Accounting Services for Small Businesses

Filing Taxes As Head Of Household: Requirements And Restrictions

Posted by on Jan 17, 2017 in Uncategorized | Comments Off on Filing Taxes As Head Of Household: Requirements And Restrictions

Most people know that they can file their taxes as a single person or as a married couple. But there’s also an entirely different class of filing: “head of household.” A head of household is an individual who has dependents who aren’t their spouse. This type of filing conveys very similar benefits to filing as a married individual, including substantial tax breaks — but it has to be understood to be used. Filing With Qualified Dependents Who is a head of household? Many people are of the mistaken belief that a head of household’s dependents have to be directly related to them — but that isn’t necessarily true. A head of household can be any of the following, provided that the dependent in question does not make over a certain threshold amount: A single parent who has children living with them under the age of 18. An individual who is supporting their live-in girlfriend or boyfriend.  An individual who is supporting their live-in parent or grandparent. The threshold amount for a dependent changes from year to year, but is generally the same amount as the threshold for needing to file a tax return. In 2016, an individual making less than $5,500 could qualify as someone’s dependent. Avoiding the Most Common Mistakes Because filing as a head of household is uncommon, there are many mistakes that can be made throughout the filing. Some of the most common mistakes include: Filing with dependent children when the dependent children have already been filed on the other parent’s return. The dependent children should be filed with the individual who has primary custody. Filing with parents who are not currently living with the individual or did not live with the individual for at least six months out of the year. Parents who are supported but who are out of the home, such as in a retirement home, may not qualify. Filing with a dependent who has already claimed themselves on their own tax return. This commonly happens when an individual did not realize that their dependent made more than they thought, such as a minor child who has a part-time job. Though filing as head of household may be more complex than filling as a single individual, it can improve a tax return quite dramatically. Moreover, if you already claim a certain amount of dependents on your paycheck, you could find yourself paying into your tax bills at the end of the year if you don’t claim them on your return.  For more information, talk to a professional like Zara Rhone CPA...

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Deducting The Foreign Tax Associated With Dividend Income From A Foreign Company

Posted by on Dec 20, 2016 in Uncategorized | Comments Off on Deducting The Foreign Tax Associated With Dividend Income From A Foreign Company

Many individuals diversify their portfolio holdings by investing in companies based in other nations. U.S. tax filers who receive dividend income due to their stock ownership in foreign companies may be eligible to take a tax deduction for taxes paid to a foreign government. You may directly own shares in a foreign company, or you might have ownership in a mutual fund that has investments abroad. Either way, it is likely that your dividend income received from a foreign company is slightly reduced by taxes paid to the home country of the business. Your share of taxes paid to the taxing authority of the other country can be determined by examining your yearly earnings summary. Form 1099-DIV After the close of each tax year, you should be provided with IRS Form 1099-DIV by your broker or your mutual fund provider. Form 1099-DIV contains a specific entry box designated for reporting each shareholder’s portion of taxes paid to a foreign tax authority. If there is an entry in the designated box, you may be able to utilize the amount of foreign tax paid as a tax deduction. The Foreign Tax Credit The intent behind some tax rules is to prevent the double taxation of income. A deduction for foreign taxes paid may be taken as either a tax credit or an itemized deduction. For many tax filers, the credit is more effective since a credit is a direct reduction in tax. In contrast, an itemized deduction simply lowers taxable income before calculating tax. Form 1116 The Foreign Tax Credit is typically claimed on IRS Form 1116. There is a specific entry line on Form 1040 on which to enter the credit calculated on Form 1116. The foreign tax credit may be entered directly on Form 1040, without the inclusion of Form 1116, for individuals that meet all of the following requirements. All of the foreign income is passive, such as dividends and interest Both income and tax are reported on a qualified statement such as Form 1099-DIV The foreign tax is not more than $300 for individuals or $600 for a married couple The foreign tax credit is not refundable, which means that it is useful only to the extent it reduces the amount of tax otherwise payable. If used as an itemized deduction, foreign tax paid is entered along with other taxes on IRS Schedule A. Contact an accountant, such as those found at Vlasac John M & Co, for assistance in deducting foreign taxes...

