Category Archives: Tips

IRS, Tips

Tax Year 2017 E-filing Ends Nov 17

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An important announcement from the IRS today:

Do you still need to file a 2017 tax return? If you intend to file electronically, do so by Saturday, Nov. 17. E-File closes for 2017 tax returns on that date, even if the taxpayer is in a presidentially declared disaster area. Paper filing will remain available.

Preparers and taxpayers — make sure you get those final lagging returns e-filed asap, or you just bought yourselves a bunch of extra processing time, as well as unnecessary administrative effort.

In case you’re wondering why the cut-off, the IRS explains:

IRS Modernized e-file, the system that processes electronically-filed individual returns, will shut down after Nov. 17, enabling the IRS to perform annual maintenance and to reprogram the system for the upcoming 2019 tax-filing season.

Source: For Tax Year 2017, e-file closes on Nov. 17; After that, disaster victims, others need to file on paper | Internal Revenue Service

Education, IRS, Tips

IRS Side-By-Side Comparison For Businesses Of Tax Cuts & Jobs Act

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I found the recent IRS release on the new tax law — a side-by-side comparison for businesses showing “before-and-after” rules — to be well-written and clear, and it does a good job of highlighting the key changes in order of relative importance to most companies. As such, I’m reprinting the recent IRS newsletter to small businesses in its entirety below.

From the IRS e-News for Small Business, Issue #36:

The Tax Cuts and Jobs Act (TCJA) changed deductions, depreciation, expensing, tax credits and other tax items affecting businesses. This side-by-side comparison can help businesses understand the changes and plan accordingly.

Some provisions of the TCJA affecting individual taxpayers can also affect business taxes. Businesses and self-employed individuals should review tax reform changes for individuals and determine if and how these provisions may concern their business situation.

Visit IRS.gov/taxreform regularly for tax reform updates. Businesses can find details and the latest resources at Tax Reform Provisions that Affect Businesses.

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.

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

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, 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