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Monday, December 12, 2016

New Year's Payroll Resolutions

We want to help you start off the New Year right with your payroll services.  Having served Richmond’s small business community for over 10 years, we have seen a demand for affordable accounting services, including payroll, and have decided to fill it.  Beginning in 2017 we are offering competitively priced, comprehensive payroll services that are tailored specifically to your small businesses’ needs.

Through our platform, business owners and employees alike can log in through a website to easily view payroll periods, expenses and reports. Employees can download pay stubs and W2s.  Payroll advances, garnishments, and before and after tax deduction reports that any other full-service payroll company can provide, including:

-Year-to-Date Reports
-Check Register
-Taxable Wages
-Cash Requirements Report
-Generate checks
-Worker’s Comp Audits
-Direct Deposit

We are offering flat-fee rates for businesses with 10 or fewer employees and have a variety of flexible solutions for over 10 employees.  We want to save you time, money and headaches by filling your payroll needs.

Wednesday, November 30, 2016

Diversity Richmond Celebrates



It was a pleasure attending Diversity Richmond Celebrates last night on behalf of the Richmond Business Alliance.  While it has been a trying year for the LGBTQ Community there are many accomplishments that this organization has achieved that deserve to be celebrated and recognized! To read more about this event, and Diversity Richmond's impact on this community, visit here

Monday, November 21, 2016

Payroll Complaince Update

As Accounting Works rounds out the rest of the year, we will be turning our focus to offering comprehensive and competitively priced payroll services to our clients in 2017!  With an easy to use platform, we will be offering a flat rate for businesses with 10 or fewer employees and only a small fee for any additional employees! Of course, we'd like to work with any size business, so if you have a larger company we'd be happy to work out a plan that fits your needs.

That being said, it can be hard as a small business owner to keep up with changing regulations, especially if you're doing payroll yourself.  As a reminder, these payroll changes will take effect December 1, 2016!

Final Rule: Overtime
From the Wage and Hour Division (WHD) of the US Dept of Labor

Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees under the Fair Labor Standards Act


On May 18, 2016, President Obama and Secretary Perez announced the publication of the Department of Labor’s final rule updating the overtime regulations, which will automatically extend overtime pay protections to over 4 million workers within the first year of implementation. This long-awaited update will result in a meaningful boost to many workers’ wallets, and will go a long way toward realizing President Obama’s commitment to ensuring every worker is compensated fairly for their hard work.

In 2014, President Obama signed a Presidential Memorandum directing the Department to update the regulations defining which white collar workers are protected by the FLSA's minimum wage and overtime standards. Consistent with the President's goal of ensuring workers are paid a fair day's pay for a hard day's work, the memorandum instructed the Department to look for ways to modernize and simplify the regulations while ensuring that the FLSA's intended overtime protections are fully implemented.

The Department published a Notice of Proposed Rulemaking (NPRM) in the Federal Register on July 6, 2015 (80 FR 38515) and invited interested parties to submit written comments on the proposed rule at www.regulations.gov by September 4, 2015. The Department received over 270,000 comments in response to the NPRM from a variety of interested stakeholders. The feedback the Department received helped shape the Final Rule.

Key Provisions of the Final Rule

The Final Rule focuses primarily on updating the salary and compensation levels needed for Executive, Administrative and Professional workers to be exempt. Specifically, the Final Rule:


  1. Sets the standard salary level at the 40th percentile of earnings of full-time salaried workers in the lowest-wage Census Region, currently the South ($913 per week; $47,476 annually for a full-year worker);
  2. Sets the total annual compensation requirement for highly compensated employees (HCE) subject to a minimal duties test to the annual equivalent of the 90th percentile of full-time salaried workers nationally ($134,004); and
  3. Establishes a mechanism for automatically updating the salary and compensation levels every three years to maintain the levels at the above percentiles and to ensure that they continue to provide useful and effective tests for exemption.


Additionally, the Final Rule amends the salary basis test to allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level.

The effective date of the final rule is December 1, 2016. The initial increases to the standard salary level (from $455 to $913 per week) and HCE total annual compensation requirement (from $100,000 to $134,004 per year) will be effective on that date. Future automatic updates to those thresholds will occur every three years, beginning on January 1, 2020.

Monday, November 14, 2016

Do You Qualify for the Earned Income Tax Credit?

As a small business owner, you could qualify for the Earned Income Tax Credit!  It's different than itemized deduction and available for those that qualify with or without children.


What is the Earned Income Tax Credit?
By Maurie Backman on Fool.com

Taxes can be a huge burden for low-income Americans who need every penny they can get to pay the bills. Thankfully, there are tax credits available to help lower earners make ends meet. One such credit is the Earned Income Tax Credit. The Earned Income Tax Credit, or EITC, is a federal tax credit that can save eligible low-income Americans money on their taxes. You must meet certain criteria to file for the EITC, but if you qualify, you could receive up to $6,318 for 2017. Best of all, the EITC is refundable, which means that if it reduces your tax liability to $0, you'll actually get a check for the difference.


Tax credits versus deductions

Some people use the terms "tax credit" and "tax deduction" interchangeably, but in reality, they're not the same thing. A tax deduction reduces your taxable income, while a tax credit is a dollar-for-dollar reduction of your tax liability. If you're eligible for a $3,000 tax deduction and your effective tax rate is 25%, that deduction will save you $750 in taxes. But if you get a $3,000 tax credit, it'll save you $3,000 in taxes.

Now many tax credits are non-refundable, which means that if they reduce your tax liability to $0 with money left over, you won't be eligible to receive the difference. The EITC, however, is refundable, which means that it has the potential to put even more money back in your pocket. Let's say you owe $2,000 in taxes but are eligible for an EITC credit in the amount of $3,400. Because the EITC is refundable, you'll actually get a check for $1,400.

How do I get the Earned Income Tax Credit?

There are certain criteria you must meet to be eligible for the EITC. To qualify, you must have earned income from a job or business that you own. Furthermore, your tax filing status must be single, married filing jointly, head of household, or qualifying widow. Additionally, for 2017, your investment income for the year can't exceed $3,450.

There are also income limits that determine your eligibility to receive the Earned Income Tax Credit, and they depend on the number of qualifying children you have in your household. The following table shows what the 2017 EITC income limits are based on your tax filing status and number of qualifying children:


How much can I get from the Earned Income Tax Credit?

The amount of money you get from the EITC depends on your income and number of qualifying children. For 2017, the maximum you'll receive from the EITC is:


  • $6,318 if you have three or more qualifying children
  • $5,616 if you have two qualifying children
  • $3,400 if you have one qualifying child
  • $510 if you don't have any qualifying children


Don't pass up free money

To benefit from the Earned Income Tax Credit, all you need to do is claim it on your tax return. Surprisingly, an estimated 20% of eligible tax filers fail to claim the EITC and lose out on much-needed money each year as a result. If you're a low earner, it pays to see whether the Earned Income Tax Credit could lower your taxes or, better yet, put extra cash back in your pocket this year.

