The Upcoming Tax Planning Season and SALY

The tax planning season is just around the corner. Most small businesses are more focused on the end of summer and gearing up for the fall season. What they should focus on is getting their ducks in a row for the year end and beyond. Here's a reason why small business owners should avoid the SALY (Same As Last Year) and start planning now.

listen to ‘Why Accountants Hate "SALY"’ on Audioboo

More Bean Spilling - Importing Bank Data

So I have had a little time to play around with BeansBooks, a new cloud accounting product by System 76, that makes small business accounting a bit more manageable. In this video we look at the banking import function and how it can save time during account reconcilations.

Spilling the Beans on BeansBooks

In an already crowded cloud small business accounting market, enter another competitor. BeansBooks developed by System 76 is a new cloud accounting service that is designed for small to medium sized businesses looking to take their accounting to the clouds.

Competitively priced BeansBooks attempts to keep accounting simple and offers a clean user interface and is open source that will allow programmers to customize the product to their liking. The ultimate goal of the product is less data entry, easier reconciliations, and current information at the fingertips of the small business owner.

Let's spill the beans on BeansBooks in this short video.

2010/2011 Tax Outlook -What happen and what to do in the future

The lame duck session of Congress is behind us and the new Congress is in session. So what happen at the end of 2010 and what can taxpayers expect going forward?

Here's is a brief overview of what the lame duck session did and how you can plan for your future taxes now.



The Tech Accountant

Tax Relief and Your Small Biz

For most small business owners, the year 2010 was a continuation of hard economic times felt during the past two years. The economic indicators now state that there are signs that the economy is starting to recover, however many small business owners are still waiting to feel the effects of the recovery. In an effort to assist the small business owners, Congress passed and the President signed into law the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 on December 17. The multi-billion dollar tax package includes a great deal of modifications to current tax law affecting small business owners and extends many tax provisions that expired at the end of 2009.


Small Businesses Modifications

The 2010 Tax Relief Act provides businesses with better incentives for investing in property that will help them run their businesses more efficiently. The Act increases the bonus depreciation limit from 50-percent to 100-percent for property purchased during periods September 8, 2010 thru December 31, 2011. The Act also extends 50-percent bonus depreciation on property purchased from December 31, 2011 thru December 31, 2012. Small business owners that have certain long lived property or transportation property may be eligible for 100-percent expensing for property placed in service before January 1, 2013.

The depreciation incentives for small business owners do not stop there, in addition to bonus depreciation; Code Sec. 179 Expensing (named after the IRS Code) has been modified. The investment limits were increased under previous legislation and the 2010 Tax Relief Act grants a $125,000 limit and a $500,000 limit on investment for tax years beginning in 2012. Depreciation allows small business owners to expense property purchased against their taxable income. The modifications to the tax law allow small business owners to recover the cost of property used in the businesses fast than traditional depreciation methods.

Small Business Extensions

There were quite a few extensions of previous tax law that were set to expire or expired in 2009. Among those extensions includes:

• 100 percent exclusion of gain from qualified small business stock

• Transit benefits parity

• Work Opportunity Tax Credit (with modifications)

• New Markets Tax Credit (with modifications)

• Differential wage credit

• Brownfields remediation

• Active financing exception/look-through treatment for CFCs

• Tax incentives for empowerment zones

• Special rules for charitable deductions by corporations and other businesses

Keep in mind that many of the 2010 Tax Relief Act’s provisions are temporary. It is important to plan early to maximize your tax savings. Be sure to speak with your tax professional to get all the details regarding the tax law changes.

The Tech Accountant

How the States have turned to “The Grinch”

Thanks to the state and local taxation (S.A.L.T.) experts over at Peisner Johnson and Company, LLP here is a brief video of the 10 worst states to give charitable contributions in. For those that did not know, there are quite a few states that tax charitable contributions of inventory and non-inventory items. So for those small business owners that were thinking about giving away some of their inventory or non-inventory items to charity, think again.


http://portal.sliderocket.com/AHJKO/Charitable_Donations

The Tech Accountant

Form 1099's and You

Here is the topic that just won't go away....at least maybe not this year. Due to the lame duck Congress not reaching a compromise, the Form 1099 reporting requirements look like they will be a reality in the coming years.

Still confused about the new Form 1099 reporting requirements, feel free to watch this short video to fill you in on the details.



The Tech Accountant

Small Biz vs. Form 1099's

I was under the impression that I would have more details regarding the proposed repeal of the Form 1099 reporting requirements today, but did not know it would be bad news.


Yes folks the Senate failed to repeal the 1099 requirements that many small business owners were hoping they would finish before the year end.

This means in 2012 small businesses will have the burden of providing a 1099 for any purchases that total $600 or more. Additionally very little information had been provided regarding the increased 1099 reporting requirements for landlords (in another bill this year) that starts in 2011.

