All posts by Nancy McClelland

Education, IRS

Biggest Tax Law Changes for Small Business Owners – Upcoming IRS Webinar

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I’d like to promote two important, related resources I came across recently:

CPA Practice Advisor released an article summarizing the biggest tax law changes for small business owners:

With just a few months left in the year, the IRS is highlighting important information for small businesses and self-employed individuals to help them understand and meet their tax obligations. Here are several changes that could affect the bottom line of many small businesses.

They outline a few key issues in particular:

  1. Qualified Business Income Deduction
  2. Temporary 100 percent expensing for certain business assets
  3. Fringe Benefits
  4. Estimated Taxes

Meanwhile, the IRS is trying to help educate taxpayers and their accountants on these topics. They are offering a free one-hour webinar on Thursday, November 1, 2018 (2 pm Central-time) called, “Tax Reform Basics for Small Businesses and Pass-Through Entities”. It will provide an overview of the following:

  1. Estimated Taxes
  2. New Rules for Depreciation
  3. Business Deductions
  4. Live Q & A session

If you run your own business or work with taxpayers who do, this resources are for you! Please do not wait until January to dip your toes into the whirling cesspool that is the new tax law. The regulations may only be in the proposed stage, but there’s no indication they’ll be finalized before year-end.

QuickBooks Software, Tips

How to Clear Bills in QBO When Bank Feed Expenses Have Been Accepted

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A wonderful colleague of mine, Melissa from Bookkeeping for Good, recently shared this excellent article from Insightful Accountant and I wanted to share it here as well.

It’s a common occurrence: a client will accept an Online Bank Feed entry as an expense instead of creating a bill payment. As a result, the expense is entered and the bill remains, causing the costs to be duplicated. Furthermore, Accounts Payable is now overstated, since the vendor invoice should have been relieved via bill payment. How do you fix this?

The solution is to re-categorize the accepted expenses to Accounts Payable and then apply them to open bills — and this short article does a great job of walking you through the print-screens to show you how to make it happen: Clearing Bills when Bank Feed Expenses have been Accepted. – insightfulaccountant.com

IRS

IRS Extends Deadlines for Victims of Hurricane Michael

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From the IRS Newsroom today:

IRS Extends Deadlines for Victims of Hurricane Michael 

Hurricane Michael victims in parts of Florida and elsewhere have until Feb. 28, 2019, to file certain individual and business tax returns and make certain tax payments, the Internal Revenue Service announced today.

The IRS is offering this relief to any Major Disaster Declaration area designated by the Federal Emergency Management Agency (FEMA) as qualifying for either individual or public assistance. Currently, this only includes parts of Florida, but taxpayers in localities added later to the disaster area, including those in other states, will automatically receive the same filing and payment relief. The current list of eligible localities is always available on the disaster relief page on IRS.gov.

“The IRS has moved swiftly to announce this relief for taxpayers affected by Hurricane Michael in advance of the Oct. 15 extension filing deadline,” said IRS Commissioner Chuck Rettig.” We recognize the devastation this historic storm caused for many taxpayers, and IRS employees stand ready to support the disaster recovery effort as they have done many times in the past.”

Source: Help for Victims of Hurricane Michael | Internal Revenue Service

Education, QuickBooks Software, Tips

Income Statement (Profit & Loss) Template, Example and Guide

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A colleague recently shared this link on her facebook page — first, I was just curious — and then, I was actually pretty impressed. Most of the Income Statement (also known as a Profit & Loss) descriptions I’ve read have been entirely too technical, assuming not only a familiarity with accounting, but also an old-world understanding of manual ledger-keeping. As a result, I developed my own way through the years of explaining the Income Statement to clients.

I felt this description, provided (surprisingly) by Intuit, the company that produces QuickBooks, did a nice, succinct job of explaining the relationship between the three main financial statements: Income Statement, Balance Sheet, and Statement of Cash Flows. It also walks through a few examples of how real financial data is expressed on each of the reports, and then how the Income Statement itself is organized between Operating and Non-Operating income.

They offer a free template for all three statements for those using the DIY approach or want to familiarize themselves with the structure before starting their own business. A guide to financial reporting is among the many resources on the site.

Source: Free Income Statement (i.e. Profit and Loss Statement) Template, Example and Guide

Tips

State Amnesty Programs React To Wayfair

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Monika Miles wrote recently for AccountingWeb about the various states responding to the Supreme Court’s Wayfair decision with amnesty programs designed to bring non-compliant retail businesses into the fold. Each program is different, but they’re all designed to waive some sort of penalty, be it fines, interest, or a statute of limitations.

She reports on the programs that four states have put into effect, as well as a proposed one, and points out:

As the states become more focused on economic nexus in light of Wayfair, we expect more states to consider amnesty programs or other relief.

With all the establishment of these amnesty programs, it is a good time for companies to evaluate their situations (e.g., determining if your company has nexus or not) and whether it’s more beneficial to participate in amnesty or whether a traditional Voluntary Disclosure Agreement (VDA) with states where you may have nexus may be more advantageous.

