QuickBooks 7-Point Inspection

Did you know most QuickBooks users only use about 40% of the features QuickBooks offers? Failing to take advantage of these features can drain your productivity, which can drain your wallet!

Here at Rikard & Neal CPAs, PLLC we have a solution to help you get the most out of QuickBooks. For a limited time, we are offering a free QuickBooks 7-Point Inspection.

A free QuickBooks 7-Point Inspection can help:

• Identify problem areas.
• Identify QuickBooks features that may be beneficial for your business to implement.
• Identify potential security issues.
• Identify time-wasters.
• Identify the reports to help you make sense of your finances.
• Identify areas where performance could be lagging.
• Make year-end tax planning much smoother.
• Save you money!

Please contact us today at 901-685-9411 for your free QuickBooks 7-Point Inspection.

QuickBooks Tip: Finding the Report You Need

For many busy business owners, QuickBooks is the go-to accounting software. QuickBooks has made entering invoices, bills, and all kinds of financial transactions as easy as can be, but how does a business owner analyze and make sense of all this data? If you know where to look in QuickBooks, you can find the report you need to answer the questions you have.

  

QuickBooks provides many preset reports that focus on all aspects of your business finances. These reports can answer many of your business questions, such as:

1. How much do my customers owe me?
2. How much do I owe my vendors?
3. Do I have enough cash?
4. Which parts of my business are profitable, and which are not?
5. And most importantly…Am I making money or am I losing money?

While QuickBooks preset reports can answer the questions mentioned above and so much more, how can you find the reports that are tailored to the needs of managing your business? The easiest way to find the report you need is to use the Report Center. In the Report Center, you can:

1. Browse through report categories and the related reports for each category.
2. View sample report images and report descriptions.
3. Create and access a list of your favorite reports.
4. Quickly access recently reviewed reports.
5. Search for reports based on words found in its title or description.

The Report Center is a central location for all your reports. From here, you can easily run reports that show all Open Invoices, Sales by Customer, or Sales by Rep, for example. You can even print several different reports all at once!

What is your favorite report? Post a comment and share it with everyone – thanks!

7 Tax Savings and Financial Planning Ideas for your Business

#1)   Any Accounts Receivable that need to be written off?  (does not apply to Cash Basis Taxpayers)

#2) 100% Bonus Depreciation

Bonus depreciation has been boosted to 100% for qualified investments made in 2011. This reverts back to 50% in 2012.

Unlike Section 179 expensing, it is not limited to use by smaller businesses or capped at a certain level.

Bonus depreciation is not limited by the size of a taxpayer's investments in

qualified property and it can generate net operating losses. Keep in mind that bonus depreciation applies only to new property and is not exempt from certain

uniform capitalization rules as is Section 179 expensing.

#3)   Section 179 up to $500K (for Federal Returns) in 2011.

Planning on purchasing any assets for the business in the near future?

Some assets purchased in 2011 may qualify for a special depreciation allowance.

Qualifying property includes tangible personal property and up to $250,000 of real property.

The deduction for up to $250,000 of real property includes qualified leasehold improvement property (improvements to an interior part of a nonresidential

building that is conditional to a lease and used exclusively by the lessee),

qualified restaurant property, and qualified retail improvement property.

This provision is only for 2011.

Please note that in 2012, the dollar limit for Section 179 expensing drops to $125,000.

#4)   Timing Strategies.

Any expense items that can be accelerated into this year?

Any income items that can be deferred to next year?

#5)   Considering hiring your children?

In 2011, first $5,800 earned by each child is tax free and not subject to kiddie tax.

A child's wages, which is earned income, is always taxed at their tax rate.

This may help a child toward earning half of their support and thus might help their

unearned income (interest, dividends, investment, etc.) to avoid the kiddie tax.

If applicable, a child must have earned income to contribute to a traditional or Roth IRA.

#6)   Basis in Partnerships, LLCs, or S Corps?

If a loss is expected in a Partnership, LLC, or SCorps,

do you have enough basis to deduct the loss?

Consider increasing your basis.

#7)   Retirement Accounts.

The matching of the employees' contribution is generally a deductible expense.

Several types of retirement plans are available to businessess and business owners.

7 Tax Savings and Financial Planning Ideas for your 1040

#1)   Qualified Energy Efficient Home Improvements.

Plan to make any qualified energy efficient home improvements in 2011? If so, you could be eligible for a credit equal to 10% of the cost of qualified energy-efficient property or improvements up to a maximum of $500.

