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Don't Wait Too Long To Prepare Your Personal Exit Strategy

10/30/2015

 
As a small business owner, preparing for retirement (your own personal exit strategy) can never start soon enough. The link below is a great review of factors to consider when planning your retirement.
​
https://blog.tsheets.com/2015/news/ways-small-business-owners-prepare-retirement#.VjE2bdT2aBI.email

What Happened to the Cash?

10/28/2015

 
Picture
Image courtesy of Stuart Miles at FreeDigitalPhotos.net
​Despite regular reminders to small business owners about the need to carefully track expenses, cash payments (petty cash) are often easily overlooked or forgotten. Why? Two main reasons:

  • Receipts for cash purchases are not requested at the time of purchase
  • Receipts are easily lost in wallets, pockets or the myriad of other places into which they are quickly tucked away

The consequence? Cash withdrawals cannot be accounted for (higher risk of denied deductions in the event of an audit and/or theft), tax deductions may go unclaimed and higher taxes result.
​How can the small business owner avoid this trap? The best plan is to develop a process to ensure expenses paid with cash are not forgotten. Steps that could be included are:

  • At the time of purchase, always ask vendors for cash receipts and note on the receipt what the item is, plus any other important details of the purchase
  • Subscribe to an expense management service such as ReceiptBank.com or Bill.com that allows for photos of receipts to be submitted via an app
  • If you do not subscribe to an expense management service such as noted above, have an envelope or area in a wallet or purse where receipts are consistently placed until returned to the accountant/bookkeeper
  • Immediately upon return to the office submit the receipt(s) to the accountant/bookkeeper

The expense of an expense management service may seem to be a roadblock to some small business owners. However, by using an expense management service, the following benefits will be had:

  • Data entry is simplified or lessened, leading to lower bookkeeping expenses
  • A permanent digital record of the receipt is created, so there is no need to retain the original paper receipt, removing the need for files, file cabinets, scanning or other storage methods
  • 24/7 access for employees to upload and/or manage expenses incurred (whether cash or other types of expenses)
  • Less lost time spent by the bookkeeper/accountant waiting for receipts to be submitted
 
To learn more about simplifying your process for managing cash and other expenditures using expense management services, please contact us now for more information. Also, check out the videos on the Resources page!

Tips to Avoid an IRS Audit

10/21/2015

 
One of the scariest events for small business owners is receiving notice of an IRS audit. Even though we work hard to keep our business records up-to-date and accurate, the concept of an audit creates fear. Questions jump into our mind:
  • Did we forget anything?
  • Did we miss anything?
  • Did we record our transactions properly?
  • Do we have supporting documentation for our expenses?

While there is no perfect method for avoiding an audit, by taking the following steps, we can limit the possibility. Worse case, we can make an audit as pain-free as possible. 
  • Exercise care in choosing your tax-return preparer. The IRS has tax-return preparer regulations. This permits easy identification of preparers who frequently compile returns that fail IRS audits. That increases the audit potential for every return of such preparers.
  • Carefully gather complete tax information. The IRS compares figures on your tax return to W-2s, 1099s and other reporting by payers of income to you. Make sure your tax return matches these information reports. 

  • Don’t estimate any figures. Don’t use rounded-off amounts. Take the deductions you are entitled to report, but be prepared to justify them with accurate records. The IRS uses a discriminant function system score to select returns for audit. This compares amounts you claim for specific deductions to the statistical averages for your income level. Any large deduction relative to your income might require response to an IRS audit with proof of the amount.
​
  • Ensure your state income tax return is accurate. If you’re audited by a state and owe additional tax, an IRS audit is likely to follow. The IRS maintains information-sharing agreements with every state.
Picture
Image courtesy of Master isolated images at FreeDigitalPhotos.net
​An IRS audit can be a time-consuming and frustrating process if books and records are not in order. If you need assistance with cleaning or catching up your books and/or to set up processes to avoid future bookkeeping issues, please contact us now for a free consultation.

