Accounting in the New Millennium

Well, the "new" millennium is about 15 years old now which is pretty insane but with it came a myriad of updates as far as technology is concerned. Remember when the first cell phone came out? That thing was huge and the battery lasted at best a couple of hours. Fast forward fifteen years and we have mini computers in all of our pockets capable of doing everything from video calling, word processing and most importantly let us check our Facebook! Yes, we tend to use our electronic devices for all sorts of unproductive things but believe it or not we can get a lot of stuff done with our computers, tablets and smartphones! This is especially true if you own a business or are self employed. I have put together a list of a few of my favorite services to facilitate everyday accounting and taxes, I am all about automation. Let’s dig right in:

Small Business Workbench

One of the hardest things to do when you have a small business is budgeting. Understanding your cash flow and capital to hire and spend accordingly is difficult, this online tool helps your predict how much money you’ll have in the bank based on your previous sales history. Basically it does all the math so businesses don’t have to, it helps them make projects into the future helping them better manage their expenses. Sometimes it’s not as simple as looking at a business’ bank account but instead it’s about understanding how much money is coming in, out and how much money will be available in the future. What’s great about this is that it is cloud based so all your information can be accessed from multiple and various types of devices at any time as long as you have an internet connection.  

http://www.sbworkbench.com/

TaxMate

One of the main reasons why we even keep track of cash flow, other than try to figure out if we’re a profitable business, is because we are required to by law. Well sorta, taxes are one of the biggest burdens that a business owner has to deal with. Sometimes an accountant or employee handles all the numbers but business owners need to ensure everything is accurate to avoid serious consequences. Taxmate is a free app that helps you “predict” how much you will owe in taxes. Although taxes are typically a little bit more complicated than what an app can handle, TaxMate is a great way to have a ballpark figure as far as taxes are concerned allowing you to better manage your sales. 

http://www.taxmateapp.com/

Hiveage

Do you have a smaller business? and by smaller we mean under twenty employees. Some businesses just need a bit of help managing their everyday accounting needs, specifically invoicing, taking payments, keeping track of mileage, managing teams among other tasks. There are different tools that accomplish this same process but Hiveage aims to offer more functionality than some of the other services out there that only do one thing at a time. Hiveage is also very affordable since you only pay for the features you need and as your business grows, you can add more features. The core of Hiveage is actually free, so it’s a win win since you get to try it out without investing too much in it. 

http://www.hiveage.com/

I have only really scratched the surface with these services, there’s plenty more and I will be covering some of them in the upcoming weeks. You can always reach out to me personally if you have any other questions

Stephen

stephen@accountingworkssolutions.com 

Same Sex Couples May Want To File Tax Amendments in Virginia

The deadline for filing an amended Federal and State Tax Return for same sex marriage couples is this tax year.  The deadline is April 15, 2015.  Even if you currently live in a state where same sex marriage is not recognized you are still able to file a current and amended return if you were married in a state where it is.  Like any marriage, there are benefits and penalties for filing together.  You are not required to re-file but it may be wise to calculate whether or not filing an amended return for years 2011-2013 is worthwhile.
   
One reason to calculate the value of re-filing for previous years is if you and your spouse have a differential of incomes.  If you or your spouse don’t work, or make substantially less than your spouse, it is likely there will be a benefit.  However, if you and your spouse both work and have similar incomes, there may be a “marriage penalty” depending on the current tax rate.  Another reason to tabulate if you’d come out ahead with an amended return is if you had capital losses for the year.  Filing jointly may limit your deductions for those losses.
   
When filing an amended return, you need form 1040X for each year you’ve decided to re-file.  The key for filing an amended return is to provide as much documentation to the IRS as to the reason you are re-filing.  The more information you can give them the better.  Keep in mind that this rule does not apply for domestic partnerships or common law marriage. Again, the pending deadline for filing an amended status is April 15, 2015 if re-filing for year 2011. For information on filing an amended return, go to Tax Topic 308, Amended Returns, at http://www.irs.gov/taxtopics/tc308.html

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.

4 Money Maneuvers for 2015

2014 is not over, at least in tax-terms and most taxpayers are not as prepared as they’d like to be in order to take advantage of all the tax savings available.  Why not include being prepared for the 2015 tax season a financial priority starting now!  You can get ahead by doing some or all of these 4 things:

Make a Roth IRA contribution sooner than later.  Don’t wait for the tax deadline to contribute.  While it doesn’t seem like a substantial amount in the short term, contributing in January rather than December adds a full year of tax free growth.  Over many years, that can translate into thousands of dollars.

Donate to your favorite charities with your appreciated securities.  Those who invest consistently in most cases have stocks or property that have increased in value, consider donating them and that way neither party has to pay capital gains taxes on the amount.  If a charity only accepts cash donations, a donor advised fund can provide the same tax benefits, and you can recommend grants from the fund periodically.

Remember your Flexible Spending Account throughout the year.  If you are frantically trying to spend the rest of your FSA at the end of this year, do some accounting for 2015 and contribute a little less, perhaps.  Also, get organized by saving all of your applicable receipts and keep them in one place.  These funds can be wasted if claims or receipts are submitted in a timely fashion. Ask your health care director what qualifies for reimbursement. 

Plan your deductions at the beginning of the year.  Pay your property taxes in advance, or gain deductions by paying your January mortgage payment in December.  These are financial maneuvers are usually unavailable at the last minute to save on taxes, but if you plan ahead now, you can increase your return even more in the long run.  Just an extra excuse to save!

With a little initiative, you can increase your return for the 2015 tax year by starting to think about them now!  Add these tips into your new years resolutions, stay organized and take advantage of all the breaks and benefits available to you for the upcoming year.

 

Business in 2015: Arm Yourself With the Right Tools for Tax Season

Being a small business owner usually means doing a lot of the work yourself, on top of everything taxes can be a handful!  As long as you follow a few basic rules, you don’t have to sweat tax season at the last minute.

Get An Accountant.  

When you first open your business or shortly after you can afford it, get one. They can set you up with a system to keep all of your records for the year, whether it be paper or an electronic filing system, having accurately dated information is very helpful.  They’re very knowledgable and current with tax laws that may benefit your business with new tax breaks!  Also, they can inform you about what filing system might be best suited for your small business; filing monthly, quarterly or just annually. 

If you have employees, file the right forms.

Making sure you have all the right forms can protect you and your employee when tax season begins.  Have your employees file a W-4, and you can immediately begin withholding wages for tax purposes.  Contractors fill out a W-9.

Keep records, keep records, keep records.  Did I mention, keep records?

You never know what may be deductible for the tax year.  Keeping detailed income records is vital.  Gross receipts, inventory, investment interest, etc.  What also may prove helpful is keeping track of office expenses like rent, business vehicles, travel expenses even down to parking receipts.  The list goes on, just think, if you’re doing something for your business like just running to the store for paper clips, write down your mileage, keep the receipt for the paperclips.  Keeping track of employee payroll and contributions, legal fees and business insurance is also important.

Pay yourself.

Document how your salary is decided.  In most cases it is not legal to pay yourself with the entirety of the profits.  Pay yourself, and use the rest to increase your equity.

Finally, decide in advance how you want to prepare your taxes

You can use e-file or software, a CPA or a tax preparer, or do them yourself.  Request all the tax forms months in advance.  If you’re prepared, you can avoid incurring late fees.

As your business grows these things will become like second nature and keeping organized will seem like a synch.  Dreaded tax season won’t seem so bad after all!