The Importance Of Professional Accountants

To File Or Not To File — 3 Steps To Know If You Can Skip Taxes This Year

Posted by on Jan 13, 2017 in Uncategorized | Comments Off on To File Or Not To File — 3 Steps To Know If You Can Skip Taxes This Year

As tax season arrives, there can be a lot of questions in people’s minds. If your income situation has changed since last year, you may even wonder if you need to file federal income taxes at all. To help answer this question, here is a handy guide to deciding.

Who Could Be Affected?

Since the vast majority of U.S. citizens and residents must file taxes each year, it can seem strange to contemplate not doing so. But, there are a number of situations in which you can legitimately skip it for a year or more. For example, if you find yourself in any of the following situations:

  • Full-time students earning little money
  • Temporarily unemployed workers, with or without benefits
  • Seasonal workers
  • Retired workers
  • Self-employed persons with a new business or a business loss
  • Stay-at-home single parents

Are You Required to File? 

If you may fit into one of these categories or a similar situation, the first question to answer is whether you are obligated to file taxes. Generally, you must file if you have reached one of two income thresholds: For employees, this threshold is $10,350 for single filers and $20,700 for married filers. Other taxpayers may have a slightly different threshold. For self-employed persons, the threshold is much lower: $400 of self-employment income, regardless of receiving a Form 1099 or not.

Add up your total income and determine if you must file based on these numbers. If not, determine if you must file due to being subject to any special circumstances. For example, if you received federal assistance paying premiums through the health insurance marketplace, you must reconcile these payments through filing. Other situations may include receiving an IRA or Health Savings Account distribution.

Should You File? 

Even if you aren’t required to file taxes, you may benefit from doing so. There are several refundable credits that you may benefit from, including the following:

If you may qualify for any of these credits, it’s a good idea to claim them. In addition, you will likely want to file taxes to request a refund of any income taxes that were withheld from your paycheck or Social Security payments.

If you’re still unsure if you should be filing federal or state income taxes, it may be a good idea to consult with a qualified accountant like Alexander & Associates CPA.

How Parents Can Save Money And Reduce Their Income Tax Obligation

Posted by on Dec 16, 2016 in Uncategorized | Comments Off on How Parents Can Save Money And Reduce Their Income Tax Obligation

Parent’s know that the expenses associated with raising a child quickly add up. By the time a child is 18, parents can expect to spend anywhere from $145,500 to $455,000, a range that doesn’t include the cost of college. Get ahead of your expenses by utilizing some of the tax benefits specifically designed for parents.

Contribute to a Tax Advantaged 529 College Savings Account

One of the most significant expenditures a parent will have is college tuition. A 529 college savings plan helps parents save for this huge expense. Though parents do not get a tax break on the contributions themselves, they do not have to pay taxes on the earnings, as long as the earnings are used for qualified educational expenses.

This means that a 529 plan can possibly offer decades of tax free growth for your college savings. Other savings vehicles require that you pay taxes on the earnings (such as taxable investing accounts).

Some states do offer tax payers a tax deduction or credit for 529 contributions, permitting tax payers to decrease their state income tax obligation.

Reduce the Cost of Your Childcare Expenses

Childcare expenses is another significant cost that parents face. There are a few ways that parents can use the cost of daycare to save on their taxes.

Some parents have access to a dependent care flexible spending account (FSA). A dependent care FSA may be offered by the parent’s employer. The dependent care FSA lets parents set aside pretax contributions that they can use to help pay for daycare, after school care, and summer child care. Parents do not pay income taxes on the money that they contribute to the FSA.

Parents can contribute up to $5,000 a year to their FSA. The contributions must be used for child care in the same plan year that you contribute the funds.

If your employer does not offer an FSA, you can still save money on your child’s daycare expenses by claiming the child and dependent care credit. The amount of the credit you are qualified to take varies based on your income and the number of children you are claiming the credit for.

To take the child and dependent care credit, you must pay someone other than the child’s parent to care for their child. The childcare provider or daycare must report the income on their taxes for you to be eligible to claim the credit. It is a requirement that you use the childcare to either work or look for employment.

