IRS

IRS Releases New Publication 5307 on Tax Reform

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Big news from today’s CPA Practice Advisor — the IRS has finally released their new Publication 5307 on Tax Reform.

Publication 5307 focuses on the changes affecting 2018 federal income tax returns that must be filed in 2019. It includes valuable information about the following:

  1. Increases in the standard deduction;
  2. Changes to itemized deductions, including state and local tax (SALT) payments, mortgage interest, charitable contributions, casualty and theft losses and miscellaneous expense deductions;
  3. Suspension of personal exemptions;
  4. Removal of moving expense deduction and reimbursement exclusion;
  5. Changes for Child Tax Credit (CTC) and other family-based credits;
  6. Increase in alternative minimum tax (AMT) exemption amounts;
  7. Repeal of deduction for alimony payments;
  8. Reporting on health care coverage;Rules for recharacterizing a Roth conversion;
  9. Rules for retirement plan loans for employees leaving employment;Changes for ABLE plans; and
  10. Expansion of use of Section 529 accounts.

Taxpayers can access Publication 5307 at the IRS website in their “get ready” section.

Source: IRS Releases New Publication 5307 on Tax Reform | CPA Practice Advisor

Education, Tips

Vacation Time Is Key to a Better Business

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I’ve had the privilege to work with many wonderful clients through the years, among them, Honey Butter Fried Chicken and Sunday Dinner Club, both brainchildren of talented chefs Christine Cikowski and Josh Kulp.

Recently, Christine’s writing was featured in the James Beard Foundation’s op-ed series, where luminaries from the culinary world get a chance to share their unique perspectives. Here, she:

explores the structures and cultural assumptions of the industry that disincentivize taking time off, and why she and her co-owner Josh Kulp decided to make the benefit of paid leave a top priority.

These chef-owners have always made fair wages, benefits and PTO a priority in their business, but in this article, she lays out why this commitment has resulted in a return on investment (ROI) — not just an ethical responsibility. Christine breaks it down into three main areas:

1) What started simply as a pledge to take care of our people has gifted our small business back with big benefits. Staff are happier and healthier when they have the resources to care for themselves. They come to work with higher energy, and give better service. They stay with us longer, which yields less turnover.

2) We view this as a benefit not just to staff, but to the restaurant itself. It’s smart business for our team to experience what it is like when their co-workers are out: how to cover positions and how to run lean… Our team has embraced a culture that supports time off. We all pitch in and work a little more when people are out, because at some point it will be our turn.

3) It’s good business for [owners] to take time off, too. It allows me to rest and reset… all of which have made me a much better business partner, leader, and human. It’s beneficial for all of us: not just in terms of my own health as an owner… but for my staff as well. It gives them the opportunity to run the business, to troubleshoot and fix things. It allows them to grow into their roles and shine on their own. If we owners and chefs never take a day (or even an hour) off, our teams won’t gain these experiences.

Her closing paragraph sums it up perfectly, in my opinion, and echoes some of the key teachings of thought-leaders throughout the business world:

It takes a village to run a restaurant—so we let them run it. I don’t believe we are, nor should be, crucial to the daily survival of our kitchens and businesses. Especially if we want to be in business for five, 10, or 20-plus years. And if we want our amazing staff to stick around and come on that journey with us, we need to make sure they’re taken care of. We must provide them the means to take time off when they need to—so that they can be strong and healthy along the way.

Read the full article here: Why Vacation Time Is the Key to a Better Restaurant | James Beard Foundation

Education, Software, Tips

Small Business Credit & Financing Webinars

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The question of funding for small businesses comes up quite often, and I found myself yet again recommending Nav.com to a client recently. It’s been a while since I mentioned the two helpful webinars offered by them on CPAacademy.org — both archived so you can access them anytime:

Help Your Clients Build Strong Credit And Get Lender-Ready

  • Learn how strong business credit scores can help businesses grow.
  • Understand the process for building business credit.
  • Identify and avoid common ways business activity puts business owner’s personal credit at risk.
  • Help your small business clients become “lender-ready.”

Where’s The Money? Financing Sources For Your Small Business Clients

  • Understand the pros and cons as well as lender requirements for the main types of financing.
  • Learn about financing options for start-ups, business owners with poor personal credit, and other challenging situations.
  • Help your clients prepare for financing and avoid expensive pitfalls.
  • Get free tools you can use to help your clients evaluate costs and make better borrowing decisions.​

I have no particular allegiance to Nav over any of the other companies, such as FundBox, except that I’ve been very impressed with their mission and their commitment to client education, especially from Gerri Detweiler, the Head of Market Education. A quote from their website:

We launched Nav in 2012 to solve a major challenge faced by small business owners: finding affordable financing. There are more ways than ever to get business funding—over 44 options at last count—but it is still a complex and miserable experience. Business owners need a partner, not just a loan. As small business owners themselves, our founders, Levi King and Caton Hanson, experienced this challenge first hand. They believed small business owners deserved an easier, transparent way to manage their financial health and find the right financing.

The two webinars above do a great job of outlining how you can help your accounting, bookkeeping and finance clients become more credit-worthy and prepare for future borrowing. And Nav itself does a great job of helping them find the least expensive loan for their risk-level.

Some tips they mention in the webinars, for businesses wanting to establish credit: maintain under 30% credit utilization; have 5 or fewer credit inquiries in the past 6 months; and have at least $5k in personal credit limits.

I want to specifically mention the app “Nav Business Loan Reality Check App” — a great tool for small businesses to see the lender’s view of their creditworthiness. Another is the “Match Factor” tool, which I remember as impressive, along with these helpful links:

– Business Financing Options
https://www.nav.com/business-financing-options/

– Link to the Interest Rate Traps calculations feature from my website to help clients calculate the APR of business financing.
https://www.nav.com/business-loan-calculators/

For accountants, you can set up your own account, check your credit score, and even see if your business has its own credit score. You can also join their accountant advisor program and get free business credit reports to send to clients who are considering looking at borrowing options. I recommend signing up to receive their “Accounting Professional’s Guide to Business Credit” if the webinars leave you hungry for more.

And as always, none of this is sponsored material. I’m just a fan of the company because they’ve been helpful to my clients, and their webinars have been helpful in making me a better consultant.

Education, IRS

Upcoming NSAC Webinars Nov 6 & 27

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There are a couple upcoming NSAC webinars I really encourage you to consider taking!

Should I or Shouldn’t I – The Basics of Business Ethics for Co-op Personnel
https://nsacoop.org/webcast_details.php?id=238
Tuesday, November 06, 2018
11:00 AM EST / 10:00 AM CST / 09:00 AM MST / 08:00 AM PST

This session, presented by Steve Dawson of Dawson Forensics, focuses on business ethics: how do we determine between should and shouldn’t. This session focuses on the “why’s and how-to’s” regarding the establishment of a business ethics policy.

1099: Increased Reporting Pressure
https://nsacoop.org/webcast_details.php?id=244
Tuesday, November 27, 2018
02:00 PM EST / 01:00 PM CST / 12:00 PM MST / 11:00 AM PST

The IRS has been increasing its identification number matching for 1099 reporting. This has caused an increase in notices and penalties issued to taxpayers. In this session, Tara Guler and Jared Kempel, both of Baker Tilly, will discuss the new 1099 penalties, how to deal with a notice and steps that can be taken to obtain proper 1099 reporting information.

Please add https://nsacoop.org/cooperative_learning_network.php to your regular list of upcoming educational opportunities — no, they don’t pay me anything or even ask for me to post these. I just think they’re great.

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

Accounting Services for Small Businesses