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LATEST STORIES ABOUT ACCOUNTING AND TAX SERVICES

Mon, 20 Sep 2021 06:04:32 GMT

The pandemic seems to be the center of the stories being told in our world today because of the disruption it caused in every area of our lives.

The accounting and tax sectors were not spared from this disruption either. The reason is that many clients, especially business owners, do not only seek accounting and tax assistance during uncertain times, they also desire business insights and workable plans, and they believe they can get this from someone familiar with their finances.

Fortunately, many CPA firms were able to manage the different situations their clients were faced with effectively. They achieved this by assessing their clients' needs since they had an existing knowledge of the business.

Below are the recent events and stories in the accounting and tax services:

1. Foremost, I will like to start with a notable change in the accounting profession: the recent adjustment in the CPA exams.

The pandemic made accounting and tax professionals perform many roles for their clients more than they did. It became necessary to review the exam criteria of becoming a CPA.

Topics such as the testing of the difference between IFRS & GADP standards, the alternative minimum tax, trusts and estate taxation in the REG section; and defined benefit pension plans and derivative journal entries in the FAR section, which were a standard part of the exams are to be phased out, while priority is given to topics such as understanding business processes, automation, data analysis and "the need for a digital and data-driven mindset."

It cannot be any more accurate that the disruptions caused by COVID-19 helped shape this decision as people involved in accounting and tax services had to evolve and play new roles. New sets of risk management issues were exposed, and more than ever, businesses had to find strategies to survive the threats posed by the pandemic on their revenue.

Majorly we have seen more requirements of Accounting Services in USA with these businesses also demanding tax services specially in case of the Taxation Services in Houston .

CPAs became the primary advisors to analyzed the numbers and also helped assess business decisions that would impact their client's bottom line.

It became apparent that CPAs will be expected to offer advisory services to their clients and help clients make intelligent decisions by analyzing available data.

2. Nick Swedberg, a CPA with a client base of majorly (about 75%) restaurants and small craft breweries owners in Minnesota.

During the pandemic, restaurants and small craft breweries were greatly affected. As a result of this, Swedberg needed to find a way to keep his clients in business, so he came up with different solutions for them, which included implementing to-go sales and deliveries.

As these businesses were about to branch out, it was observed that they had to answer questions about how feasible and profitable this action will be. Also, employee compensation, car insurance, and handling tips were to be checked because these factors are strictly regulated in Minnesota. Swedberg was able to achieve this with Excel.

In addition, Swedberg helped some of his clients obtain permission from the local government for a temporary exemption from specific regulations. This brought about more flexibility for these businesses as they could expand outdoor when the government banned indoor dining.

One of his clients was able to utilize the parking lot in his town, while a brewery owner client was able to make home deliveries of his goods by working hand-in-hand with the local board of health.

Swedberg served as a guide in helping his clients work through their creative ideas. He took it upon himself to help them organize their thoughts and then make an actual financial projection to know if the idea was workable.

3. For Sandy Shecter (CPA, CGMA), her major clients were health practitioners whose businesses were affected due to the lockdown.

Sandy took the initiative of helping her clients apply for the Paycheck Protection Programs, loans, and grants.

Three vital roles played by Sandy's firm were that they provided data and projections to help their client make good management decisions, introduced new methods of working with patients, and providing solutions to technological needs.

4. For Brandon Hall, his clients were in the real estate sector, and during the pandemic, the rental income went down. This development left Hall with no choice but to act as an outsourced Chief Financial Officer (CFO) for his Clients.

Not only did he perform a real estate portfolio analysis for his clients to improve performance on rental income, but he also came up with tax minimization and cost-segregation strategies to help them improve cash flow.

5. For Shin, some of his clients were in the construction sector in Colorado, and their finances weren't affected by the pandemic. However, their challenge was that they had issues hiring sufficient workers/contractors. This situation made Shin's company shift its focus on things such as reevaluation of the hiring process, billings (especially because of the extra cost of getting Personal Protective Equipment).

They also got involved in training on remote work and the benefits of a home office for their professional clients.

To sum up, the accounting and tax sector has experienced some unprecedented changes these past few months, and interestingly, these changes are here to stay.

THE NEXT BIG THING IN ACCOUNTING, TAX SERVICE, AND CONSULTING

Thu, 09 Sep 2021 07:37:07 GMT

The accounting industry is changing rapidly with the rise in technology. Technology, a word synonymous with development, has been an effective tool when it comes to industries development. Technology improves systems and processes, automating manual tasks, and easing off the workload. Accounting, tax service, and consulting jobs have been made easier as personnel can be more efficient and operate more effectively. Technology is the root of the next big things in accounting, tax service, and consulting.

Improvements in technology are taking the accounting, tax service, and consulting services to new levels.

These improvements are:

Automated accounting process: It is without a doubt that accounting, tax service, and consulting are time-consuming and laborious. Banking, tax preparation, payroll, audit, and other time-intensive aspects of accounting are rapidly becoming fully automated. As self-learning continues to thrive due to artificial intelligence, a task that would have taken days to complete is now done in hours. Technology is taking on most of these repetitive and onerous tasks. The industry has seen a steady increase in efficiency due to integrating technology with accounting processes better.

Major software vendors such as Sage, Xero, OneUp, and Intuit automated data entry and reconciliation options in companies accounting and bookkeeping especially when we search Accounting Services for Small Businesses . This can be directly traced back to the integration of machine learning and AI. Larger firms also use robotic process automation AI integration to increase efficiency by reducing the overall processing time for audits.

Cloud computing: Cloud computing is one of the next best things in accounting. Cloud computing is simply the on-demand accessibility of computer system resources without direct active management by the user. It means accounting firms can access their accounting systems remotely at all times. This gives instant access to high data and computing capacity. As with all system that uses cloud computing, the accounting or tax firm using cloud computing will have access to updated information at any point in time.

The cloud’s ability to synchronize information allows accountants, tax officers, consultants, and clients to evaluate data and decide based on a piece of up-to-date information. This enables constant monitoring as opposed to recurrent analysis whenever the data is updated. Cloud computing also the creation of workflows which is essential for effective time management.

The accounting industry exploits cloud computing; it becomes better with improved integration of intelligent technologies such as artificial intelligence, the Internet of Things, and machine learning.

Artificial intelligence and Machine learning: Machine learning is a subset of artificial intelligence specializing in building systems that learn based on the data they interact with. On the other hand, AI is the ability of a computer to perform tasks associated with intelligent beings. AI is producing incredible results in accounting, tax service, and consultation. It is capable of analyzing huge volumes of data at incredible speeds. This has helped accounting and tax firms to increase productivity and generate accurate data at a reduced cost.

It also optimizes accounting processes and administrative tasks that result in various organizational changes.

Blockchain Technology: Blockchain technology is best described as a decentralized, distributed account book that records the attribution of a digital asset. This computer-based recording system uses cryptocurrency within a user-to-user network. Bitcoin, Ethereum, and other major Blockchain offer digital currencies in which the transaction record is maintained independently of a bank. New units of currencies are also generated autonomously without the influence of the bank. Blockchain technology has progressed significantly and has created a niche of its own in the accounting sector. This is as a result of the presentation of the possibility of a new type of accounting ledger. This constantly updated ledger eliminates the threat of data alteration and corruption. Blockchain allows users to access updated and verified ledgers in real-time. It also creates records transactions and smart contract which is embedded into the ledger. Many of the top firms now accept Blockchain-based payment and top accounting firms implement Blockchain.

