Your Income Tax….May be Wrong???

Now that the holidays are mostly gone, many of us are looking for ways to pay off the holiday bills that we have built up. Usually the first option that comes to everyone’s mind is their tax refund, and we now scurry to get all our tax information together just like we are scurrying for those gifts for friends and family. Many taxpayers make an attempt to prepare their taxes on their own without the assistance of a tax professional by using off the shelf software and income tax books.

One of the main books that taxpayers use is J.K. Lasser’s Your Income Tax editions. These are rather nice references for a taxpayer to have that include a wealth of information; however the current version (2009) was printed before all of the current tax changes were put into effect. If you were one of the taxpayers that bought the 2009 edition, be sure to check their website for updates to the printed information or speak to a tax professional that has the proper training regarding the new tax law changes.

Keeping Your Business N Synergy

Getting Taxed While Injured and Innocent

While working at a client today, one of their customers overheard us talking about the upcoming tax season and asked if I did taxes. After responding that I did the individual asked me a couple questions about how the IRS handles issues when one spouse owes and the other spouse has debt or other obligations that have not been paid. After telling the taxpayer how it was handled I thought to myself that many other taxpayers may be in a similar situation. The situation can usually be handled using the IRS injured spouse or innocent spouse rules.

Injured Spouse – an injured spouse occurs when the IRS attempts to seize the refund on a jointly filed return when only one spouse owes debts or obligations. Relief for the “injured” spouse can be obtained by filing Form 8379.

Innocent Spouse – an innocent spouse occurs when the IRS seizes the refund of a jointly filed return when only one spouse made fraudulent reports on a joint return. Relief for the “innocent “spouse can be obtained by filing Form 8857.

There may be additional steps that may need to be taken, so be sure to speak to your tax advisor before filing in either situation.

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Tech Tools to Improve Your Small Business

Keeping with the technology theme of our last post, I simply wanted to give an update on our firm’s field computer woes. We luckily were not “down” very long as it only took the computer repair shop one day to isolate and fix our problem. It turns out that something was wrong with the main PC board on the laptop and being that it was still under warranty, the repairs were free. So we are now back up and running smoothly.

I did get a chance to check out some new software that might prove useful for many of the small business owners out there and the great thing about them is they are free. The first one is called Jing Project and it allows users to capture pictures from their own workstations, record video of your click thru’s and then share those click thru’s with others. This is great for those of you who need to walk others through steps and processes (like assisting clients with accounting software). The second is somewhat similar and is called Dimdim. Dimdim is a free web conferencing service (no software to download) that allows you to share your desktop for web based live meetings. They offer a free version but down also have low cost editions that offer more features.

If your small business wants to be on the cutting edge of technology and compete with the Big Boys, be sure to check out these tools. Our firm uses them and loves them.

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Technology CYA

Recently our office had to deal with a system crash of one of our field laptops. Usually for a small business, a system crash can be a major setback. There are ways to minimize the chance that a system crash does not send you business into a holding pattern and by following a few steps a small business can save money in the long run. Here are a few process and procedures that our firm uses to minimize the chance of lost data when a system crashes.

1. Password protect any (and all) computers – whether they are used within the firm or in the field.
2. Do not save critical data on the hard drive – use an online secure storage service or some other offsite secure storage facility
3. Create (and use) a backup schedule – for very critical data, backup on a daily basis.

These are just a few of the processes and procedures that our office uses to ensure that our critical data is always accessible. If the procedures were not in place, there would be increased costs to retrieve data and/or rebuild data. Setting up similar procedures in your small business can save you money in the long run.

As for the laptop that crashed, we are still awaiting its arrival from tech repair which is still under warranty.

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S-Corporations Compensation Revisited

This past week while getting ready for tax season, I had the chance to review some of the changes and requirements for S-Corporations (thanks to the IRS and NSA). One of the most common mistakes that S-Corporations make occurs in the area of owner/employee compensation. Typically owners of S-Corporations are considered employees that must take “reasonable compensation” when they perform services for the S-Corp. Once a reasonable compensation has been established, owner/employees can take additional income from the S-Corp as distributions that will not be subject to employment tax rules.

The main question(s) that arises are what is considered reasonable compensation, and how is that compensation validated. The best way to determine reasonable compensation is to look at what the market pays for similar work performed and possibly reviewing information from the employment section of the newspaper or websites. Structuring your compensation plan with your tax advisor will assist S-Corp owner/employees and ensure that their returns won’t come up for audit. Audits of S-Corps increased in 2006, and by taking the necessary steps owner/employees can have less worries at tax time.

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Disregard the past IRS rules LLC’s

There will be some reporting changes for single member/single owner LLC’s (also known as disregarded entities) in 2009. According to a recent email notice received from the IRS, LLC’s that are considered disregarded entities will have to report employment taxes in the name and EIN of the LLC instead of the single member/owner. The change makes IRS Notice 99-6 obsolete whereas a single member/owner had a choice to use the either the name or EIN of the owner of the LLC. The changes only affect the employment taxes and not income tax reporting for LLC’s. Small business LLC’s that are affected by this change may want to seek the assistance of their tax professional for details on applying for a new EIN.