Accounting Mistakes That Will Give Bloggers a Headache at Tax Time

Posted by on Nov 8, 2016 in Uncategorized | Comments Off on Accounting Mistakes That Will Give Bloggers a Headache at Tax Time

You may have started writing your blog because of a passion you have, but, if you’ve started making money with it, tax time can be somewhat stressful. As someone who isn’t used to running a business, you are likely to be making the following accounting mistakes because you don’t realize how your actions can affect you when it’s time to do your taxes at the end of the year.

Not Separating Out Business Income and Expenses

An easy mistake many beginner bloggers make is that they keep all their expenses and income in one or two personal accounts. The same debit card you use for groceries might be the same one you use to pay for your e-commerce plugins and your hosting fees. This can lead to a huge headache when it comes to your taxes because looking at pages and pages of bank documents from the past year to attempt to find specific business-related expenses or deposits can be time consuming.

Instead, set up a completely separate account for your blogging business. Have deposits go straight there and when you make any purchase regarding your blog, use the money from that account only. When you or your accountant finally gets to the taxes, it will be much easier to work with the numbers.

Not Holding on to Your Receipts

Another mistake bloggers make is that they don’t always hold on to relevant receipts. You might not have expected to make money from your blog when you first started out, but it’s important to realize that receipts can help you prove purchases and may help you prove other deductions. Keeping computer receipts, printer ink receipts, event receipts, and fuel receipts from your trip to someone you interviewed is smart.

It’s also wise not to put all your receipts inside a shoebox. Sort them according to category and place them neatly in a pile using binder clips. If you’re uncomfortable with receipts of all different sizes, you might also want to scan them into your laptop or computer. Save the images on a pen drive so you can always be sure that they’re available and not lost.

These two mistakes can cause a great deal of stress when it’s time to complete your taxes; use the advice here to alleviate your stress. Ask a small business accountant like Teri J Henderson, CPA, P.A. if there are additional things you can do to make tax time easier.

Does Your Home Business Need A Financial Consultant?

Posted by on Oct 31, 2016 in Uncategorized | Comments Off on Does Your Home Business Need A Financial Consultant?

If you have a small home business, you may be eager to keep as much of your income in your pocket as possible. However, there are a couple of reasons why hiring a bookkeeper or small business accounting team can be beneficial for even the smallest businesses. Here are some reasons to look into a small business accounting service.

Helps You Focus Your Time

As a new business owner, it’s important to be able to focus a lot of your time on creating more revenue and expanding your business’ reach. Things like doing payroll or keeping track of your expenses and financial reports are the grunt work that can take time and headspace away from more important tasks. By hiring a professional to do those tasks, you keep your attention where it’s really needed.

One Less Thing to Learn

Running a home business is difficult, and there are certainly subjects that you’ll need to learn more about. If you hire a small business accounting or bookkeeping service, you can keep things like the intricacies of business tax laws off of your list for the time being.

A Good Example for the Future

If you don’t have a lot of financial experience in your past, hiring a bookkeeper or small business accounting specialist can be a great educational investment. They might be able to give you pointers on how to create an organized management system going forward. You’ll get back plenty of examples of professionally done invoices, tax returns, and other financial documents that you can use as a reference going forward.

Ensure You’re Doing Things Correctly

Errors can be costly for a new business. If you’re not invoicing your clients correctly, they might think that you are unprofessional. If you make a mistake on your taxes, the IRS might come knocking at your door. If you hire a bookkeeper to primarily put these services together, then you can guarantee that it’s done well and is compliant with your state’s laws. Until you get your financial legs under your business, it’s important to spend the extra money to make sure that you’re not creating costly errors that could put you out of business.

Now you know the why of hiring a financial consultant, but you may not be sure of the how. There are many companies that cater to small business accounting, and they can work on a consulting or as-needed basis. This way, if you feel comfortable taking on certain tasks on your own, you only need to outsource the things that you really need help with.

Does Your Home Business Need A Financial Consultant?

Posted by on Oct 31, 2016 in Uncategorized | Comments Off on Does Your Home Business Need A Financial Consultant?