Another major impact of Blockchain technology is that it lowers the cost is reconciling and maintain ledgers. This is done while keeping the ledger accurate in terms of

ownership ad history of assets. Blockchain technology allows accountants to gain a more clear view of their organization’s available resources and obligations.

Account software solution upsurge: The implementation of technologically-driven solutions in the accounting and tax service business has deepened in the last few years. The demand for computerized accounting grows, and accounting software firms have been responding with the creation of robust solutions. The software is made to optimize the accounting processes while reducing manual tasks.

This trend will continue for a while since the accounting and tax service market is constantly growing. This growth will increase the demand for accounting software to

manage accounts, maintain and keep records, and better understand tax management.

Data analytics: Data Analytics is simply the science of analyzing raw data to derive meaningful information. Accounting, tax service, and consulting have shifted their

attention to data analytics. This shift of attention has made the data analytics job role a valued position in the industry. Analysis helps accounting and tax firms develop prized acumens, which also them to identify process progresses, manage risk and increase efficiency. Data analytics has been around for a while, but it is now on the high rise. It is giving new light to the financial performance and presenting better actionable options. Data analytics has become a “thing” in the accounting industry, with many CPAs utilizing the best data analytics solutions proficiencies. Data analytics has applied to support industry-specific needs in consulting, auditing, tax, and risk management.

Outsourcing accounting functions: Outsourcing might not be new, but the rise in tax and accounting functions outsourcing is primarily due to technological development. One of the benefits of outsourcing is the management of a firm’s limited resources without compromising the quality of service received. This also reduces costs such as taxations, salaries, training, benefits, payroll, and other employment costs.

Outsourcing now allows CPA firms like CKO CPAs & Advisors to add value to their business by rendering better service to their clients. The numerous benefit of outsourcing has made this a trend in the accounting industry. This has also created a volume of respected careers globally.

All these point to one thing: technology permeates the accounting industry and is the primary cause of the rapid progressive change in the industry. The next big thing is accounting, tax service, and consulting is as a result of technology.

ACCOUNTING, TAXATION AND CONSULTING: EXPECTATION VS REALITY.

Mon, 30 Aug 2021 07:08:13 GMT

Accounting and taxation are two separate systems that are intrinsically connected. Although,

accounting may not always involve taxation, taxation usually involves accounting because you

cannot do taxes without accounting. Nevertheless, they are both associated with economics and

finance. To set things in perspective, let’s check the definitions:

Accounting: This is the process of recording business-related financial transactions, which

includes summarizing, analyzing, and reporting these transactions to supervisory authorities,

regulators, and tax collection bodies.

Taxation: The simplest definition of this term can be seen in the Merriam-Webster online

dictionary. taxation is defined as an amount of money that a government requires people to pay

according to their income, the value of their property, etc., and that is used to pay for the things

done by the government.

Consulting: There is a general belief that consulting is about giving expert advice about a

specific filed. As true as this seem, there is more to consulting than just giving advice. According

to Harvard Business; the tentacles of consulting also spread to involve helping a client solve their

problem, assisting clients or organizations with the implementation of the recommended

solution, making a diagnosis, which may necessitate redefinition of the problem, making

recommendations based on the diagnosis, etc.

Interestingly, there are several cases whereby the expectations about these systems or fields

differ from reality.

Again, let’s start with accounting .

Accounting: Expectation versus Reality

Below are some of the general expectations and realities about accounting:

1. Expectation: You have to be a math guru to delve into accounting.

Reality: Accounting is not pure mathematics. You are not expected to punch the

calculator and solve complex mathematics all day. Many accountants usually do the math

heavy-lifting with Microsoft Excel. The fact is that accounting does more of

documenting, guiding finances and operations for individuals and companies.

2. Expectation: Accounting is all about tax preparation.

Reality: That’s not true. There are many other responsibilities attached to accounting

asides from tax preparation, and this includes: maintaining a record of assets, liabilities,

profit, and loss, preparing financial reports, collecting receivables and making payments,

and processing a company’s payroll.

3. Expectation: People often expect that the accounting field should be a male-dominated

field.

Reality: Accounting is not gender-specific. Suppose you have a flair for numbers and

economics. Nothing should stop you from exploring the field.

4. Expectation: There is no much fun about Accounting. It is for the nerds.

Reality: Accountants are not boring people that solve math all day. They interact with

people (clients) and help organizations with structure and processes.

Taxation: Expectation versus Reality

Below are some of the general expectations and realities about Taxation :

1. Expectation: A young person, especially a student, should not pay taxes.

Reality: This is quite relative. If the young person or student is a dependent and has an

annual income of less than $12400 (for 2020), then filing a tax return is not compulsory.

Regardless, they should file; they may get a refund, especially if their employer holds

back some of their income for tax purposes.

2. Expectation: Home business should be tax-deductible

Reality: This is not always the case. The structure put in place by the IRS does not permit

some entrepreneurs to claim the deduction, mainly if the home business space is not

defined.

3. Expectation: It is not necessary to report cash earnings.

Reality: Since cash earnings is an income, you must report it else; you should be ready to

welcome the IRS’ invite.

4. Expectation: Couples should always file their returns together.

Reality: It is a choice. You can decide to file a joint return with your spouse or file

separately, but some benefits come with filing jointly, and you might want to take

advantage of that.

Consulting: Expectation versus Reality

Below are some of the general expectations and realities about consulting :

1. Expectation: To be relevant in the consulting field, you have to be in it for donkey years.

Reality: This is not necessarily true. Regardless of your years of experience, you can perform

excellently well as a consultant, inasmuch you have all it takes to help a client.

2. Expectation: You shouldn’t be expensive as a newbie.

Reality: So far, you know your sauce; there shouldn’t be anything stopping you from

billing your worth.

3. Expectation: As a consultant, you are required to work for long hours.

Reality: It is not usually so. You can dictate your time, especially if you work for

yourself.

4. Expectation: Anyone that is into consulting should have all the answers.

Reality: No human is an encyclopedia of knowledge. Inasmuch as consultants are

expected to give their best to their clients, they do not have all the answers, and that’s

fine.

To sum up, expectations are not facts. It is best to get accurate information about a situation,

especially if it involves finances and taxes.

FILING TAX RETURN IN HOUSTON

site-NvOWzw — Sun, 04 Jul 2021 06:44:24 GMT

It’s no news that many Houstonians dread the early months of the year due to tax filing and its

numerous paperwork.

However, tax filing isn’t as difficult as people make it seem. You can make filing your taxes an

interesting activity by changing the mindset that it is a herculean task and doing what is

necessary early enough.

Although the year 2021 did not seem to take it easy on Taxpayers especially those filing tax

return in Houston, or better put, residents of Texas. Asides the economic effect the pandemic

had on Taxpayers, the winter snowstorms experienced in Houston and other parts of Texas

affected the filing of returns in these areas. Thankfully, the IRS were sensitive to this situation

and extended the deadline for those filing returns in Houston and Texas generally to June 17 th .

Nevertheless, as a Taxpayer resident in Houston, here are some suggestions that can always

come handy for filing your tax returns:

1. Start early by resisting the urge to procrastinate. Doing this will save you a whole lot of

agitations. Always remind yourself that no matter how you run from it, you will still end

up doing it, so you should start early enough so as not to lose your peace. Lol

2. Gather all the tax documents that are essential for your filing. The typical ones are Form

W-2 (Statement of Wages), K-1s (income and deductions from partnerships, S

corporations, trusts, estates), Form 1099 (Interests, dividends, royalties, etc.), Form

1099-R (Distributions from pensions, annuities, retirement or profit-sharing plans, IRAs,

insurance contracts, etc.), Form 1099-B (sales of securities), and Form 1095 (proof of

health insurance).

