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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

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.

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?

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.

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

What Happened to the Cash?

Tips to Avoid an IRS Audit

Rounding the Corner to Year End

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