If you have a small home business, you may be eager to keep as much of your income in your pocket as possible. However, there are a couple of reasons why hiring a bookkeeper or small business accounting team can be beneficial for even the smallest businesses. Here are some reasons to look into a small business accounting service.

Helps You Focus Your Time

As a new business owner, it’s important to be able to focus a lot of your time on creating more revenue and expanding your business’ reach. Things like doing payroll or keeping track of your expenses and financial reports are the grunt work that can take time and headspace away from more important tasks. By hiring a professional to do those tasks, you keep your attention where it’s really needed.

One Less Thing to Learn

Running a home business is difficult, and there are certainly subjects that you’ll need to learn more about. If you hire a small business accounting or bookkeeping service, you can keep things like the intricacies of business tax laws off of your list for the time being.

A Good Example for the Future

If you don’t have a lot of financial experience in your past, hiring a bookkeeper or small business accounting specialist can be a great educational investment. They might be able to give you pointers on how to create an organized management system going forward. You’ll get back plenty of examples of professionally done invoices, tax returns, and other financial documents that you can use as a reference going forward.

Ensure You’re Doing Things Correctly

Errors can be costly for a new business. If you’re not invoicing your clients correctly, they might think that you are unprofessional. If you make a mistake on your taxes, the IRS might come knocking at your door. If you hire a bookkeeper to primarily put these services together, then you can guarantee that it’s done well and is compliant with your state’s laws. Until you get your financial legs under your business, it’s important to spend the extra money to make sure that you’re not creating costly errors that could put you out of business.

Now you know the why of hiring a financial consultant, but you may not be sure of the how. There are many companies that cater to small business accounting, and they can work on a consulting or as-needed basis. This way, if you feel comfortable taking on certain tasks on your own, you only need to outsource the things that you really need help with.

How To Save Time When Managing Your Small Business Finances

Posted by on Sep 29, 2016 in Uncategorized | Comments Off on How To Save Time When Managing Your Small Business Finances

Keeping an eye on your finances is key to a successful business, but it may not be your forte if you come from another background. There are some strategies that you can take to both have a strong handle on your finances and save most of your time for other tasks. 

Let a Specialist Do the Work

First of all, there are several reasons to have a finance person who is designated to do most of the legwork. It will cut down on the hours you spend doing finances yourself. It can also help to ensure that your finances are done carefully; it’s your finance specialist’s job to put time and effort into entering data correctly and catching mistakes before they cost your business time and money. 

As far as who to hire, there are a few options. The first would be an accountant. You might not need to have a full-time accountant if you are a small business, so consider hiring an accounting firm who you can give access to your financial data. A bookkeeper is another valuable asset for handling the administrative side of managing finances. 

Use Management Reporting

If you are having another person do a lot of the work on your finances, it’s crucial to have strong management reports so that you are aware of the financial situation at all times. Good management reports will give you an idea of what your accounts look like today, and what they are projected to look like in the next week, month, or even year. 

You don’t have to spend a lot of money on management reports, either. There are ways that an accountant can pull up simple reports using accounting software, without a lot of manual labor. But you could also set up more complicated management reports that measure some metrics that are standard in your industry. 

Work On Your Filing System

Finally, a lot of time and effort can be saved with a great bookkeeping system. If you haven’t done so yet, get a bookkeeper to audit your current system to see if there’s anything you could do better. They will start by looking at your past years’ records to make sure that they are complete and easy to access. They may provide you with some better standards for organizing the information so that the numbers are easy to find and the receipts are in the correct spot. 

Exposing a Few Common Myths Concerning Managing Your Business’s Finances

Posted by on Aug 19, 2016 in Uncategorized | Comments Off on Exposing a Few Common Myths Concerning Managing Your Business’s Finances

Managing the financial aspects of running a business can seem like a daunting and overwhelming task for anyone to do. This can be particularly true during tax season. Unfortunately, there are some individuals that may make the mistake of assuming that some common misconceptions about this aspect of managing a business are true. By learning the reality about the following financial myths, you will find yourself in a far better position to make sound choices for your needs.