3. Choose what works for you best between standard deductions or itemizing your

deductions. Remember the standard deductions for the year 2020 is $12400 if you are a

single filer and $24,800 for a couple filing jointly. However, if you feel itemizing your

deductions is the best option for you, then ensure everything you need to prove your

claim is ready and handy, e.g., receipts for deductions and tax credits which include

education costs, childcare, medical expenses, etc.

4. Pick a suitable filing status. Depending on your status and preference, you can either file

as a single, married filing jointly, or married filing separately. You can also file as a head

of household if you paid more than half of the household expenses for the year; are

unmarried, or have a qualifying child as a dependent. The last status option available is

that of qualifying widow(er), you have the license to this status for about two years after

the loss of a spouse if you do not remarry.

5. If you feel you have all it takes to file a tax return excellently, you should go ahead and

do it. However, if you are not sure about yourself, it is advisable to seek the help of a

Tax-Expert.

6. Lastly, do not let the excitement of delivering your return to the IRS make you set all

receipts and tax forms ablaze. Create a space for them and keep them safe. They can

save your skin in the near future.

To sum up, tax filing isn’t a hard activity. I agree it can be complicated, but with a lot of focus on

your part, it can end up being a yearly fun activity. In situation whereby you feel you need a

second eye, it’s best you go for a professional Tax Preparer- an Enrolled Agent.

What are Bookkeeping Services and Who Can Benefit from Them?

sites@tailorbrands.com — Thu, 03 Jun 2021 12:14:38 GMT

Wondering what bookkeeping services actually are? Check out our article to find out not only that, but how they can directly benefit your company as well.

Did you know that 51% of small businesses that have been in business for 5 years or longer outsource their bookkeeping services? Most of the time, it is easier to outsource bookkeeping than it is to keep the process in-house.

As businesses mature, they learn that there are plenty of benefits to outsourcing their bookkeeping tasks, such as increased confidentiality, saving money, and better law compliance.

Are you thinking about using bookkeeping services for your business but aren't sure where to start? If so, keep reading to learn more about what bookkeeping services are, who they can help, and the benefits!

What Are Bookkeeping Services?

Bookkeeping is the process of recording all money that comes in and out of your business. To keep your business books up to date, you will need to record all transactions that your business completes.

Bookkeeping is important for your business because it allows you to stick to a budget, helps you prepare to complete your taxes, and helps you stay organized.

Here are some of the transactions that you will need to record in your business books:

Payroll and payroll services

Materials purchased

Sales

Bookkeeping services offer outsourced bookkeepers that can do your bookkeeping for you. This will save your business time, money, and ensure that your books are accurate at all times.

Bookkeeping services are responsible for recording all transactions, using bookkeeping software, maintaining records, and creating reports.

Who Needs Bookkeeping Services?

Bookkeeping services are perfect for small and medium-sized businesses. They also are ideal for individual business owners or people with a complicated financial portfolio.

Here are some signs that your business could use bookkeeping services:

You don't have enough time

Your books are behind

You don't understand bookkeeping

You have faced accounting fines in the past

If any of those situations relate to your business, it could be a sign that outsourcing is the right move for you.

What Are the Benefits of Bookkeeping Services?

Now that you understand what bookkeeping is, you should also know the benefits of outsourcing your business's bookkeeping. Knowing the benefits will help you decide if you should outsource your bookkeeping or keep the job in-house.

Keep reading to learn more about the benefits of bookkeeping services!

Detailed Financial Records

One of the best things about hiring bookkeeping services is that a bookkeeper will keep detailed records of your finances. Your books should always be up to date.

This is helpful if you need to create a report or pull finances with little notice. Having detailed records will make completing taxes an easier process. If your business happens to be audited by the IRS , you will have easy access to your financial details.

More Prepared for Tax Season

Tax season is a stressful time of year for most business owners, but it won't be as bad if you hire bookkeeping services. When you have all the details of your business's cash flow, it is easier to predict earnings for the IRS.

Once you have kept detailed books for your business over time, you start to notice trends. Trends will allow you to better predict how much money your business will owe when it is time to prepare your taxes .

Law Compliance

There are several different laws when it comes to business finances. These laws include federal, state, and local laws. Part of a bookkeeper's job is to make sure that your business stays in compliance with the law.

Hiring a bookkeeper could save you money and time because there are fines for not complying with the law.

Unbiased Financial Advice

Another benefit of hiring bookkeeping services is that a good bookkeeper will be able to offer your business financial advice.

Because an external bookkeeper doesn't report to your company, they can give you a clear and unbiased picture of where the company stands. An internal employee that is invested in the business may portray unrealistic finances.

Lower Costs

Hiring bookkeeping services has the potential to save your business money. When you hire a full-time bookkeeper, you will need to pay them a salary and benefits.

With bookkeeping services, you will only need to pay for the amount of time that your business actually needs. If you are a small business, you may only need a bookkeeper for 20 hours per week.

Also, if your business already has an accountant, hiring a bookkeeper could save your accountant time. Because all the financial data will be neatly organized, it won't take as long for your accountant to create financial reports.

Accountants are more expensive than bookkeepers. Cutting back on the time required from your accountant could save your business money.

Better Relationship With Banks

Did you know that having a bookkeeper can improve your relationship with banks? When companies prove that they are good at keeping track of their cash flow, banks will have more trust in the business.

This could be helpful if your business needs a loan. Also, if your business wants to look for new investors, being able to show them a detailed balance sheet could encourage them to work with you.

Are You Ready to Sign up for Bookkeeping Services?

Bookkeeping services is the process of hiring a bookkeeper to manage all your business's transactions. Hiring a bookkeeper can save your business money, increase compliance, and provide unbiased financial advice.

Are you interested in signing up for bookkeeping services? If so, visit our services page to learn more about the financial services that we offer!

What to Consider When Hiring a Tax Preparation Service

sites@tailorbrands.com — Wed, 05 May 2021 12:08:15 GMT

Finding the right expert to help you prepare for taxes requires knowing your options. Here is what to consider when hiring a tax preparation service. Across the United States, over 1.2 million tax preparation professionals serve the American people every tax year

No one wants to get on the Internal Revenue Service's (IRS) wrong side by filing tax returns that aren't fully prepared. While that may be your desire, the professional you hire for that service may inadvertently end up getting you in trouble.

Here is a deep dive into five fundamental things to think about when hiring a tax preparation service provider to help you avoid such a nightmare scenario.

1. Relevant Qualifications

There are two groups of folks you can hire in the tax preparation world - Those with credentials and non-credentialed preparers. Who you choose will depend on your tax preparation goal.

Certified Public Accountants (CPAs) are trained to handle complex account and tax duties. To become a CPA, one must have at least 150 hours of college accounting classes under their belt. Furthermore, one must pass a comprehensive CPA exam.

Each state has its regulations governing CPAs operating within its borders. As such, you have high visibility into their track record.

An Enrolled Agent (EA) is a tax preparer commissioned by the IRS. While an EA doesn't need an extensive educational background like a CPA, they still have to impress the IRS to serve you.

A Non-Credentialed Income Tax Preparer is a seasonal or part-time tax preparer who does not require any qualification to operate beyond a GED. The IRS doesn't regulate non-credentialed tax preparers.

Before you opt for the cheapest option, remember this - Only a CPA, an EA or a non-credentialed preparer holding a valid Preparer Tax Identification Number (PTIN) can represent you before the IRS.