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2009 Small Business Accounting Software

Earlier in A Tale of Two Software Freebies we took a look at the free versions of small business accounting software titles Microsoft Office Accounting Express and QuickBooks Simple Start. Well both software vendors have recently undated their paid software titles for 2009. Small business owners that are looking for a change or just starting out may want to take a look at some of the new features that both titles have included.

Microsoft Office Accounting Professional (MOAP)

MOAP has updated their offering to include income tax integration with major tax preparation software that will surely bring a smile to your tax professional’s face. MOAP has also added 20 plus new custom reports to give a small business owner more information about their business. Third party add on’s allow small business owners to accept credit cards online and integrate with E-bay.

QuickBooks Products

QB has two has two products (QB Pro, and Premier) for the small business owner depending on the market and size of your business. The Premier version has more features and provides more reports for small businesses. A major enhancement that caught my attention is the software now has Microsoft Vista certification as there were problems loading previous versions on Vista machines.

Both software is priced right for the small business owner so be sure to test drive them for your business.

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The IRS Audit Results

In a previous post (see IRS IT Woes), we looked at some of the problems that have been occurring at the IRS. Well it appears that the IRS has a couple more issue that need to be ironed out regarding their operations. An audit report from the Government Accountability Office reveals internal control problems and financial management inefficiencies within the IRS. The main areas that need improvement are controls dealing with information security and the utilization of obsolete financial management systems.

The IRS contends that measures have been taken to improve internal controls and improve processes within the financial management systems. Will be interesting to see how these improvements work out in the coming year. Stay tuned.

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Banking on Small Business

As the economic bailout continues to make its way through the U.S. economy, banks are “banking” on small business to give out the new loans. The only problem is banks are having difficulty finding borrowers. Part of the reason is many small business owners are feeling the bite of the slow economy and have cut back their borrowing needs. SBA loans dropped 30% this year as banks scramble to find creditworthy customers.

Creditworthiness is an important part of the issue when a small business owner considers a loan as a way to finance growth. Small business owners that already have loan or credit lines with banks (and they more than likely have been cut back) should keep an eye on their budgets so that loan payments can be made in the future. If you are a small business owner looking for a loan, lookout in your e-mail/mail box for deals from banks banking on you.

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A Tale of Two Software Freebies

Last month at the accounting panel discussion, I gave the audience links to a couple of small business software titles that would give a small business owner a jump into the realm of accounting and reporting. Both titles are free and can be downloaded from the internet for use. Microsoft Office Accounting Express and QuickBooks Simple Start were the titles and we will take a look at each to see which one is the best for your business.

Microsoft Office Accounting Express (MOAE)

MOAE has the same look and feel as the current Office programs making the learning curve less steep (To me it looks similar to Outlook). A small business owner can track income and expenses, manage employees, customers and vendors and the owner can setup the business using wizards. MOAE also allows importing of data from QuickBooks, Excel or MS Money.

QuickBooks Simple Start (QBSS)

QBSS similar to MOAE in that it can also track income and expenses, organize employees, customers and vendors, manage payroll, and utilizes wizards in the setup. QBSS does not allow a small business owner to import data from MS Excel, Quicken, or MOAE.

MOAE and QBSS Technology

Both MOAE and QBSS have integrated technology into their offerings. MOAE includes seamless integration into other Office software (Word, Excel, and Outlook) and the software allows small business owners to reach online via EBay and PayPal integration. QBSS allows users to accept credit cards payments into the software, and create a website for online services.

Which is right for you?

That will depend on your needs as a small business owner in the start up phase of your business and the market that you serve. Accounting software should be viewed as a tool that can grow with your business so be sure that the future is taken into account in your needs assessment.

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New Updates from Microsoft

Our friends over at Microsoft have a couple of new updates that may be of interest to many individuals and small business owners. The firs is a security update MS08-067 which affects many versions of the Windows operating system and server operating systems so be sure to download this update as soon as possible. Many individuals turn off their automatic updates and if that is the case you will have to go directly to the Microsoft website to download the update.

The other update is the unofficial death of the Windows Vista operating system. I came across an article that Microsoft recently revealed the next version of their operating system which will be called Windows 7. Be sure to check out the slideshow that provides screen shots of the new look and feel of Windows 7. Although similar to Vista, Windows 7 has made a great deal of changes that are sure to please new computer buyers when released sometime next year. If you are in the market for a computer and can hold off, waiting until this operating system is released may be a good thing.

