Tuesday, October 27, 2009

Is QuickBooks Right For Your Business?

QuickBooks has been the most popular off-the-shelf accounting software package for small businesses since the mid-1990s. There are many versions of QuickBooks available for small businesses to choose from, including Simple Start, Pro, Premier, Premier Industry Specific versions, and Enterprise Solutions. Okay, now which one is right for your specific business?

Is your business a start-up business, where you are running the business part-time from your home? Do you have a lot of inventory or services that you provide to your customers or clients? What type of business do you have? Service? Retail? Construction or Contractor? Professional? Non-Profit?

Is your business a going concern? Are you switching to QuickBooks from another accounting package? How many employees does your business have that will need to access QuickBooks simultaneously?

Opps. I bet you didn't think of all these questions when you purchased QuickBooks from the office supply store, did you? You purchased QuickBooks Pro when you really needed the Premier version (with industry specific versions). Or did you need the Enterprise Solutions version because you have more than 5 simultaneous users?

What features does your business need to run efficiently? Do you know which version of QuickBooks best meets these needs? Each version of QuickBooks adds more features, more usability, more security (Enterprise Solutions). Each version of QuickBooks is also more expensive. How many users will be using QuickBooks simultaneously? The number of user licenses needs to be taken into account when purchasing the software. Simple Start only allows one user. Pro and Premier allow from 1 to 5 users. You MUST purchase Enterprise Solutions for more than 5 simultaneous users (up to 30 maximum users).

Did you consider the online version of QuickBooks? Does the online version meet your specific needs? The online version is the only version that does not require updates. But the online version does not offer some of the features available in the desktop version.

If your business is considering using QuickBooks, you need to sit down and analyze all of the features that you will require, including the number of users, how many list items (this includes customers, vendors, classes, inventory/non-inventory/service items, etc.). You also need to know whether or not your business might need additional software that will work with QuickBooks - such as a retail or manufacturing business that has a lot of inventory.

Another consideration to remember is this: Does your accountant know and use QuickBooks? If not, you may need to change accountants or consider using another accounting program.

If you need help in determining whether or not QuickBooks is right for your business, please contact me by email at mastertype@mabspc.com. I will be happy to consult with you on which version of QuickBooks is right for your business. If it is determined that QuickBooks is right for your business, I will even help you install the software and get it setup properly so you can begin using the software.

Bookkeeping Jobs—Why Employers Hire You

Research shows the primary reasons employers hire or promote you is because you assure them you:

1. can be trusted with their personal and confidential information, and
2. have the knowledge, skills, and experience to perform the job.

To get a bookkeeping job or promotion, you not only have to be a trusted and competent bookkeeper, but you must communicate you are a trusted and competent bookkeeper. In the minds of prospective employers, perception is reality.

Friday, October 23, 2009

Treasur Surpasses $3 Billion in Recovery Act Funds for States to Provide Affordable Housing

California to Receive $284 Million in Payments in Lieu of Tax Credits;
To Date, 45 State Housing Agencies Receive Funds

WASHINGTON – As part of the Obama Administration's efforts to strengthen communities and ease pressures on the housing market, the U.S. Department of the Treasury today announced $284 million in American Recovery and Reinvestment Act (Recovery Act) funding to spur the development of affordable housing in California. To date, 45 state housing authorities have been awarded a total of $3.1 billion in payments in lieu of tax credits for affordable housing projects.

"This innovative Recovery Act program allows the federal government to partner with states to support local developers and helps ensure that housing developers can access the financing necessary to build affordable housing," said Treasury Deputy Secretary Neal Wolin. "We have worked quickly to make available more than $3 billion to state housing agencies, and we expect to see continued efforts at the state level, so that these funds can be delivered to the communities that need it most."

In May 2009, the Treasury Department launched an innovative program to provide payments in lieu of tax credits to state housing agencies to jump start the development or renovation of qualified affordable housing for families across the country. Upon receiving notice of these allocations, state housing agencies manage a competitive process to disburse funds to qualified developers. This is an ongoing program open to additional state applications through 2010.

The following link is a complete list of funds awarded to states under the program to date. For more information on the award to California, please contact Alice Scott, Public Affairs Director of the California Tax Credit Allocation Committee, ascott@treasurer.ca.gov, (916) 651-9411.



Wednesday, October 21, 2009

New Form Aids Processing of Mortgage Applications, Makes Ordering Tax Transcripts Simpler

From Washington — The Internal Revenue Service today issued a new form to aid the processing of mortgage applications under the Home Affordable Modification Program (HAMP) as part of the Making Home Affordable Program. The new form will make it simpler for people, especially homeowners trying to modify or refinance their mortgages, to order copies of their tax return transcripts.