Keep in mind though that credit amounts may differ based on the improvement made.

Examples include: insulation reducing heat loss/gain, exterior windows & doors, storm windows & doors.

There is a $500 lifetime limit. If you received over $500 in these tax credits from 2006-2010, you are not eligible for 2011 and beyond.

#2)   Health Savings Accounts (HSAs).

Are you covered under a high deductible health plan (HDHP)?

Are you not covered under any other non-HDHP, except Permitted Non-HDHP Insurance?

If so, HSAs can achieve tax savings in two ways: First, funds inside an HSA can be withdrawn at any time for medical expenses. Thus the HSA can be used

to accumulate tax-free income for use later in life. Secondly, HSAs can be

used to pay for current medical expenses. For people with few medical expenses,

HSAs have the effect of getting a deduction up-front rather than as an itemized deduction which may have little or no tax impact.

Contributions to HSAs are generally deductible.

For 2011, the maximum deductions for contributions are $3,050 for individual coverage, $6,150 for family coverage, and $1,000 for catch-up contributions.

#3)   Coverdell Education Savings Accounts  (Sec. 530 Plans)

Contributions are not deductible to currently save taxes.

But if you plan to give money to help pay for the qualified education expenses to someone under 18 (or a special needs beneficiary), this account grows tax free

and future earnings would be tax-exempt.

You can contribute up to $2,000 for 2011.

Contributions for 2011 can be made up until 04/15/12.

#4)   Retirement Accounts   (must have earned income of up to contribution, etc.).

2011 Maximum Allowed SEP Contribution is up to $49,000.

Under 50, 2011 Maximum Allowed Simple IRA Contribution is up to $11,500.

Over 49, 2011 Maximum Allowed Simple IRA Contribution is up to $14,000.

Under 50, 2011 Maximum Allowed IRA Contribution is up to $5,000.

Over 49, 2011 Maximum Allowed IRA Contribution is up to $6,000.

#5)   Consider converting to a Roth IRA in 2011.

Switching a traditional IRA to a Roth requires paying tax on the converted amount, but that can be a fabulous tax-saving investment because all future earnings

inside the Roth can be tax-free in retirement.

In 2011, there are no Modified Adjusted Gross Income (MAGI) limitations.

#6)   Other Timing Strategies

Any expense items that can be accelerated into this year?

(ex: taxes, interest, contributions, etc.)

Any income items that can be deferred until next year?

(ex: bonuses, other income, etc.)

Bunch expenses in one year if doing so puts you over the thresholds on Sch A.

(ex: contributions, medical, misc, etc.)

#7)   Any Investment Interest Expense?

Does any interest classify as Investment Interest Expense? If so, you can deduct this expense if you itemize your deductions on Sch. A.

14 Ways to Improve Profit and Cash Flow

#1) Bank Accounts over $250K?   Sweep Accounts?, etc.                                           

Does your business have any bank accounts with an excess of $250K? Any sweep accounts being used? Bank accounts are only protected by the FDIC of up to $250K.     

                                  

#2) Increase Collections                                     

Start tracking your receivables very closely. See who pays on time, who pays inconsistently, and who pays late (consistently). Be proactive and contact the inconsistent and late payers before the invoice becomes overdue, and then steadily keep the pressure on. This takes time, but the pay-off is in improved cash flow and ultimately, improved profit maximization.

#3) Reduce Expenses

Stop spending money on things that don't add to the bottom line.

#4) Manage and Calculate Cash Flow

Look for ways to reduce cash outflow, while increasing cash inflow. While the Statement of Cash Flows is usually part of the monthly process of analyzing financial statements, if cash is tight maintain a daily cash flow chart or projection spreadsheet. When you manage your money that tightly, you will spend less and look for ways to increase income more (and focus on profit maximization).

#5) Invoicing Clients

If you invoice your clients, then it is wise to do your invoicing daily.                   

If your work is spread out over time, send a progress bill. By using either method, you can receive a more consistent cash flow.                

#6) Consider Reducing Inventory                      

Reducing inventory will help reduce cash outflows, but do not reduce inventory to the level that it will hurt sales. Develop more favorable terms with suppliers (for example, the supplier holds your inventory on their floor or they give you extended payment terms) to lower the cash drain that inventory can cost. Consider streamlining the supply chain to improve your inventory turn cycles.               