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Tax Provisions "Bail" You Out

This past week I had the pleasure to sit on a panel with other local accountants that spoke to the needs of small business owners and one of the main questions that attendees wanted answers was regarding how the small business would stay afloat after the passage of the bailout bill. The bailout bill had a great deal of tax provisions that were included (and I finally had a chance to take a closer look at) here are a few that will hopefully help bail out small businesses and individuals in this slow economy:

Individual Provisions

• Itemized and “above the line” deductions – state and local sales tax deductions, higher education tuition deduction, additional standard deduction for real property taxes extended through 2009
• Tax free distributions from IRA’s for charity has been extended through 2009
• Child tax credit floor falls allowing more taxpayers to tax the credit

Small Business Provisions

• Leasehold and restaurant improvements now eligible for a shorter depreciation cost recovery through 2009
• Charitable Contributions of food, books and computers extended through 2009
• New markets tax credit extended through 2009, encouraging more small business investment

Be sure to speak with your accountant regarding these new tax provisions and how they may affect your tax planning for 2008 and 2009 tax filing season. As always tax planning should be proactive and not reactive to the economic environment around you.

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Let’s Be Reasonable

Recently a potential client posed a question to our firm regarding what kind of salary he should take for his new business. Although this may sound like a simple question, there are many factors that must be taken into account before constructing a compensation plan for a small business and their owners. The main factor that must be addressed is what type of business entity the business owner has chosen (sole proprietor, partnership, C or S-Corp) and this should be addressed in the planning stages with input from an attorney and accountant.

If the business is organized as a corporation, additional legwork must be done to ensure that the compensation taken by the officers/employees is reasonable. The IRS has recently stepped up their enforcement on corporations that do not provide their officers/employees with a reasonable compensation and it is important for a small business owner to address the following factors when developing a compensation plan:

• The financial condition of the company
• The roles and responsibilities of the company
• The salaries paid to other individuals in similar situations in the market

These are just a few of the factors a small business owner must address when structuring a compensation plan to maintain compliance with the IRS guidelines. Be sure that your compensation plan is outlined and detailed within your corporate information and there will be minimal chance that the IRS adjusts your compensation to what they feel is reasonable.
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Tax Extenders Catch a Ride on Bailout Bill

Now that the tax filing extension is behind many taxpayers, it is now time to focus on next year’s tax season. I know that many are dreading the process that will start all over again very soon, but there have many quite a few tax law changes that many affect your business and individual tax returns. The passage of the recent “bailout” package contained a great deal of changes for the coming tax season. The major changes include making the penalty provisions the same for taxpayers and tax preparers and the major change of extending the AMT patch. Luckily the AMT patch extender was passed in time enough for the IRS to make the necessary changes to the tax forms for the upcoming filing season.

The majority of the changes in tax code will more than likely happen after the election and going into the 2010 tax year. Be sure to stay tuned in to properly plan for your tax future. As always remember that tax planning should be a year round process.

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Remote Possibilities During a Tough Economy

Today the House voted on the $700B bailout and the vote turn out to be a bust. As the bailout busted, so did the stock market and add in the limited supply of gas, many individuals frustrations are running at a high level. With the limited supply of gas in our local area, many firms are finally seeing the light and looking for alternative ways to have their employees complete their work assignments. Working remotely is on the rise and for those who are looking for alternative ways to have their employees complete assignments here are a few low cost options that may be of interest to you and your firm.

Microsoft Office Live Workspace – great for managing projects and teams from virtually anywhere you have an internet connection.

Send This File – great for sending and receiving files of various sizes

LogMeIn – great for working remotely on another’s computer(s) to access software and systems not available on your computer.

These are just a few options that firms can use to work remotely and still get the job done. Many think that when individuals work remotely that productivity tends to slump, however in our existing economy the frustration associated with “getting” to work can be alleviated when individuals work remotely from their own personal locations.

Keeping Your Business N Synergy

Rise with Inflation

The present economy is very tough for everyone especially the small business owner. With all the business closures, mergers and buyouts by the big businesses on Wall Street, the trickle-down effect is taking its toll on Main Street businesses. Staying competitive in a very slow economy is important for a small business and devising a sound strategy will help a small business when sales slow. A recent survey conducted by The Small Business Research Board indicated that many small businesses are utilizing price increases to offset the inflationary pressures of the economy. This is certainly a way to offset one’s own expenses at the expense of your customers. Other ways to possible offset higher business costs may be to streamline your operational budget (yes you need to budget) and look for ways to cut costs by using technology. If all else fails however, an increase in your prices may be your only defense. Ultimately the small business owner needs to stay abreast of the changes in their industry and always plan ahead for slow economic times.

Keeping Your Business N Synergy

IRS Form Changes for Not-For-Profits

Now that the extension deadline for corporations has passed many accountants and tax professionals can focus on those personal returns and some not-for-profits (NFP’s) with tax years ending in December. NFP’ will get a kick out of the news coming from the IRS recently for there are some changes on the horizon for the next filing season. The first change is the redesigned Form 990 that now has an 11 page core form that must be completed by all NFP’s. The major changes are in the areas of governance, and compensation of officers. Other changes are driven by IR-2008-102 which eliminated the advance rulings that gave NFP’s charity status but then required them to support their status by providing the public sources of their funding to receive a final determination letter.

The changes will definitely provide the IRS with more transparency on NFP’s and also make NFP’s information more open to the public. I guess NFP acronym will have to mean New Filing Procedures for not-for-profits.