The $15,834 Social Security bonus most retirees completely overlook
If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $15,834 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after.


Wednesday, November 9, 2016

Charitable Donations for Small Business

As the year comes to a close, many small business owners and individuals look for ways to make deductions on their taxes.  Contributing to your favorite cause is a great way to minimize your bottom line.  Here's how to make those charitable donations count!


Small Business Guide to Deducting Charitable Donations
By Bonnie Lee

Businesses can make tax deductible donations to bona fide nonprofit organizations. But you may be surprised to learn how it is deducted on your tax return. In fact, the only entity able to deduct a cash charitable contribution as a business expense is a C Corporation.

If you are a sole proprietor and you make a donation of $100 to a dog rescue society which is registered as a 501(c)(3) with the Internal Revenue Service – all bona charities must be registered as such for your gift to be tax-deductible – and your business received no goods or services in return, the deduction is listed as an itemized deduction on Schedule A of your tax return. This provides a tax benefit only if you are able to itemize deductions.

You cannot deduct this contribution on Schedule C. It is not a business expense; it will not reduce your self-employment tax. The IRS views it as a personal expense paid from business funds.

But now let’s say you want to support young athletes and therefore donate $100 from business funds as a sole proprietor to the local soccer league. In exchange, they run a small display ad for your business on their program. This is no longer a donation. This is an advertising expense; you received something in return which can be classified as an “ordinary and necessary business expense,” and therefore the cost is deductible as such on Schedule C.

If as a sole proprietor you donate your services to a bona fide 501(c)(3), you have no deduction whatsoever. Doesn’t seem fair, does it? But the IRS places no value on your time or expertise. A manicurist donated her time to do nails for women clients at a shelter who were preparing for job interviews. While she was not allowed to deduct the $35 per manicure she would normally charge, she was able to deduct her mileage to and from the shelter, and the cost of all supplies and materials used in the performance of the manicures. She gave away bottles of nail polish to be distributed by the nonprofit to their clients. These were a write off for her as well.

By the same token, if this manicurist were to give away a nail care set of polish and files and other products to a poor individual who needs help, she would not be able to write off the donation. This is simply because the IRS does not allow the deduction of gifts to individuals, or for that matter to political organizations or candidates.

If your business is incorporated as an S Corporation or formalized as a partnership filing Form 1065, the same rules apply. In fact, any donations made at the S Corporate or partnership level flow out as a special line item on your Schedule K-1 and end up on Schedule A of your individual income tax return. Again, this is a tax benefit only if you are able to itemize deductions.

A C Corporation may take the deduction on Form 1120 but must follow all of the IRS rules regarding donations.

Remember to acquire and retain the acknowledgment letter from the nonprofit for your donation. Your canceled check is not enough documentation and the IRS may disallow the deduction if you cannot provide this document. It must be obtained before filing your tax return. You cannot request it later during an IRS audit.

To view the original article, click here.

Thursday, November 3, 2016

Celebrate National Wine Tasting Day @ Secco Wine Bar


Did you know that November 5, 2016 is National Wine Tasting Day?  As an avid wine drinker, I was delighted to learn of the event and excited that it gave me an excuse to visit one of my favorite clients in Richmond serving my favorite beverage Secco Wine Bar! Having recently moved to their new location (something we both have in common...) they've been able to expand their menu as well as their seating with a heated patio outdoors and more space inside.  Celebrate this holiday with me and go to your favorite local wine bar...as if you needed the excuse.



Wednesday, November 2, 2016

Tax Planning for Small Business

It’s fairly common knowledge that when you plan ahead, things generally cost you less money.  You have more time to shop around for the best deal and you aren’t paying exorbitant fees for last minute convenience.  While it comes to mind that this rule is especially true for travel expenses, it is also very true when it comes to tax planning for your small business.  The more you plan ahead, the more likely you are to find a strategy or that new tax law, that saves you hundreds.

Cash flow is incredibly important for small businesses, and minimizing your tax liability means more money for growth and investment.  Money saving strategies like making contributions at end of year are also beneficial to your bottom line.  Further, knowing your bottom line months in advance can give you more time to plan on making that payment.  Would you rather learn about a $10,000 bill a week in advance or 4 months in advance? Exactly.



Tax Planning for Different Business Forms

SOLE PROPRIETORSHIPS AND PARTNERSHIPS Tax planning for sole proprietorships and partnerships is in many ways similar to tax planning for individuals. This is because the owners of businesses organized as sole proprietors and partnerships pay personal income tax rather than business income tax. These small business owners file an informational return for their business with the IRS, and then report any income taken from the business for personal use on their own personal tax return. No special taxes are imposed except for the self-employment tax (SECA), which requires all self-employed persons to pay both the employer and employee portions of the FICA tax, for a total of 15.3 percent.

Since they do not receive an ordinary salary, the owners of sole proprietorships and partnerships are not required to withhold income taxes for themselves. Instead, they are required to estimate their total tax liability and remit it to the IRS in quarterly installments, using Form 1040 ES. It is important that the amount of tax paid in quarterly installments equal either the total amount owed during the previous year or 90 percent of their total current tax liability. Otherwise, the IRS may charge interest and impose a stiff penalty for underpayment of estimated taxes.

Since the IRS calculates the amount owed quarterly, a large lump-sum payment in the fourth quarter will not enable a taxpayer to escape penalties. On the other hand, a significant increase in withholding in the fourth quarter may help, because tax that is withheld by an employer is considered to be paid evenly throughout the year no matter when it was withheld. This leads to a possible tax planning strategy for a self-employed person who falls behind in his or her estimated tax payments. By having an employed spouse increase his or her withholding, the self-employed person can make up for the deficiency and avoid a penalty. The IRS has also been known to waive underpayment penalties for people in special circumstances. For example, they might waive the penalty for newly self-employed taxpayers who underpay their income taxes because they are making estimated tax payments for the first time.

Another possible tax planning strategy applies to partnerships that anticipate a loss. At the end of each tax year, partnerships file the informational Form 1065 (Partnership Statement of Income) with the IRS, and then report the amount of income that accrued to each partner on Schedule K1. This income can be divided in any number of ways, depending on the nature of the partnership agreement. In this way, it is possible to pass all of a partnership's early losses to one partner in order to maximize his or her tax advantages.

C CORPORATIONS Tax planning for C corporations is very different than that for sole proprietorships and partnerships. This is because profits earned by C corporations accrue to the corporation rather than to the individual owners, or shareholders. A corporation is a separate, taxable entity under the law, and different corporate tax rates apply based on the amount of net income received. As of 1997, the corporate tax rates were 15 percent on income up to $50,000, 25 percent on income between $50,000 and $75,000, 34 percent on income between $75,000 and $100,000, 39 percent on income between $100,000 and $335,000, and 34 percent on income between $335,000 and $10 million. Personal service corporations, like medical and law practices, pay a flat rate of 35 percent. In addition to the basic corporate tax, corporations may be subject to several special taxes.