Get ready for increased workloads small businesses for the score right now is Form 1099 (1), Taxpayers (0).

The Tech Accountant

The New Smart Vault

Cloud vendor SmartVault has come out with some great new features in their update release that are sure to be on the holiday list for small biz owners. Be sure to view the video below to see the new features in action.



I will be testing the new feature this week (since this will be a slow week) and will be sure to post some feedback regarding them. I will say that I am glad to see the product expanding more into other markets and not just the QuickBooks market. Smart....very SmartVault.

The Tech Accountant

Cloud Accounting for Small Biz's

Just in time to get small business owners ready for the new year and tax season, cloud accounting vendor Outright has partnered with Google and Shoeboxed.com to offer small business owners an easier way to integrate back office admin functions with their accounting product. Be sure to watch the video below and see how using cloud products can save you money, increase productivity, and focus on growing your business.

 

The Outright product is mainly geared toward sole proprietors (Schedule C)....sorry for everyone else, but there are cloud options available for you too.

The Tech Accountant

1099 Reporting for Rentals

Rental property owners will have a little more work to do next year thanks to a new law that requires them to file Form 1099-MISC forms for purchases over $600. Hear all the details below.



We will keep you posted on the updates since the IRS is supposed to provide additional guidance.

The Tech Accountant

Uncertain Tax Planning

The fall season typically brings about a change. Whether it is change in the temperatures, the changes in the leaves, or the change in the time (fall back) around this time of year everyone is experiencing a change. One thing that should not change during this time of year is a taxpayers’ ability to properly plan for the upcoming tax season. This year however, is one of the most difficult tax years to plan for due to the uncertainty in the Congress and our economy. The economy is currently filled with uncertainty making many small businesses hold on to their hard earned money and not hire more workers. Congress is adding their uncertainty to the pot by recently adjourning without addressing the expiring Bush tax cuts in addition to other important tax issues (AMT, estate tax, and more).


What is a taxpayer or small business owner to do in a situation of uncertainty? Listen to some of the ideas we have come up with for our clients here.



The Tech Accountant

1099 Reporting...What's New???

Recently while speaking with a construction client, the topic of 1099’s came up and my client asked me if he was going to have to give a 1099 to every vendor that he does business with (he has a lot of vendors) and when would this start. As I gave him the details (i.e. requires businesses to file information returns if they pay more than $600 to a single vendor, won’t have to start until 2012) I could tell he did not want to deal with the burden of filing all those 1099’s. Well it seems Congress doesn’t want to deal with the burden of repealing the new 1099 reporting rules either.


The new 1099 reporting requirements will raise about $19 billion as part of the Patient Protection and Affordable Care Act. The burdens that the requirements put on the small business owner are sure to increase their administrative duties/costs considerably. There have been a couple of ideas being kicked around in Congress lately. One was to increase the amount required to file reports from $600 to $5000 and another was to exempt businesses with 25 or fewer employees. Obviously neither idea was passed.

So where do we stand now? Congressional leaders say that they have heard the cry from the masses and will repeal the law sometime before the first of the year (hopefully). I guess this will have to be as separate legislation since it was not attached to recent small business legislation signed into law. We will be sure to keep you posted on any changes in the 1099 reporting requirements as they are made.

The Tech Accountant

Rain Clouds on Peachtree? Here’s you Umbrella

Yesterday I received an e-mail from Sage Accountants Network that Sage Peachtree’s cloud based solutions will be discontinued on November 30th of this year. With the discontinuation of the Sage Peachtree cloud products (ePeachtree, Peachtree Web Accounting, Sage Peachtree WebsiteTrader and WebsiteCreator Services) is there a “next step” for clients that are using these products before the November 30th deadline? I have been getting calls/emails with questions and concerns about:


• Having access to their data after Nov. 30th

• Will Sage offer any other cloud products to move data over to

• How this affects the use of desktop Sage Peachtree products

Here is what we know so far regarding alternatives to Sage Peachtree Cloud products:

• ePeachtree – extract data by November 30th and Sage will offer customers a free desktop version of Sage Peachtree Complete Accounting and Sage Peachtree Simple Payroll

• Peachtree Web Accounting – Sage offers two alternate sources for web accounting. Sage Remote Access powered by GoToMyPC and Sage Peachtree Accounting 2011 using Terminal Services. To see which solution will work for your small business click here.

• Sage Peachtree WebsiteTrader and WebsiteCreator Services – Probably the toughest of the alternatives, clients will have to transfer their websites to another provider. The transfer can be completed via uploading the code to a new provider via FTP or exporting the website catalog item list to an XML or CSV file.