Myth: It Is Too Expensive to Hire an Accounting Firm for Your Business

There are many business leaders that may be under the impression that it will be too costly to hire an accounting firm. This can be particularly true of those that are managing small or startup companies. However, it should be noted that an accounting firm may actually end up saving your company money. This is due to their ability to accurately keep track of your business’s expenses so that the proper tax deductions can be claimed. Also, these firms can provide financial guidance when it comes to lowering your tax burden. When you consider these potential savings, the small fee charged by these services may seem insignificant.

Myth: You Will Always Have to Pay the Entire Balance of Your Tax Burden at Once

Over the course of a year, it is possible for your business to generate a substantial amount of tax debt. Unfortunately, there are some enterprise leaders that may attempt to avoid paying these taxes for fear of having to pay them all at once. Fortunately, it is usually possible to work out a payment plan with the various tax agencies. While these payment plans will usually entail penalties and other fees, they can be essential for ensuring that your business is able to meet its tax debt without compromising its ability to function. By consulting with an experienced accountant, you will be able to determine whether a payment plan would be a viable option for your company’s needs.

Managing the finances and tax obligations of your business can be one of the more challenging aspects of owning a business. However, this challenging task can be made much harder by giving credit to frequently believed myths and misconceptions. By understanding that accounting firms such as Herman & Cormany may help to save your business money on its taxes and that it is possible to make payment arrangements for tax burdens, you will be better able to efficiently manage your business’s finances.

Black Gold, Not Fool’s Gold: 6 Financial Tips for Oil-Field Workers

Posted by on Jul 25, 2016 in Uncategorized | Comments Off on Black Gold, Not Fool’s Gold: 6 Financial Tips for Oil-Field Workers

The oil industry—or its support industries—can be a “boom or bust” line of work. When times are good, an oil-field worker can bring in as much as six figures annually. But when the price of oil drops or other outside forces push costs up, workers can be laid off in a heartbeat.

If you’re starting work in the oil fields, then it’s important to follow a few guidelines for maintaining a healthy financial life even in these volatile times. Here are six valuable tips for any new oil-field worker.

Think Twice About Debt. When you’re earning a fat paycheck, buying assets on credit—things like shiny new trucks, houses, cool home theater systems or fun off-road vehicles—doesn’t seem like a bad idea. But what do you do when your earnings drop below your debt payments? The result of taking on too much debt can be harassing phone calls, rising interest costs, garnishment, or even bankruptcy.

Automate What You Can. One of the best ways to ensure your finances stay healthy while you work long hours far from home is to automate as much as you can. Set up automatic payments of any debt, utilities, and housing costs possible so you never miss a payment. You should also have a portion of your paycheck deposited directly into designated savings and retirement accounts.

Live on the Same Amount. While some expenses go up and down each month, the majority of your monthly costs to live and work should remain relatively similar. Once you figure out this basic number, try to live on the same amount of money each month regardless of whether your income goes up or down. By making your costs more equalized, you should be able to save up extra for lean times.

Make Sure You’re Covered. It can be easy for young, healthy workers to believe they will never suffer an accident, bad health, or other emergency. But this happens even to the best of people, so be sure to plan ahead for emergencies. This includes purchasing health insurance, life insurance (if you have a family to care for), taking advantage of Health Savings Accounts and having an emergency fund (often three to six months’ worth of expenses) sitting in the bank.

Don’t Keep Up with the Next Guy. It’s easy to fall into the trap of trying to live like the guys around you, especially given your day-in, day-out proximity. But many of those other employees are heavily in debt and facing an uncertain future. Others who may be in a better financial situation often got there by learning how to manage their money in earlier years. Avoid living like one of the former people and ask the advice of those who are in the latter group. Learn from others’ mistakes, and try not to repeat them.

Get Some Help. Meet with a financial professional on a regular basis, or at least once a year, to see how you can make better use of your money. This may include an accountant who can help you learn how to reduce your tax bill (which can be quite high for a young, single high-earner). Or you may want to consult with a financial planner who can help you look at long-term goals instead of just day-to-day expenses. Alternatively, you might want to include both accounting and financial-planning professionals on your team. Asking for help from pros is a great way to ensure that you feel more confident and in control of your fluctuating paychecks. 