#7) Negotiate Better Deals                    

In a weak economy when many businesses are struggling, anything can be negotiable. From business loans to leases and everything in between, lower payments, extended terms, and better rates can be negotiated.                  

#8) Take a Closer Look at your Business Debt.                                               

Can you consolidate loans (credit cards, equipment loans, line of credit, etc.)? Can you negotiate better rates?                                      

#9) Don't Pay your Payables Too Early                                     

If your supplier's terms are net 30 days, pay your bill in 30 days. Even if you have the cash to pay, don't pay - keep the money in an interest account until you have to pay the bill.                                             

#10) Consider Consolidating Suppliers                                        

By consolidating suppliers, you may receive a better price and/or payment terms.   

                                           

#11) Sell More to Existing Customers                                         

Acquiring new customers can be expensive. Consider focusing on increasing revenue from existing customers and you'll cut promotional expenses and increase profits at the same time.                                          

#12) Consider Outsourcing

This can help you focus on the key elements of your business and reduce personnel costs by outsourcing some of your back-office functions, such as human resources or technology services.

#13) Go Open Source

Free and open-source software can be far less expensive to obtain and maintain for a small business owner. For example, you could spend hundreds on programs like QuickBooks, Microsoft Office, and Photoshop, or you could get Gnu Cash or Open Office absolutely free of charge. The interfaces are generally of great quality, and will contain all or most of the familiar tools you're used to using in industry-standard, professional software. In all likelihood, you clients will never know the difference, and you'll save hundreds or even thousands of dollars in software licensing fees.

#14) Return Slow-Moving Inventories

Identify inventories that aren't turning over, and ask the suppliers to take back some of these supplies or products at cost. Getting these materials off your books will put cash back into your account.

Can an S Corp Owner Receive Reimbursements for Section 179 Deductions?

   IRS regulation 1.62-2(d)(1) permits your S corporation to reimburse you for your employee expenses. The regulation identifies expenses suitable for reimbursement as those found in Part VI, Subchapter B, Chapter 1 of the Internal Revenue Code. Section 179 expensing is one of the many expenses in this section of the law that is identified as appropriate for reimbursement.

   So How Does This Work?

   For example, you purchase a used vehicle for $10,000. Your business cost is $8,000 based on your mileage log. You personally own the vehicle, but you want the corporation to claim Section 179 expensing on it.

   To make this work, you submit an expense report to your S corporation requesting reimbursement for your business expenses, this includes the amount of section 179 expensing. You must also submit to your corporation a mileage log that supports your business use of this vehicle. You must also submit a mileage log for each of the next 5 years, because this is the time during which your corporation could suffer Section 179 recapture if business use of the vehicle were to drop to 50% or less.

   The expense report and mileage log combination creates a tax-defined “accountable plan” that allows your corporation to deduct the expenses, and makes the reimbursements to you not taxable.

   Say you give your corporation a separate expense report just for the $8,000 Section 179 expense. Based on this request and the information from your mileage logs, the corporation writes a check to you for $8,000. The corporation deducts the $8,000 as a Section 179 expense as if it had purchased the vehicle itself, subject to the rules that apply to the corporation for its expensing.

   In general, your agreement with the S corporation will be for the corporation to reimburse all your actual vehicle expenses. If recapture should occur, your agreement could require you to reimburse the corporation for the recapture amount. Requiring the reimbursement is the easy way to handle this.

IRS Releases Smartphone App to Check Refund Status

   The IRS recently unveiled IRS2Go, its first smartphone application that lets taxpayers check on their status of their tax refund and obtain helpful tax information.

   Apple users can download the free IRS2Go application by visiting the Apple App Store. Android users can visit the Android Marketplace to download the free IRS2Go app.

   Get Your Refund Status

   Taxpayers can check the status of their federal refund through the new phone app with a few basic pieces of information. First, taxpayers enter a Social Security number, which is masked and encrypted for security purposes. Next, taxpayers pick the filing status they used on their tax return. Finally, taxpayers enter the amount of the refund they expect from their 2010 tax return.

   For people who e-file, the refund function of the phone app will work within about 72 hours after taxpayers receive an e-mail acknowledgement saying the IRS received their tax return.

   For people filing paper tax returns, longer processing times mean they will need to wait three to four weeks before they can check their refund status.

