Accurate Accounting And Its Importance

Tax law these days is getting increasingly complex.  Knowing what qualifies for a tax break, questioning what you’re required to claim or not along with saving your receipts year round can be overwhelming. Recent rulings in federal courts have put the burden of proof more heavily on the taxpayer rather than paid tax preparers, which a staggering 50 percent of Americans rely upon when tax time comes.  Whether it be e-filing at home or a larger firm, in the end the responsibility is still with the person who is filing.

In 2013, Federal Courts ruled that the IRS did not have the power to regulate paid tax preparers and this decision was upheld in appeals court last year.  In response to this ruling, there has been new legislation introduced in the Senate to give the IRS and the Treasury Department said needed authority.  The intent of this legislation is to protect tax payers from incompetent preparers by making enforceable standards to which they will be held.  While CPAs, tax attorneys and Enrolled Agents are still under the IRS’s umbrella of regulation, this new legislation is aiming for those tax preparers who aren’t already registered.  For now, the IRS is offering a voluntary program for continuing education and testing called the Annual Filing Season program. 

There is some controversy over whether or not this will be good for the taxpayer.  Some argue that making the IRS responsible for overseeing the very preparer who is trying to guard your money from the government seems as helpful as shooting yourself in the foot. In other cases, it is viewed as holding the preparer responsible for his or her job the way you would a contractor to build your home, there are rules you must be held accountable for.  However, in both cases it is clear that the taxpayer must ultimately be the one protecting themselves.  To stay organized throughout the year, spending a little extra money on a qualified accountant to keep track of yours can really pay off in the long run.  Maximize what you save in paying taxes or maximize what your tax return may be, keep track of your dollar so you can be solid and assured when its time to file.

Click here for more information about the introduced legislation.

Accounting for the New Year

It’s the holiday season and everyone seems to be preoccupied with holiday parties, shopping and merriment all around; this is all great and I am probably one of the people that loves this season more than anyone else. However, tax season is not far from now, only a couple of months away if you really think about it. As a business owner or even as an individual how are your finances right now? Do you know where you stand as far as profits and losses for the year?

These are questions that you should be asking yourself right now, not next year. Once the fiscal year closes, it may be too hard to get tax write offs by making business related investments. If you have employees, you should make sure that you have all your numbers in order because you’ll be providing them with the right tax documentation so they can file in a timely manner. This is something that you should not be left as a last minute task, this needs to be present on your mind right now.

Zoho Books offers a great little cheat sheet for those who may need a little bit of a reminder on the things you’ll need to do before the year closes:

• Reconcile your bank accounts
• Complete your invoicing
• Record all your supplier bills
• Write off bad debts
• Get to the bottom and look for outliers
• Record your depreciation
• Handle prepaid expenses
• Close out the owner’s draw
• Get started with 1099s now

I know getting a lot of these things done before the end of the year can be a little bit overwhelming with the holidays being right around the corner but trust me on this one, you’ll be very happy that you got these done once tax season comes around.

To read the full article provided by Zoho Books, click here.