Author: Harvey Beringer, CPA

Categories
Taxes

Specific Tax Services

You have received a notice from the Internal
Revenue Service. It could be because you did
not file, you have a balance due or your return
was adjusted.

These problems can easily be solved by some
of the services we provide.

Services include:
Offers-in-Compromise, Delinquent Tax Returns,
Innocent Spouse Relief, Audits, Partial-Pay
Installment Agreements, IRS Appeals and
Penalty Abatement.

Contact us today.

Categories
Accounting Bookkeeping Tips

Which Is the Right QuickBooks Version for Me?

While QuickBooks is the most popular business accounting software, the decision as to which of the five versions is suitable for your needs is not that simple.

There are five versions available: Self-Employed, Simple Start, Essentials, Online Plus, and Online Advanced.

Some of the pertinent questions you have to answer are:

  1. How many users will I need?
  2. Do I want simple invoices?
  3. Will I need mileage tracking?
  4. Do I want to use customized invoices?
  5. Do I want to send statements to customers?
  6. Will I have to process payroll?
  7. Will I have to track accounts payable?
  8. Will I use budgets in my business?
  9. Do I want to track expenses by customer?
  10. Will my business have inventory?
  11. Will I use purchase orders?
  12. Will I have recurring transactions?
  13. Will I need to track projects?

The above list is not intended to be all inclusive but just some of the needs to be considered.  It would not be helpful if you used a lower level program that would not offer some of the features that would be crucial to the success of your business.  It would be wasteful to use a higher level that includes items you do not need.

Please contact us if you have any questions and want to take advantage of the 35% discount we can provide.

Categories
Taxes Tips

Do You Qualify For the Child Tax Credit (CTC)?

This credit is for individuals who claim a child as a dependent, if the child meets additional conditions.  This is in addition to the credit for child and dependent care expenses. 

Some of the conditions are:

  1. The child is your son, daughter, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, half -brother, half-sister, or a descendant of any of them. (for example, your niece, nephew, or grandchild).
  2. Child was under age 17 at the end of 2020.
  3. Child did not provide over half of his or her own support for 2020.
  4. Child lived with you for more than half of 2020.

This is one of many credits your tax preparer might have missed in preparing your taxes. If you have any questions or want to make sure you don’t overpay for taxes, contact us.

Categories
Budgets Tips

Financial Literacy

The lack of knowledge and understanding, of how money and everything that revolves around it works, is one of the greatest challenges today.  Whether you own a business or not, it is important to realize how financial decisions affect you or the company’s financial success.

Budgets help ensure that financial limits are not exceeded.  Living within your means will help prevent the need for overspending and unnecessary borrowing. For individuals, a budget can be developed from past spending habits.  This information can be accumulated from bank statements, credit card statements and receipts that are not recorded.

Financial statements are the most important source for financial literacy of a business.  Financial statements must be timely.  The importance of ratios cannot be overemphasized.  They can help recognize trends that would require immediate action.  Their importance in proactive steps, instead of reacting to negative trends, is crucial.  Financial statements should be reviewed monthly and on real time, if possible.

With years of experience as a CPA, corporate controller, and QuickBooks ProAdvisor, I can answer any questions you have about planning and tracking budgets. Send a message.

Categories
Taxes Tips

Why Am I Paying Estimated Taxes?

When clients receive their tax return from their preparer, they may find estimated payment vouchers (1040 ES). Taxes can be paid by withholding from paychecks and making estimated payments. If there is a balance due when filing the return, a W-4 (Employee’s Withholding Certificate) might be completed to increase the amount withheld from your paycheck.

If you receive income such as interest, capital gains, alimony, prizes and awards, you may have to make estimated payments. If you own a business, depending upon the type of entity formed, you may also have to make estimated payments. If you receive a W-2 as an employee, but do not have enough withheld from your paycheck, you may be charged a penalty. This would generate a form 2210 form (Underpayment of Estimated Tax by Individuals, Estates and Trusts) with your tax return.

Who Does Have to Pay

If a tax of $1,000 or more is owed, individuals, sole proprietors, partners and sub S shareholders would usually have to make estimated tax payments.

Corporations also may be subject to estimated payments if a tax of $500 or more is due when they file their corporate taxes due on 3/15. There is a worksheet provided on the IRS website to help determine if estimated payments are required.

Who Does Not Have to Pay Estimated Tax?

Not every taxpayer is required to pay estimated taxes. If you receive a paycheck and a W-2 at the
end of the year, you probably will not have to pay estimated taxes. When you start such a job, you will
be required to complete a W-4 (Employee’s Withholding Certificate). If you find that you owe too much
tax at filing time, you may have to change the number of exemptions, or have an additional amount
withheld from your paycheck.

Categories
Tips

Checklist for a Successful Business 

The completion of the these tasks is essential to running a profitable business.