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What Types Of Reporting Should You Bring To Employee Reviews?

Posted by on Nov 1, 2016 in Uncategorized | Comments Off on What Types Of Reporting Should You Bring To Employee Reviews?

Rather than being a chance for you to talk with employees about issues, a great employee review should be a two-sided discussion that allows both parties to gain insights and share their feedback. Using management reporting in employee reviews is one way to foster dialogue during these sessions. Here are some pointers on how to incorporate reports into your reviews. Why Bring Reports? There are a few key benefits of bringing reported data into your reviews. First of all, it gives you some starting points for discussion in different areas. If the conversation isn’t flowing, the management reports will add new fuel to the conversation at each turn. They can lend extra structure to your conversations and help you make sure that you cover the most important topics with each person. They can also be a good starting point for difficult discussions; if you can point to some data that supports your points, it makes it easier to start challenging conversations about behavior and low performance. What Types of Reports Should You Bring? There are a few categories of reports that you can bring into an employee review. The first is general information about how the company is doing. This may include a recap of any major projects or company changes over the year, the general financial health of the company, and comparisons between now and last year’s success. These provide a great base for your employee to let them know where the company stands (and, in turn, it provides some insight into the security of their own role). If there are department-specific data that you can share, this is also helpful. For instance, customer service representatives may want to see customer satisfaction rates. Salespeople might want to look at sales quotas for the year. It’s even better if you can give them an estimate of how they personally did compared to the group. Finally, individual data is helpful for giving performance feedback. Billable hours and revenue show how much business the person is bringing in to the company. Data such as attendance and timeliness can also show behavioral issues when present. How Can You Prepare these Reports? Getting set up with management reports takes a little bit of effort, so give your small business accounting services team some heads up before using management reports. They might need to adjust the way hours or sales are tracked in order to provide the most effective data for your management reports. For more advice or information, contact a company such as Broutman & Co.,...

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The Reasons Your Small Business Requires Skilled Accounting To Become Successful

Posted by on Sep 30, 2016 in Uncategorized | Comments Off on The Reasons Your Small Business Requires Skilled Accounting To Become Successful

Starting a business can be a huge task, especially when it’s your first business. Making the right choices is extremely important for your small business to experience the growth it needs to become larger and more successful. One of the most important aspects of your small business is maintaining accurate accounting records. Check out the benefits of professional small business accounting and how you can take steps to ensure your business never runs out of money. Daily Counts Are Essential Checking your business accounts every morning is a good habit to get into. Knowing exactly how much cash you have on hand can help you make smarter and safer monetary choices through the day. In many small businesses, tracking daily purchases is vital. When you know exactly how much you have to spend each day, you have fewer chances of overspending and getting yourself into a financial crisis. This is especially important if you need to purchase materials and supplies for your production. Accounting Tasks You Should Complete Daily On days when you spend nothing out of your business account, you may not visit your record books to write down zero spending for that day. However, by doing so, you can prevent a lot of confusion later on days when you do have receipts to write down and subtract. If you open your books to find empty slots, it is easy to forget whether or not you simply forgot to record spending for that day or whether you didn’t spend anything at all. Also, be sure to keep every receipt for everything you spend for your business, even purchases as small as a roll of tape or a pack of paperclips or pens. The Part Of Your Business Accounting You May Not Prefer Keeping a folder that contains the names of vendors or customers that owe you money for your products or services is extremely important. Write down the times you review each account in this folder so you will have an easier time keeping up with them. For example, if you have tried to collect money owed from one customer over a period of several months, it may be time to take legal actions, so knowing the dates of each time you tried to collect the debt is a good idea. When you stay abreast of your business accounts and remain aware of how money is being spent, you can catch problems early enough to make choices about fixing them and doing so in the most affordable...