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IRS Form Changes for Small Businesses

For those small to mid-sized businesses that are organized as corporations or partnerships, there are some changes coming for you after the 2008 tax year. According to recent information from the IRS, there are going to be some changes to the look of Form 1120’s and Form 1065’s that will increase the transparency about the ownership and relationships between entities that make up complex business structures . The main changes will be focused on the ownership issues (Sch. K for Form 1120 and Sch. B for Form 1065) and the changes will help the IRS better assess the risk on non-compliance in these areas.

What About The Sole Proprietors???

Well the IRS has created a website for you. The Self Employed Individuals Tax Center provides small business owners with a wealth of information for those starting a business, employment tax issues, filing and paying taxes and more.

For more information on how these changes will affect your business be sure to check the IRS website and speak to your tax advisor.

Keeping Your Business N Synergy

IRS IT Woes

As the summer comes to a close, many taxpayers are looking forward to taking that last summer vacation trip to wrap up the warm months. Earlier in the year the IRS made an attempt to provide taxpayers with a little bump of income to help stimulate the economy and maybe even pay for their summer vacations. Well unfortunately as some received their stimulus checks, the price of gas (among other things) increased. For those of you that did not receive your stimulus check, the reason may be blamed on the IRS.

A recent report by the Treasury Inspector General for Tax Administration indicated that the IRS may need to revise their software code to reduce the delays in reissuing undeliverable checks to taxpayers. Not all the blame can be put on the IRS however. If a taxpayer has changed their address it is important to fill out Form 8822 to ensure that your stimulus (and refund) checks make it to you on time.

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Need an Accountant Hollywood??

Greetings to everyone out there in Blog Land hope all is well. It has been a little while since our last posts, with the extension deadline for S-Corporations closely approaching. There has been a great deal of things going on in the news lately in addition to the busy season around the office. A couple of news stories did catch my attention recently one was that American Idol Winner Ruben Studdard had the IRS placed tax liens placed on him for not paying his taxes and actor Paul Hogan of Crocodile Dundee fame is being probed by Australian tax authorities for attempting to not claim a tax residence.

It always amazes me how many taxpayers attempt to fly under the radar and evade paying their fair share. Maybe these individuals can get Jackson Hewitt to prepare their taxes although there may be a problem with them bill when they receive it. The moral to the story is being honest and always look for an honest accountant to guide you along the way.

Keeping Your Business N Synergy

Is Your City Business Tax Friendly

Big four accounting firm KPMG recently conducted a study that names the U.S. cities (and territories) that have the most favorable tax structures for businesses and the results are interesting. The results were broken down between large cities (populations over 2 million) mid-sized cities (population between 2 million and 500,000) and small cities (populations between 100,000 and 500,000). Did your city make the list? Here are the top three from each category:

Large Cities
San Juan, Puerto Rico
Baltimore , Maryland
Atlanta, Georgia (good Job Atlanta)

Mid-Size Cities
Omaha, Nebraska
Greenville/Spartanburg, South Carolina
Little Rock, Arkansas

Small Cities
Saginaw, Michigan
Cheyenne, Wyoming
Cedar Rapids, Iowa

One thing for sure is that if your city is not on the list, there quite possibly is a city in close proximity of you.

Keeping Your Business N Synergy

Cool Tax break for a Hot Summer

The summertime brings vacations, cookouts, fireworks and summer camp to the minds of many taxpayers. It is also a good time to lookout for summertime tax breaks. A recent IRS newsroom article provides tax payers with children in summer camp a potential tax credit. The cost of day camp (sorry overnight campers) will qualify taxpayers as an expense towards the child and dependent care credit. The taxpayer’s child must also be under 13 years of age and there are additional rules that also apply. Be sure to speak to your tax advisor to see if this cool tax break is for you.

All part of your mid -year tax planning for 2009. Be sharp as a tack this tax year.

Shopping for a Shopping Cart

For those small business owners that sell products (and services) online, the use technology is an important part of your business operations. It is very important for all your systems to work together especially when those systems are from different software vendors. The main component of an online sales system or e-commerce site is the shopping cart function. The shopping cart functions with all of your back office accounting and inventory systems to track revenue and goods sold.

It is important for the e-commerce business owner to have a point of sale (POS) system that fully integrates with your accounting and inventory systems for accuracy and efficiency. Tech savvy accountants can assist you with finding and deploying the correct POS system for your business. If your small business uses QuickBooks, be sure to check out their Solutions Marketplace for software that is compatible with your accounting software too.

Keeping Your Business N Synergy

Tax Return….Ah the Good Ole Days

Here is something that many of the taxpayers may get a little kick out of. It is a copy of the first tax return that was ever filed in the US. Take a quick look at how small the tax return is compared with the returns taxpayers file today. With all the talk about how the Congress is trying to simplify the tax code, there have been over five thousand changes in tax laws since 1986. Many changes have resulted into new tax forms and the simple 1040 tax return instructions is around ninety-two pages.