Corporations must prepare an annual corporate tax return on either a calendar-year basis (the tax year ends December 31, and taxes must be filed by March 15) or a fiscal-year basis (the tax year ends whenever the officers determine). Most Subchapter S corporations, as well as C corporations that derive most of their income from the personal services of shareholders, are required to use the calendar-year basis for tax purposes. Most other corporations can choose whichever basis provides them with the most tax benefits. Using a fiscal-year basis to stagger the corporate tax year and the personal one can provide several advantages. For example, many corporations choose to end their fiscal year on January 31 and give their shareholder/employees bonuses at that time. The bonuses are still tax deductible for the corporation, while the individual shareholders enjoy use of that money without owing taxes on it until April 15 of the following year.

Both the owners and employees of C corporations receive salaries for their work, and the corporation must withhold taxes on the wages paid. All such salaries are tax deductible for the corporations, as are fringe benefits supplied to employees. Many smaller corporations can arrange to pay out all corporate income in salaries and benefits, leaving no income subject to the corporate income tax. Of course, the individual shareholder/employees are required to pay personal income taxes. Still, corporations can use tax planning strategies to defer or accrue income between the corporation and individuals in order to pay taxes in the lowest possible tax bracket. The one major disadvantage to corporate taxation is that corporate income is subject to corporate taxes, and then income distributions to shareholders in the form of dividends are also taxable for the shareholders. This situation is known as "double taxation."

S CORPORATIONS Subchapter S corporations avoid the problem of double taxation by passing their earnings (or losses) through directly to shareholders, without having to pay dividends. Experts note that it is often preferable for tax planning purposes to begin a new business as an S corporation rather than a C corporation. Many businesses show a loss for a year or more when they first begin operations. At the same time, individual owners often cash out investments and sell assets in order to accumulate the funds needed to start the business. The owners would have to pay tax on this income unless the corporate losses were passed through to offset it.

Another tax planning strategy available to shareholder/employees of S corporations involves keeping FICA taxes low by setting modest salaries for themselves, below the Social Security base. S corporation shareholder/employees are only required to pay FICA taxes on the income that they receive as salaries, not on income that they receive as dividends or on earnings that are retained in the corporation. It is important to note, however, that unreasonably low salaries may be challenged by the IRS.

This article originally appeared on ReferenceforBusiness.com and includes some other great resources as well!

Monday, October 10, 2016

Payroll Services for Small Business



Accounting Works has offered a variety of accounting services in Richmond for many years, working with many small business owners has made us realize that there are certain accounting needs not being met. I am speaking of Payroll Services.  Small to medium size businesses feel that the cost of outsourcing this service is not justifiable and instead opt to handle it in house, consuming both time and resources they can’t afford to lose. This has prompted us to begin a program for Payroll Services for businesses who need it.

Start your small business Spring Cleaning with payroll services at Accounting Works.  We are offering flexible and affordable payroll solutions to save small business owners time at a competitive price! Through our platform, business owners and employees alike can log in through the website. Employers can easily view payroll periods, expenses and reports. Employees can download pay stubs and W2s.  Payroll advances, garnishments, and before and after tax deduction reports that any other full-service payroll company can provide, including:
  • Year-to-Date Reports
  • Check Register
  • Taxable Wages
  • Cash Requirements Report
  • Generate checks
  • Worker’s Comp Audits
  • Direct Deposit
For employers with 10 or fewer employees, we are offering these services for a flat fee of $155 per month, with only a small charge for any additional employees.  If you have more than 10 employees, don’t worry! We will work with you on a bulk solution to your payroll needs.

Accounting Works has been providing affordable accounting services to Small Business owners for years.  We’ve seen the need for affordable payroll solutions and we’re here to help!

Payroll Services for Small Business



Accounting Works has offered a variety of accounting services in Richmond for many years, working with many small business owners has made us realize that there are certain accounting needs not being met. I am speaking of Payroll Services.  Small to medium size businesses feel that the cost of outsourcing this service is not justifiable and instead opt to handle it in house, consuming both time and resources they can’t afford to lose. This has prompted us to begin a program for Payroll Services for businesses who need it.

Make it your New Year’s resolution to start your payroll services with Accounting Works.  We are offering flexible and affordable payroll solutions for small businesses beginning the first of the year! Through our platform, business owners and employees alike can log in through the website. Employers can easily view payroll periods, expenses and reports. Employees can download pay stubs and W2s.  Payroll advances, garnishments, and before and after tax deduction reports that any other full-service payroll company can provide, including:
  • Year-to-Date Reports
  • Check Register
  • Taxable Wages
  • Cash Requirements Report
  • Generate checks
  • Worker’s Comp Audits
  • Direct Deposit
For employers with 10 or fewer employees, we are offering these services for a flat fee of $155 per month, with only a small charge for any additional employees.  If you have more than 10 employees, don’t worry! We will work with you on a bulk solution to your payroll needs.

Accounting Works has been providing affordable accounting services to Small Business owners for years.  We’ve seen the need for affordable payroll solutions and we’re here to help!

No Tricks, Just Treats!




Now that we're all settled in, help us celebrate our new location at 122 Granite Ave!  We are inviting all of our friends, family, clients and colleagues to stop by for some grilled burgers and dogs along with craft beer and tasty homemade treats!

Tax Extension Deadline!




If you filed for an extension, Monday, October 17th is the deadline to file your Individual Tax Return (1040, 1040A, or 1040EZ) for 2015!  

October 17th is also the date for Electing Large Partnerships that have filed for an extension (Form 1065-B).


Think Ahead:
December 15th is the deadline for Corporations to make 2016 estimated payments.

For a list of all tax deadlines by quarter click here.

Wednesday, September 28, 2016

Payroll Clients of Accounting Works: Compliance Updates!



To Our Payroll Clients,

As part of your subscription to HRAdvisor, we monitor labor laws and compliance requirements. Governmental regulations have changed and may require your business to display new posters.  To get the updated posters, please log in to your payroll account and visit the Compliance Center.

To maintain your $25,000 compliance guarantee, you will need to download and post the new poster.

The compliance wizard will create one packet containing all of your updated posters. On the print screen, you can always choose not to print those posters that haven't changed since the last time you printed the posters.

Thank You!


Friday, August 19, 2016

The Advantages of Professional Payroll Services

Just like hiring an accountant to do your yearly taxes or monthly bookkeeping,  outsourcing your payroll responsibilities can save a small business owner lots of time and money!  By taking a time-consuming chore off your plate, it frees you to focus on all the other aspects of running your business. Here are just some of the reasons to consider having a professional do your payroll.