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Three Critical Accounting Tips For New Small Business Owners

Posted by on Aug 22, 2016 in Uncategorized | Comments Off on Three Critical Accounting Tips For New Small Business Owners

Opening a small business is a lot of work, but you already know that. Unfortunately, once your business is up and running, the hard work isn’t over, but it is instead just beginning. This is particularly the case when it comes to your finances. Keeping your finances in order is a long-term responsibility that can make-or-break any organization. Make sure you’re on the right track. Utilize Separate Accounts Make it a point to keep your finances separate. A common mistake made by small business owners, especially those that are generating very little profits, is to intermingle their personal finances with their business finances. Failure to keep things separated can only complicate matters. When you don’t separate the two, you will constantly have to go back and the end of each day, week or month and crossover expenses, which can be a lot of work depending on the number of transactions performed. Secondly, this poor practice can make it harder to analyze your profits because those personal deductions you made might accidentally get recorded as a business transaction, causing you to come up with a false bottom line. Keep All Records One of the most stressful, and sometimes scariest, things about opening a new small business is the unknown. You don’t really know what to expect so you have to be prepared for everything. Your finances are no exception to this statement. However, you can better prepare yourself by keeping a record of everything. It’s critical that new business owners get in the frame of mind of keeping a record of every transaction, including invoices, checks, receipts, and even budget logs. You never know when this information will come in handy or may even be necessary, such as for the IRS. When you already have this information on hand, half the battle is already won. Don’t Overlook A Pro Don’t fall for the misconception that professional accounting services are only for larger, more established businesses. The day you decided to open your own business, you justified the need to rely on one of these professionals. Accounting professionals aren’t just for taxes, but they can also be highly beneficial when it comes to setting up your accounts, profit planning, and expense management. In the long run, this assistance won’t just keep you more organized, but it can also help you work towards your goals more aggressively and with clear direction. Don’t overlook the benefit of professional skill like Don Lamb CPA Inc P.S. Organized finances are the foundation of any successful business, including yours. Make sure you are setting yourself up for...

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New To Filing Taxes? Here’s How To Do A Simple Return On Paper

Posted by on Jul 11, 2016 in Uncategorized | Comments Off on New To Filing Taxes? Here’s How To Do A Simple Return On Paper

Filing your income taxes on paper returns can be easier than many people think. For a young taxpayer new to the process, it may simplify your life, save money and allow you to file for yourself. But there are a few things to remember when filing your taxes this way. Here is a 5 step guide to filing on paper forms. File Early. Most people know that the deadline is April 15 (April 17 in 2017), but paper filers should do their returns as early as possible. Why? Paper returns are processed manually at the IRS and state levels, so you will need to allow extra time to receive your refund.  Choose the Simplest Form. There are basically three Forms 1040 to choose from. As a paper filer, you want to use the least complicated one to prevent errors and save time. You can use this handy information page at the IRS’ website to determine which form is appropriate for you. If your tax situation is such that you cannot use the simplified forms — either Form 1040-EZ or Form 1040A — you should consider seeking out professional help filing your taxes rather than attempt them on paper. Check Your Numbers. One of the easiest ways to make a mistake filling out paper returns is to enter information incorrectly. Take the time to double check each entry you make on any forms or schedules — paying particular attention to the numbers. Transposing numbers, missing digits, entering into incorrect boxes and using wrong data are common mistakes and could affect your refund. Also, check your direct deposit information twice to avoid problems having your refund sent in a timely manner. Learn About Credits. Missing out on tax credits can cost you money, so it’s a good idea to know what kinds of credits are available to you and when you may qualify for others. The IRS posts guidance on its website for taxpayers on common credits and deductions, but keep a lookout for credits related to such changes in your situation as: Having children whom you can claim on your taxes Caring physically or financially for other family members Attending higher education or repaying student loans  Turning 25 and earning less than $47,747 individually or $53,267 jointly (to qualify for the EITC) Earning income other than wages or receiving a Form 1099 Purchasing health insurance through your state’s Affordable Care Act marketplace  Contributing to an Individual Retirement Account These types of events usually offer some tax relief through either tax credits or money you can deduct from your taxable income. However, they may make your situation more complicated and you may want to find a qualified accountant or tax preparer.  Keep a Copy. When filing on paper, it’s more important than ever to keep a copy of what you sent in. Because there are no digital copies, you will want to have your own proof of what you filed. The IRS has posted guidelines for how long you should keep tax records. Generally, you should keep tax returns at least 3 years in case you need to file an amendment or at least 6 years if you may have understated your income.  By knowing when it’s advantageous to file your own simple return on paper and how to do it, you can...