Now that it is July, many taxpayers don’t have taxes on their mind, but this is the best time to have a little mid-year tax check-up to ensure that everything is on track for year-end. There have been quite a few changes since last filing season and the AMT will have to be revisited by Congress again this year. Be sure to speak to your tax advisor so you can return your taxes to the good ole days.

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Small Business Economic Worries Continue

Small businesses are still quite pessimistic about their futures in the current economic environment. According to the National Federation of Independent Business, small business optimism fell to its lowest level since the 80’s. One bright spot from the survey however is that many small business owners are still spending money and hiring employees to keep their operations going.

Check out the details at the NFIB’s website and be sure to join their site that will provide a small business owner with a wealth of information to assist in keeping your business in synergy through these tough economic times.

Time to Cut Your Extensions

According to a recent IRS news release, the due date for certain business returns will be cut from six months to five. The change is an effort by the IRS to assist personal tax payers with the burden of preparing their personal tax return by the extension deadline. The current business extension due date of October 15th is being changed to September 15th and provides individual tax payers time to receive certain schedules that are needed to prepare personal returns due a month later.

Does this affect your small business and you?

It all depends on your business organization. For S-Corp owners there is no change as the six month extension deadline already falls on September 15th. Be sure to speak to your tax advisor to see if the change affects you.

Keeping Your Business N Synergy

Gotta Hate Mondays

Interesting news today as Microsoft stops selling their XP operating system to retailers and major computer makers. The main option now is Windows Vista for those interesting in purchasing a computer. If there happens to be a small business computer retailer in your area, there may still be an option to purchase a system through the end of January. Another option is to focus on new ultra low cost PC’s that not only will have XP, can also save you money. Guess the major decision for many is to buy now or wait till Microsoft releases Windows 7 in 2009. Feel free to post your thoughts.

Keeping Your Business N Synergy

Is Your Cash Coming or Going?

If the slowdown in the economy is affecting your small business, improving your cash management may help when sales are slow. I quick review of a small business’ cash collections policies will reveal if changes (such as interest on late payments, or requiring deposits for jobs) will speed up cash coming into the business.





On the cash disbursements side of the equation, reviewing the costs that vendors charge for goods and services and possibly renogiotiating your rate will keep more cash in your pocket. Small business owners should also consider investing excess cash in the bank in a interest bearing account and have their money working just as hard as hard as the owner.

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IRS Indigestion helps Taxpayers

The IRS has gas on their mind and this is great for the individual and small business taxpayer. According to a recent newsroom article the standard mileage rate will increase through December 31st 2008. The new 6-month increase is a direct result of the economy and high fuel prices. The new rates go into effect on July 1 2008 are as follows:

Business - 58.5 cent per mile

Medical Moving – 27 cents per mile




The mileage rate for charitable contributions (14 cents per mile) remains unchanged. Be sure to speak to your tax advisor regarding this change and taking the standard mileage rate for this year.

Keeping Your Business N Synergy

Paperless Ideas for Small Businesses

Many small businesses have mountains of paperwork to file and the task of organizing, filing, and archiving can take away from growing the business. Coupled with the costs of off-site storage, managing the information can become a job within itself. One way a small business can cut down on the costs and time managing their data is to embrace technology and go to a paperless filing system.





The first step is to stop receiving paper statements from your bank and credit card companies. The statements can typically be downloaded and saved as a PDF file. For archiving and sharing those files (with your accountant) and others be sure to check out Microsoft Office Live Workspace and Windows Live SkyDrive. The tools are free and may help small businesses cut down on the time it takes to organize their important information.

Keeping Your Business N Synergy

Mixing Business and Social

The talk of “networking” is always on the lips of many small business entrepreneurs to meet and possibly generate new business. The more traditional methods of networking usually mix business with socializing to reach out to small businesses in a particular area. The web has brought about a new avenue of networking that is still able to integrate business and socializing with the introduction of social networks. These social networks have been the craze for many individuals to meet and socialize, but now small businesses are also using them to promote their businesses.

It does not stop there. A quick search of the internet produces a wealth of information about how social networks are being used by small and large businesses alike. Here is a special site that may be of interest from Dell. It is a free online course on how to use social networks to promote your business. Enjoy!

Keeping Your Business N Synergy

Running a “Lean” small business

Recently there have been quite a few networking meetings in our area. Many of the themes of those meeting were how small businesses could operate in the slow economy. The majority of the solutions included increased time and effort in seeking out new businesses. The solutions also leveraged technology to improve the flow of the small business operations.

Technology driven workflow solutions should be an integral part of a small business owner’s plan for the future. These solutions can improve small business operations in the areas of business development, marketing, finance and accounting. Technology may be the key to operating a lean small business during these rough economic times.

Keeping Your Business N Synergy

Employee or Independent Contractor….IRS knows

For many small business owners the mistake of misclassifying employees as independent contractors (IC) can be a costly one. When one factors the interest and penalties for not withholding taxes, it can cost some small business owners the business itself. The IRS is focusing more efforts on ensuring compliance with the laws regarding employees and IC’s including partnering with states to share payroll tax data, better matching programs that will match Form 1099’s with payments, and increased audits of payroll data.