The Advantages of Outsourcing Payroll Services

Writing checks, keeping accurate records, calculating and paying payroll taxes, and communicating with your employees can be very demanding and costly, especially if you are a small business owner. Outsourcing your payroll services can reduce cost, save time, and make sure that your taxes are correctly calculated. Managing a company’s payroll is considered a big hassle even by the most experienced professionals. Outsourcing payroll is a great alternative to in-house processing and can even help you save money in the long run.

Truth be told, for very small businesses it is actually recommended that they process the payroll themselves. But, if you are a small business owner, you should take into consideration the time needed and the cost associated with in-house payroll management. Without good knowledge of the process and without access to specialized payroll software, it is very easy to make costly mistakes. For example, employees, as well as tax agencies, have to be paid on time and in full, or your business will have to pay penalties.

When to Outsource Payroll Services
Processing your company’s payroll in-house requires at least the purchase of a computer, the payroll software and the training required in order to use it. Keeping up to date on changes in personnel, salaries, or tax requirements can prove to be a real hassle, so the person or team that handles your payroll must be highly trained and professional.

If your payroll expenses are fairly stable, in-house payroll management can be done without a lot of effort. But if your payroll changes on each pay period, or if you have a lot of employees that don’t work a set amount of hours each week, then outsourcing your payroll services might be the better choice.

Benefits of Outsourcing
Payroll companies normally handle calculating each employee’s salary and taxes, printing and delivering paychecks, and supplying management reports. Additional services that a payroll company may offer are: automatic check signatures, direct deposit of checks, or issuing W-2 forms. Hiring a payroll management company can have many benefits that will make running your business a lot easier. Here are the most important:


  • Save time – Hiring a professional payroll company will free up time and employees, allowing the more important areas of your organization to benefit. Processing payroll, writing and delivering checks, calculating and paying employment taxes, preparing and delivering tax forms, and handling payroll inquiries are all very important parts of running a business, but your employees’ time can be spent more effectively by improving customer service, finding more business, or releasing a new product line.
  • Reduce costs – You must not underestimate the cost of in-house payroll processing. The time and resources spent on internal payroll management must be taken into consideration when you consider hiring a payroll company. In most cases, business owners find that, by employing a professional payroll service company, they will save money that can be used to improve other sides of their business.
  • Avoid IRS penalties – The IRS estimates that over 40 percent of small businesses in the United States pay penalties of over $800 per year. These penalties are the result of late or incorrect filing and payments. Besides being a hassle, calculating and filing payroll taxes can attract fairly large penalties if done incorrectly. Most payroll companies offer the guarantee that you won’t have to pay any penalties if you use their services. Plus, by using a payroll service, you are also guaranteed that the tax paperwork is completed and filed on time.


In Conclusion
Whether your business needs to outsource payroll services or not depends on many individual factors, and you should carefully analyze all the data before deciding to hire a professional or do your own in-house payroll management. Always exercise caution before hiring a payroll company. They will be handling a very important part of your business, so a high level of professionalism and customer service is very important. Finding and hiring a good payroll services provider will save you and your employees a lot of time and even money, allowing you to concentrate on more important parts of your business.

To view the original article, click here.

Monday, August 15, 2016

The Most Helpful Reports for Small Business Accounting

Most small business owners know that data entry - when it comes to your accounting - is important.  What's equally important is interpreting those numbers into meaningful and digestable information that can help your business thrive.  There are as many types of accounting reports as there are software tools to create them.  Here are 10 that may come in handy for you.


The 10 most helpful reports on your accounting software
By Elizabeth Gillam of myob.com

When you own a business it’s all too easy to be caught up in the day-to-day running of the business. You find yourself working in the business, not on the business.

It is tempting to stay in the comfort zone of the day-to-day rather than face the reality of the business by researching your reports.

But the only way you can truly know how your business is going is by checking your back-of-house reports to find your Key Performance Indicators. Knowing your numbers and understanding the data in your reports helps you to be a better manager — and run a better business.

Get into the habit of printing and analysing your daily, weekly and monthly reports to improve your business performance. It only takes a short time each morning, and it increases your chances of meeting your targets and budgets exponentially.

To help you out on which reports to run, let me suggest my top 10.

1. Analyse Sales report
You should run this report daily; it keeps you on your toes and details your sales history.

You have sales budgets, and it is important that you meet them. This report shows you the productivity of your sales team. It also tells you who your most important customers are — the ones who spend the most money.

Learn who these customers are to be sure you are giving them excellent customer service.

2. Sales Customer Detail report
This report shows you which customer is ordering what. This enables you to better know your customer and offer them superb customer service by suggesting other items they might like to purchase from you.

This report also enables you to set your production or ordering schedule. If you are selling items, then your stock levels need to be replenished.

3. Sales Register
This report should be done each morning to track where you are on outstanding quotes, sales in progress and finalised sales.

Your sales people value leadership, and this report allows you to have a conversation with each salesperson every morning to set their daily task list.

4. Aged Receivables Summary
Use this report to monitor your cash flow — the cash you have on hand to pay bills and run your business.

I’m sure you have terms on your invoices, and it’s important that your clients or customers don’t abuse their privileges. Each time a customer takes longer to pay their account, the more it costs you.

Make it a habit to print this report every week and ring each customer whose account is outside your terms of trade. The squeaky wheel gets the grease — make sure you are that squeaky wheel.

Want more invoicing tips? Read 6 quick fixes to improve your invoicing process.

5. Cash Flow Analysis report
This report is gold for the business owner. It will show you what cash will be coming into and out of your account over a set period of time.

If this report shows a negative, it will give you all the more reason to use the aged receivables report from above to identify those customers outside trading terms and ring them to get their money in.

6. To-Do List Receivables report
This report should be run daily. It will tell you whose account is due when.

It’s a great opportunity to ring a client when their account is due to firstly offer further sales assistance and potentially sell more product. You can also mention that their account is due.

This is a great initiative to not only build sales but also to offer superior customer service.

7. Bank Register report
Run this report daily to check to your bank statement.

It helps to identify that your sales from the day before have in fact been banked and that the right amount has been banked. The number of times I have seen money disappear from when it leaves your office until it hits the bank is mind-boggling.Finding an error the next day is always easier than trying to find it next week or next month.

8. Undeposited Funds report
This report helps you keep an eye on transactions that have been paid by the customer and receipted in your system but are yet to hit the bank.

It gives you an idea of how much cash is sitting in your store and whether it is over your insurance levels. It will also show you how much money you have waiting to be settled from credit card transactions.

9. Profit & Loss report
This is a monthly report that is essential for any businessperson to use. It shows you how much profit you have made.

Diving deep into this report will show you where your sales and expenses are coming from. Paying close attention to small improvements on every line of this report will lead to greater profitability.

Want to get a handle on the key drivers of increasing profit? Read more here.

10. Profit & Loss Report to Budget
This report compares your actual figures to those you budgeted for previously in the year.

