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Chris Blach, QuickBooks ProAdvisor |
 It looks like the economy may finally be looking up. Still, this is no time to loosen the purse strings in terms of your business expenses. Rather, why not re-double your efforts to cut costs and boost your profitability?Excessive expenses cause debt, which in itself can be very costly. So any money-saving actions you take will be doubly rewarding.
More Effective Money ManagementTo cut expenses significantly, it’s necessary to poke into every corner of your company’s finances. Inventory is a good place to start. If you sell multiple units of the same item and reorder regularly, you should be using QuickBooks’ inventory-tracking tools. Go to Edit | Preferences | Items & Inventory | Company Preferences. (more…) |
Archive for June, 2012
Cutting Expenses Key to Profitability: Some Tips for QuickBooks
Friday, June 22nd, 2012The IRS Is Paying Attention to Your Plan
Thursday, June 21st, 2012|
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| Safe Harbor 401(k) plans, designed to take advantage of an exemption from the rules barring discrimination in favor of highly compensated employees (HCE’s), are an effective tool for HCE’s to defer the maximum amount without recognizing excess contributions in a future year. For employers to qualify for a Safe Harbor 401(k) plan, they must fully match the first 3% of salary and half of the next 2% of pay that non-HCE defer, or firms can contribute at least 3% of pay for all eligible non-HCE’s. Because so many employers are using safe harbors, the IRS is scrutinizing these plans to make sure the rules are followed.Plans with uncollectible loans or leases are also on the IRS radar. They are looking to make sure affected plans are properly valuing their assets and complying with the rules.
If your plan has real estate investments or participant loans, watch out for Uncle Sam. He is interested in making sure the real estate is valued at fair market value and the value is well documented. Participant loans must meet the terms of the plan and be properly documented. Mistakes with Participant loans can lead to prohibited transactions. |
Start Planning Now for Next Year’s Tax Return
Wednesday, June 20th, 2012|
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| This year’s tax deadline may have come and gone already but it’s never to early to start planning for next year. With that in mind, here are eight things you can do now to make next April 15 easier.
1. Adjust your withholding. Why wait another year for a big refund? Now is a good time to review your withholding and make adjustments for next year, especially if you’d prefer more money in each paycheck this year. If you owed at tax time, perhaps you’d like next year’s tax payment to be smaller. Give us a call if you need assistance in adjusting your withholding. 2. Store your return in a safe place. Put your 2011 tax return and supporting documents somewhere secure so you’ll know exactly where to find them if you receive an IRS notice and need to refer to your return. If it is easy to find, you can also use it as a helpful guide for next year’s return. 3. Organize your recordkeeping. Establish a central location where everyone in your household can put tax-related records all year long. Anything from a shoebox to a file cabinet works. Just be consistent to avoid a scramble for misplaced mileage logs or charity receipts come tax time. 4. Review your paycheck. Make sure your employer is properly withholding and reporting retirement account contributions, health insurance payments, charitable payroll deductions and other items. These payroll adjustments can make a big difference on your bottom line. Fixing an error in your paycheck now gets you back on track before it becomes a huge hassle. 5. Consult a tax professional early. If you are planning to use a tax professional to help you strategize, plan and make financial decisions throughout the year, then contact us now. You’ll have more time when you’re not up against a deadline or anxious for your refund. 6. Prepare to itemize deductions. If your expenses typically fall just below the amount to make itemizing advantageous, a bit of planning to bundle deductions into 2012 may pay off. An early or extra mortgage payment, pre-deadline property tax payments, planned donations or strategically paid medical bills could equal some tax savings. If you need help with tax planning for 2012 give us a call. We can help you prepare an approach that works best for you. 7. Strategize tuition payments. The American Opportunity Tax Credit, which offsets higher education expenses, is set to expire after 2012. It may be beneficial to pay 2013 tuition in 2012 to take full advantage of this tax credit, up to $2,500, before it expires. Each household’s financial circumstances are different so it’s important to fully consider your specific situation and goals before making large financial decisions. Feel free to contact us any time you have questions or concerns. We can help you stay abreast of tax law changes throughout the year–not just at tax time. |
The Best Financial Tool for Business Owners
Wednesday, June 20th, 2012|
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What if there were a tool that helped you create crystal-clear plans, provided you with continual feedback about how well your plan was working, and that told you exactly what’s working and what isn’t?Well, there is such a tool. It’s called the Budget vs. Actual Report and it’s exactly what you need to be able to consistently make smart business decisions to keep your business on track for success.
Clarifying Your PlanThe more clear you are about your business goals, the more likely you are to achieve them. Creating a budget forces you to examine the details of your goals, as well as how even a single business decision affects all other aspects of your company’s operations.