Therefore, if you know you'll need to contend with the IRS for auditing or other matters, your choices are limited. Furthermore, a non-credentialed tax preparer can't help you handle tax refunds without meeting special regulations in 20 states.

Anticipate the full scope of your tax needs to determine what qualifications you need from a tax preparer if they are to serve you.

2. Applicable Experience

A tax preparer should ideally know the ins and out of the process. For many people looking to hire such a professional, that expertise ranks high among the benefits of working with a tax preparer.

It's, therefore, a no-brainer that before you hire a preparer, you need to vet their experience. Have they ever put together axes before? If so, which taxes?

That might seem like a fundamental question, but it's a vital one. All taxes aren't the same, and every client comes with a different set of tax needs. The tax preparer you plan to work with needs to be familiar with tax needs similar to yours.

For example, some preparers can handle 1040-EZ forms without batting an eyelid. Others are experts in Schedules C and/or E taxes.

No matter how well-rounded a tax preparer is, they can't handle all types of taxes. If they tell you they can do that, run for the hills. Pair the proper qualifications with experience to gauge if a tax preparer can serve you satisfactorily.

3. Prod the Fee Structure

The tax preparer you can hire will depend significantly on the budget you have for the services.

Online tax preparation services often offer a free tier for prospective clients to road test the platform. You can leverage that to have a keener understanding of how much you are willing to pay for what the platform offers.

If you opt for offline service providers, you'll need to ask the professional upfront how they charge. It's advisable to get several quotes so you can shop around. Comparing preparation fees helps you gauge the market average, so you get the most value for money.

A crucial bit to checking out tax preparer fees is going beyond asking them how much they charge. You need to learn how they will determine their costs.

What does this look like?

How much a tax preparer will charge you depends on a few variables. The factors range from how complex your tax returns situation is to whether you need extra schedules. If your tax needs include unusual line items, that will influence the total cost.

As with any other professional, there are some black hat tactics to avoid. When it comes to cost matters, you want to avoid tax preparers who want to charge you a percentage of your anticipated refund.

Such professionals will have a flawed incentive egging them on to inappropriate deductions and credits. And you don't want to go down that road and unwittingly set yourself up against the IRS.

4. Will They Sign Your Returns?

Another seemingly straightforward yet insidious issue is there the tax professional you hire will sign your returns.

Only a tax preparer with a PTIN can do that. And even then, some professionals with that documentation still won't append their signature. Others will set lower rates to attract clients who don't realize their tax preparer won't sign their return until it's too late.

Before signing on the dotted line, you should ask the service provider if this is part of their service agreement. Be wary of a tax preparer who won't sign the tax returns they prepare for you.

5. The Tax Preparer Should Be Available Off-Season

Tax preparation is not a one-and-done affair meaning that even after you file your documentation with the IRS, you may still need assistance. Look out for what the tax professional offers on follow-on consultation after filing.

If the IRS asks for more information from you post-tax season, you need to be a tax preparer who can still be on call.

Don't Settle When Hiring a Tax Preparation Service Provider

Tax preparation is critical to helping you comply with the law. Since this is an essential function, you need to contact a competent tax preparation service provider.

Make a concerted effort to understand what makes a reliable tax preparer in order to know what to look for when hiring one.

Getting the right kind of tax preparation skills is non-negotiable for compliance. Talk to us today for exemplary tax, consulting, and accounting services that will keep you and your business in good standing with the law.

7 Rewarding Benefits of Hiring Payroll Services for Your Business

sites@tailorbrands.com — Mon, 15 Mar 2021 11:23:15 GMT

Outsourcing payroll services for your business is a great way to cut expenses and increase productivity. Here are the benefits of hiring payroll services.

The key to starting and running a successful business is to ensure that each element works well and efficiently.

Payroll is a crucial component of your business that you cannot afford to overlook. You might be good at managing your company, but that does not make you’re a great bookkeeper. Following up on accounting and payroll might not be your thing.

Things get easier if you decide to outsource payroll services. Letting the professionals handle all the complex financial-related tasks gives you peace of mind. Also, you focus on what you do best around your firm.

Outsourcing payroll services may sound like an expensive venture. But that is not any further from the truth. If you are skeptical about the idea, here are seven rewarding benefits to expect from hiring bookkeeping services.

1. Payroll Services Save Time

Most people perceive payroll as just a twice-monthly bookkeeping task. Nonetheless, the truth is that the endeavor requires full commitment and attention to detail.

It takes a considerable amount of time to complete bookkeeping. The worst part is that you may end up making costly errors.

The demand for more time increases as your team of employees grows. Luckily, payroll services providers are there to make things easier for you.

Every payday calls for a series of balances and checks to eliminate any errors. This is because you will be dealing with a ton of data that differs from one worker to another.

Hiring a payroll company saves you from the hassle. In return, it allows you to spare more time and use it in core tasks to help you grow your business.

2. Cost-Effectiveness

There is a common belief that outsourcing is expensive. Business owners opt for in-house teams without realizing how much funds they channel towards that.

For starters, an in-house team means that you must be willing to invest in staff training. You have to ensure that they are always up-to-date with the latest bookkeeping trends and technology.

Besides the cost of training, you have to pay for the accounting equipment and technology. And don't forget, you will be putting in more time and effort into the tasks, which you would have spent in other activities such as production and marketing.

When combined, all the incurred costs are much higher than the flat fee paid to a payroll company.

3. Stay Organized

Outsourcing payroll services help you to get organised.

The service providers are committed to seeing their clients satisfied. They have the necessary systems for managing tasks and ensuring that they meet deadlines.

They commit all their time and effort to handle whichever accounting tasks you have for them. Moreover, they possess the required software and tools for managing different data types and filing information.

With such a service, you no longer have to deal with tons of files in your office or disposing of the out-of-date files.

The bottom line is, professional payroll management providers have the tools and experience you need to keep everything organized from the start.

4. Promote Discipline and Accountability

As previously mentioned, the payroll management company will not rest until they exceed your expectations.

The providers aim to offer error-free payroll management, something you cannot easily achieve with your in-house team. The company will show you how payroll works and communicate to your employees. The results will be increased discipline while ensuring that everyone is held accountable for errors or missing files.

You must, however, take your time to look for the best payroll service and make good use of their abilities. You can do so by conducting background research, going through reviews, or getting recommendations from your family, friends, or colleagues.

5. Accuracy Is a Guarantee

Every business dreams of error-free payroll management . But this is easier said than done, especially if you lack the experience, skills, and tools to carry out the tasks.

With the right payroll management company, accuracy is guaranteed. The experts pay attention to minor details without leaving anything to chances.

Failure to pay attention to each detail can significantly affect your staff and payroll management. For example, duplicate or missing data may result in under or overpayment of workers. This will not only harm your business finances but could affect your brand credibility.

The payroll management providers know the ins and outs of accounting tasks.

From tax regulations to employees’ classification, hiring a payroll company will save you from missing important details. You can trust them to help you maximize payroll processes while minimizing liability, hence better chances of business growth.

6. Promote Employer Compliance

Outsourcing full-service payroll helps you to maintain compliance.

The service providers are not just mare payroll gurus. They can offer you more services that will help your firm in ways you don't expect.

Outsourcing payroll services prevent you from violating codes, law, and regulations.

Your business should comply with safety and inspection standards.

Moreover, you are required to set policies that your workers must observe. The policies and procedures are a crucial part of risk management. For instance, if you dismiss a worker without notice, you will be subject to a lawsuit. The same case applies if you omit any taxes.