These are the solutions that are currently offered by Sage to somewhat minimize client’s pain with transferring their data to alternate sources. Clients must take the initiative and start planning for the transfer now to ensure that there is no interruption in their office procedures and administration and they can also test the transfers before the yearend reporting season. Be sure to seek assistance from a Sage Peachtree software consultant to correctly walk you through the transfer of your data.

The Tech Accountant

Form 1099 reporting - Need Your Input

Small business owners are in for a treat starting in 2012 if they do not voice their opinions. Under Section 9006 of the Healthcare Act all businesses, tax exempt organizations, and federal, state and local government entities will be required to issue Forms 1099 to vendors who they make purchases from totaling over $600 during the calendar year.

What?!?!

So if you are a small business owner, the new law is going to increase your paperwork burden for the end of the year and may possibly increase your accounting fees. Currently there is a bipartisan effort to have this portion of the law repealed, but nothing has changed as of yet.

I would recommend that small business owners take the time to leave comments with the IRS regarding this new law. At the following link:

IRS Requests Pubic Input on Expanded Information Reporting Requirement

To hear my personal input, listen below.

The Tech Accountant

3 Ways to Take Small Business Accounting to the Clouds

Small business owners (SBO’s) who use any kind of technology in their business will have undoubtedly heard someone mention “cloud computing” or “SaaS” and how this new technology will be the future of their business operations. Due to tighter budgets and a bit of misunderstanding of what the cloud has to offer, many small business owners continue with the “if it ain’t broke…” way of doing things. When speaking to small business owners about how they can streamline operations and save money, the topic of cloud computing seems to come up a great deal. I usually hear reasons for resisting the cloud to include security issues, control of data, and learning curve.


If a small business owner is not ready to fully jump out the airplane and into the clouds, they have three basic ways they can move to the clouds. These solutions also address some of the many issues that small business owners have about the cloud way of doing things.

Remote Access

Test your current accounting system using remote access. Remote access allows a SBO to still control their data by having it located on one of their computers and gives bookkeeping personnel the ability to login to the system from anywhere there is an internet connection. The bookkeeper can access accounting information at their leisure and can cut down on in office expenses. Remote access works best when there is a dedicated computer for accounting and only one person is accessing the data. Some remote access vendors include LogMeIn and Citrix.

Software Hosting

Hosting your accounting data is an even closer step towards the cloud. When an SBO “hosts” their accounting software bookkeeping personnel will login to the hosting company’s servers and complete their tasks over the internet. The data will reside on the hosting company’s computers and updates will be done by the company. Hosting also allows simultaneous users allowing more than one person access to accounting functions. SBO’s must use due care when setting up permissions to various functions of the accounting software to ensure that proper controls are in place. Some hosting vendors include CPAASP and Right Networks.

SaaS Solution

When an SBO uses a SaaS accounting product, all of their mission critical data is in the clouds. Bookkeeping personnel will login to the accounting system just like accessing an online banking module. Changes are updated in real-time and updates are usually done during non-peak hours. Simultaneous users can also access the system at once and the control functions are integrated into the module. Since the data is completely online, there is no data file to share or provide to outside parties. Some SaaS vendors include Netsuite and AccountantsWorld.

As a SBO, taking your accounting processes to the cloud can be done in many ways. Depending on the SBO’s resistance, one solution is sure to fit your business operations. Embracing the cloud can be tough for many SBO’s thus it is important to speak with cloud vendors, map out a plan, and test the systems before going full speed with a cloud accounting solution.

The Tech Accountant

Five Trends Killing Horizontal Accounting Software

Blogger Austin Merrit of Accounting Software Advice had a recent post that discussed the 5 trends that are killing horizontal accounting software . Merrit states the 5 trends are:
1. Decision makers require more than a standalone system

2. Businesses want systems that fit their unique needs

3. SaaS emergence

4. Mobile Access and Social Media Integration with the enterprise

5. Software vendors fueling the switch

I would agree with Merrit that horizontal accounting software is quickly becoming obsolete and feel that the continued development of vertical software “flavors” are the driving force behind the switch. Software designed for small business (those that gross between $1 million to $5 million in revenue annually) currently on the market can be considered “vertical” once additional modules or “add-ons” are integrated with the existing software. If you take the major accounting software vendors (Intuit, Sage, Microsoft) each has what they consider a “middle” market product that can integrate customer management, financial management, operations management and employee/HR management. These systems are also currently providing advanced reporting, deeper sales and inventory management, customizable dashboards, collaborative workflow management and online training that further push their existing software into the vertical market.

The path to vertical accounting solutions for existing software vendors can be traveled down to major routes. One is to allow 3rd party vendors to develop add-on vertical products to use in conjunction with an existing horizontal software package. An example would be Intuit’s Marketplace and Worplace App Center. The Marketplace allows small business owners with horizontal accounting software the ability to add industry specific solutions that can be implemented via the desktop or the web. The Workplace App Center provides small businesses with software programs that can be loaded on the computer or smart phone to help save time.

