Read this great little blog post by The Inuitive Accountant on Resolving Inactive Inventory Items with Quantities on Hand. It’s a common problem — your client deactivates an inventory item, but there’s still a quantity on-hand left… how do you best troubleshoot this? The Intuitive Accountant gives some suggestions to QuickBooks Professionals using the “Troubleshoot Inventory” tool with some nice tips for filtering and adjusting entries.
Category Archives: Tips
Small Business Health Insurance Credit ONLY Available to “SHOP” Participants
(Inspiration for this post: I just met my FOURTH health insurance agent that did not enroll their small business employer client in a SHOP Marketplace plan. And this client is a not-for-profit that was counting on the credit. It’s thus far been one of my major sources of stress this tax season.)
PUBLIC SERVICE ANNOUNCEMENT — The small business health insurance credit is ONLY available in 2014 & 2015 IF the small business buys employee health insurance through SHOP. Please check with your agent for 2015 to avoid any unpleasant surprises.
See if you qualify to purchase insurance through SHOP, here:
https://www.healthcare.gov/small-businesses/provide-shop-coverage/qualify-for-shop-marketplace/
We’re talking about a 35-50% credit for what you paid for employee health insurance. Insurance agents are often not doing this on behalf of clients; be proactive. And please spread the word to your small-business-owner friends: https://www.healthcare.gov/small-businesses/provide-shop-coverage/shop-marketplace-overview/ .
Also — The U.S. Small Business Administration has numerous articles and webinars on the Affordable Care Act for small business owners. A great resource for non-tax-professionals. More SBA resources and a link to an archived audio recording on the topic, here: https://www.sba.gov/content/affordable-care-act-training-materials .
It breaks my heart when I have to tell small business owners that they don’t qualify; then they put me in touch with their agent, who acts defensively and tells me to stop telling them how to do their job, instead of a being a partner to their client. All I’m saying is I’ve seen it too many times and I’m not arguing with any more brokers. I’m just sending them to this post.
For the record, I understand that there are other reasons than a tax credit to choose a particular health insurance plan, and that’s fine — if the client is informed that they will not qualify for the credit, and chooses to get a non-SHOP plan for other reasons, that’s fine by me. But they need to know what they’re giving up to do it.
S-Corp Accountable Plans
UPDATE 2/25/17 — please don’t confuse partnerships with S-Corps. The home office deduction for partnerships is completely different than what I’ve outlined below. There’s a fabulous blog post about partnership home office deductions here, by an excellent CPA firm in Oregon.
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As you may know, many small businesses take a “home office deduction” on their personal return. But that doesn’t include S-Corp shareholders. Those business owners cannot take the home office deduction because they are considered employees of the business, as well as owners, and as such, they would be restricted under the same “2% of AGI” floor that regular employees are when they try to deduct unreimbursed employee expenses.
They also aren’t allowed to charge themselves rent — or if they do, they can’t deduct expenses against it, making that arrangement costly.
However, they can get reimbursed by the S-Corp for their out-of-pocket expenses. It’s called an “Accountable Plan”, and it’s really quite simple. Just keep decent records — which you’d have to do if you were claiming the home office deduction anyway. Substantiate the portion of the space used by your business, divide it by the total square footage, and there you have your business-use-percentage. Now multiply that by the expenses related to running an office out of your home — keeping in mind that you have to follow the same rules as sole proprietors: the space has to be used BOTH regularly and exclusively for business. I have a couple of clients who wrote up an accountable plan (stating that the company would reimburse the shareholder-employee for these substantiated home office expenses) and attached a floor plan of the office space as further support for which portion is personal and which is business-use. Nice touch.
I was really impressed by this lovely article that a CPA firm out in Colorado wrote on the topic, and they link to a “sample accountable plan reimbursement form” that’s quite nice (they even update it annually). If you’re looking for a CPA in that area, I must say I was pretty impressed with their resources, offerings and pricing.
Pull Money Out of the S-Corp, Accountable Plan – Watson CPA Group- Tax KnowledgeBase and FAQs.
Determine an Accurate Cash Position in QuickBooks – March 11 Webinar
I just got word in the latest edition of the “Intuitive Accountant” newsletter (one of my favorite resources) of an upcoming webinar on how to determine an accurate cash position in QuickBooks. It’s designed by QB ProAdvisors for QB consultants, but I think it looks like a good resource for any small business owner who has a hand in doing his/her own bookkeeping as well.
Not only do they plan to walk through common issues with figuring out how much cash is “in the bank”, and how to fix them, but they also will discuss “adjusting entries and other reporting options for income tax preparation and GAAP-compliant financial reporting”, making it a worthwhile investment of time for staff accountants and bookkeepers.
If you decide to register for and take the webinar, let me know in the comments how you liked it, what you learned, and what you’d recommend for improvements.