Daily Tasks

  1. Check cash positions
  2. Record transactions
  3. Document and file receipts
  4. Review unpaid bills from vendors
  5. Pay vendors, sign checks
  6. Prepare and send invoices
  7. Review projected cash flow

Monthly Tasks

  1. Balance your checkbook
  2. Review past-due receivables
  3. Analyze inventory status
  4. Process/review payroll.  Approve tax payments
  5. Review actual profit and loss v. budget and prior years
  6. Review month-end balance sheet v. prior period

Quarterly Tasks

  1. Prepare revised annual P & L estimates
  2. Review quarterly payroll reports – make payments
  3. Review sales tax – make quarterly payments
  4. Complete estimated income tax – make payments

Annual Tasks

  1. Review past due receivables
  2. Review your inventory
  3. Fill out IRS forms and 1099 Misc.

If you have any questions or need our assistance, contact us.

Categories
Tips

Do Millennials Ever Think about Retirement?

When retirement seems so far away, the common thinking is, “I have plenty of time before I start to save”.  However, suddenly those thirty years fly by and you are ill prepared for that big day.  As a Certified Public Accountant, I can help guide my clients towards that day in which they retire.

It’s never too early; whether you have a six- figure job in Silicon Valley, or you are working at a fast-food restaurant.  According to a handful of financial advisors, that day is more nigh than they may think.  The first thing is to save now.  No amount is too small, just start now.  You can always increase the amount of your contribution at a later time.  It is a good habit to start and try not to miss any contribution to your plan.

There are five things to remember:

  1. It’s never too early to start:  This is an often-repeated recommendation.  Generation X benefitted from this advice just as Boomers did.  Millennials are no exceptions to this advice.  If you wait until you are 30 instead of when you are 25, that means you could have 20% less in savings when the time comes, due to compounding interest and value appreciation.  If you wait until you are 35 you could be missing out on 40%.     
  2. Your challenges get greater:  You’ve probably noticed that five to six-figure college debt you accumulated.  It’s tough to balance retirement savings with paying down student loans and paying for a house.  Other generations did not experience these issues.  You can start with a small contribution to your retirement and increase it 1% per year.
  3. Don’t rely on Social Security:  FinancialPlanners say it is a misnomer that Social Security will not be there for millennials.  It’ll still be there, but not at the generous levels of today.  You can plan on it being there, but don’t use it as a crutch.  If your company has a 401(k), at the very least, save what it takes in order to get the maximum match from your company; otherwise you’re giving away free money.  Index funds, exchange traded funds, and mutual funds are sound investment vehicles.
  4. Get advice from anywhere:  A good starting point might be your parents, who experienced the financial crisis of 2008 – 2009.  This could be a learning experience to help avoid the   related hardships.  You can also get advice from mutual fund companies, stock brokerages and financial advisors, who usually have retirement advice on their websites. 
  5. Visit the tool box: There are countless digital tools on line and retirement calculators.  You should check the website of the financial institution you are using.        
Categories
Tips

What To Do With That IRS Refund

Tax season has already started, despite the delay of the government shut-down.

If you are like most taxpayers, that anticipated refund is already spent. However, you might want to give serious consideration to some options. The average refund on 2017 returns paid in 2018 was $2,825. Financial advisors are quick to offer suggestions that take into consideration your greatest needs, as well as your financial goals.

How you spend your refunds depend on your priorities, so don’t make the mistake of acting impulsively and foolishly.

  1. Build emergency savings. Most Americans are not prepared to meet an
    emergency. Many Americans don’t even have enough savings to cover a $400 emergency expense, according to the Federal Reserve.
    A goal should be to have at least three to six months of expenses in your rainy day account, in order to be prepared for that emergency.
  2. Reduce debt. I am always amazed to hear how much debt some consumers have. The logical approach is not to buy it if you can’t
    comfortably pay for it. Increasing interest rates can make such a burden grow beyond control. The average rate was 14.14% as of January 9, 2019. You would be much better off with an investment earning that much, instead of paying that much on a credit card bill each month.
  3. Increase your 401(k) contributions. If you are lucky enough to have an employer contribute towards your 401K, you should match that contribution, in order to maximize it. It’s free money in your account.
  4. Add to your IRA contributions. It is a no-brainer to build up your nest egg. A Roth IRA is preferable to a traditional one, if you qualify. Younger taxpayers have the advantage of being able to withdraw from it tax-free, when they are ready to retire.
  5. Start or add to a health savings account (HSA). One of Americans’ biggest fears is running out of money in their old age. You can prevent this by making contributions. A high-deductible insurance plan is required to open an HSA. What are the advantages? It has a triple tax benefit: a deduction for contributions being made, your money grows tax free, and withdrawals made for medical bills are also tax free.
  6. Pay down student loans. With increasing interest rates, student loans are becoming more expensive than government loans. It’s worth it for taxpayers to eliminate the debt, since it prevents workers from saving for their retirement.
  7. Reward yourself. You may feel you deserve to treat yourself. You can use part of your tax refund to purchase a new TV, have a nice family dinner at a fine restaurant, or even splurge on a long awaited vacation. Just remember that it is advised that you shouldn’t spend more than 10% of your tax refund.
  8. Begin saving in a 529 account. The earlier such a plan is started the better. Don’t be the taxpayer who regrets not taking out a savings plan early in your child’s life, for their secondary or college education. While you do not get a deduction for these contributions, your savings grow tax-free and qualified withdrawals are tax-free as well. You can set up one at any financial institution.
Categories
Taxes Tips

Who is Filing Your Tax Returns?