From the employee/IC side of things, any taxpayer that may think that an employer is misclassifying them as an IC can file Form 8919 with their tax return. This will allow the taxpayer to avoid paying self employment tax on their earnings. Check with your tax advisor for details of who an employee is versus and IC.

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Planning in Economic Downturns

It has been about a month since the last tax return was filed for tax year 2007 (excluding those that filed extensions) and many taxpayers are relieved that the stress is over. Now is a great time to consider mapping out a strategy for 2008. Economic downturns coupled with rising consumers prices, make tax planning an important part of your over all savings and investment plans.

For small business owners , Microsoft’s Small Business Center provides a short but informative article on ways to survive during…dare I say the “R” word recession. Feel free to post any additional ideas that you would like to share.

Keeping Your Business N Synergy

The Ole Give and Take

By now many taxpayers are in the process of receiving those economic stimulus payments from the IRS. This is under the assumption that you have filed your tax return for 2007. If you have not it is important to file your return before the extension deadline to ensure receipt of your payment in 2008. So far about 7.7 million checks have been sent out. Be sure to check the IRS website for answers to any questions you may have regarding your economic stimulus payment.

As the government sends you a stimulus check many ponder how they will spend it. More than likely the money will go right into your gas tank. The taxpayer is caught by the ole give and take again.

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Know the Rules for Summer Help Hires

Now that the spring has sprung, summer can’t be too far away. This will bring many young job seekers, looking for temporary work that the summer months bring. It is important for the small business owner to know the rules when hiring in the summer. Here are a few tips to get your business’ summer search started:

1. Withholding taxes is done on ALL summer employees (yes summer help is considered an employee)

2. Parents with children can allow them to work in the business from the ages of 14-21

3. Check state labor laws for additional details regarding summer help.

Hope the information puts your business on the right track to a healthy summer season

Keeping Your Business N Synergy

Audits are Up

The IRS’s ongoing effort to close the tax gap are paying off it would appear. By stepping up their audit and compliance activities, the IRS has seen an increase in their revenues. Examinations of personal tax returns have increased from every 1 in 202 returns to every 1 in 97 tax returns. Returns for small businesses rose around 4percent. Good information to know and keep in mind as the next tax season is around the corner.

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Windows XP rides into the Sunset

In a move that will more than likely affect the small business owners more so than anyone, Microsoft will end the sales of Windows XP products on June 30, 2008. The majority of small businesses have been quite reluctant to migrate to the newer Windows Vista operating systems due to glitches and problems running many of their older software titles.

What’s a Small Business Owner To Do?

If you still want an XP operating system in a new computer purchase, the computer makers will provide several options with downgrade rights to XP. What this means is that your system will be equipped with the newer operating system (Vista) and you can reload XP on to the system. Mainstream support for Windows XP will continue through April 14, 2009. Additionally, Microsoft Extended Support will be available until April 8, 2014.

Keeping You Business N Synergy

Didn’t Pay Your Taxes? Know Your Options

The April 15th tax deadline has come and gone and there are some taxpayers out there that may have missed filing and extension. Interest and penalties add up for taxpayers that do not pay as much as they can along with filing their extension. For those that did not pay tax with their extension, the interest currently at the rate of 6 percent per year and late payment penalties, normally 0.5 percent (1/2 of 1 percent) per month, apply to any tax paid after the April 15 deadline.

What are the Options Now?

Many options for taxpayers are available including:

EFTPS – payments can be made via internet or phone
Credit or Debit card payments – 1-800-2PAY-TAX, or 1-888-PAY-1040
Online payment agreement – will provide a taxpayer with a short term extension or payment plan
Form 9465 – Installment agreement request

Of course the best approach is to file your tax return on time and make payments sooner.

Keeping Your Business N Synergy

Proposed Changes for Small Businesses

There are some interesting developments in the small business arena right now. New laws that are aimed at cutting down on tax cheating by the self-employed will more than likely just be more paperwork for the self-employed. Two important small business changes include:

1. Detailed reporting of credit card transactions to the Internal Revenue Service.
2. Another would require most owners of small businesses to report any payments above $600 to corporations for things such as delivery services.

This increased reporting will make it quite burdensome form self-employed small business owners if the proposals are passed. We will keep you posted on any other proposals that are on the horizon to ensure that your small business’s reporting requirements are not increased.

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Small Business Woes Continue???

A recent study conducted by the Discover Small Business Watch for March indicated that economic conditions in the small business arena were getting worse according to over three quarters of the small businesses polled. This is definitely a sign that the economy for the small business owner is getting worse. Almost one half of the small business respondents indicated that their economic outlook for the next six months getting worse.

It is important as a small business owner to keep track of trends that occur in your particular industry and look for ways to run a “lean” operation when economic times look bad. A great way is to be sure to have a strong support staff around you at all times. Small business owners spend the majority of their time operating the business that there is little time for keeping track of planning for the future. According to Discover’s study small business owners are also more likely to partner with a financial consultant to keep track of trends and economic downturns.

