OffAssist

 

April 2013
Volume 10, Issue #4

Relax & Review

Ah, April. The birds chirp, the sun shines, the grass grows... and all the bookkeepers in the land lose whatever mental facilities they had left.

Seriously, April --especially from the 16th to the 30th-- brings a sense of renewal for me. The weather finally starts to warm up, the kids want to play outside more, and the final files are out of my office and ready for the CPA to deal with. I traditionally take a couple days of me time after the 15th. I use the time to unwind from the bulk of tax season and to look back and take stock of how the season went; review what we did right, make plans for what we can change next year.

Thus far tax season 2013 has gone remarkably well. Either that, or I’m just getting immune to it. Every year I learn something different. This year we e-filed all 1099s. All I could think afterward was, “WHY we didn’t do this before?!” It sure made life easier for us! 1099 time was reasonably stress-free. I wasn’t fighting with the printer over forms or looking for postage or any of the myriad other issues that go along with doing 1099s by hand!

Take a few minutes (or days) this month to relax, look back at Q1 and think about what you learned and what you could do differently in the first quarter of next year to take some stress out of your life.

Candy

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In this issue...

Article: How Small Business Owners Can Prevent an IRS Audit

Bookkeeping Tip: QuickBooks Shortcuts

Tax Deadlines April 2013 / May 2013

Spotlight on N3 Tax Services

Tech Talk: Start Menu Button

Humor

How Small Business Owners Can Prevent an IRS Audit

While the below article has good tips, keep in mind, as always, that what is right in general may or may not be right for you, your state, or your business. Always check with your tax professional before implementing changes that could affect your taxes.

By Sandra Riker

Introduction

Running a small business is usually a lot of work for the owner who does everything from sales to services and everything in between. The last thing that an owner needs is a tax audit. There are many good ways to avoid any problems with the IRS if one is vigilant and keeps good records. Doing this, along with some other tips can help small business owners to be sure that when it is time to deal with taxes they have everything in order so that the IRS is reassured that a business is in compliance with tax laws.

There are some simple steps a business can take to be certain they are in compliance and can prove this where the IRS and taxes are concerned. Recording everything, filing the right forms, keeping contractors straight and a few more important details can keep a small business from being put through an IRS audit. The following steps should be a guide for small business owners to follow in order to be sure that when it is time to deal with the IRS they have all their documents lined up and forms filed so that they will not add the pressure of an audit to the regular stresses of owning and running a small business.

Keep Records of Everything

When running a small business it is vital to keep track of all records of everything that goes on with the business. The records should be detailed with all income and every expense recorded. Less than 4% of sole proprietors are actually audited by the IRS. Even with this being the case, it is important to keep very clean records of everything that goes on in your business. The recommended time for a business to file and keep records is seven years in the event your business should be audited. One can buy commercial software or use something like Microsoft Excel spreadsheets to keep track of records for a business.

Any income and outgoing debt should be recorded at least weekly by the business owner. This can be done in Excel and there should be a column for any expenditure for supplies or debts owed, including fixed debts such as rent for the building or property taxes as well as electricity and other utilities. These should be broken down into weekly increments and recorded. Travel and business trip expenses should also be recorded as they are deductible, in addition to, any business cash transactions.

File All Necessary IRS Forms

The IRS will want to look at all the forms you need to fill out that are obtainable through them. Be certain to fill the entire form out as directed. If something is left blank the IRS will note this and want to audit it. Once you are certain that the forms are filled out properly make sure they are signed.

According to the IRS a calendar tax year is 12 consecutive months beginning January 1 and ending December 31. A fiscal tax year is 12 consecutive months ending on the last day of any month except December. A 52-53-week tax year is a fiscal tax year that varies from 52 to 53 weeks; but, does not have to end on the last day of a month. This does not mean you keep your records yearly. Keep weekly records and file the quarterly or yearly tax reports.

The IRS is Interested in Your Income

Since the IRS is particularly interested in whether those who are self-employed are reporting their full income all that you earn must be listed. Use the exact figures that appear on your 1099 or W-2 forms. The IRS has also been on the alert for errors in Schedules K-1, the form used to report incomes from partnerships, S corporations and some trusts on individual tax forms. As cash based business are more likely to be audited, if your business deals in cash anything over $10,000 should be listed on a Form 8300.

If the government notices that a business owner is taking a lot of vacations or owns a house or car that is more expensive than what that owner is reporting it will throw up a red flag that will almost surely result in an audit. So be certain all cash is accounted for on your filings.

Be Accurate in Assessing an Independent Contractor

The National Society of Accountants tells small business owners to be certain to have freelance workers sign contracts. If a worker is not listed and contracted as a freelancer that is issued a 1099 then they will expect to see them on a payroll.

