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

Share your Biz Story...Win an iPad

Here's a cool contest for all the small biz owners and entrepreneurs out there. Be sure to watch the video and then post your own story.



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

You Deserve a Cool Credit

In these cooler weather months it's good to know that the IRS is offering us a cool credit that may warm our wallets and our homes. Check out all the details in this quick video.



The Tech Accountant

A Lame Duck still Quacks

All the votes have been tallied and all the precincts have reported…some people are happy with the outcome and some are not. Whether your Congress person won or not is not the issue at this point, the issue lies in what is going to happen in the lame duck session of Congress for the rest of the year and will you as a taxpayer be prepared. Here’s a quick rundown of what is on the table for taxpayers before the year ends:


• Bush Tax Cuts extended?

• Estate Tax?

• AMT?

• Health Care Reform?

I am not a betting man but would have to think that more than likely some taxes are going to go up. What taxpayers do before this year ends is important but you may need to call the psychic hotline or a crystal ball to assist you. When I looked into my crystal ball this is what I have come up with.


Be sure to speak to your tax professional (psychic) to ensure that all of your ducks are in a row for the upcoming tax season.

The Tech Accountant

Using Logic and Love in Your Small Business

While going thru my e-mails recently, I came across one of those chain e-mails that everyone sends…you know the one’s that always ends with send this to….and instead of simply deleting this one I figured what the heck let’s see what this one is all about.


Well the e-mail was initially sent to provide the reader with a new outlook on living their lives knowing when to use logic or love. It described in detail what logic and love were and how they are used in our interactions and relationships every day. Logic was described as being aggressive, argumentative, detailed oriented and sparking debate. Love was described as being compassionate, empathetic, building relationships and communion.

The descriptions got me to thinking “How can one use logic and love in their small business operations” since many of the terms used to describe logic and love are needed by entrepreneurs to run their own business. I came up with two major areas where an entrepreneur can use logic and love to effectively manage and grow their business.

Business Operations – Logic Rules the Day

Entrepreneurs need to use logic when they are focusing on business operations. Since logic sparks debate and is argumentative, those skills will come in handy say when dealing with bill disputes or improving daily operational procedures that may need reviewing. Logic is also detailed oriented and attention to detail is always great for productivity and efficiency. Logic will also assist an entrepreneur with ethical issues since when one is using logic there is typically no grey area.

Start-Up/Marketing – Love What you Do

Entrepreneurs must initially use love when they start their business. One of the most important aspects of starting a business is finding something you love to do and offer that product or service to the public. I love to help people save money, time and grow their business that’s why I’m in accounting. An entrepreneur should find what they are passionate about before starting a business. The passion will then carry over in your dealings with clients/customers. Marketing is simply about building relationships, and being compassionate about your clients needs. By using love to build relationships, a small business owner has a better chance of growing their business.

These are just a few of the ways I see that an entrepreneur can use logic and love to assist them in growing their business and becoming great at what they do. Feel free to post your comments below.

The Tech Accountant

10 Signs Your Small Biz may be ready for the clouds

Cloud computing continues to make inroads into our everyday lives as indicated by many surveys taken recently. That got me wondering if small business owners were also embracing the cloud more for the coming year. There are still quite a few small businesses out there that feel the need to continue to use on premise software for their operations feeling that if it ain’t broke…well you know the rest. The importance of using the cloud finally came to a head when I was recently on an engagement and before I could start to work, I had to update the software. So I came up with a brief list of 10 signs that your small business is ready for the clouds:


1. You receive a CD to load the software

2. You have to go thru a registration/renewal process

3. A new version comes out every year

4. Software has to be updated

5. You have to call tech support for problems

6. You spend time being tech support researching your own problem

7. Support contract expires every 3-4 years

8. Corrupted data issues

9. Desktop has too many version icons

10. Your PC runs slower

Listen to me elaborate a bit more about the list here:



This is just a quick list of things I see when working with clients why the cloud would help them lower their costs, increase productivity and efficiency and let them focus on growing their businesses. If anyone can think of any more or even why a small business owner should stay with on premise software feel free to post a comment to the post.

The Tech Accountant

A Win for Small Businesses

Not too long ago our friends over at Microsoft released a very robust product called Microsoft Security Essentials, an antivirus product. The cool thing about this release is that the antivirus software is one of the highest rated products on the market and it is a free download. The only downside was that the End User License Agreement (EULA) only allowed for personal use (although I wonder how a sole proprietor with a single computer case would apply to the situation but that’s a whole other topic).


Well Microsoft has in a sense thrown small business owners a bone this month by amending their EULA to allow the software to be used by small businesses with 10 or fewer PC’s. This is a great way for a small business to save money by reducing their technology expenses, become more productive since the software is less of a resource hog on the computer, and protect their PC’s and whatever is on those PC’s.