It will show you if you are on track to reach the goals you set yourself and your business when you prepared your budgets. It helps you to run a tight ship.

Having a software system is a given in business. Using it effectively is the difference between a good businessperson and a successful businessperson.

To view the original article, click here.

Wednesday, August 10, 2016

A Quality Experience with KMI Insurance

    


In classic small business owner fashion, I realized a few weeks ago (in the middle of the night) that I needed business insurance immediately.  In fact, I needed it a while back and was playing catch up. After scrolling through client and vendor contacts, I decided to go through the Richmond Business Alliance (RBA) directory.

Bingo!  I have done business with fellow Richmond Business Alliances members before with great success.  I had also chatted with Kate of KMI Insurance at quite a few of the RBA’s monthly networking events.  I vaguely knew that she worked in the insurance field, but I mostly recalled the intelligent and full of laughs conversations that we’ve had.

In less than a week, Kate and her staff coordinated to go from first phone call to executed policy. Throughout all of this communication was excellent.  When I had a question, it was answered.  When I asked for her recommendation, she gave it and then explained it.  My needs were accommodated promptly and professionally.  I cannot recommend more highly the services of KMI Insurance.  I would also like to recognize that without our membership in the RBA that this business relationship may not have been formed.

If you have insurance needs, please give Kate a call.  I’m glad that I did.

Tuesday, August 9, 2016

Upcoming Deadlines for Small Businesses and Self-Employed



There are some upcoming tax deadlines for Small Business and those who are Self-Employed.

September 15th

  • Third Quarter estimated tax payments are due. Form 1040-ES.
  • Final day to file for Partnerships that filed with Form 1065 and for a 5-month extension.
  • Corporations that filed a 6-month extension file a calendar year Form 1120 or 1120S.
October 17th
  • Final day to file tax return for Self-Employed if you filed for a 6-month extension in April.

For a comprehensive list of deadlines visit www.tax.gov/calendar/

Friday, August 5, 2016

How We Helped Design By E



It’s no secret that we help all kinds of businesses, big or small, reach their goals and find their individual success. We have clients from all different backgrounds and we’ve learned that no client is created equal. It keeps it interesting because we are faced with a variety of unique problems to solve and we love finding great solutions for our clients' financial future.

One of our newer clients, Design By E, is no different and they offered a new kind of challenge for us. They are a small firm who specialize in creative multimedia and marketing.  Despite being small, they experienced big growth in a relatively short amount of time. They were growing at an exponential rate and needed financial direction when they sought out the services of Accounting Works Solutions.

Having been the sole proprietor of the company, the founder, Enrique Mendez, was able to create a healthy budget for himself from the start. However, the unique and valuable services offered by the company quickly gained traction throughout the small business owner community in Richmond and he was able to acquire some pretty reputable clients in a short amount of time.

In order to keep up with their gain, Enrique hired two full-time employees and needed help organizing his company's financial future quickly as his business became more complex.

When they came to us, we were we able to analyze and figure exactly where their finances stood and write down a plan for them to budget for the future. The plan included setting money aside for taxes, savings and company growth.

We reached this plan by carefully looking at their profit margins and seeing where their strength and weaknesses lie. We asked them to pay attention to those areas where they were the most profitable and maybe adjust their strategy when it came to less profitable projects.

“Accounting Works Solutions really helped us take our business to the next level,” says Enrique.  “We found ourselves so busy with work that we often forget to pay attention to our finances. Stephen was a such a big help and crucial for our future as a company.  I feel confident going forward that we’re going to continue to be profitable!”

At Accounting Works, we not only offer accounting solutions but also financial planning for growing businesses. We’re excited to have a wide portfolio of clientele and will always do our best to help our clients be at their best. If you always find that your finances are the last thing on your list to worry about, it may be in your best interest to make sure that your business is operating the most efficient way possible. We can help you achieve those goals! It can save you hundreds and maybe thousands in the long run when you talk to an expert. So give us a call today and see if you’re the best you can be!






Wednesday, August 3, 2016

We're Open!

Thanks to all of our clients for their patience during our move, we are up and running at full speed! Make your appointments today!

Tuesday, July 26, 2016

One day to one year, how to keep accounting

From Quickbooks comes an incredibly helpful guide to your daily, weekly, monthly and annual accounting tasks to keep your small business running smoothly!









Wednesday, July 20, 2016

Move Update for Our Clients



We’ve moved!

If you haven’t heard by now, we made a big move last week! It has been an exhausting process but we believe this new location will better serve our customers!

However, this move has not been without some minor issues. We’re still waiting for our internet to be fully operational in the office so in the meantime we have maintained our servers offsite. As a byproduct of this particular issue, we experienced some email interruption last week, this has been corrected and we don’t expect this issue to arise again. If you have emailed us within the last week or so and have not gotten a response from us - don’t be alarmed! We weren’t ignoring you, we just may not have gotten it. We encourage you to email us again so we can promptly get back to you.

At this time, we have limited availability for appointments and expect to be fully functional on Tuesday, June 26th. If you are one of our payroll customers, don’t worry, payroll services have not been affected by our move.

To all our other customers, we appreciate your patience in this matter and please, if you have a time sensitive issue that needs to be resolved right away, don’t hesitate in calling us!

We will keep you updated throughout our transition to our new location so keep an eye out for any email updates that may come your way!

Thank you, we appreciate your continued business.

- Stephen Fishel

You can now find us at
122 Granite Ave
Richmond, VA 23226

Thursday, July 14, 2016

We are Richmond's One-Stop Shop!



If you're a small business owner, self-employed, a freelancer or just an individual who needs help - Accounting Works provides customized solutions for your individual needs!  We are Richmond's one-stop shop for everything accounting - even payroll services!  Let us know what we can do for you!

Monday, July 11, 2016

Streamline Your Invoicing Process

From the founder of the popular online payments company, Due, comes these 6 tips to streamline invoicing for your business.  A big portion of invoicing has to do with consistency in billing, clarity on your invoices, and making your system paperless can help a lot as well!



6 Ways to Simplify Your Invoicing Process
By: John Rampton

How many times have you forgotten to send an invoice? How about having an invoice getting lost? Are you getting overwhelmed with this additional accounting task?

If you said ‘yes’ to any of those questions then it’s time for you to simplify your invoicing process. Not only will it guarantee that you’ll get paid on-time, it will also alleviate all of that additional stress that small businesses always dream accomplishing.

Sound too good to be true?

It’s not by using the following six techniques.

1. Create an Agreement

As a business owner you should already know how important agreements are. Without them, you could be greatly increasing your chances of getting stiffed. For example, if you were a contractor, you wouldn't agree to reinventing an entire office building without a contract in place prior to work. But, let’s say that you did and the job is finished. The problem? The person who hired has skipped town and is nowhere to be found. Without an agreement, there’s else you can do.

