Bean Counter Bookkeeping

Are you thinking of showing your employees how much they mean to you and your business?  But then decide not to because of the hassle of those pesky taxes? 

According to Publication 15b from the IRS it is allright to show a random act of kindness once in a while.   According to the IRS you can give a De Minimus benefit to an employee and exclude it from their employee wages and have it be a tax deduction.  The catch?  The gift has to be of so little value that it would be too much work for you sweet bookkeeper to track.  Here are some examples:

• Holiday Gift, other than cash, with a low fair market value
• A meal here and there (go ahead - treat them to lunch)
• Occasional parties or picnics
• Occasional tickets to theater or sporting events.

Hope that gets your creative gift giving juices flowing and show those employees how great they are!

P.S.  If you choose to go the Gift Card route keep it under $25 and you will be good to go.

In case you didn't read your insert that came in the mail with your Quarterly Unemployment letter this quarter I thought I would summarize it for all effected Arizona companies who have employees.

Arizona borrowed money from the Federal Goverment to cover their depleted unemployement trust funds and the Feds want their money back. On July 20 House Bill 2619 will go into effect imposing a Special Assessment (SA) on all employers who are subject to Arizona Unemployement Income Tax. This Payment will be due on October 31, 2011 for the first 3 quarters of 2011.

It is projected that the SA Rate will be .40% of taxable wages (first $7k of wages to all employees) paid in 2011. It will increase to .60% for taxable wages in 2012.

You will be receiving a statement from DES for the amount you owe for the first two quarters in the mail - you can submit that payment with your 3rd quarter return.

If you have any questions or want to read more about it you can visit the Arizona Department of Economic Security website.

   I am all about keeping files and offices organized.  What better way to do that then to purge all those receipts and invoices taking up space?  Unfortunatley, the IRS sees it differently.  

Some docs are important to keep - rule of thumb - 7 years. 

Although some documents — such as records relating to a home purchase or sale, stock transactions, IRA and business or rental property — should be kept longer.  

In most cases, the IRS does not require you to keep records in any special manner. Generally speaking, however, you should keep any and all documents that may have an impact on your federal tax return.

Records you should keep include bills, credit card and other receipts, invoices, mileage logs, canceled, imaged or substitute checks, proofs of payment, and any other records to support deductions or credits you claim on your return.

For more information on what kinds of records to keep, see IRS Publication 552, Recordkeeping for Individuals, which is available on the IRS website at http/www.irs.gov or by calling 800-TAX-FORM (800-829-3676).

   My best advice:  Get a good bankers box (or 2) for each tax year.  Clean out all your files for the previous year and store them in the box with the outside clearly labeled.  Note on the box when the 7 years are up and purge them paperwork then. 

   This method will keep your current working folders clutter free and your old stuff more managable!

Do you know that big, ugly, Labor Law Poster you have hanging in the employee lounge and never think twice about?  That beautiful poster can cost you a fine up to $17,000 (yes, you read right) if it is not kept current.

  *Failure to comply with federal posting regulations can result in fines of up to $17,000 per customer location (29 USC Sec. 666(i) and 29 USC Sec. 2005). *

Read more about it Labor Law Posters Here.

Looking to purchase one?  Office Supply stores carry them and you can also order them directly from https://intuitmarket.intuit.com/cp/laborlawchanges.aspx?track=52697&src=compliancestatechanges" target="_blank">Intuit by phone.

Just when you think you have all your bases covered!! 

~ Elizabeth

Family Business

Whether or not your business is home-based, there are certain tax advantages to employing one (or more) of your children. If you operate a sole proprietorship (or partnership with the other parent of the child) and as long as your child is under the age of 18, payments for their services are not subject to social security or Medicare tax withholding. If your child is under the age of 21, payments are not subject to FUTA (Federal Unemployment Tax Act) tax withholding.

This is an excellent tax savings tool!

~Hope 2011 is off to a prosperous start!

With the coming of cool weather brings the countdown to the end of the year.  For small business owners it is the perfect time to really take a look at how your company has been performing during the year because you still have time to make some changes.  By reviewing your financial statements you can obtain some great information.  

Looking at your Balance Sheet (a snapshot from a point in time) you can determine how your assets are distributed and how much money you have out as a liability. 

• How is your bank balance?  Is it sufficient to pay your current bills?
• What is your Accounts Receivable balance?  Should you be putting pressure on those non-paying customers?  Perhaps you can set-up payment plans?
• Is your inventory too high?  Have you done a physical count?
• Have you purchased any new Equipment, Furniture, Fixtures?  Are they categorized as Fixed Assets? 
• Have you invested in anything (Land, Stocks, etc?)  Have they been recorded?
• Who do you owe money to?  Are your current assets less then your current liabilities? 
• Can you set-up a payment plan to get rid of some debt?