Source: The Amnesty Program Ripple Effect From Wayfair

IRS, QuickBooks Software, Software, Tips

Short-Term Rental Clients Need To Navigate Tax Concerns

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Rob Stephens of The Progressive Accountant recently shared his top four recommendations when advising clients to make sure they avoid costly mistakes when working with short-term vacation rentals:

1. Listing quality and rental rates.
2. Hotel occupancy taxes.
3. Get organized and find the right tools.
4. Administrative risk around taxes and regulations.

And I’d like to add that there’s an additional concern folded into the above, which is whether this is truly a Schedule C hotel operation business or a Schedule E rental property — a entire topic on its own.

He points out that:

More and more people are renting their homes, which triggers new and unique tax requirements. Being on the alert for these pitfalls can protect your client (or you) from hidden tax liability and operational problems.

He is recommending Avalara’s MyLodgeTax as a hotel occupancy tax solution. (Though, full disclosure, he sold his compliance software to them and it is currently being rebranded. Still, as Avalara is a trusted name in sales taxes, I feel confident sharing the recommendation.)

Source: Helping Your Short-Term Rental Market Clients Navigate Tax Concerns and Avoid Costly Mistakes | Sales Tax & Compliance

IRS, QuickBooks Software, Tips

Why Small Businesses Should Have an Accountant on Their Team

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QuickBooks Certified ProAdvisorYou may not know that Intuit, the owner of popular small business accounting software QuickBooks, has a resource center for small businesses on its website. And tucked away in there is a great article on the reasons to bring an accountant onto your team.

Now, I’ve often complained about Intuit’s sales pitch — whether it’s hawking QuickBooks Desktop, Online, Mobile or even one of its tax preparation solutions such as TurboTax — they make it sound like anyone can do their own books or taxes as long as they have the right tools. And it’s simply not true. To clarify: this is not a problem with the tools themselves — it’s an issue with the marketing and advertising. (The tools tend to be pretty great, in fact.)

The issue is that you need to know not only how to use the tools, but how the internal systems for using those tools should be customized to suit your specific situation. Accounting and bookkeeping rules — the basics, anyway — are pretty solid; but the workflow is extremely specific to each company. This is one reason it’s essential to work with a professional bookkeeper or accountant to interview you, get your books set up right, train you, and then review things on a periodic basis.

I’m not saying any of this because I’m trying to get more work — I have a waiting list that’s too long already. I share this because over and over, I’ve watched small businesses spend more time and money on clean-up or mistakes (some of which involved the IRS or state agencies) than they ever would have spent on proper set-up and training in the first place.

Intuit lists some specific reasons to engage the services of a professional bookkeeper or accountant:

  1. Getting Your Business Properly Set Up
  2. Spending Your Time Wisely
  3. Providing Expert Advice and Help
  4. Focusing on Growth
  5. Staying Up-to-Date on Tax Laws
  6. Reducing Your Tax Bill
  7. Audit Prep and Representation
  8. Accounting Mistakes Are Expensive

So if you haven’t made the commitment to seeking at least an initial professional consultation yet, maybe this is the time. Ask around within your neighborhood or industry and see if other business owners are happy with their bookkeeper or accountant and schedule an initial session where you bring a list of questions and get some answers. If you feel a connection, then maybe this is the right person for your team. If you don’t — at least you got some questions answered, and you’re better off for the experience.

Source: Why Small Businesses Should Have an Accountant on Their Team – QuickBooks

IRS

2019 IRS Form W-4

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From today’s “e-News for Tax Professionals Issue 2018-38” —

Following feedback from the payroll and tax professional communities, the IRS announced the 2019 version of the Form W-4, Employee’s Withholding Allowance Certificate, will be similar to the current 2018 version, while important changes will be incorporated into the 2020 version of Form W-4.

A draft version of the 2019 Form W-4 will be available in coming weeks. The IRS will continue to work closely with the payroll and tax professionals as it makes changes to the 2020 version of the form.

Source: IRS Statement on Form W-4 | Internal Revenue Service

IRS, Tips

IRS Extends Deadlines for Victims of Hurricane Florence

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This past Monday, September 17th, was a big tax deadline for business returns on extension, as well as third-quarter estimated tax payments. Unfortunately, hurricanes don’t care that we’re in a tax deadline season. As was the case with last year’s natural disasters, the IRS is offering relief for taxpayers affected by Hurricane Florence. Most notably:

The tax relief postpones various tax filing and payment deadlines that occurred starting on Sept. 7, 2018 in North Carolina. As a result, affected individuals and businesses will have until Jan. 31, 2019, to file returns and pay any taxes that were originally due during this period.

This includes quarterly estimated income tax payments due on Sept. 17, 2018, and the quarterly payroll and excise tax returns normally due on Oct. 31, 2018. Businesses with extensions also have the additional time including, among others, calendar-year partnerships whose 2017 extensions run out on Sept. 17, 2018. Taxpayers who had a valid extension to file their 2017 return due to run out on Oct. 15, 2018 will also have more time to file.

Source: IRS extends upcoming deadlines, provides tax relief for victims of Hurricane Florence | Internal Revenue Service