A payroll company will help you meet tax obligations and develop workers' handbooks.

7. Better Data Security

In-house payroll services come with considerable risks. Your company will be vulnerable to identify theft , considering that you lack reliable data storage systems.

Workers' records will be accessible to anyone who handles payroll. If you are not careful, employees may tamper with the information for personal gain.

Outsourcing the services means that the data is stored in secure servers. It can only be accessed by authorized persons, not to forget that they have backups.

Hire a Reliable Payroll Company Today

Outsourcing payroll services is an excellent way to cut expenses, save time and increase productivity. However, you can only enjoy these benefits with a reputable and reliable service provider.

CKO is a team of professionals ready to help your business. Contact us today for tax and payroll services.

The Benefits of Hiring a Professional Tax Preparation Service

sites@tailorbrands.com — Thu, 04 Feb 2021 10:50:55 GMT

Taxes can be confusing. Sometimes, hiring tax services to help you is the smart option. Here are the benefits of hiring a professional tax preparation service.

Do you tend to procrastinate when it comes to filing your taxes? You're not alone.

Trends over recent years show that more people are waiting longer to file their taxes. Sometimes, they're even waiting until just a few days (or hours) before the deadline.

If you get overwhelmed even just thinking about trying to get all the right documents together, it's easy to understand why procrastination continues to win out. But, there's an easier way! Consider hiring professional tax services to do the hard work for you.

Wondering if it's worth the money to hire tax preparation services? The answer is yes! Keep reading to find out why, as we go through some of the benefits of having your taxes done by a professional, below.

Saves You Time

Betwe en work, family obligations, and social commitments, do you really have time to add yet another task to your overflowing to-do list? For most Americans, filing taxes is not a simple, 10-minute task.

Instead, you'll need to block out time for collecting all the required paperwork and making sure you correctly include all the necessary deductions. Of course, you'll also need to double-check everything for accuracy before submitting, to make sure you didn't make any mistakes.

If you're not a tax professional, this means you need to stay updated on new tax rules every year in your limited free time.

By using professional tax services instead, you'll save yourself hours and hours of extra work, so you can put more time back into your busy schedule.

Saves You Money

You might be wonde ring how paying for tax services can save you money, but it's definitely possible. As we mentioned briefly above, an important part of a tax professional's job is to stay on top of all the latest tax rules and regulations.

In doing so, they can help their clients take advantage of every possible deduction and credit for which they qualify.

In some cases, the money they can help you save through deductions and credits may exceed the cost of using their services. This puts more money back in your wallet, with no extra effort on your part.

And, best of all, depending on your circumstances, the fee you pay for your tax services may be deductible, helping you save even more money.

Similarly, if you're a small business owner, hiring someone to file your business taxes can help you save money because it frees up your time to work on tasks that make your business money. Let the professionals handle your taxes, so you can focus your efforts where it counts.

Helps You Prevent Costly Mistakes

Did you know that in 2018, around 80% of people made a mistake when filing their taxes? Not only could this land you in hot water with the IRS, but it could lead to a delay in getting your refund, in a time when people are looking for that financial relief more than ever before.

Because the process of filing your taxes is not always a straightforward one, it can be easy to make an innocent mistake, even if you're careful.

Instead of taking that risk, let a tax professional, with years of experience file your taxes for you, so you won't have to worry about making a mistake that could cost you additional time and money.

Gives You a Knowledgeable Resource to Ask Questions

If you've ever had a specific tax question that you took to Google, you understand how difficult it is to wade through thousands of results trying to find the answer.

When you work with a tax professional, on the other hand, you'll have a single point of contact that you can reach out to when you have a tax question.

This is especially helpful if you find yourself being audited by the IRS. While audits aren't terribly common, having a tax professional on your side can help you feel more comfortable, as you'll know where to turn to respond to any inquiries the IRS may have.

Helps You Stay Organised

When y ou're doing your taxes yourself, it's natural to feel a bit scatterbrained. After all, you haven't been through the process since this time last year and it's easy to forget everything you may need to gather and do.

Working with a tax professional, on the other hand, can help you stay organized. They'll communicate with you about the documents you need to bring so you're not left wondering if you're missing anything.

Then, they'll file on your behalf, so there's less for you to keep track of year-to-year. Plus, if you continue to work with them in the future, they'll have documents about previous filings that you can access if needed.

Gives You Peace of Mind

When you hire professional tax services, all the work is taken off your shoulders. You'll meet with your tax professional, ask them questions, answer some questions they may have, and that's it.

From there, they'll take over, leaving you with a convenient, hassle-free experience from th e very beginning. Even if you feel confident that you could do your taxes yourself, with no issues, sometimes it's nice to let someone else take over instead.

This can help lower your stress levels during tax time. As a result, you won't have to spend any more time wondering if you're going to miss the filing deadline or worrying that you've missed a critical deduction. You've got a professional on your side who's looking out for your best interests.

Hire Professional Tax Services Today

After reading through this guide, it's easy to see that hiring professional tax services can make your life easier in a number of ways.

If you're ready to work with a team of professionals on your taxes this year, look no further than the CKO team. We're here to help you get through tax season stress-free, so all you have to do is sit back and relax.

Contact us today to learn more about how to get started.

What Is an IRS Tax Resolution?

sites@tailorbrands.com — Sun, 24 Jan 2021 17:10:55 GMT

For individuals owing taxes to the government, help is available to deal with such problems. Here is what you need to know about IRS Tax Resolution.

Does you or your small business owe back taxes to the IRS? If so you are not alone. Every year millions of Americans find themselves owing back taxes to the IRS. Knowing how to handle this problem can make all the difference.

Depending on your tax situation it may be helpful to consider working with an IRS tax resolution service. While all tax settlement firms are different, you do have options . Here is some information on what you need to know about IRS tax resolution and how it can help your business get back on track.

What Is an IRS Tax Resolution?

An IRS tax resolution, also known as tax relief is a service that assists taxpayers in resolving their back tax issues. IRS tax resolution services specialize in settling tax debts.

Tax settlement firms have tax experts who are knowledgeable about ways to reduce your tax burdens. Taxpayers tend to seek the help of these services once the IRS attempts to forcibly recover their back taxes.

One of the most common ways the IRS attempts to collect on unpaid taxes is through a bank levy. What happens is they can seize your assets by issuing a levy to your bank and demanding the back taxes you owe. The IRS can also put a tax lien on your home and seize any other assets you may have.

An IRS tax resolution provider can help guide you through the process to prevent any further seizure of your assets. They can also help with getting you an extension as well as many other things.

The Benefits of Working With an IRS Tax Resolution Service

If you tax problems get overwhelming there are benefits to working with an IRS tax resolution service. One of the major benefits is you will have someone to deal with the IRS on your behalf. The IRS can seem like a big entity that is difficult to deal with.

When you work with a tax settlement firm you no longer have to worry. The reason being you will only have to interact with your IRS tax resolution service provider and they communicate with the IRS for you.

Another benefit of working with an IRS tax resolution service is they can help you resolve your back taxes more quickly than you could alone. The reason being many of these firms have tax experts with years of experience on the tax code and the way it works.

Working with tax experts could help you get a tax settlement deal that will save you money and end years of going back and forth with the IRS. This is certainly an added benefit.

One last benefit for working with an IRS tax resolution service is they can ensure your application for tax relief is filled out correctly. The reason being they know the proper forms to file and how to negotiate on your behalf. This can help prevent your application from being declined by the IRS.

How Does an IRS Tax Resolution Work?