Rounding the Corner to Year End

10/7/2015

 
I can’t believe it is already October! We have finished the third quarter of the year and are rounding the bend toward year-end and (I know, don’t say it) tax season. This is the best time of the year, though, to start thinking about prepping for tax season. A few year-end housekeeping tasks worked through now can save time and stress later. For small businesses, what are a few tasks you could handle now?
Picture
Image courtesy of shirophoto at FreeDigitalPhotos.net
  • Make it a priority to go through those piles of receipts that have been shuffled aside and ensure the information is entered into your accounting system and you have a paperless copy of the receipt – then shred!

  • Verify all your bank and credit card accounts are reconciled and up-to-date

  • Review your Profit & Loss and Balance Sheet for any posting issues or questionable balances

  • Verify you have all information needed for any independent contractors who will be receiving a 1099

  • If you are new (or newer) to QuickBooks Desktop or QuickBooks Online and need training, book sessions now before the rush of tax season
If you need assistance with any of the above, please contact us now. We take the stress out of financial management and would be happy to help.

    Author

    Successfully meeting the challenges inherent to new and smaller businesses provides me with a special type of satisfaction. 

    Supporting businesses that have the potential to become amazing – from both the perspective of owners and team members as well as their clients – is what I enjoy. 

    I hope to use this blog to provide information specific to businesses that are growing from small beginnings into exceptional companies.

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  • Home
  • Why Us?
    • Reviews
    • Open Positions
  • Client Services
  • Resources
    • Save on QBO Subscriptions!
    • Tax Refund Status
    • Gusto Year End Checklist
    • Videos >
      • Business Taxes >
        • 2019 Business Tax Highlights
        • 7 Ways Small Business Can Save On Tax
        • Taxes for S-Corp Owners
        • The IRS Loves Businesses
      • Personal Taxes >
        • 2019 Tax Highlights
        • Five Yearly Tax Essentials
        • 4 Common Tax Surprises
        • Retirement Can Be Taxing
        • Advance Child Tax Credit Reconciliation - 2022
        • Make the Most of Your Donations
        • Five Great Tax Secrets
        • Renting Your Property Tax Free
        • Ideas to Audit-Proof Your Tax Return
      • The Tax Cuts & Jobs Act >
        • The Tax Cuts & Jobs Act: What You Need to Do Now
        • The Tax Cuts & Jobs Act: Are Itemized Deductions A Thing of the Past?
        • The Tax Cuts & Jobs Act: The New Child Care Tax Credit
      • Tax Topics >
        • Tax Season is Coming!
        • The New World of Deductions: What Everyone Needs to Know
        • Proving Your Deductions
        • How to Fix a Mistake on Your Tax Return
        • How Long Should I Save It?
        • Tax Credit vs Tax Deduction
        • Understanding Effective Tax Rate
        • Understanding Marginal Tax Rate
      • Life Events >
        • Life Events: A New Birth
        • Life Events: Marriage
        • Life Events: Divorce
    • Articles >
      • Accounting & Bookkeeping >
        • How to Get the Most Out of Your Accounting Fees
        • The 10 Biggest Money Leaks in Your Accounting System
      • Business Factors >
        • IRS Rules for Classifying Workers
        • Checklist for a Healthy Cash Flow
        • 12 Ways to Improve Your Business Profits
        • 10 Step Annual Business Check-Up
      • Tax Topics >
        • Tax Guide for Self-Employeds
        • 15 Things Every Tax Payer Should Know
        • Disaster Casualty Losses
        • Travel & Entertainment Deductions
        • Tax Guide - A Deduction Checklist
        • What You Should Know About Tax Audits
    • Newsletters >
      • Newsletters - Monthly Editions >
        • Newsletter - Monthly Edition
      • Newsletters - Quarterly Editions >
        • Newsletter - 2019 Fall/Winter
        • Newsletter - 2019 Spring/Summer
    • How To's >
      • How To - Dext
      • How To - BILL
  • Blog
  • Appointments
    • Client Consultations