Here is a video with the details:



When tested the software ran smoothly in the background and did not slow the computer down at any point (like when running scans or updates). There may be a chance that the software is not a good fit for your small business, so be sure to speak to a technology consultant to accurately assess your needs.

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

A look back at the tax season

Now that the tax extension deadline is one day into the rear view mirror, many taxpayers (and us tax professionals too) would like to take a break away from taxes. This gives me the opportunity to sit back and reflect on some of the more memorable comments I heard during the year regarding taxes and filing. There were quite a few areas of tax law where some taxpayers I spoke with were unclear as to the rules but some of the major ones had to do with extensions with balances due, and failing to file a tax return.




Tax Extensions

When a taxpayer does not have all the information to accurately complete their return by the deadline, the IRS will allow for an extension of time to prepare the tax return. To request an extension, taxpayers must file Form 4868 (individuals) or Form 7004 (businesses) on or before the due date of the return. Typically this is where the misunderstanding starts. An extension of time to file your return does not include an extension of time to pay your tax liability. Taxpayers filing extensions should estimate to the best of their knowledge their tax liability and send a payment when filing their extension.



Failure to File

When a taxpayer does not file a tax return by the due date (including extensions) a failure to file penalty may be incurred. This rule has been in existence for quite some time, however many taxpayers are unaware of the penalty. This may also be a good time to notify taxpayers that the failure to file penalty has been increased for income tax returns filed more than 60 days after the due date (including extensions). Returns filed after 2008 qualify for the increased failure to file penalty in which the minimum penalty will be $135 or 100% of the tax not paid.

These are just two of the more frequent misconceptions that I personally heard about during the year, but there are more. With all the recent changes in tax law, there are sure to be more “grey” areas where many taxpayers may fall thru the cracks. One the reasons I always say taxes are a year round strategy that can be proactively done with your tax professional instead of reactively at year end.

The Tech Accountant

Statements too broad for the IRS

Recently when speaking to a few of the attendees of our small business workshops the topic of business expenses came up and one of the attendees was under the impression that all a business owner needed to validate an expense was their bank or credit card statement. Unfortunately it gonna take a little more than that for it to fly with the IRS.

The IRS defines a business expense as a cost that is ordinary and necessary to carry on the trade or business. Expenses are typically deductable if the business is out to make a profit (i.e. not a hobby). If a small business owner is audited, and a review of the business expenses is warranted, it is important for a small business owner to have more than just their bank or credit card statements to substantiate their purchases. The IRS is looking for proof that the purchase was for a business purpose and most statements only provide the date, amount, and the vendor, not what was purchased. A prime example of the IRS not allowing statements as evidence of business purposes can be uncovered in KEITH J. FESSEY, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent a quick Tax Court case that I recently came across (I like to read stuff like this).

In summary Mr. Fessey was not allowed a large portion of his business expenses due to his poor recordkeeping. So what is a small business owner to do?

Small business owners need to keep the receipts and attached them to each statement so that they are easily recognizable and locatable. There are times however that the receipt can fade and the ink is no longer readable. In these cases, a small business owner can use technology as a backup. By scanning the receipt (and the bank/credit card statements) into a file and either store the file within their accounting software, their hard drive or the clouds. There are a great deal of scanning vendors out there for small businesses to use so be sure to Google “receipt scanners” to locate one for your small business.

By retaining your receipts and having a backup, a small business owner can ensure that their bank and credit card statements are not too broad for the IRS.

For more information on business expenses be sure to speak to your tax professional or read IRS Publication 535.

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

IRS Introduces Widgets to Inform Taxpayers

The IRS continues to embrace technology and is quickly moving into the realm of social media with their new widgets. The widgets can be placed on websites, and social media sites to inform taxpayers about new developments with the IRS and tax breaks. Topics for the widgets include EITC (Earned Income Tax Credit), IRS Retirement Plans; HIRE Act tax breaks, due diligence, and non-profits. Be sure to keep a lookout for the new widgets on your tax professional’s website and social media pages. Examples are below:

The Tech Accountant

Fishing with the EFTPS

Back in July, I posted about a new e-mail scam that had been circulating to get taxpayers personal data. Well, the crooks seem to be at it again according to the IRS, and this time the “fish hook” is the EFTPS (Electronic Federal Tax Payment System). Now before everyone jumps to conclusions and says “See another reason to not use technology”, let me outline the details of the scam.


The scam claims to be from the IRS and states that it comes from the Anti-Fraud Commission (and many of the words are misspelled). The e-mail goes on to say that someone has used the taxpayer’s credit card information to pay a tax liability. The e-mail continues and says that taxpayer’s bank accounts have been used for fraud and money has been lost. To help recover the funds, taxpayers must click on a link within the e-mail to start the recovery process.