The way in which an IRS tax resolution works depends on the firm. Yet, the process normally begins with a free consultation. During your initial meeting with an IRS tax resolution service, you will discuss a few key things about your tax situation.

They will want to know how much you owe in back taxes. They will also want to if you have any tax liens or levies. It is also common for tax settlement firms to ask questions about your income and your current tax filing status.

This will help them find the right solution for your tax situation. If you decide to have them work on your behalf they will contact the IRS for you. This can put an immediate end to any collection calls from the IRS.

There are a few different approaches an IRS tax resolution can take to settle your tax debt. They can get an offer in compromise which is an agreement between you and the IRS to settle your tax liabilities for less than the amount owed.

They can also do a partial pay instalment agreement which allows you the ability to pay your tax debt for less than the amount owed overtime. Another approach that your IRS tax resolution firm can use is a currently not collectible status.

If you can qualify for a CNC status the IRS will stop its collection efforts. What this means is your wages won't be garnished and you won't have a levy on your bank account. Other approaches your tax settlement firm can take may include asking for an extension, tax penalty relief, and more.

Things to Consider When Choosing a Tax Settlement Firm

When choosing a tax settlement firm there are a few things you should consider. The first thing is that there is a cost associated with using this type of service. No matter how much you owe in back taxes expect to make some level of monetary investment.

Another thing to consider is that you won't be in full control of how your tax situation is handled. This is why it is important to ensure that the tax settlement firm you work with is reputable.

There are many firms that make promises they can not deliver on. To avoid choosing the wrong tax settlement firm, do your research. As a taxpayer, you don't want to create a new problem by not working with a reputable company.

One more thing to consider is that sometimes resolving your back taxes can take time. Depending on your tax situation it can take months or years to get things completely resolved. The right IRS tax resolution provider will help you prepare and be by your side every step of the way.

Tax Advice You Can Trust

An IRS tax resolution can be a great solution to getting things back on track. No matter if you are looking for an offer in compromise or requesting an extension, we can help. We are the experts when it comes to everything tax-related.

IRS Rules Make Retirement Plan Withdrawals Mandatory

sites@tailorbrands.com — Sun, 24 Jan 2021 17:08:20 GMT

Retirement Distribution Rules

Do you own a traditional IRA, SEP-IRA, SIMPLE IRA, Keogh plan, 401(k) plan, or 403(b) plan? If so, you'll have to start taking distributions when you reach age 70½. If you don't, you'll forfeit 50 percent of the amount you should have taken but did not.

The RMD rules apply to the plans mentioned above, but not to Roth IRAs.

Here are the requirements:

You may take your first distribution any time before April 1 of the year following the year in which you reached age 70½. However, a first distribution taken after the year you turned 70½ still will be credited to the year you actually reached the required age. You'll then have to take another distribution by December 31 of the current year, forcing you to pay income tax on two distributions in the same year

You must take each subsequent distribution by December 31 of the applicable year. To avoid the 50% penalty, give your plan administrator enough time to process the distribution and get it to you by year-end.

The amount of your RMD is computed using Uniform Lifetime Tables issued by the IRS. These tables provide percentages that are applied to the value of your retirement account as of December 31 of the year preceding your distribution.

If you're still employed at age 70½, you may be able to delay withdrawing from your current employer's plan until you actually retire.

You and your spouse may not take distributions from one another's accounts to make up your RMDs. However, if you individually own more than one IRA, you may compute a combined RMD and withdraw it from one or any combination of the accounts. RMDs from non-IRA plans, such as Keogh or 401(k) plans, must be computed for and withdrawn from each separate account.

You may take distributions in monthly, quarterly, semi-annual, annual, or irregular increments, as long as you reach your required total each year.

Since RMDs are taxable, consider making quarterly income tax estimates to cover your liability, or instruct your administrator to withhold taxes from each distribution.

Financial institutions must either inform retirement account owners about their required distribution amount, or they must offer to calculate it upon the owner's request. Banks, brokers, and other custodians must also inform individuals about the deadline for taking their minimum withdrawals.

Financial institutions must report your name to the IRS if you're required to take a distribution. This will alert the IRS if a distribution fails to show up on your tax return.

Complexity remains

Current rules make calculating your distributions simpler, but retirement plan rules remain complex, and they differ for each type of retirement plan.

Financial Basics: Calculate Your Net Worth

sites@tailorbrands.com — Wed, 02 Dec 2020 13:10:15 GMT

Net Worth

Whatever your financial goals in life - whether they include buying a new house, taking a trip to Europe, funding your children's college educations, having enough money for a comfortable retirement, or all of the above - you are more likely to reach your goals if you do some planning. The fact that you are reading this indicates your desire to plan and to take control of your financial life.

After you've set your financial goals, the next step is to determine your current net worth. Only when you know where you are today can you calculate how far you have to go to reach your financial goals in the future.

On a sheet of paper, list everything you own (your "assets") and everything you owe (your "liabilities"). Subtract the total liabilities from the total assets; the result is your current "net worth."

In doing this exercise, it's important to review the actual documents for the specific assets and liabilities and accurately record account numbers, identification, and dollar amounts. It's easy to forget details about assets and liabilities and to list misleading information.

After you've arrived at your current net worth, ask the following questions:

1. Has your net worth increased since you last did this listing? If it hasn't, you need to determine the reason and perhaps make some changes in your spending, saving, or other financial habits.

2. Does your net worth statement reflect a preference for personal assets such as an expensive home, cars, furs, and jewelry? Your balance sheet should show a concern for acquiring investment assets, not just personal assets that are far less likely to increase in value or produce income that will help you meet other financial goals.

3. Is your debt out of proportion? If your sheet shows excessive debt, especially for personal consumption, that's a signal to review your spending. Keeping debt under control is essential in good financial management.

4. Have you given enough thought to money needed for retirement? If your sheet shows total neglect for accumulating funds for retirement, you'll want to make some changes as soon as possible.

5. Are your assets diversified? Diversification is a good hedge against inflation and changes in the economy. Having all your eggs in one basket is seldom a good idea. Also, don't keep excess cash in no-interest or low-interest accounts unless you have an immediate need for the cash.

6. Where do you want to be three years, five years, and ten years from now, in terms of your net worth? You might determine this by doing projected net worth calculations for three years, five years, and ten years from now.

Conduct a net worth calculation like this every year in order to chart the progress you're making in increasing your net worth.

Virtual Currency...Every Bit Counts

sites@tailorbrands.com — Wed, 02 Dec 2020 10:33:01 GMT

In Internal Revenue Service Notice 2014-21, virtual currencies like Bitcoin are classified as property. The IRS is aware of the growing popularity of this medium of exchange and that it is not considered legal tender by any government. The IRS notice hopes to clarify how you must treat your use of this new technology. The outcome for users is not good. Here is what you need to know;

As property. Property is subject to gains and loses. So if you use a virtual currency like Bitcoin, you must keep track of the original cost of the coin and its value when you use it. As a capital asset you must also know whether your gain or loss on use of the virtual currency is a short-term or long-term.

As income. Wages paid in virtual currency are taxable to the employee, must be reported on a W-2, and are subject to employment taxes. Income received as an independent contractor has self-employment rules applied and must follow Form 1099 reporting requirements.

A currency? Per the IRS, no. Businesses have the ability to calculate foreign currency gains and losses on their financial statements. This foreign currency gain or loss calculation is not available for virtual currencies like Bitcoin.

Determining value. If you purchase or sell something using a virtual currency, you need to determine the fair market value of the transaction using a valid virtual currency exchange and translating it into U.S. dollars.

