strategy

If there is one piece of advice most commonly offered by financial planners, it is to diversify your portfolio. A strong portfolio is one that includes a healthy mix of traditional investments as well as fixed income investments, passive income streams, and investments in a company or project you are passionate about.

Build Your Portfolio over Time

One method of diversification to consider is investing your funds over a period of time. Lump sum investing could cost you in future returns, as the market is plagued with peaks and valleys as a result of economic volatility. Decide on an amount you want to invest and use dollar-cost averaging to make contributions to your investment on a regular basis, rather than all at one time.

Build Passive Income Streams

For an investment portfolio to be strong, investors should consider adding some passive income streams into the mix. Passive income steadily builds in equity after an initial investment. For accredited investors, this can be a prime opportunity to build wealth. Real estate, and pensions can significantly reduce risk while also diversifying investments.

Fixed Income Investments

Fixed income investments are available in a variety of forms and are more commonly known as bonds and money market securities. These are loans made by an investor to a corporate or government borrower. The borrower then agrees to pay fixed interest regularly until a maturity date that is established in advance. As the maturity date nears, the borrower promises to return the principal amount of the bonds to the investor. The following are examples of fixed income investments:

·       Government treasuries: The federal government issues these with maturities ranging from months to 30 years. Treasuries are backed by government credit, making them the highest quality fixed income investment.

·       Municipal bonds: These are issued by states, cities, and local municipalities. They finance projects run by these entities and offer a tax-efficient way of generating income.

·       Corporate bonds: these are debt issued by corporations for a variety of investments. Corporate bonds are often more risky than other fixed income investments because they are debt issued by higher-risk companies with lower credit quality but having higher yields.

Remove Investments That Aren’t Performing

From time to time, it may be necessary to remove investments that are under performing. It is ideal to pay attention to market conditions and remain current with your investments. There is no reason to hang on to investments that are too risky, not providing a high yield, or are backed by companies in turmoil. Diversifying your portfolio in this way can have a positive impact on building your wealth.

Establish a diversification strategy even when the market is booming. However, since you can never predict how the market will behave, having a solid mix of investments in your portfolio is crucial. For more information, contact a business such as Amos Maney & Payne CPA’s LLC.   

Becoming A Landlord? Don’t Miss These 6 Tax Deductions

Posted by on Apr 21, 2016 in Uncategorized | Comments Off on Becoming A Landlord? Don’t Miss These 6 Tax Deductions

Becoming a landlord is an excellent way to invest in your future and create a separate stream of income. But whether you’re simply renting out your old home or you buy a building full of units, it’s vital to make sure you take all the tax deductions you can so you don’t spend all your hard-earned money on taxes. But first-time landlords often do not know what deductions are available and how to claim them. To help get you started, here’s a handy guide to the 6 most commonly available deductions.

  • Depreciation. Depreciation helps you annually deduct a portion of the cost of the actual building and any large assets on the property. Deducting depreciation is an important way to recoup your cost. Your accountant can help you calculate the amount of depreciation that can be deducted each year. You can also find calculators on the internet
  • Travel. Keep a log of your trips to do anything connected with your rental. This includes all trips to the property itself, running related errands, picking up supplies and meeting with vendors. The IRS standard mileage rate is usually better than keeping actual receipts, but you could try both methods to determine which is more valuable.
  • Home Office. The IRS allows you to deduct as an expense a certain portion of your home used for any business activity, including rentals. Keep in mind that this space must be used exclusively for the business and cannot be used (even a little) by you or the family for other things. If your space fits this criteria, you can use a simplified standard dollar method per square foot. 
  • Repairs. Most landlords remember to keep invoices and receipts for large-scale repairs, but don’t forget even small repairs. These small expenses add up to a large amount. Reasonable and necessary repairs are fully deductible and can include painting, appliance repairs, landscaping fixes and emergency calls.
  • Interest. Interest is usually a large expense that you want to be sure is included in your expenses. It usually includes mortgage interest, but you can also claim interest in loans or credit used to purchase assets for the rental or needed services. 
  • Casualty Losses. Damage to your rental property by emergency events like fires or floods create casualty losses. These losses are usually partially deductible up to the amount of insurance reimbursement. If you suffer a (covered or non-covered) loss, be sure to include the portion you had to pay out of pocket as a deductible expense.

By knowing what receipts to keep and what to track during the year, you and your accountant can be certain that you haven’t left any money on the table when tax time comes. To find out more, speak with someone like Carmines Robbins & Company PLC.