No matter what industry you’re in, you and the clients should be both agree on terms like;


  • Your hourly/project fees or how much the job is going to cost.
  • The scope of the project.
  • How long the job will take.
  • What types of payments you accept.
  • The deposit amount.
  • How long the client has to pay after the invoice has been sent.
  • The penalties or interest that incur if the invoice hasn’t been paid.

Having an agreement not only protects you and the client, it also speeds up the payment process. In fact, those with invoice terms are 1.5x more likely to get paid on time than those without.

When the clients has this information, they’re less likely to ask any further questions when they receive the invoice. It may take a little work in the beginning, but it saves you a lot of time and financial headaches when you and the clients are going back and forth.

2. Easy-to-Understand Invoices

Another delay when it comes to invoicing is when the client has questions regarding what they’re being charged because the invoice is too vague or confusing.

That’s why you should keep your invoices simple, yet detailed.

Use a clean design and layout that is easy-to-read and contains information like;


  • Your contact information.
  • Invoice number - this a touch of professionalism, it will also make it easier for both you and the client track during tax time.
  • Itemized description of your work - instead of “Wrote 10 Articles,” list each article title, when it was written, and how much each piece cost.
  • Final cost.
  • The due date.

Again, this takes a little extra work on your end, but it makes sure that the client doesn’t have any questions to ask when they review the bill.

3. Be Consistent When Sending Out Invoices

In a perfect world you would send out an invoice immediately following the completion of a project. However, that’s not always the case.

For example, you client may only do their bookkeeping one the first of each month, so it’s pointless to invoice them weekly. In other situations, you may not have the time to invoice daily - plus that makes it a mess when tracking which invoices have been paid and the ones that haven’t.

Instead, set aside a specific day and time to invoice your clients. It could be every Friday morning, every other week, or the first of each month. Whatever works best for you and your clients. This makes managing your invoices a whole lot easier and keeps the cash flowing back into your business.

Just remember though, the longer you want to invoice, the longer it takes for you to get paid. So try to invoice as frequently as possible.

4. Replace Paper-Based Systems

If you’re still using a paper-based system you’re doing yourself a huge disservice. These relics of the invoicing-world are frustrating, time-consuming, and can be easily misplaced. That’s why you need to make the move to a cloud-based invoicing system.

With online invoicing tools, you can send professional looking emails to your clients electronically. That means that they’ll pay you faster since you no longer have to use snail mail to send invoices and receive a check.

Speaking of payments, cloud-based tools allow you to accept multiple ways of getting paid, such as via credit card, direct deposit to your bank account, or third party payment gateway like PayPal.

Here’s some other awesome features that come with online invoicing software;


  • You can create estimates and quotes and then convert them into an actual invoice.
  • Set-up recurring or automated payments for recurring clients.
  • Knowing when the invoice has been paid - or even viewed in some cases.
  • Send automated reminders when an invoice is past.
  • Customize invoices by adding your logo, brand’s colors, payment terms, and personalized messages.

These tools can also be used to track your income and expenses so that you can create an accurate budget and files your taxes painlessly.

In short, cloud-based invoicing software handles all of your invoicing needs in one convenient dashboard.

5. Outsource

I understand that money can get tight when running a small business. But, we live in an interconnected world where you no longer have to rely on the local town accountant to handle all of your accounting needs.

There are now freelance accountants who can manage your books - like creating, sending, and following-up on all of your invoices. While there are great sites to find these type of freelancers, try going the word-of-mouth route first. Maybe a friend, family member, or fellow business owner can refer you to someone who can take over your books. Remember, they’re having access to important financial information, so you want to make sure that you can trust them 100%.

6. Limit the Amount of People Managing the Account

I know. I just recommend that you consider outsourcing your invoicing. The thing is, that’s still limited to just two people - you and the person you hired. By limiting the amount of people who have access to your invoices prevents any accounting issues like sending duplicates of the invoice, leaving out certain items on the invoice, or human error like not properly calculating the final amount due or taxes.

With less hands involved, the less likely you’ll run into any severe invoicing mistakes. Still need help? Here is a complete invoicing guide I put together with every step you need detailed out in a 6000 word guide!

To view the original article, click here.

Tuesday, July 5, 2016

3 Simple Reasons to Move to Online Invoicing

Lots of small business owners like a paper trail.  It is physical "security" of your payments received, your expenditures among other things.  But, in reality, what you end up with is a desk full of papers with no apparent order by the end of the month and a lot of manual data input that you don't have time for.  Making the move to online invoicing can save you lots of time and actually enhance organization.  Many platforms offer printable or emailable receipts and not only cut your time in half but get you paid faster!


3 Ways Online Invoicing Will Help Your Business
By: John Rampton

Everyone likes getting paid, that is one thing we can all agree on in the business world. Keeping track of payments and invoices can be a nightmare but staying on top of these things are key to your keeping your business alive.

Getting set up with an online invoicing platform that's sole purpose is to make these things easier is a great way for your business to stay on top of its finances.

Here are 3 reasons why Online Invoicing will help your business:

1. Save Time

Sending out manual invoices is a not only a pain but it really is a thing of the past. Don’t waste your valuable time trying to get paid. Invoicing templates are a great way to speed up the task of creating invoices. Many businesses have clients that they invoice regularly and the ability to automatically send those on a recurring basis is a huge luxury. Getting paid should be easy and fast not a headache.

2. Know who pays and more importantly who doesn’t

The whole reason you invoice in the first place is to get paid, so there is no reason you should be unaware of unpaid or overdue invoices. With platforms like due you can always stay on top of the status of your invoices. Being able to send reminders which give your client a notification can help for situations where you have to ask a deadbeat client for money. Nobody likes hearing “the checks in the mail” type of excuses and you want to ensure you are getting paid on time.

3. Get Paid More Often

Your brand is very important even when it comes to the invoicing space. You are 3x more likely to get paid if you add a company logo to your invoice. With the ability to add your logo easily, set due dates, and add specific notes you are increasing your chances of getting paid. You don’t need to be a be a design major to make a nice looking complete invoice. The more professional your invoices look the better chance you have of getting paid, and that's a fact.

Invoicing isn’t about having large stacks of unorganized papers on your desk, it's about getting payments into your client's hands. There is no excuse to be spending excess time to be less organized and less efficient. These are just three of the many reasons online invoicing will help your business.


To view the original article, click here.

Tuesday, June 28, 2016

We Are Moving!



Accounting Works Solutions is moving this week to a new address!  In the Westhampton area of RVA, near Grove & Libbie Avenues, our offices will be located at

     122 Granite Ave
     Richmond, VA 23226

We will be closed this week due to the move besides payroll services and resume normal hours next week!

Mon - Thurs: 9:00 am - 5:00 pm
Fri: Appointment Only

Please email us with any questions regarding the move!