The second route is to create an industry specific accounting software product that integrates other small businesses back office functions. Sage currently offers vertical software designed for the construction, real estate, and non-profit sectors. These software titles give small businesses the ability to focus on industry specific business management issues, operate their business in real time, and have all their back office functions in one package.

Small businesses using existing accounting software and third part add-ons are also pushing the industry to provide more vertical solutions to their business specific issues. The question is however; are these small businesses utilizing their existing software to its full potential. I personally have rarely seen a small business outgrown one of the higher level horizontal accounting solutions (QuickBooks Enterprise, Sage Quantum, and Microsoft Dynamics GP) when they are using all of the software’s features/modules/add-ons. A major problem is that many small businesses don’t take the time to learn how to use all the features in their accounting software. The key is that small business decision makers must prioritize their needs when considering an accounting software package. By focusing on the software’s features, implementation, technology, the vendor’s reputation in their vertical market and the small business’ budget a small business can turn their horizontal accounting software into a vertical accounting powerhouse.

The Tech Accountant

QuickBooks Helping IRS Audit Your Books?

The IRS and Intuit are joining forces to make it easier to audit your small businesses. This information was provided from a recent liaison meeting. Does this allow auditors the ability to review QB data that is NOT within the audit scope allowing the audit to be expanded? Let me know your thoughts.



ISSUE:

I was informed yesterday by a Revenue Agent that a national directive has been issued to all Revenue Agents to obtain a copy of the QuickBooks file for any taxpayer being audited who uses QuickBooks. Apparently each audit group has one license from Intuit.

What I plan to do is to use the utility feature to condense prior years so that no detail can be accessed. My audit is for 2008, but obviously other periods can be opened if they want. Hopefully this is not their intention....I have asked for a copy of the directive.

My main concern is the cost of audit representation for our clients if the IRS goes crazy with this. I would love to get your thoughts on this.


RESPONSE:

There have been some substantial changes in the last six to twelve months regarding the issues raised. The IRS has purchased 1500 to 2000 licenses from Intuit and will have one agent trained and licensed per group to assist others in the examination of taxpayers who use QuickBooks. Agents are instructed to obtain a copy of the taxpayer's data base for the year under examination only when it is necessary. This examination tool will not be used in all cases - it is the judgment of the examiner.

IRS has found that many taxpayers do not save hard copies of their records or the copies they have are incomplete. The Service also found that taxpayers reuse an old version and over write the prior year. The examiner may request the data base to verify the integrity of the internal controls. A definite problem could arise where a client thinks they have turned off the internal audit feature to avoid  tracking of adjusting entries but the program does not totally delete these items.

If the qualified representative (power of attorney) considers the Revenue Agent's request for the data base as totally unnecessary, he/she should speak to the agent's group manager. If the taxpayer/representative refuses to provide the data base and the revenue agent/manager determines it necessary, a Summons to obtain the information would be issued.

I spoke with our SB/SE national Technical Advisor for electronic records in our Exam Special Processes unit regarding the issue stated below. The Revenue Agent referenced in the question may have been referring to a memo issued by Monica Baker, the Examination Director, in late April announcing the implementation of the QuickBooks software availability to Revenue Agents. However, there is no written directive that has been issued instructing Revenue Agents to request the electronic data file in every instance where the taxpayer uses QuickBooks or other electronic records.

While Rev Proc 98-25 provides the authority for the IRS to request electronic records, in most cases (with exceptions), the Service will generally request the data file if some sort of electronic system was used. It is indeed up to the agent's and manager's judgment at the group level to make the request.

Although the data file generally retains information from the date of initial input to the date of backup which could obviously include multiple years in addition to the actual audit year, agents are instructed to look at the information only for the year under exam. If there is a decision to expand the examination to prior/subsequent years, then information for those years could be reviewed. As mentioned, using the cleanup utility condenses prior year information into a summary, rather than a detailed, format.

As the software finds its way into RA groups and more agents are trained in its use, we could definitely be seeing a trend in the way exams are conducted since so many small businesses use QuickBooks.


Gerry Kelly-Brenner
ID #94-06950
Senior Stakeholder Liaison Specialist
SBSE Communications, Liaison & Disclosure

Internal Revenue Service
1301 Clay Street, Suite 1090S
Oakland, CA 94612

The Tech Accountant

Spreadsheets or Cloud - Tax Planning Made Easy

 
The Tech Accountant

New HIRE Form

For those small business owners that will be adding employees in the future, there is a new proposed form that will need to be filled out to ensure that your new employees qualify for the HIRE Act's tax break.

To view the draft of the form click here.

The Tech Accountant