How to spot scam IRS e-mails

1. Misspelled words

2. E-mail does not end with IRS.gov

3. Link does not end with IRS.gov

4. IRS does not send e-mails to taxpayers

Hope the following tips will keep taxpayers safe when surfing the internet and checking their e-mails

The Tech Accountant

Don’t lose this late summer tax saving opportunity

With the end of the summer near (or for most already here), brings about time for back to school for many students. Taxpayers that have students in college will be relieved to know that there is still time to capitalize on a tax credit opportunity for college expenses paid. The American Opportunity Tax Credit is still available until December 31st 2010 and will help students and their parents offset the cost of college. According to the IRS there are six (6) important factors taxpayers need to know to claim the credit:


1. This credit, which expands and renames the existing Hope Credit, can be claimed for qualified tuition and related expenses that you pay for higher education in 2009 and 2010. Qualified tuition and related expenses include tuition, related fees, books and other required course materials.

2. The credit is equal to 100 percent of the first $2,000 spent per student each year and 25 percent of the next $2,000. Therefore, the full $2,500 credit may be available to a taxpayer who pays $4,000 or more in qualifying expenses for an eligible student.

3. The full credit is generally available to eligible taxpayers who make less than $80,000 or $160,000 for married couples filing a joint return. The credit is gradually reduced, however, for taxpayers with incomes above these levels.

4. Forty percent of the credit is refundable, so even those who owe no tax can get up to $1,000 of the credit for each eligible student as cash back.

5. The credit can be claimed for qualified expenses paid for any of the first four years of post-secondary education.

6. You cannot claim the tuition and fees tax deduction in the same year that you claim the American Opportunity Tax Credit or the Lifetime Learning Credit. You must choose to either take the credit or the deduction and should consider which is more beneficial for you.

For additional details on how you can claim the credit, be sure to visit the IRS website or speak to your tax professional.

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

7 Steps to Paying Tax Liabilities

As the summer comes to a close, so does the 6 month extension to file tax returns. Extensions are used to extend the time to file your tax return but do not extend the time to pay any tax monies owed. If you are a taxpayer that has a tax liability that has not been paid, here are the seven steps to paying your tax liabilities:


1. Find out how much you owe in unpaid taxes. Either contact the IRS or get copies of your tax returns to verify the amount you owe. Tax liabilities not paid timely will include your original tax due, plus penalties and interest.

2. If setting up a payment plan, the IRS charges a user fee: $52 for direct debit installment agreements, $105 for new installment agreements without direct debit, or $45 for restructuring or for reinstating a defaulted installment agreement. Low income taxpayers can request a lower fee of $43.

3. Fill out Form 9465, Installment Agreement Request. Or use the Online Payment Agreement Application on the IRS Web site.

4. Choose a day of the month you want to make your payments. Your payment must be made by the same day each and every month. You can choose any day you want between the 1st and 28th of the month.

5. Choose your monthly payment amount. You must pay the same amount each and every month.

6. The IRS will respond to your request in about 30 days.

7. Make payments each and every month. You can pay by check, money order, credit card, EFTPS or automatic withdrawals from your checking account.

Taxpayers can increase the amount of their monthly payment if they like, but should at least make the same minimum payment each month. Taxpayers can always seek the assistance of a competent tax professional if they need assistance creating a budget for their tax liability or they do not have the time to complete the steps.

The Tech Accountant

Bankruptcy and Your Taxes

Bankruptcy filings are at an all time high according to statistics released by the Administrative Office of the U. S. Courts, the highest number since the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. Taxpayers that file bankruptcy need to know the rules regarding bankruptcy protection and how tax debts can come into play. Before a taxpayer attempts to include federal tax debts under their bankruptcy protection they must determine what tax liabilities might be dischargeable.

Find out which tax liabilities are dischargeable here:



Taxpayers also must attempt to salvage their credit history by researching other options before including tax debts in bankruptcy filings. Tax administrative options can include a request for abatement of penalties, installment agreements, offers in compromise, and innocent spouse relief. If these options have been exhausted or are not viable for the taxpayer, including tax debts in bankruptcy may be the only solution.

Taxpayers can find assistance with bankruptcy and their tax situation by seeking the assistance of a good bankruptcy attorney and their accountant. Working in conjunction with the attorney and accountant, the taxpayer can determine which type of bankruptcy they need to file, what tax debts if any will qualify for discharge in bankruptcy, and how a bankruptcy filing will affect their tax situation in the future. Filing for bankruptcy is not the end of the world and for some taxpayers may be the only option to help them rebuild their lives.

The Tech Accountant