   Get Tax Updates

   Phone app users enter their e-mail address to automatically get daily tax tips. Tax Tips are simple, straightforward tips and reminders to help with tax planning and preparation. Tax Tips are issued daily during the tax filing season and periodically during the rest of the year. The updates cover topics such as free tax help, child tax credits, the Earned Income Tax Credit, education credits and other topics.

   IRS2Go is the latest IRS effort to provide information to taxpayers beyond traditional channels. The IRS also uses tools such as YouTube and Twitter to share the latest information on tax changes, initiatives, products and services through social media channels. For more information on IRS2Go and other new media products, visit http://www.irs.gov/.

 

It's a Whole Lot Easier to Keep Track of Mileage

If you use your car for business purposes, you may have learned that keeping track and properly logging the variety of expenses you incur for tax purposes is not always easy. Practically speaking, how often and how you choose to track expenses associated with the business use of your car depends on your personality; whether you are a meticulous note-taker or you simply abhor recordkeeping. However, by taking a few minutes each day in your car to log your expenses and mileage, you may be able to write-off a larger percentage of your business-related automobile costs.

Whether you buy or lease your vehicles, if you drive them for both personal-use and business-use, the IRS requires you to select ONE of the following 2 recordkeeping methods to write off the business-use portion of your vehicles. Each vehicle may individually use either of these 2 methods:

The “STANDARD MILEAGE METHOD” with 2 tracking options:

1) Track mileage daily all year = your annual totals
2) Track any average “90-day period” x 4 = annual totals

The “ACTUAL EXPENSE METHOD” by recording all vehicle operating expenses all year, then multiplying those totals by the mileage “business-use percentage” Actual expenses include: gas, oil, tires, repairs, maintenance, insurance, interest, registration fees, licenses, parking fees, tolls, and depreciation.

Listed below are a few ways to simplify the burden of logging your automobile expenses for tax purposes.

#1 ENVELOPE METHOD. The Envelope Method can help you keep track of both MILEAGE and EXPENSES at the same time. Keep in mind, however, that only one method may be used on your return at tax time. Here’s how it works: Keep an envelope for each month of the year in the vehicle that you use for business. No matter who is driving the vehicle, they can record accurate mileage or expenses and put the receipts in the envelope pocket for documentation. On the front of the envelope, make columns with these headings: Date, Destination, Purpose of Trip, and Trip Mileage. Each year you are required to record the odometer reading for each business vehicle on January 1st and December 31st. These numbers can be recorded on the first and last envelopes used each year for each vehicle.

If you want easy documentation for BOTH of these odometer readings, simply get your oil changed on December 31st each year. The sales receipt will record your Ending Odometer reading on the last day of the year, which can also serve as the Beginning Odometer reading for the first day of the New Year.

#2 THERE’S AN APP FOR THAT. There are several mileage tracker apps that have recently been released for all kinds of smartphones. A new app for the iPhone, automilez™, now generates mileage logs for you after each trip. It’s a GPS mileage logging and online log management service, so it measures your mileage for you; you just have to say what it’s for. If you use the pre-selected categories, it will even calculate the total tax deduction for the trip. The app will even email you the data. If you think this might be for you, it is available at no charge in the Apple store.

Another app that is available for the iPhone, as well as Google Android smartphones, is called MileBug. While Milebug isn’t free like automilez™, the app costs $1.99, it does have a solid following of 120,000 users. Milebug features include detailed reporting that shows totals by business and vehicle. Users can e-mail HTML and Excel-compatible reports. The mileage tracker is able to keep tabs on mileage for multiple businesses and multiple vehicles, and keep a running total of deductions with each addition to the user’s trip log.

#3 ON THE WEB. If you want more functionality, or you don’t have a smartphone, you can keep track of your mileage online using Logbook. Logbook is a web application that allows you to track and store mileage online. Logbook often has 30-day free trials, but it is currently available for $36 a year. http://www.automilez.com/logbook.htm

#4 VEHICLE GPS SYSTEMS. There are many vehicle GPS systems, such as ones by Garmin, that try to minimize the hassle of recordkeeping. All you simply have to do is turn on your GPS when you drive. These systems are then connected to your PC where your mileage logbook will automatically be downloaded. Many of these systems take the log file and turn it into a complete overview of your driven routes. They can calculate reimbursements, give you a PDF formatted mileage logbook, complete with driven miles, start and stop destinations, dates, and other information you need for proper documentation.

***Please note that you must keep your records as long as they may be needed for the administration of any provision of the Internal Revenue Code. Generally, this is a minimum of 3 years from the date you file your return.***