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Stimulus Payment Delivery

Taxpayers by now have received their letter from the IRS stating that they will receive a check in the late spring early summer, taxpayers who file their return by April 15th, can now track when their stimulus payment will be deposited (for E-filers) or mailed (for paper returns) with IR-2008-44. Be sure to heck out the charts for the payment schedules to track when your payment will arrive.

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The Good and Bad Stimulations

Since the passing of the stimulus package by Congress, I am sure many tax advisors have been receiving a great deal of questions about filing returns and getting the rebate check. One such question that came up in our Tax Tips Seminars last week was regarding the E-filing a stimulus return when there is no adjusted gross income.

The Good

According to Revenue Procedure 2008-21, the IRS will NOT challenge returns that claim at least $1 in adjusted gross income for e-filing.

And Now the Bad

An earlier post touched on the amount it would cost to send you a letter that tells you your stimulus check is in the mail (about $42 million). Well now the IRS reports that it will loose around $681 million answering phone calls regarding the rebate checks. Also expect a lower level of service when you call the IRS asking questions. Hmmmm.

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Your First Four Years

Small business owners in need of information regarding the first fours years of start-up will really enjoy the new study by the Kauffman Foundation. The study provides a sample of about 5,000 small businesses and details the operations and demographics of the businesses since their 2004 start date.

This is great information for a small business owner to compare your business against especially in the areas of growth strategy, innovation, and survival. Hope you enjoy the information.

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The Cost of Stimulation

The IRS will begin mailing out letters to about 130 million taxpayers this month. The cost to mail out these letters that simply notify taxpayers that they will receive a check in May is $42 million. I wonder who is paying for these letters to be mailed. It seems there may be other ways these funds could be used.

So what to do with your rebate check? The best bet is to invest it and not spend it. The stimulus bill also includes some tax breaks for small businesses. One of the more important breaks for small businesses is the double section 179 expensing limit for 2008 (allowing a write-off of up $250K) for equipment purchases. Be sure to speak to your tax advisor on the benefits of this change and remember tax planning is done year-round…tax time is too late.

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I Got That Receipt ….Somewhere!?!?

The IRS has provided us taxpayers with some important information regarding preparing returns with questionable deductions. If a taxpayer can not locate all their receipts to justify a deduction on their return, the tax preparer may be in their best interest to not add the deduction.

The IRS used to penalize preparers $250 for a tax return containing questionable deductions; now the penalty is $1,000, or 50 percent of their fees, whichever is greater.

Be sure to have ALL your receipts to justify your tax deductions for the rules are definitely changing. Most professional tax preparers go through a formal checklist once a return is completed. For more information check IRS Notice 2008-13.

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Frivolous Claim….Got $5000?

Recently the IRS has amended their list of “frivolous” legal claims used by people who attempt to avoid paying taxes. Four new claims were added to the listed and include:

1. Misrepresentation of the 9th Amendment regarding objections to military spending
2. Erroneous claims that taxes are owned only by persons with a fiduciary relationship to the US
3. A non-existent “Mariner’s Tax” deduction for meals
4. The excessive use of the Section 6421 fuels credit

If you think you can use any of these claims on your tax return, well I hope you have an extra $5000 laying around for that is the penalty for filing. For more information regarding the new additions to the frivolous claims list, be sure to speak to your tax advisor and review IRS Notice 2008-14.

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Georgia Taxes on My Mind?

News from the home state are that the Georgia State Senate approved a bill that will do away with the state portion of the property tax. The planned tax relief would provide Georgia taxpayers with about $94 million per year in tax savings. Additional amendments will put a freeze on property tax rates at the 2008 rates until the property is sold.

More Georgia tax details

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Economic Stimulus….Stimulate YOUR Economy

With the president signing the economic stimulus package into law recently, many taxpayers may be unclear how and if they qualify for the stimulus payment. This has been one of the most asked topics at our weekly tax tips workshops. Based on information from the IRS, the return must show at least $3,000 in qualifying income. Low-income workers, Social Security recipients, disabled veterans and retired railroad workers who might not otherwise need to file a tax return must do so in order to receive the tax rebate.

Tax rebates checks will range from $300 to $600 for individuals and $600 to $1,200 for joint filers. Taxpayers may also receive $300 for each qualifying child. In most cases, low-income recipients will get $300 each, or $600 for joint filers.

What are you going to do with YOUR rebate check?

Check out what personal finance guru Suze Ormam thinks (not a bad idea either IMO)

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Microsoft Outlook’s “Outlook”

Microsoft states that the most recent version of Microsoft’s Outlook (along with Business Contact Manager) will now be offered as stand-alone software. Many small business owners use Outlook to manage their contacts, appointments and such; however many times client data is spread out over various different places making it difficult to mange sales and marketing efforts. The stand alone product should provide small business owners with a solution to this.

Another plus,

By using Outlook with your accounting software, a small business owner can create a small CRM (customer relationship management) system opening the possibilities of improved billing, better efficiency, and of course cash flow.