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Tip For Organizing Your Tax Information For Your Freelance Writing Business

Posted by on Feb 23, 2016 in Uncategorized | Comments Off on Tip For Organizing Your Tax Information For Your Freelance Writing Business

If you work from home as a freelance writer, then it is important for you to organize all of the information necessary to file your taxes each April. By keeping documents organized throughout the year, you can be prepared to file your taxes without having to root around looking for all of the paperwork that you need to file. In addition to keeping all of your receipts in one place, follow these tips to keep your tax obligations simple for your freelance writing business: Keep Your Business and Personal Finances Separate from Each Other Even if your clients pay you with checks that are written out to you personally or through a personal account at a payment processing service, you should always keep your business and personal finances separated from each other. Use a separate account for all of your business income and expenses in order to keep things much simpler each year at tax time. If you use a personal account, then do not use it for anything else and set up a different account for your business finances. By splitting your finances, you can easily look at the statements for your business accounts and determine your income and expenses without having to wade through all of your personal expenses. Calculate Your Estimated Payments for the New Tax Year and Pay Them On Time Since you are required to make estimated tax payments each quarter for your freelance writing business, you need to calculate them at the beginning of each new year, and then make sure that you pay the newly calculated amount to the IRS each quarter. If you simply pay the same amount that you did last year, then you may find yourself with a large tax bill as your business grows and you have more income. Seek the Guidance of a CPA Early in the Year Finally, you should make an appointment to see your CPA early in the year to speak about your unique tax situation and learn how you can get the most out of your freelance writing business income. By visiting outside of the busy tax season, your CPA will not be overwhelmed and tired from the busy season, and they will be able to dedicate more time to helping you create a long-term strategy for your business’s financials. Even if you file your own taxes, you should still use the services of a CPA at least once each year to ensure that your taxes are correct and that you are getting the maximum number of deductions possible. Contact a CPA for tax preparation in your...

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Small Business Owner? Tips To Make Things Easier For Your Accountant At Tax Time

Posted by on Jan 26, 2016 in Uncategorized | Comments Off on Small Business Owner? Tips To Make Things Easier For Your Accountant At Tax Time

If you are a small business owner, it takes a lot of hard work and determination to keep your business going. Part of doing this is hiring an accountant, like one from Bliss & Skeen CPAs, to take care of your taxes. You can make things much easier for them, as well as yourself, by handling your paperwork successfully throughout the year, and keeping your books maintained. Follow the tips below and you should have no problems at tax time. Stop Using Paper Receipts If you currently keep a paper receipt for everything, such as from office supply stores, taxis you may use, and restaurants you take clients to, it can be difficult to keep up with all those receipts. Because the Internal Revenue Service will accept electronic copies of receipts, you should be using a receipt scanner to take care of all of them. With this type scanner, each time you have a receipt, put it in the machine, it scans it, and creates a digital file for it. In most cases, you can organize the receipts in any way you wish.  If so, consider putting the receipts into different categories. For example, put travel, restaurant, utilities, and office supplies into separate folders. Taking this approach will help your accountant when it comes to tax time. Exactly how this works depends on the receipt scanner you purchase. Separate Personal Receipts from Business Receipts Your personal receipts should not be included with your business receipts, as you cannot claim anything for personal use to the IRS. If you do, the government may audit your business. Keep the personal receipts in a separate folder, and then let your accountant look them over. It may be possible for you to use some of them, but in most cases it will not be all of them. Maintain Your Records Daily It is important for you to keep track of all cash your business brings in, as well as the cash that you spend. You can do this by taking time to maintain your records each day. If you do not have a bookkeeper that you use, there are accounting software programs available for you to use for this purpose. Match all invoices and receipts for your expenses and business operations with your accounting program to ensure the numbers match. Fixing a problem as it happens is much easier than going back through many months trying to determine where the problem is. Talk with your accountant, who can give you many tips to help you stay more organized with your...

