Safeguard Tax Returns

IRS - Disaster PlanningSome natural disasters are more common in the summer. But major events like hurricanes, tornadoes and fires can strike any time. It’s a good idea to plan for what to do in case of a disaster. You can help make your recovery easier by keeping your tax and financial records safe. Here are some basic steps you can take now to prepare: [Read more…]

Track Mileage in QuickBooks

QuickBooks makes it really easy to track mileage for your vehicles.

Once the company file is open, go to Company -> Entire Vehicle Mileage.

2.21_Mileage1

The vehicle menu allows you to choose or add a new vehicle. The trip start and end dates choose when the job is starting and finishing. Typically, this will be on the same day. The total miles are automatically calculated by the difference between the odometer start and end values. The customer job, item, and class associates the total miles with a customer, job, or class. The billable button allows you to decide if you want to bill the client for those miles.

A report can be created to show the total miles during a certain period by going to Reports -> Jobs, Time & Mileage -> Mileage by Vehicle Detail.

2.21_Mileage2The current mileage rates selected in this picture are the 2013 standard mileage rates but you can bill your customers at a higher rate if you desire. Since the IRS and customers like to have a record of miles, QuickBooks makes it easy to keep track of this documentation.

All About Taxes on Gambling Winnings

Here are some important things to remember regarding your gambling winnings —

1. It’s taxable.  All of it.  Your gambling winnings could be from things like lotteries, raffles, horse races, and of course, from casinos.  It includes cash and the fair market value of prizes like cars and trips.  Report it on the “other income” line on your 1040.

2. The losses are NOT fully deductible.  I know…bummer.  You can only claim the losses up to the amount of your winnings.  You can report your losses on Schedule A under “other miscellaneous deductions”.  Don’t reduce your winnings by your losses, you need to report your winnings in full and your losses up to the amount of your winnings.

3. You may receive a W-2G for your winnings.  If you win over a certain limit, then the payer is required to give you a W-2G.  Check your W-2G to see if any tax was withheld and make sure you include that on your return.

4. KEEP GOOD RECORDS! Especially if you are going to claim some losses.  You need to have receipts, tickets, or other documentation like a diary that records your losses and winnings.  Take a look at Publication 529 for what type of info you should keep track of.   Here is a link to a good video on record keeping as well.

Starting a New Business

Thinking of starting a new business?  Congrats and thank you!!  Small businesses are what keep our country running.  I thought I’d post a few things to think about if you are starting a new business.  Of course, this isn’t an exhaustive list, and I’d encourage you to take the time to speak with a lawyer and a good CPA to make sure that all your ducks are in a row.  The expertise is worth the cost.

Having said that, here are a few things to think about:

 

  1. What type of business will it be?  There are all sorts of types of businesses — the most common is the sole proprietorship.  This is by far the easiest and simplest business structure.  When I used to tutor, I was considered a sole proprietorship.  I reported my income and expenses on Schedule C of my 1040.  There are other types of businesses as well — partnerships, S-corporations, LLCs, among others.  One of the positives about an LLC (which stands for Limited Liability Company) is that the owner(s) will have limited personal liability for the business debts.  This type of business needs to be formally set up, usually through a lawyer’s office.  In any case, if you decide to meet with a lawyer or a CPA, this will probably be one of the things they discuss with you.
  2. What types of taxes will I be responsible for?  The type of business structure that you choose will also determine what types of taxes you pay and how you will pay them.  The four general types of business taxes are income tax, self-employment tax, payroll taxes, and excise taxes.  If you decide to have an employee as a part of your business (side note: it is not your decision on whether or not someone who works for you is an employee or a subcontractor, they either are or they aren’t), then I would recommend you have a bookkeeping program like QuickBooks and sign up for their payroll subscription.  It is a very cost effective way to do a small payroll.
  3. Employer Identification Numbers: Typically, a new business will need a Federal Employer Identification Number (FEIN or sometimes just EIN).  You can go to irs.gov and see if you need to get one for your business.
  4. Recordkeeping: No matter what type of business you set up, you need to keep track of what comes in and what goes out.  This may be as simple as a spreadsheet (that’s what I used for my tutoring), or you may want to get software like QuickBooks.  Good recordkeeping also includes keeping the support documents for your numbers, like receipts and invoices.  Also, just from an accounting standpoint, it is almost impossible to run a business well if you don’t know how much money is coming in and where the money goes as it goes out the door.

 

I hope this gives you some things to think about.  Take a look at IRS Publication 583 (Starting a Business and Keeping Records)  and Publication 334 (Tax Guide for Small Business) for some more fun reading.

Payroll reports are due 7/31

Just a quick reminder to everyone that is in charge of a payroll that the quarterly reports for the second quarter are due at the end of the month.

Typically this involves the 941 for the IRS, and then a report for your state’s Department of Revenue for your withholding for the 2nd quarter, and then another report for your state’s Department of Labor for your unemployment payment for the 2nd quarter wages.  Obviously, depending on your situation, your reports may vary.

QuickBooks Enhanced payroll has the reports as a built in functionality of that subscription, so that makes it quick and easy.  Or, if you use a payroll service like Paychex or ADP, they can handle the reports for you.

It’s a good idea to keep a copy of the reports filed for your records as well as the backup support.  The Payroll Summary report from QuickBooks usually gives good detail as backup.  I also like running the Employee Earnings Summary report and I keep that on file as backup too.

If you are in charge of payroll and have questions, feel free to leave a comment in the box below and we’ll try to give you a tip or two!  Or, please give our office a call at 770-478-7424 no matter where you are in the country, and we can set something up to assist you.

Tax Tips for Child Care Providers

Do you care for children in your home?  Well…other than your own, I mean!  Are you taking advantage of the tax breaks that are available to you?  Are you keeping up with your books and recordkeeping?

There are special tax breaks for people who run a childcare business either out of their own home, or in a separate facility.  Some examples include: [Read more…]

Medical & Dental Expenses – 8 Things to Know

If you, your spouse or dependents had significant medical or dental costs in 2011, you may be able to deduct those expenses when you file your tax return.  Here are eight things the IRS wants you to know about medical and dental expenses and other benefits. [Read more…]

12 Red Flags to Trigger an IRS Audit

Why is it that some people get audited while others do not?  Is there a little man in a room just randomly pulling out returns to target?   Actually the IRS computers are responsible for catching most discrepancies that flag your account for further inquiry.  Usually a notice is generated, and the ball is in your court to address the issue.

The IRS actually only audits a little over 1% of all the individual tax returns each year.  With those odds, your chances of getting audited are quite low.  Math errors may get you an IRS inquiry, but not likely a full-blown audit.  So how do you avoid an IRS audit?  Well there’s no sure fire way to avoid an audit, but there are certain things that can attract attention from the IRS.  Here’s a list of twelve areas that could wave little red flags and target you for an audit. [Read more…]

Record Keeping

Do you know how long to keep certain tax records? Here’s a tip from the IRS on good record keeping:

If you have any questions regarding record keeping, please call our office at 770-478-7424.