Friday, June 17, 2016

Good Finances From The Beginning

Having a strong system in place at the inception of your small business is vital to tracking your growth and being prepared for unexpected expenses.  I've helped many small businesses put a system in place from the very beginning, which has helped them to continue growing their business and making their finance management easier than they thought it would be!



Starting A Business? Avoid the Usual Pitfalls with Good Financial Management
By Intuit

Looking to launch your own business? There’s good news for you: The small business segment is growing rapidly, and it’s a great time to start a business. According to the Small Business Administration, “While corporate America has been ‘downsizing’, the rate of small business ‘start-ups’ has grown, and the rate for small business failures has declined.”

As an entrepreneur, starting your own business is one of the most exciting times of your life. You wake up every day doing what you love. However, along with the pride and joy of having your own business also comes the often difficult (and daunting) task of managing aspects of your business that you are not an expert in. One such task is managing your finances and understanding your financial footprint. It’s a task that is often feared yet small business owners know that it’s a necessity to the survival of a business.

Small business owner, Nadine Quintero launched her own doula business, Fruits of My Labor Birth, in January of this year. She was excited to embark on her mission-driven business of helping women through the process of childbirth. However, even with 10 years of prior experience working with pregnant women, Quintero, like millions of other new business owners, is fighting against statistics: one-third of small businesses fail within the first two years because they run out of money.

At this point, you may be thinking, “How can I ensure long-term financial health for my business?”

It’s a no-brainer that financing your new business, sustaining the flow of money that comes in and goes out, and ensuring a steady stream of income is essential to the long-term survival of any business. Deeper knowledge about your finances and how to make smart business decisions as a result is also equally important. Similar to Quintero, the majority of business owners are experts on the service or product they build their business on; they’re not financial experts. According to a recent Intuit survey, only 40 percent of small business owners consider themselves financially literate, and two-thirds wish they knew more about their finances.

Good financial management is not just about knowing how much money you have in the bank. You need to understand your finances beyond balancing a checkbook and knowing what your finances indicate about the health and wellbeing of your business. Partnering with a financial expert, and integrating a financial management tool that best suits your business needs are two key decisions you should make early on. Not only should you look to integrate a financial management solution during the early stages of your company, you need to ensure that it can grow and adapt to the changing needs of your company. Once you deeply integrate a financial management platform, you don’t want to change. In fact, Intuit data found that 70% of new businesses buy accounting, payroll or HR services in the first 12 months. Only 7% of SMBs switch suppliers in a given year.

“A strong financial backbone can make or break any small business,” said Karen Peacock, senior vice president of small business at Intuit. “We’ve created QuickBooks to be that backbone, helping small business owners simplify and streamline their finances so they can focus on their customers and growing their business.”

According to a recent Intuit survey, 2 out of 3 small business customers say they’ve become more efficient since they started using QuickBooks. These businesses save an average of 6.4 hours per week on accounting activities since they started using QuickBooks.

In addition to QuickBooks, Intuit has created a number of resources to fuel small business success. Last year, the company launched the OWN IT Network, an online community of small business owners supporting each other in growing their businesses. For aspiring entrepreneurs, Intuit’s created a free tool to guide new business owners through the critical first steps on how to start a business. Finally, the Small Business Center is the ultimate guide for operating a small business, providing guidance, advice, insights and data to arm entrepreneurs with practical resources.

The most important lessons Quintero’s learned while starting her business: to learn from other people’s mistakes and to find the right experts to work with. While Fruits of My Labor hasn’t required extensive bookkeeping quite yet, Quintero is using QuickBooks to keep track of her early expenses and income and will hire an expert as her business grows. Currently, QuickBooks is providing Quintero the ability to track financial data from invoices and payments. And when she’s ready, the software will enable her to scale as her company grows, offering features that are more suitable for complex business operations and potentially even a channel for funding. Furthermore, she relies on experiences from other entrepreneurs to build a strong and successful business.

“As an early-stage business, I have a lot of decisions to make, from hiring employees to determining the best way to provide customer service to figuring out a payment model,” said Quintero. “While we’re trying to learn how to manage a business along the way, I’m comforted by the fact that QuickBooks helps solve for a fundamental part of my business.”

Intuit QuickBooks is built to fuel small business success by providing a robust ecosystem of cloud-based financial management solutions. Follow this series to learn about resources available to new and aspiring small business owners, including tips, tricks and anecdotes about financial management, aligning yourself with the right partners, and using the cloud and new tech innovations to achieve long-term success.

To view the originial article, visit Entreprenuer.com

Tuesday, June 14, 2016

Small Business Accounting Software: Use Free Software or Pay?

A big part of what Accounting Works Solutions does is help small businesses implement a user-friendly system (including software and accounting platforms) to meet with current and future accounting needs.  Whether that means invoicing, inventory cost estimation, tracking expenses, or payroll - it's important to plan for growth.  My experience is that when small businesses start from the ground up working with a professional accountant, they save time, hassle, and money.  If you get started with the correct platform right away, it can not only grow along with your needs but it can save you from having to learn an entirely new system once you've achieved your growth goals. 