By following these few steps, you can set yourself on a brighter financial path that will undoubtedly lead to less stress and the ability to enjoy your job and your free time more.  

3 Attributes To Look For In The Most Qualified Small Business Consultatnt

Posted by on Jul 22, 2016 in Uncategorized | Comments Off on 3 Attributes To Look For In The Most Qualified Small Business Consultatnt

Even though your business is small, it definitely does not mean that guidance will not be important. You may think that you have a good understanding and plan for the future growth of your business, but just a few consultations with a business consultant can help bring an extra layer of knowledge and insight to the table. A business consultant can help your small business with everything from developing a working business model to helping you map out expenses. In your search for the best business consultant for your small business, there are a few attributes to look for to ensure you get the most fitting individual or firm. 

Look for a consultant who specializes in small businesses.

While business consultants and business consulting firms may be easy to find, not all of them have experience with small businesses and this is definitely one attribute you should be looking for in a consultant. Even though many principles and ideas are the same no matter the size of the business, there are always a few added concerns that come along with being a small business owner. For example, you need a business consultant who understands the financial risks for a small business that can come along when accounting attempts are just slightly off.

Find a business consultant who is familiar with your type of business.

You would not go out seeking advice from a food marketing expert if you owned a hardware store. Likewise, you should find a business consultant who has an inherent understanding and knowledge base when it comes to the type of small business you operate. All small business consultants have their own skill sets and much of that comes from their experience with previous clients. It is always best to look for a consultant who knows a lot about the specific type of business you have, whether it is a small retail business or otherwise.

Seek out a small business consultant who offers an array of services. 

In a small business, the more often you can get more bang for your buck, the better off you will be, and the same rings true when searching for a small business consultant. These professionals can offer services ranging from accounting and financial consulting to helping you to develop your marketing plan or even implementing inventory control solutions. The bottom line is, the more services one consultant or firm has the capability of offering you as their client, the more beneficial their services will be in the long run. 

Avoid These Accounting Faux Pas For New Businesses

Posted by on Jul 4, 2016 in Uncategorized | Comments Off on Avoid These Accounting Faux Pas For New Businesses

When you’re starting out as a new business, there are a lot of things that you must do to learn the ropes of small business accounting. Here are some of the common mistakes that new business owners can make in their finances. 

Mixing Up Personal and Business

As soon as you become a business owner, it’s crucial to learn how to manage business accounts since it can be a bit different from managing your own personal transactions. The biggest no-no that you can make is keeping the same account for both business and personal affairs. This can cause a huge headache when tax time rolls around, since you’ll have to be careful about noting which expenses belong to your business and which are personal. It’s best to set up a separate account and to have strict rules around record keeping for your business accounts. 

Losing Sight of Cash Flow

While you’re out chasing a steady profit, it can be easy to lose sight of other financial indicators, like cash flow. You wouldn’t want to run into an issue where you have the money to pay off your subcontractors, just not “right now.” Getting the right cash flow strategy depends on how you set up your ins and outs each month in your accounts. For instance, make sure that you’re consistently paying your bills at a time when most of your clients have finished processing their invoices and sent you a check. An accountant can help you by delivering management reports that show how your finances ebb and flow through the course of a standard month. 

Giving One Person Too Much Power

Another thing that you can do wrong, especially when you have a small staff, is give a single employee too much access and control over your finances. If you have only one financial employee, for instance, they may have their hands on your account information and your payroll, as well as your taxes. While you hope to trust each employee you hire, the bottom line is that they are only human; leaving all of your financial transactions to one person who may make mistakes can cost a new business dearly.

At the least, make sure that you’re reviewing transactions on a regular basis and that you approve any major transactions ahead of time. Outsourcing your accounting management to a small business accounting firm is even better, since you’ll have a third party check to make sure that everything is done correctly. Contact a company like Homer Wilson & Co Ltd to learn more.