Miners have income. Miners are those who receive Bitcoins and other virtual currencies by validating transactions and maintaining public Bitcoin ledgers. If you are someone who “mines” virtual currency, you create income upon receipt of the currency. This is a taxable event.

As the technology of alternative methods to exchange goods and services evolves, so will your need to understand it. Should someone offer to provide you with Bitcoins for products and services, you will now know there are tax implications to saying yes.

Paying for college can be less taxing

sites@tailorbrands.com — Wed, 02 Dec 2020 10:30:42 GMT

Education Tax Rules

Parents facing college expenses have several provisions in the tax law to consider. The benefits don't apply to all, but there is something of interest for many families.

Tax credits

The American Opportunity Tax Credit is available for certain tuition and fees, and it allows you to reduce taxes annually up to $2,500 per student for four years of college. The credit is equal to 100% of the first $2,000 of qualified expenses and 25% of the next $2,000.

The Lifetime Learning Credit covers any year of post-secondary education, with a maximum credit of $2,000, no matter how many students in the family are eligible.

Both the American Opportunity Tax Credit and lifetime learning credits phase out for taxpayers with higher incomes.

Other education tax incentives

Individual retirement accounts (IRAs). Existing IRAs can also be a source of college funds. You may make withdrawals before age 59½ without penalty for amounts paid for college or graduate school tuition, fees, books, room and board, supplies, and equipment.

Education savings bonds. Interest on Series EE and Series I bonds issued after 1989 is nontaxable when used to pay tuition and fees for you or your dependents. This tax break begins to phase out once income reaches certain levels.

Section 529 plans allow individuals to set up an account on behalf of someone else (say a child or grandchild) that can be used to pay college expenses. There are two types of plans:

Prepaid tuition. Prepaid tuition plans are designed to hedge against inflation. You can purchase tuition credits, at today's rates, that your child can redeem when he or she attends one of the plan's eligible colleges or universities. Both state and private institutions can offer prepaid tuition programs. Using tuition credits from these programs is tax-free.

College savings plans

College savings plans are state-sponsored plans that allow you to build a fund to pay for your child's college education. Your contributions are not tax-deductible, but once in the plan, your money grows tax-free. Provided the funds are used to pay for qualified college expenses, withdrawals are tax-free. Qualified expenses include tuition, fees, books, supplies, and certain room and board costs. Private institutions are not allowed to set up college savings accounts.

Student loan interest deduction. Interest on certain student loans can be deducted whether or not you itemize your deductions. The maximum deduction is $2,500 per year over the loan repayment period.

Other tax benefits. Most scholarships remain tax-free, nontaxable employer-paid tuition may be available, and education expenses related to your job still may be deductible.

When you start examining your situation, remember that many of these provisions are designed so that you can't benefit from more than one in any given year. We can help guide you through the maze and help ensure that you receive the maximum possible benefit.

Recordkeeping requirements for businesses

sites@tailorbrands.com — Wed, 02 Dec 2020 10:25:12 GMT

Recordkeeping for Businesses

What records should your business keep, and how long should you keep them? There are several categories of records that are important to a business, some for internal purposes and some for tax returns and other government requirements. Let's take a look at these by category.

Tax records. First, consider the records you need to substantiate your annual income tax return. The IRS says that you must maintain adequate records, so support the items of income and expense that you claim. That means you must be able to produce receipts, invoices, cancelled checks, or banking records supporting expense items. Similarly, you should keep sales slips, invoices, or bank records to support income items.

Accounting records. Most businesses have adequate accounting systems to capture routine transactions, but not for nonroutine transactions such as the purchase of depreciable assets. When you buy a car, computer, or piece of office equipment, be sure to file all purchase documents, assign an inventory number, and immediately set up a depreciation schedule.

Travel and entertainment expenses. Good recordkeeping for travel and entertainment expenses is essential. Although the rules can be complex, in general you should capture where, when, who, how much, and the business purpose for each expense. A well-designed standard expense report form can help insure that your records contain all the required information. Also, if you have employees who drive on company business, make sure they keep an auto log showing the miles driven for each trip.

IRS audits. Generally, the IRS can audit a tax return for three years after the date it was due or the date the tax was paid, whichever is later. However, if there is a major understatement of income, they can audit for six years after the due date (or seven years after the tax year). For that reason, you should keep most income tax records for seven years. The IRS requires records relating to employment taxes to be kept for at least four years after the date of the return or the date the tax was paid, although here again a seven-year rule is safer.

Sales and Use Tax

State taxing athorities are focusing their audit activities by targeting small businesses sales and use tax. Keep invoices and reports showing your sales tax amounts and tie them to your sales and use tax filings. More importantly, keep records showing all your purchases and sales/use tax reporting. Include details behind any corporate credit card payments to defend the payment of sales and use taxes.

Corporate records. Every incorporated business needs good corporate records, including documents associated with forming the company, bylaws, business licenses, and minutes of all board meetings. Shareholder records should include stock registers and records of all share issuances and redemptions. Also keep copies of all contracts and leases. Finally, don't forget current and terminated employee files, and records of employee pension or profit sharing plans. Most corporate and employee pension plan records should be kept indefinitely.

Computer recordkeeping

The IRS has established a series of rules and recommendations concerning how electronic records must be maintained. Generally, such records should contain the same information as paper records and should be kept for the same length of time.

Cash or accrual? What's the difference?

sites@tailorbrands.com — Wed, 02 Dec 2020 10:23:03 GMT

Marriage and Money

Cash versus Accrual

When you start a business, you have many decisions to make. One of those is the method of accounting your business will use for reporting income and expenses on your tax return. It is an extremely important decision. With few exceptions, the method you choose can only be changed in the future with the IRS's permission.

The two methods generally used are the cash method and the accrual method. The cash method is probably the easiest for most people to understand and the easiest for small business owners to use. This method recognizes income when you receive a payment from a customer, and a deduction is taken when you pay cash or write out a check for a bill you have to pay.

The accrual method recognizes income when the services are rendered or the product is sold, despite the fact that you may not get paid for several months. You have "accounts receivable" in the form of money customers owe you. Expenses are handled the same way. If you buy something today, but don't pay for it until later, maybe even next year, you would deduct the cost now. What you owe for purchases you've made constitutes your "accounts payable."

The cash method is easier to understand and more closely reflects how money is coming in and out of the business. However, it doesn't tell you how much people owe you or how much debt the business owes. The accrual method better reflects how the business is actually doing, but it is more complex and, for most business owners, more difficult to understand.

All new business owners should sit down with their accountants to discuss the pros and cons of each method and to decide what works best for their business. Many businesses are required by tax law to use the accrual method for tax reporting.

Check your credit report - it's free

sites@tailorbrands.com — Wed, 02 Dec 2020 10:08:52 GMT

Marriage and Money

Credit Report

You can check your credit rating from all three of the major credit reporting agencies for free to insure the accuracy of your report. Simply log onto the Internet and go to www.annualcreditreport.com. Alternatively, you can receive your free report if you call 1-877-322-8228. You are allowed to obtain one free report from each agency annually.

Why bother to get a credit report? Identity theft is a multi-billion dollar industry, and checking your credit rating is one of the best ways to protect yourself. You might also be surprised at the number of mistakes that can be found on credit reports. Relatives or even non-relatives with the same (or similar) last name could have their credit information jumbled with yours. Individual companies could have incorrectly reported a negative credit occurrence (in the form of a delinquent payment or nonpayment) to the reporting agencies. Reviewing your credit report is a way to find and fix those negative credit issues.