How to Choose Between Free and Paid Small Business Accounting Software
By: Juan Martinez
As your company matures, it's important to determine whether or not you need a software upgrade to streamline business processes. This is particularly true in saturated industries. If dozens of reliable partners are available to meet your needs, how do you determine who to choose, how much to spend, and whether or not your choice tool is secure enough to handle your data? Perhaps no other industry creates this dilemma like the accounting software market.
With freemium, small business, and enterprise tools available, it can be difficult for small to midsize businesses (SMBs) to determine which solution is right for them. You might have the money to buy expensive software such as Cougar Mountain Denali Summit and Microsoft Dynamics GP, but do you really need all of that customization functionality and scale? Conversely, you might be able to get away with using free tools by companies such as Wave, but is the tool smart enough to handle more complex tasks?
To find out what SMBs should look for when choosing paid accounting software, I spoke with Scott Davisson, co-founder of Acclivity, provider of desktop-based small business accounting tool AccountEdge. I asked him about pricing, flexibility, security, and customer service.
1. Does Your Paid Software Do More Than the Core Four? 
Davisson said most of the free accounting tools can handle account management, expense tracking, invoicing, and sales. These are the bare minimum tasks that any tool should be able to help you accomplish, regardless of how much you're willing to pay.
"That's the core," said Davisson. "If all you need is to do that, then you're probably fine on a freemium model. As those needs get more complex…that's where you might start to evaluate your needs about what's out in the market and how much it costs."
Additional needs might arise that your freemium tool can't handle. If you need software that can handle things such as billing for time, inventory tracking and payroll, you're probably going to need to invest in a paid tool. Also, although most free tools can handle sales data, if your business has multiple departments, you might want to consider going with a more complex tool because most freemium tools won't allow you to enter sales data by department (rather, you'll need to enter the data as one lump unit).
2. How Flexible is Your Accounting Tool? 
One of the main reasons businesses select enterprise-level accounting software over lower-cost or freemium applications is that enterprise tools often provide limitless customizations that can bend and layer the software specific to each client's needs. Small business tools, such as the one provided by Acclivity, won't offer that level of complexity.
However, this doesn't mean you're stuck with what comes out of the box. Think about what third-party integrations your SMB software offers. Does it integrate with a customer relationship management (CRM) tool? Does it pull in data from your e-commerce software? If a small business accounting tool can provide you with multiple integrations and add-ons, then you might not need to spend big bucks on an enterprise-level platform.
"The software needs to be flexible enough to meet your needs," said Davisson. "But it's a tricky goal. Our software isn't for one specific type of industry. We need to have a solution that fits your needs, but we don't have that out-of-the-box customizability. We're sort of like a Swiss Army knife. Our add-ons give customers additional components that bolt onto the software to continue to make it relevant to their needs."
3. Is Your Software Secure? 
One of the main points of differentiation that you'll find between enterprise-class, SMB, and freemium accounting software is the level of security that your vendor intends to provide. If you're not paying a cent for your software, do you realistically expect Fort Knox-level security?
This is one of the reasons Davisson said his clients prefer on-premises software to cloud-based tools. "A lot of people are pulled to the cloud against their will," he said. "But they don't trust their finances in the cloud. It's about security and control."
AccountEdge is a desktop-based tool that can be expanded into the cloud with a companion app. However, Acclivity doesn't offer a cloud-only version of the tool. "Part of why we're seeing a lot of activity and interest is because, once we license the desktop software, you can put it on your own network, behind a firewall, it's yours," Davisson said. "In terms of security, that gives you the ultimate control."
This doesn't mean that cloud-based tools are inherently less secure than desktop apps. For example, Intuit QuickBooks Online Plus stores data on firewall-protected servers where the data is encrypted. When your data leaves the web browser, it's transmitted over Secure Sockets Layer (SSL) encryption technology. Intuit also lets administrators limit who can access specific types of data inside the tool should they decide to make certain information available to executive-level employees only.
4. Customer Service 
This one should be a no-brainer. The more competitive a market becomes, the more important customer service has to be. Can you reach your accounting software vendor if and when something isn't properly working? Can you reach them on the medium of your choice or do they force you to pick a specific communication platform? Are the service representatives speaking your language or did the vendor outsource its help desk team?
These are incredibly important questions you should ask each of your prospective vendors. It's highly likely that enterprise-level accounting software will offer 24/7 support, especially if you're willing to make five-figure annual payments or more. However, if you're trying to choose among a list of freemium and paid SMB tools, you'll want to closely investigate your service options.
To view the original article, click here.

Wednesday, June 8, 2016

How to Maximize Your Refund!

From Fox Business, comes great advice on how to maximize your return! That is - if you haven't already spent it somewhere else...!



5 Simple Steps to Triple The Value of Your Tax Refund
By: Chuck Saletta

According to the IRS, the average refund taxpayers received during the 2016 filing season was $2,732. That's a substantial chunk of change, but what if I told you that you could take that money and potentially triple its value for you by the end of this year?


Indeed, you can turn that average refund into over $8,000 toward your retirement by the end of this year, with absolutely no impact to your lifestyle. All you need to do is follow these five simple steps.

Step 1: Contribute your refund check to your IRA
For 2016, if you or your spouse are working, you can potentially contribute up to $5,500 each to either a Roth IRA or a Traditional IRA. If you're age 50 or up, that potential contribution increases to $6,500.


  • Your taxable compensation for the year, if your compensation was less than this dollar limit.


A refund check of $2,732 fits easily within those limits, which makes it a straightforward way to turn your tax refund into money for your retirement.

Step 2: Increase your contributions to your traditional 401(k) or equivalent plan at work
Your tax refund isn't a gift from the Government. It's the return to you of an interest-free loan you handed Uncle Sam during the year by over-withholding your taxes. Take that money back and put it to productive use for yourself. You can contribute pre-tax money to your traditional 401(k) and get not only your money working for you but also money Uncle Sam would have otherwise taxed from you.

To fully make use of your refund check, increase your 401(k) contributions by enough to make up for both the refund itself and the tax you won't be paying on the contributed income. The basic math is Refund / (1-marginal tax bracket). If you're in the 25% tax bracket and got that typical refund, that would turn into $2,732 / (1-0.25) = $3,642.67.

Step 3: Adjust your withholding at work to get it closer to break even
In step 2, you invested the money that you had over paid Uncle Sam, but in doing so, you did decrease your take home paycheck. Key to making this plan neutral to your everyday lifestyle is to decrease the amount Uncle Sam withholds every paycheck. Using IRS Form W-4 or your employer's substitute, you can adjust your withholdings to make it so you won't be making another large interest free loan to Uncle Sam this year.

When you're making this adjustment, your objective should be to get close to break even when it comes time to filing your taxes next year. If you reduce your withholdings too much, you could have to pay underpayment penalties on top of any taxes you owe. The key is to be within one of the IRS' "Safe Harbor" limits. For 2016, the key Safe Harbor limits are:


  • If you owe less than $1,000 in taxes for 2016 when it comes time to file in 2017
  • You've paid at least 90% of what you owe for 2016 (66 and 2/3% for farmers and fishermen)
  • You've withheld or paid via timely estimated tax payments at least 100% of what you owed for 2015 (110% if your income in 2015 was above $150,000 or if it's above $75,000 and your filing status is "married filing separately")


Step 4: Thank your employer for its 401(k) match
Many employers offer a match to encourage employees to contribute money toward their own retirement. Matches vary by company, but a common practice is a $0.50 match for every $1.00 the employee contributes, up to some percentage of salary. On that $3,642.67 contribution you made in step 2, a 50% match would be an additional $1,821.33, contributed into your retirement account, on your behalf.

Step 5: Count your cash
Your $2,732 IRA contribution from your refund check plus your $3,642.67 contribution to your 401(k) plus your employer's match of $1,821.33 brings your total to $8,196. That's triple your original refund amount, now working on your behalf to help fund your retirement.

Perhaps best of all, you just figured out how to save that $8,196 with no impact to your everyday lifestyle. Every penny of that money came straight from your tax refund this year, from the money that would otherwise have been a tax refund next year, and/or from your employer's matching program.

How often can you come up with $8,000 that easily?
As fun as it might be to hold that $2,732 refund check, wouldn't it be even more fun to see it turn into more than $8,000 this year? On top of that, once you've taken these five steps, that $8,196 will be in your retirement accounts, where it can grow tax-deferred on your behalf for the rest of your career.

That's an amazing opportunity available to you simply by choosing to no longer offer Uncle Sam an interest free loan, instead putting that very same stack of your own money to work for you. So get started today, and turn that tax refund into the foundation for your financial future.


To see the original article, click here.