Looking at your Profit & Loss Statement you can determine how much Income you are bringing in and were it is being spent.

• Have your sales increased or decreased from last year?
• Is your pricing consistent with industry standards?
• Is your Gross Profit were you need it to be?
• What is your biggest expense?
• Can you cut costs anywhere?
• Finally, what is your Net Income (Loss)? 

Financial Statements are great tools to use.  If you currently use an Accountant or Bookkeeper as them to review your reports with you today.

~Elizabeth

For the past four years I have utilized Remote Access programs like PC Webex Now to get to my clients computer without leaving my office.  Just this past year I have begun using the Remote Access feature through QuickBooks and I really like it.  Here's why:

• The client has the option of giving me full access to their computer or just allowing me to access the QuickBooks program. 
• It is priced on the lower end of the Remote Access Programs (Starts at $3.95/mo)
• I can print directly from the remote computer to mine
• It is not complicated to set-up

Follow this link for more information http://quickbooks.intuit.com/product/add_ons/remote_access.jsp or just contact me and I can walk you through it.

~Elizabeth

Are you opening a new business this summer? The IRS has many resources available for individuals that are opening a new business. Here are six tax tips the IRS wants new business owners to know.

1.  First, you must decide what type of business entity you are going to establish. The type of business entity will determine which tax form you have to file. The most common types of business are the sole proprietorship, partnership, corporation and S corporation.
2. The type of business you operate determines what taxes you must pay and how you pay them. The four general types of business taxes are income tax, self-employment tax, employment tax and excise tax.
3. An Employer Identification Number is used to identify a business entity. Generally, businesses need an EIN. Visit IRS.gov for more information about whether you will need an EIN. You can also apply for an EIN online at IRS.gov.
4. Good records will help you ensure successful operation of your new business. You may choose any recordkeeping system suited to your business that clearly shows your income and expenses. Except in a few cases, the law does not require any special kind of records. However, the business you are in affects the type of records you need to keep for federal tax purposes.
5. Every business taxpayer must figure taxable income on an annual accounting period called a tax year. The calendar year and the fiscal year are the most common tax years used.
6. Each taxpayer must also use a consistent accounting method, which is a set of rules for determining when to report income and expenses. The most commonly used accounting methods are the cash method and an accrual method. Under the cash method, you generally report income in the tax year you receive it and deduct expenses in the tax year you pay them. Under an accrual method, you generally report income in the tax year you earn it and deduct expenses in the tax year you incur them.

IRS Publication 583, Starting a Business and Keeping Records, provides basic federal tax information for people who are starting a business. This publication is available on www.IRS.gov or by calling 800-TAX-FORM (800-829-3676).

Visit the Business section of www.IRS.gov for resources to assist entrepreneurs with starting and operating a new business.

Are you a small business owner in Arizona?  There has been a big tax change in the way State Withholding is calculated.  If you recall the old A-4 form had percentages to choose from like 21% or 32.5%.  Now the numbers are much lower.

Here is how it works: Prior to July 1, 2010 the state witholding tax was a percentage of your Federal Withholding.  So if you checked the box 32.5% then that percentage was multiplied by the amount of Federal Withholding taken out of your check to arrive at your State Withholding. 

Now, the percentage you choose will be directly multiplied by your Gross Wages.  For example:  If you make $1000 a week and you check the box 5.1% as your withholding then your State Withholding for you weekly paycheck will be $51 ($1000 x 5.1%). 

It is super easy now to figure out how much you will be putting in for the year.  I like it

~Elizabeth

For more information or forms visit www.aztaxes.gov

Most business purchases can be made using a Debit Card that is linked to your Business checking account in lieu of writing that check out.   The trick is getting those items recorded in your QuickBooks check register so your account balances. 

One way to ensure the transactions are recorded is to use the feature that downloads all of your bank transactions into QuickBooks ~ but that is a topic for another post.

If you are still entering each transaction seperately - which I still tend to do for most clients- you will want to record Debit and (online payments) this way:

• From the Home Screen click on WRITE CHECKS
• Select the bank account you made the payment out of
• In the "Number" space you can leave it blank or type "debit" or "online"
• Enter date of transaction
• Enter the name of where you made the purchase
• Enter the amount
• Under the Account section choose the category (expense/Fixed Asset) the purchase related to
• Then choose Save and Close (or Save and New if you have more to enter)

Now those receipts are recorded in your check register.

As always I love questions and comments and am availabe for "Quick Phone Consulting" staring at just $30 for 1/2 hour.

Happy Recording