It is important these workers are distinguished when a small business files so that it does not draw the attention of an auditor. A freelancer must report taxes if they make over $600 in a year.

Never Mix Personal Deductions with Business Deductions

Tax write-offs must never mix personal and business deductions. It is suggested that anything that will be used as a deduction, such as computers and office equipment be photographed. If a vehicle is used for business then the mileage used for business must be recorded. If a business trip is taken, it is acceptable to take family and make it a vacation; however, only money spent for the use of the business associated costs may be deducted. If there is cross-over in this area, it could cost a small business owner an audit and penalties.

Using Rations for Analysis

One final way to avoid having a small business audited is to align it with other businesses to show that the income patterns are consistent with ratio analysis. This is particularly important if the business is cash heavy. A "vertical analysis compares expenses relative to gross receipts in a given year. An industry analysis shows how a small business compares to others within the industry as a whole and there are sites for these kinds of comparison. Bizstats.com is one that is recommended for these kinds of analyses and they should show consistency across the years.

Concluding Thoughts

Small business owners should be consistent with record keeping and filing forms. A small business that is cash intensive needs to record all cash transactions. The right forms need to be filed for various parts of the business including freelance contractors. Deductible expenses must be kept to only those that are relevant to the business. Using comparison ratios will help an owner make sure that they are on track with other similar businesses and they will be able to prove that they are not hiding money by not reporting cash. Photographs of office equipment or other questionable deductibles can be useful as well. If a small business owner follows all these rules they should not attract an IRS audit and if they do, they will be protected from fines and fees.

About The Author: Sandra Riker, MBA, is the Founder & Chief Accountant of PSJ Business Solutions, and can be reached by phone at (609) 388-4821 or by email at sandrariker@psjbusinesssolutions.com.

Article Source: http://EzineArticles.com

Bookkeeping Tip: QuickBooks Shortcuts

If business owners decide to keep their own books or help out their bookkeeper by entering data during the month, they usually want to spend as little time as possible doing this. Shortcuts for general maneuvering in QB will save you time.

  • When in a check or invoice window, highlight the check number or invoice number and use + or - increase the numbers.
  • Alt-S - save the current transaction.
  • Alt-N - save the current transaction and go to the next.
  • Tab - go to next field.
  • Shift-Tab - go to prior field. Up Arrow - go to previous line item in form.
  • Down Arrow - go to next line item in form.
  • Page Up -move to a previous page in a form area or report.
  • Page Down - move to next page in a form area or report.
  • Ctrl-Page Up - Move to the first item in a list or register.
  • Ctrl-Page Down - Move to the last item in a list or register.

Start using these shortcuts and they will become routine for you and save lots of time.

Note: Check with your accounting professional before doing this to be sure that's how they'd like it done. YMMV!

Susan Kovalesky is the owner of Balanced Bookkeeping Solutions and is a Certified QuickBooks ProAdvisor, a certification updated annually. She is also a team member of OffAssist. Follow her on Facebook.

Tax Deadlines

April 1
- Electronically file Forms W-2, W-2G, 1098, 1099, and 8027.
- File Form 2290 and pay the tax for vehicles first used in February.
- File Form 730 and pay the tax on wagers accepted during February.

April 3
- Deposit payroll tax for payments on Mar 27-29 if the semiweekly deposit rule applies.

April 5
- Deposit payroll tax for payments on Mar 30 - Apr 2 if the semiweekly deposit rule applies.

April 10
- Employers: Employees are required to report to you tips of $20 or more earned during March.
- Deposit payroll tax for payments on Apr 3-5 if the semiweekly deposit rule applies.

April 12
- Deposit payroll tax for payments on Apr 6-9 if the semiweekly deposit rule applies.

April 15
- Individuals: File Form 1040, 1040A, or 1040EZ. For automatic 6-month extension file Form 4868 and deposit estimated tax. Pay the first installment of 2013 estimated tax.
- Partnerships: File Form 1065 and furnish a copy of Sch. K-1 to each partner.
- Electing Large Partnerships: File Form 1065 calendar year return.
- Household Employers: File Sch. H with Form 1040 if you paid $1,800 or more to a household employee.
- Corporations: Deposit the first installment of your 2013 estimated tax.
- Employers: Deposit payroll tax for Mar. if the monthly deposit rule applies.

April 17
- Deposit payroll tax for payments on Apr 10-12 if the semiweekly deposit rule applies.

April 19
- Deposit payroll tax for payments on Apr 13-16 if the semiweekly deposit rule applies.

April 24
- Deposit payroll tax for payments on Apr 17-19 if the semiweekly deposit rule applies.

April 26
- Deposit payroll tax for payments on Apr 20-23 if the semiweekly deposit rule applies.