Using technology can improve your outlook too.

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Are You Making these Tax Errors?!?

The IRS has listed the top errors made when filing tax returns and it is a must read for this tax season. It compiles all the possible errors that a person or their tax advisor may make when filing a tax return.




For those in the Atlanta area, be sure to stop by the College Park Library for “Tax Tips” every Wednesday 6:30 – 7:00 pm (except for those Wed. when there will be seminars…see here) thru the April 15th tax deadline. We will review the common errors and other tax changes that will affect your return this year and beyond.

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Today's The Day

The end of January is here and by now taxpayers should receive their income tax information (W-2’s and 1099’s) for correct tax filing. I am sure for the small business owner, “information returns” had to be one of your many priorities for the first month. It is important that workers are properly classified when preparing W-2 and 1099’s to ensure that the small business is in compliance with IRS regulations. The IRS looks at 3 areas to determine if a worker is an employee or independent contractor.

1. Behavioral control – the right to direct the performance of specific tasks

2. Financial control – the right to direct the financial opportunities of the worker

3. Relationships – Actions and agreements between the two parties

Be sure to review these areas before submitting your information returns in the coming months. The next deadlines will be here before you know it.

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News Regarding IRA’s and the IRS

With the US economy trying to get a boost recently, those nearing retirement are worried about how their investments will perform. Well the IRS has stepped in and has given a bit more flexibility on penalties for early withdrawals (before age 59 ½). In a private ruling, the IRS stated a divorce related transfer will not incur a 10% penalty. Distributions from an IRA before age 59 ½ will not incur a penalty if the owner takes substantially equal annual payments over at least 5 years.

Watch Out though…if a payout change is made due to financial need and the payments change, all prior withdrawals will be hit with a penalty. Speak to your tax advisor for the details regarding IRA’s and their tax advantages.

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What’s In What’s Out This Tax Season

Thanks to everyone who attended our “Are You Getting All Your Tax Deductions?” seminar at the College Park Library this past Saturday. We will be having another session for tax season a week from today Wednesday Jan 23 2008 6:30-7:30PM if you were not able to attend. Reservations are required.

One of the topics was the expiring federal tax provisions for the upcoming years (actually to the year 2020). Check out the following information to ensure that you get all your tax deductions this season and beyond.

Listing of Expired Federal Tax Provisions

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The 411 on 2/11

The IRS officially starts accepting tax returns for the 2007 tax season today, but the problem now lies with those taxpayers who file certain forms affected by the AMT patch. Those returns will be accepted a whole month. (February 11th 2007). If you file any of these forms you will have to wait another month:

New Features in QuickBooks 2008

- Education credits (Form 8863)
- Residential energy credits (Form 5695)
- Mortgage interest credit (Form 8396)
- Child and dependent care expenses on Schedule 2 of their Form 1040A

Be sure to speak with your tax advisor to see if you will be delayed this tax season

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Winter Seminars for Individuals and Small Businesses

New topics to help individuals and small business owners save money, start your business successfully, and operate your business more efficiently. All seminars are FREE and will be at the College Park Library Meeting Room

3647 Main Street
College Park GA 30337
404-762-4060

Saturday Jan. 12 2008 2-3PM "Are You Getting All Your Tax Deductions?"

Wednesday Jan 23 2008 6:30-7:30PM "Are You Getting All Your Tax Deductions?"

Saturday February 9 2008 2-3PM "Start Your Business Successfully"

Wednesday February 20 2008 6:30-7:30PM "Start Your Business Successfully"

Saturday March 8 2008 2-3PM "Using Technology to Grow Your Business"

Wednesday March 19 2008 6:30-7:30PM "Using Technology to Grow Your Business"

Space is limited and reservations are required.

Stay on Track This Tax Season

Another tax season is here and I hope that everyone is ready. There have been a lot of tax laws changes so be sure to check your software for updates if you will be preparing your own return. If your tax advisor or tax preparation office will be doing the return, be sure to ask the person preparing the return if their software is up to date.

Buy Quicken and TurboTax Bundle & Save up to $25 + Free Shipping!

If you know that you will owe money, consider using the Electronic Federal Tax Payment System (EFTPS) service that is offered free.

Happy Filing Season

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IRS cleans up the Block

Happy New Year everyone out there in blog land. As we close out the first week of 2008, everyone puts their focus from friends and family to all those bills and debt that piled up during the holidays. Many use their tax refunds to pay down those bills and they also request refund anticipation loans (RAL’s) when their taxes are prepared to get the money quicker. If you are not familiar with RAL’s check out this post from last year for more details.

Well the news coming from the IRS regarding RAL’s may finally stop the tax preparation shops (H&R Block, Jackson Hewitt, Liberty Tax) from offering these products because doing so encourages fraud. According to acting IRS Commissioner Linda Stiff, because the loans are often limited to the size of refunds, unscrupulous tax preparers might be tempted to inflate refunds to collect higher fees.

It is good to see that the IRS and Treasury Department are finally stepping in to regulate this part of the industry. I hope that this change is implemented swiftly.

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