Navigating the ShipOnce you clarify your goals, then you start making business decisions to help you reach your desired outcome. Some of those decisions will be great and give you better than expected results, but others might not. This is when the Budget vs Actual Report becomes an effective management tool. When you compare your budgeted sales and expenses to your actual results, you see exactly how far off you might be with regard to your budget, goals, and plans. Sometimes you need to adjust your plan (budget) and sometimes you need to focus more attention to the areas of your business that are not performing as well as you planned. Either way, you are gleaning valuable insights into your business. It’s like sailing a boat. You may be off-course most of the time, but having a clear goal and making many adjustments helps you reach your destination. Just Do ItWe often know what we need to do but don’t take the necessary action. It may seem like a huge hassle to create a budget and then create a Budget vs. Actual Report every month, but as with any new skill, it does get easier. Turn your dreams into reality. Give us a call and we’ll guide you through the budgeting process. |
Tax Impacts of Early Retirement Distribution
Tuesday, June 19th, 2012|
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| Taxpayers may sometimes find themselves in situations when they need to withdraw money from their retirement plan early. What they may not realize is that that transaction may mean a tax impact when they file their return. Here are facts you should know about the tax implications of an early distribution from your retirement plan.
1. Payments you receive from your Individual Retirement Arrangement before you reach age 59 1/2 are generally considered early or premature distributions. 2. Early distributions are usually subject to an additional 10 percent tax. 3. Early distributions must also be reported to the IRS. 4. Distributions you roll over to another IRA or qualified retirement plan are not subject to the additional 10 percent tax. You must complete the rollover within 60 days after the day you received the distribution. 5. The amount you roll over is generally taxed when the new plan makes a distribution to you or your beneficiary. 6. If you made nondeductible contributions to an IRA and later take early distributions from your IRA, the portion of the distribution attributable to those nondeductible contributions is not taxed. 7. If you received an early distribution from a Roth IRA, the distribution attributable to your prior contributions is not taxed. 8. If you received a distribution from any other qualified retirement plan, generally the entire distribution is taxable unless you made after-tax employee contributions to the plan. 9. There are several exceptions to the additional 10 percent early distribution tax, such as when the distributions are used for the purchase of a first home (up to $10,000), for certain medical or educational expenses, or if you are totally and permanently disabled. For more information about the tax related impacts of early distributions from retirement plans, please contact us. We’re here to help you! |
Starting a Business? 3 Things You Must Know
Tuesday, June 19th, 2012|
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| Starting a new business is a very exciting and busy time. There is so much to be done and so little time to do it in. If you expect to have employees, there are a variety of federal and state forms and applications that will need to be completed to get your business up and running. That’s where we can help.
Employer Identification Number (EIN) State Withholding, Unemployment, and Sales Tax Payroll Record Keeping Form W-4 is completed by the employee and used to calculate their federal income tax withholding. This form also includes necessary information such as address and social security number. Form I-9 must be completed by you, the employer, to verify that employees are legally permitted to work in the U.S. If you need help setting up the paperwork for your business, give us a call. Letting our experts handle this part of your business will allow you to concentrate on running your business. |
Are Your Social Security Benefits Taxable?
Friday, June 8th, 2012|
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| How much, if any, of your Social Security benefits are taxable? It depends on your total income and marital status. Generally, if Social Security benefits are your only income, your benefits are not taxable and you probably do not need to file a federal income tax return.
If you receive income from other sources in addition to Social Security and your modified adjusted gross income is not more than the base amount for your filing status, then your benefits will also not be taxed. (See below for more on base amounts.) (more…) |
Tax Court Ruling Benefits Small Business Owners
Friday, June 8th, 2012|
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| Owners of closely held businesses, including family owned and other small businesses can now pass assets to heirs with minimal taxation thanks to a recent tax court ruling (Wandry v. Commissioner, US Tax Court March 26, 2012).Under current regulations ownership of the business can be transferred to heirs using yearly and lifetime exemptions ($5,120,000 in 2012), as well as gifting $13,000 per year per heir. The catch is that there must be a professional appraisal of the business, but the IRS can contest the appraised value after the gift is given, and if the IRS finds the value is significantly higher there may be tax consequences.
Here’s what happened. (more…) |
Sell Your Home But Keep the Profits
Friday, June 8th, 2012|
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| If you’re looking to sell your home this year, then it may be time to take a closer look at the exclusion rules and cost basis of your home in order to reduce your taxable gain on the sale of a home.The IRS home sale exclusion rule now allows an exclusion of a gain up to $250,000 for a single taxpayer or $500,000 for a married couple filing jointly. This exclusion can be used over and over during your lifetime, as long as you meet the following Ownership and Use tests. However, it cannot be used more frequently than every 24 months.
During the 5-year period ending on the date of the sale, you must have: (more…) |
Financial Tips for June 2012
Friday, June 8th, 2012|
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| Review Your Insurance Policies You reviewed your “asset” policies in April. This month, review your life, health, and disability insurance policies. Check with your employee benefits office as to what programs are available. Make certain you have adequate coverage. Call us to determine the appropriate amounts for your age and income. Lower Your Utility Costs Analyze Budget vs Actuals |