Taxpayers often need copies of their tax return information, especially when they are obtaining a new mortgage or when they are refinancing or modifying an existing mortgage. Taxpayers can use Form 4506T-EZ, Short Form Request for Individual Tax Return Transcript, to order a Form 1040 series tax return transcript free of charge.

A transcript is a computer print-out that includes most lines on the original return. A transcript often is an acceptable substitute for a copy of the original tax return for purposes of verifying income.

Form 4506T-EZ is a streamlined version of the Form 4506T, Request for Transcript of Tax Return. The Form 4506T-EZ is only for individuals who filed a Form 1040 series. Businesses, partnerships and individuals who need transcript information from other forms must still use the Form 4506T.

Transcripts ordered through the Form 4506T-EZ can be mailed to a third party, such as a financial institution. The IRS cautions taxpayers that they should complete all required fields, especially the requested years, before signing and dating the form.

Taxpayers can obtain Form 4506T-EZ at IRS.gov. It is a fillable form so people can complete the form online and print a copy. They can mail it or fax it to the addresses and numbers listed in the instructions. It generally takes 10 days to process the request.

The IRS also recommends that people retain copies of their original tax returns in a safe, secure place. Exact copies of tax returns are available by filing Form 4506, Request for Copy of Tax Return, but each copy costs $57 and can take 60 days to process.

Monday, October 19, 2009

What does "Exempt" and "Non-Exempt" position mean?

Many employers do not know the difference between "Exempt" and "Non-Exempt" employees. In this blog, I will explain the difference between "Exempt" and "Non-Exempt" employees. Many employers treat "Non-Exempt" employees as "Exempt" employees because the "Non-Exempt" employees are normally salaried employees — just like "Exempt" employees. This is not the correct way to treat "Non-Exempt" employees.

"Exempt" employees are salaried employees who supervise or manage other employees as a regular part of their job. "Non-Exempt" employees are salaried employees who do not supervise or manage other employees as a regular part of their job.

"Exempt" employees generally do not receive overtime pay for hours worked in excess of 40 hours per week.

"Non-Exempt" employees MUST receive overtime pay for ALL hours worked in excess of 40 hours per week. In certain states, "Non-Exempt" employees (as well as hourly employees) receive overtime pay for hours worked over 8 hours per day whether or not they work 40 hours per week.

Tuesday, October 13, 2009

Cutting expenses

The "experts" say the economy is beginning to turn around. I have yet to see any change for the better in the current state of the economy. In fact, I am seeing more and more individuals and small businesses hurting financially. What can be done to help these individuals and businesses?

For individuals, it is somewhat more difficult to say what should be done to weather the storm. One thing for certain is to cut unnecessary expenses. Many individuals (and families) have cable TV. One way to cut expenses is to drop your cable subscription for the time being. This will give you (your family) a little more money for paying those necessary expenses.

For businesses, again, it can be difficult to say what should be done. Many times, business owners tend to act before thinking things through, and they start cutting back on expenses such as payroll, accounting, and marketing. In some cases, business owners want to cut all accounting expenses, or cut them so much that the accounting services being provided become worthless because the accountant no longer has enough information to be able to provide accurate and timely advice to the business owner.

When times get tough, that is not the time to stop advertising, and certainly not the time to get rid of your accountant and/or bookkeeper. It may be okay to cut the hours of the accountant or bookkeeper, but do NOT tell the accountant or bookkeeper to stop entering information into the accounting system. Every single expense needs to be tracked, along with income and payroll expenses. When the accountant does not have all of the expenses and/or payroll information, but only has the income, the accountant cannot let the business owner know where the business stands financially.

In slow times, many businesses cut back on advertising efforts, sometimes completely cutting all advertising and marketing expenses from the budget. This is the wrong time to totally cut advertising and marketing expenses. Cutting advertising and marketing during slow times will prolong the downturn in a business. It will take longer for a business to recover, if it can recover, when all advertising and marketing efforts are cut from the budget.

Admittedly, advertising and marketing can be very expensive. However, if a business stops advertising and marketing to its customers and potential customers, these customers (and potential customers) will think that the business is unable to survive the storm, and they will go elsewhere.

If you need help determining how you can weather the storm, MasterType Accounting & Business Services, P.C. can help. Contact us at mastertype@mabspc.com.