There are several choices when one is deciding upon a tax preparer. We will discuss all of your options and you decide which is best for you.

  1. “Ghost preparers”– These are “tax preparers” who will not sign a return or disclose their social security number in the preparer section. The Internal Revenue is engaged in a major program to register all tax preparers. Those who participate will then pay a fee to the Internal Revenue Service and be assigned a PTIN (Preparer Tax Identification Number). This will ensure that they have met some minimum requirements. The main purpose of this program is to identify and eliminate “ghost preparers” and subject those returns to the increased possibility of being audited.
  2. Tax software such as Turbo Tax, Tax Alert and H & R Block Tax Cut- The purpose of these software programs is to allow taxpayers with “simple returns” to file their own returns. These software programs will indicate “self-prepared” on the “preparer’s signature” line. This will support the limited knowledge of the preparer who could then be more likely to be audited. Those taxpayers filing more complicated returns may find themselves at the mercy of the software, with no idea of the subject matter they are dealing with.
  3. Tax legal services such as “Tax Masters” and Ronnie Deutch have become ubiquitous on the television screen. Websites such as “Ripoff.com” , “Complaintsboard.com” and Pissedconsumers.com are filled with complaints about these services. They are not local providers but merely agents of the principals located in other states. Their exorbitant fees are well known and the questionable nature of their services have been documented on the internet and in an SNL (Saturday Night Live) skit.
  4. H&R Block, Liberty Tax Service and Jackson Hewitt– these are all franchise operations. The franchisee might be an EA (enrolled agent) but the preparers usually have limited experience and knowledge. After April 15th, don’t expect the office that you used to be open. After that deadline these franchises usually have only one regional office open which makes it impossible to meet with the preparer of your return. The fees charged by the franchises are often the same or more than those charged by a Certified Public Accountant.
  5. Certified Public Accountants– They can be classified as “best in field.” They are the preferred source for tax preparation, due to their extensive education and breadth of knowledge. They are licensed by the state they are located in, have PTINS and prepare the most accurate returns for a fair rate. Only Certified Public Accountants are required to complete an extensive CPE (continuing education program). They must complete 40 hours every year in defined areas (accounting & auditing, taxes or management advisory services) or 24 hours of concentrated study in one area. In addition they must complete 4 hours of ethics during every triennial of their current certification period. This insures that they are the most knowledgeable and current in the latest changes in tax laws and regulations.

Beware of services that claim to offer the greatest refund and those that provide RALS (refund anticipation loans). Offices that offer RALS seem to be the source of the most questionable returns and those more likely to be examined by the tax authority.

Categories
Tips

Buying or Selling a Business?

When business owners first think about selling their business, they are often offered far less than they expect.  You should first compare the relationship between the receivables and the payables.  The greater the ratio (receivables/payables), the better.  Are there any major liabilities to consider and is the building owned by the seller?

Why do many business owners find out their business is worth less than they thought?   It is important to take care of the intangibles.  For example, they should have a database of its customers.  Programs like QuickBooks include vital information such as customer contacts, customer emails and other vital information in the customer master.  The importance of customer profiles cannot be understated.

The products customers bought, frequency of those purchases and reminders at the time of reordering is information that should be collected for prospects.  Failure to do so could cause large numbers of interested customers to pass through the owner’s hands over the years.  Quotes or callbacks from salesmen should be stored.  Besides being stored, this type of information should be updated.

Buyers of businesses are looking for more than cash, receivables and inventory.  They would be willing to pay a lot more for solid intangibles.  A thorough and accurate customer database would bring even more value to the seller.

Many times, the sellers feel that the completion of the sale is the signal for them to disassociate themselves from their former business.  Without the seller staying for a few years to ensure a successful transition, the value of the acquisition can quickly decline.  A potential buyer of qa small company rarely buys unless they intend to bring the existing management on for some time.  Any buyer would have second thoughts if they knew the seller had plans to leave immediately upon the completion of the sale.  The selling process continues even after the seller no longer is the owner.   They would have to stay for a while.  This would maximize the value of the assets sold.

The owners may have long term relationships with their customers.  Their presence can affect the decision to remain a customer of the buyer.  Otherwise, customers can jump to a competitor without recourse.  The departure of key employees could seriously affect the future success of the buyer.  We can help you take the necessary steps to enhance the value of your business.