April 30
- File Form 720 for the first quarter.
- File Form 730 and pay the tax on wagers accepted during March.
- File Form 2290 and pay the tax on vehicles first used in March.
- Employers: File Form 941 for the first quarter.
- Deposit FUTA tax owed through Mar if more than $500.

May 1
- Deposit payroll tax for payments on Apr 24-26 if the semiweekly deposit rule applies.

May 3
- Deposit payroll tax for payments on Apr 27-30 if the semiweekly deposit rule applies.

May 8
- Deposit payroll tax for payments on May 1-3 if the semiweekly deposit rule applies.

May 10
- Employers: Employees are required to report to you tips of $20 or more earned during April.
- File Form 941 for the first quarter if you timely deposited all required payments.
- Deposit payroll tax for payments on May 4-7 if the semiweekly deposit rule applies.

May 15
- Deposit payroll tax for Apr if the monthly deposit rule applies.
- Deposit payroll tax for payments on May 8-10 if the semiweekly deposit rule applies.

May 17
- Deposit payroll tax for payments on May 11-14 if the semiweekly deposit rule applies.

May 22
- Deposit payroll tax for payments on May 15-17 if the semiweekly deposit rule applies.

May 24
- Deposit payroll tax for payments on May 18-21 if the semiweekly deposit rule applies.

May 30
- Deposit payroll tax for payments on May 22-24 if the semiweekly deposit rule applies.

May 31
- File Form 730 and pay the tax on wagers accepted during April.
- File Form 2290 and pay the tax for vehicles first used during April.
- Deposit payroll tax for payments on May 25-28 if the semiweekly deposit rule applies.

Spotlight: N3 Tax Services

Spotlight: N3 Tax Services

You know how much I ~love~ tax season. Personally, I can’t imagine spending all my time as though it was tax season, but there are folks in the world who do wonders with all those forms and boxes and checklists. I’m not one of them :-) But Nicole at N3 Services? She IS.

In addition to being one of our newest team members, Nicole is an independent tax whiz. She handles both individual and personal taxes and both income and small business payroll taxes. She can even help out with re-files and, if you haven’t started your taxes yet, filing extension requests. Check out her extensive service options at N3services.com or visit her Facebook page for more information


Have you nursed a secret longing to be in the spotlight, center-stage, all eyes on you?

If you would like to be featured in the OffAssist spotlight column, and have not been featured in the past twelve months, contact Patty@OffAssist.com and we'll see if we can put you in the limelight.

Fine print: We do reserve the right not to feature anyone and a request is not a guarantee that you will make it into the newsletter. Also, if your news, announcement, etc. is time sensitive or tied to a specific date, please let Patty know in your email.

Tech Talk: Start Menu Button

Tom BeauchampBy Tom Beauchamp

Many people hated Windows Vista. I personally didn’t think it was too bad. As a matter of fact, most of Windows Vista is still around in Windows 7 which I personally love. I love it so much that I just cannot bring myself to try Windows 8. Don’t get me wrong, I’ve got a tablet. It’s just that my tablet runs Android and it does it very well. I see no reason to change.

However, if you did take the plunge and went for Windows 8 you are probably like most people and think “Where is the Start button?” I can’t say why Microsoft took it away. I do know they went to great lengths to get rid of it, stripping out any code that would make it easy to bring it back. Luckily some 3rd Party developers feel your pain.

Here are 3 utilities that bring back the Start button and make Windows 8 a little more Windows-like:

Classic Shell: Price: Free. Download from www.classicshell.net
Start8: Price: $5. Download from www.stardock.com/products/start8/
Start Menu 8: Price: Free. Download from www.pcworld.com/product/1252525/start-menu-8.html

I am not sure why Microsoft saw fit to remove a feature that all Windows users have grown accustomed to over last 2 decades. Luckily there are developers out there that see a way to get their names out as well as serve the community. Microsoft is currently working on a major service pack for Windows 8. Only time will tell if they have listened to their customers or if they will continue down their current path.

Tom Beauchamp is the marketing and tech expert behind OffAssist. He can be reached at tom@offassist.com.

Humor

Have an article you'd like to write for our monthly newsletter or want to be spotlighted? Have a QuickBooks question or something you'd like to see in the Tech Tip? Email candy@offassist.com.

The OffAssist newsletter is made possible by the copywriting/editing skills of Ink Think VA, and the coding talents of Time Is Of The Es-Cents.

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This newsletter is published monthly by Candy Beauchamp of OffAssist. © 2013

Much of the advice in this newsletter is based upon the research, professional and personal experiences of the authors. If the reader has any questions concerning any material or procedure mentioned, the publisher and authors strongly suggest seeking the advice of a qualified CPA or other professional.