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Get The Skinny: The IRS Can Help You Lose Weight And Save Money

Posted by on Nov 23, 2015 in Uncategorized | Comments Off on Get The Skinny: The IRS Can Help You Lose Weight And Save Money

The Centers for Disease Control and Prevention (CDC) reports that close to 80 million American adults are considered obese. Individuals who are considered obese are much more vulnerable to certain diseases and health conditions, which include stroke, heart disease, some forms of cancer and type 2 diabetes. Some of these conditions can lead to death, which could have prevented had one taken the necessary steps to reduce their weight. Luckily, if you are obese and are at risk these conditions, the IRS may be able to help you. Read on to learn more. Why Obese People Don’t Get Help One of the primary reasons that many people fail to tackle their problem with obesity is because of the cost. The CDC reports that there was $147 billion spent in 2008 on obesity-related medical costs. The average obese individual spends nearly $1,500 more than a person who is within their normal weight range. Where Does the IRS Come In? Believe it or not, you can file some of your weight loss expenses on your tax return by itemizing your deductions, which is something that could potentially pay off for 25 percent of taxpayers. The IRS is allowing taxpayers to deduct their medical expenses – in this case, medical expenses related to weight loss efforts – as long as a medical professional has confirmed that your current weight poses a significant threat to your health. Your doctor must be requiring that you enroll in a weight loss program in order to treat a disease, such as hypertension, obesity or heart disease. What You Can and Can’t Deduct According to the IRS, you can deduct a significant amount of your weight loss expenses. This includes fees paid for weight reduction group memberships. However, you are unable to deduct any expenses that you may incur related to gym or health club memberships. The money that you spend on diet beverages and foods cannot be included in the medical expense deduction. The only way you can deduct the cost of special food items is if the food helps to treat a certain illness, the need for the food is put in writing by your doctor or the food is unable to satisfy your normal nutritional needs. Why You Need to Speak to an Accounting or Tax Expert Because there is a limit to how much you can deduct (7.5 percent of your Adjusted Gross Income) and the fact that the rules can be a bit complicated, it may be in your best interest to speak to either an accounting or tax professional for expert assistance. A professional will be able to help you determine if itemizing your deductions is even worth your time, as it may not be if the expenses don’t meet the deduction requirements. If you’ve been through a weight loss program, are currently enrolled in one or are considering one at the request of your health care provider, get in touch with an accountant at Herman & Cormany to learn more about the deductions that may be able to help save you money come tax...

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3 Reasons To Hire A Certified Public Accountant

Posted by on Nov 6, 2015 in Uncategorized | Comments Off on 3 Reasons To Hire A Certified Public Accountant

If you are a business owner, you know how challenging it can be to keep up with all of your financial matters. The demands of getting your suppliers paid and keeping up with your account receivables can simply be overwhelming. One of the best ways to take some of this burden off of your shoulders is by getting a certified public accountant (CPA) to assist you and knowing the ways this individual can help are ideal. Reason #1: File taxes You will be responsible for keeping up with all the income your business makes and paying taxes on your profits. This can be challenging to understand unless you are an accountant who knows the tax laws. These laws change annually, and you could overpay your taxes unless you have an accountant to assist you. Additionally, you may qualify for some deductions you would be unaware of without having the assistance of a CPA. Reason #2: Business planning Are you considering expanding your business or making some major changes? If so, your CPA can give you an idea of how these can help or hurt your bottom line, by providing you with a projected income of what the changes you make will be. CPAs are also in business to make money and are the ideal person to ask about how to create the perfect business plan for success. Reason #3: Day-to-Day Activities Keeping your business running on track will require a lot of work, and there are various financial transactions that will need to be recorded.  Listed below are some of the things your accountant can do for you daily: 1. Accounts payable – Pay your bills for you that are owed to people you purchase supplies and goods from regularly. 2. Accounts receivable – Deposit your checks and cash from goods you sold into your business account. 3. Financial statements – The CPA you hire can create various reports that can help you understand how well your business is doing if it needs help. For instance, you will want to have a profit and loss report completed regularly. The benefits of hiring a CPA to assist you with all of your financial needs are many. Being able to count on a professional who has the adequate training to provide you with this information is important to your company. Be sure to find the right CPA in your local area, like Carmines Robbins & Company PLC, who can assist...

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