Tax Planning Check up

Individuals and businesses alike need to check in with their accountants between now and December 31st to see if there are any changes that need to be made in order to take advantage of changes made during this year that affect your income tax situation. What affects one individual or business may or may not affect another individual or business, and the affects may be different for one individual or business compared to another individual or business (under similar circumstances).

There have been many sweeping changes to the tax laws in 2009 that affect both individuals and businesses in many ways. Some of these changes will have a positive affect on individuals and businesses while other changes can have a negative affect, although most "experts" don't want to point out the negative affects of these changes.

If you would like to discuss your specific situation with me (or my firm), please contact me at mastertype@mabspc.com. I will respond to your email within 24 hours.

Tuesday, October 6, 2009

COBRA health subsidy: What you need to know

Job loss brings many challenges to families, and that often includes obtaining affordable health insurance coverage.. Under a 1985 federal law referred to as "COBRA," many employees who are discharged can keep health insurance coverage provided by their former employer for as many as 18 months. But to do so, the employee has to pay 100% of the COBRA premiums.

Employees' subsidy

The economic stimulus law enacted last February significantly reduces the cost of COBRA health coverage for those who lose their jobs.

Qualified individuals who timely elect COBRA coverage are required to pay only 35% (instead of 100%) of these premiums. The remaining 65% of premiums are paid by the employer, but reimbursed by the federal government through tax credits. This subsidy is available for up to nine months after the job loss.

Those qualified for the subsidy include terminated employees and their family members who are eligible for COBRA coverage at any time from September 1, 2008, to December 31, 2009.

Employees who voluntarily terminate employment or who are qualified to participate in another group health coverage plan (such as a spouse's employer's plan or Medicare) are not eligible for the subsidy.

The subsidy is phased out for higher-income taxpayers. For instance, the phase-out starts once modified adjusted gross income (AGI) exceeds $125,000. It is fully phased out at $145,000. The phase-out for couples filing jointly begins with modified AGI of $250,000 and is complete at $290,000.

Any part of the subsidy paid to an individual that is subject to phase-out because of their income limitations must be repaid as an additional tax on the employee's federal income tax return.

Employer' credit

COBRA coverage is only required for employers with 20 or more full- and part-time employees, but many states sponsor plans similar to COBRA for small employers.

An employer that sponsored a health insurance plan that included COBRA coverage is required to pay 65% of the COBRA premium if the terminated employee pays the remaining 35%. The government reimburses the employer through tax credits on the employer's quarterly payroll tax returns (Form 941, 943, or 944).

You can use the credit to reduce payroll tax deposits, or you can claim the entire amount at the end of each quarter.

Employees must be notified of the reduced premiums, and you'll need to keep copies of the notifications.

In addition, maintain records of payments you receive from employees who choose to participate, as well as proof of your remittance to your business's health insurance provider.

The only way to claim the COBRA credit is on payroll tax returns for applicable periods. If you overlooked it on your first quarter payroll return, please call. We can help you file an amended return and assist you with payroll return preparation in future quarters.

The new subsidy may make it possible for laid-off workers to continue affordable health insurance coverage until new employment and coverage can be found.

Kenneth Reid, ATP, CPB, CPP
MasterType Accounting & Business Services, P.C.

New Rules for NOLs

Essentially, a net operating loss or NOL, is generated when a business has more deductions than income.

Under prior rules, a business that had an NOL could carry that loss back only two years for a refund of taxes paid in those earlier years. (The business could also choose to carry the loss forward for up to 20 years.)

The American Recovery and Reinvestment Act of 2009 changed the acrryback period to as many as five years. The new rule applies only to 2008 net operating losses in companies with average annual gross receipts over the last three years of $15 million or less.

Planning opportunities

The carryback periods of either three, four, or five years are elective. That means that the taxpayer can choose how long to carry back the NOL as long as it doesn't exceed five years.

This opens up many tax planning opportunities, especially if taxable income has fluctuated significantly over the years. Not only that, it's a terrific benefit to taxpayers with NOLs larger than could be absorbed over the traditional two-year period.

As an alternative to carrying the loss back to prior years, you can still elect to forgo the carryback althogether and simply carry your losses forward to reduce future taxes.

Remember that the new NOL rules are elective, and you may choose to carry losses back as you see fit for up to five years.

There are filing and time restrictions on this tax break for businesses, so contact us if you need details and filing assistance.

Kenneth Reid, ATP, CPB, CPP
MasterType Accounting & Business Services, P.C.