The webinar will be offered twice on the same day — March 11 — at noon and 5 pm Chicago-time. Click here for more information and to register: Determine an Accurate Cash Position in QuickBooks – intuitiveaccountant.com.
Why you should take notes by hand — not on a laptop
I switched back to making my to-do lists on paper about a year ago, and found it helped me organize my thoughts and remember what I wanted to get done better. Really neat to see that it wasn’t just a good hunch on my part… these studies show that taking notes by hand helps you remember better than if you type them on a computer.
Fabulous Small Business Accounting Resource
I am wondering how I’ve never come across this resource before. My favorite presenter at the Sleeter Accounting Technology Conference this year was Greg Lam — which is pretty funny, because due to a last-minute emergency, he had to record his presentations for us and have them played back during his sessions. THAT’s how good a presenter he is… I watched his recordings and found his sessions to be the best of all the [amazing] presentations.
Anyway, it turns out that Greg runs an amazing little website called The Small Business Doer. For $15 — a one-time fee for lifetime membership — you get access to all his incredible “how-to” video recordings, interactive lessons, quizzes, course materials, and the ability to ask him questions. It sounds ideal for a small business entrepreneur who wants to learn more about accounting and bookkeeping, without paying someone like me to train them on the basics.
I kind of wish I could require all my clients to take Greg’s courses first, and then come to me for the bits and pieces of training specific to their situations. I think it would be a win-win situation. And lest anyone think I’m just trying to point folks toward a colleague’s website for marketing purposes, I should point out that I’ve never even met this guy — I’m just a huge fan of what he does, and I love reading his Sleeter Group articles (these are aimed at accounting professionals, as opposed to small business owners).
If you end up becoming a member and using his resources, or if you get to ask him questions or meet him, I’d love some feedback, to know how strongly I should be recommending this membership. Please comment below.
Money Management for Small Businesses
Setting New Year’s Resolutions for your small business or freelance work? The author of this “Intuitive Accountant” article shares some nice thoughts about money management goals and methods to consider adopting:
Money Management for Small Businesses and Proprietors – intuitiveaccountant.com.
Volunteering & Charitable Contributions — what’s deductible, and how?
I was chatting with wonderful old friend tonight and helping her with some year-end tax advice, when I found out that she had some misconceptions and missing knowledge about how charitable contributions and volunteer deductions work. I realized she might not be the only one, so here I find myself inspired to spread the word during this time of holiday cheer and giving.
Volunteering — did you know you can deduct 14-cents-per-mile when driving on behalf of a charitable organization during your volunteer work? For example, if you pick up meals from a soup kitchen and deliver them to folks around your city, you can deduct that mileage as a charitable contribution. Or if you drive to visit an elderly person for a regular visit as part of a non-profit Eldercare program. Or if you drive to pick up organic plant seedlings to be sold by a non-profit community garden or a group like Slow Food. The list goes on! Just make sure to log the date, location, number of miles, and purpose (same info as for business mile tracking for the standard mileage deduction).
Non-Cash Charitable Contributions — my friend got the wrong idea from her accountant that it’s somehow difficult or inadvisable to deduct $250 or more when giving away old clothing, household items, or other Goodwill/ Salvation Army/ Brown Elephant-type stuff. Not true! All it means is that you have to fill out an extra form on your tax return that lists the following: what types of items were donated; the fair market value (how much would the usual consumer buy it for at a thrift store); the date of contribution; the name & address of the donee. Thing is, you should be keeping this information anyway, even if the donation was under $250. Only difference is that the IRS requires it to be noted on the tax return for $250 or above.
People often underestimate the value of these used items. I just use a spreadsheet with columns: ITEM; VALUE; QUANTITY; TOTAL (quantity times value). Then I add up the TOTAL column. Easy peasy. However, I’ve also worked with clients who use the tool “It’s Deductible”, by Intuit which has a free version they use to try to entice you into buying their Turbo Tax product. But it’s a good tool, worth trying — https://turbotax.intuit.com/personal-taxes/itsdeductible
Charitable Contributions via cash, check or credit card — Lastly, here’s a nice little list of tips from the IRS on deducting Charitable Contributions. It’s such a great way to lower your tax bill, and give back to the causes that move you, or to “invest” in your own community. Don’t forget to check out your charities on http://www.charitynavigator.org to make sure they’re using your dollars efficiently. Happy Giving!
IRS Raises Standard Mileage Rate for Businesses
Extra, extra! This just in!
Beginning on Jan. 1, 2015, the standard mileage rate will be 57.5 cents per mile for business miles driven, up from 56 cents in 2014.
Year-End Tax Tips for Businesses
Nice little article in Accounting Today on year-end tax tips helpful for businesses (ignore the annoying comments section).