What if there's an error? If you find an error, it might take some time to fix, but all of the agencies will provide you with instructions on how to correct errors. It's possible that you'll also have to contact the company that gave the incorrect information to the credit reporting agency. All of this communication should be done in writing.

One thing you can't get for free is your credit (or FICO) score. This is the number that companies use to determine how well you manage your credit. You will still be required to contact the three agencies individually in order to, for a fee, obtain your FICO score. However, watch for the "free" credit rating come-ons. If you use another service, either by e-mail or telephone solicitation, you will likely be charged for something that you can get for free.

Will Your Tax Return be Audited?

sites@tailorbrands.com — Mon, 16 Sep 2019 15:02:07 GMT

Audit Risk

Few things are more unnerving than having your tax return selected for an IRS audit. The IRS uses that "audit anxiety" to help keep taxpayers honest on their tax returns.

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DIF scores count

The IRS evaluates tax returns based on their "DIF" scores, a set of IRS formulas known as the "Discriminate Function System." About three-quarters of all returns audited are selected by the DIF computer, which compares deductions, credits, and exemptions with the norms for taxpayers in each income bracket.

While these formulas are kept very secret by the IRS, you can count on having a higher audit probability if you fall into certain categories or report certain things on your tax return.

What interests the IRS?

Some higher risk areas include the following -

1. Tax protests. Both the IRS and tax courts are getting fed up with what they consider frivolous tax protests. If you file a return stating that you owe no tax because the dollar is worthless or make some other such protest, you'll probably be audited.

2. High income. Because auditing higher-income taxpayers is likely to produce more additional tax revenue than auditing lower-income taxpayers, this category is targeted by the IRS.

3. Certain occupations. Taxpayers whose occupations produce cash income, such as taxi drivers and waiters, run a higher risk of being audited. Self-employed individuals, particularly independent contractors, are IRS targets for the same reason; they are more likely to have unreported cash income.

4. No preparer or a problem preparer. If you have a complex return and prepared it yourself, or if your return was prepared by someone on the IRS's problem-preparer list, you are more likely to be audited.

5. Certain deductions. The IRS has found it profitable to audit returns that claim office-in-the-home deductions, travel and entertainment deductions, and certain other write-offs where they feel taxpayers stretch the truth.

6. Related party transactions. Taxpayers who involve family members in their financial operations are more likely to be scrutinized by the IRS. Paying wages to your children, lending money to relatives, splitting income among family members, or running a family business will make the IRS more interested in your returns.

7. Abusive tax shelters and offshore accounts. In the last few years the Internal Revenue Service has detected a proliferation of abusive trust tax evasion schemes. It also believes some people are using offshore credit cards to evade paying U.S. income taxes. The Service intends to expand its efforts to crack down on abuses in these areas.

Your best audit defense

Unless there is suspicion of fraud or substantial understatement of income, the IRS has three years from the due date of your return to initiate an audit. Typically, most returns are selected within two years of their filing date.

The best defense in an audit is a two-part strategy:

1. Have supporting documentation for all deductions and credits.

2. See your accountant immediately upon notification that you're being audited.

A professional can put your mind at ease, find the information that the IRS wants more quickly than you can, and very likely will save you money in the long run by getting a faster and more favorable conclusion to the audit.

Make the Most of Your 401(k) Plan

sites@tailorbrands.com — Mon, 16 Sep 2019 14:56:57 GMT

401(k) Plans

With the future of Social Security uncertain and company pension plans being cut back, careful management of your 401(k) becomes very important. Here are some basic guidelines to help you make the most of your 401(k) investments:

Start early. A 25-year-old employee who saves $300 a month will accumulate over $1 million by age 65 (assuming an 8% annual rate of return). By waiting ten years and still investing the same amount ($300 a month), that employee would accumulate less than $500,000 by age 65.
Be willing to take some risks. Over the long term, you aren't likely to beat inflation by placing all your money in ultra-conservative investments. If you are more than five years from retirement, consider putting at least a portion of your money into stock funds. A fund that mirrors the overall stock market, for example, is likely to beat inflation.
Don't invest too much in your own company's stock. Even if you're confident that your company will be profitable for years to come, it's seldom a good idea to tie your financial future to one firm. In some cases, employees are locked into their employer's stock, but if you have a choice, consider diversifying your 401(k) funds.
Don't be quick to borrow from your 401(k). Although you can repay principal and interest to yourself, dipping into your 401(k) will reduce its earning power. If it's available, a home-equity loan may be a better alternative, especially since the interest is generally tax-deductible.
Don't raid your 401(k) when you change jobs. Resist the temptation to deplete your retirement savings when you change employers. If it's allowed, leave what you have in your old plan or roll the money into your new employer's 401(k). Another option is to roll the funds into an IRA.
Review your portfolio at least once a year. If you've decided to keep 60% of your 401(k) in stock funds, a bull market can push the stock portion of your portfolio beyond the limits you've set. By readjusting your portfolio annually, you'll maintain the desired mix.

Amended Returns: What You Should Know

sites@tailorbrands.com — Mon, 16 Sep 2019 14:54:56 GMT

Amended Returns

Out of sight, out of mind. When it comes to old tax returns, that's an approach many people like to follow. But before you completely forget about your old tax forms, you may wish to consider filing an amended return.

Why file an amended return?

If you made a mistake on a prior-year tax return, an amended return is the way to set things right. Arithmetic errors, missing information, and oversights are all fairly common, and generally there's no reason to fear filing an amended return - whether you owe money to the IRS or vice versa.

Certain special situations can also trigger amended returns. For example, if you suffer a casualty loss in a presidentially declared disaster, you may deduct the loss on your tax return for the year of the disaster, or you may amend the prior-year return and deduct the loss in that year. The best strategy depends on your tax bracket for both years, plus other factors such as the amount of your loss and whether it occurred early or late in the year.

An amended return can help ease the sting of certain business and worthless security losses. You also may benefit from an amended return if there's a retroactive change in the tax law as a result of new legislation or a favorable court ruling.

Use Form 1040X

Form 1040X ("Amended U.S. Individual Income Tax Return") is the IRS form designed for amended filings.

Generally, you have three years from the time your return was filed or two years from the time the tax was paid, whichever is later, to file an amended return.

Be sure the changes you want to make are valid. The tax laws have changed frequently over the past several years. What was deductible one year might not be deductible the very next year, and the list of items includable in taxable income has also changed from year to year.

Also, although filing an amended return is not necessarily a red flag for an audit, some changes are looked at more closely than others. For example, claiming additional travel and entertainment expenses on an amended return may be risky.

If you have omitted income from your return, you should file a 1040X as soon as you become aware of the omission. You may owe additional taxes, interest, and perhaps penalties. The proper presentation of previously omitted items is crucial and is best left to a professional.

Regardless of the reason for the amended return, be sure to keep good records to substantiate the reasons for the change.

If, as a result of the changes, the IRS owes you, you will receive a refund with interest. If you owe the IRS, payment should be made with the 1040X. The IRS will bill you for any additional interest.

Discuss Money Before You Marry

sites@tailorbrands.com — Mon, 16 Sep 2019 14:49:39 GMT

Marriage and Money

Couples often enter into marriage without ever having had a serious discussion about financial issues. As a result, they find themselves frequently arguing about money. If you are planning a wedding, here are some steps you can take to get your marriage off to a good financial start.

Premarital financial discussions. You and your intended might enjoy the same movies and the same kinds of food, but are you financially compatible? Take some time to discuss your finances before you tie the knot. Talk about your assets, your debts, your credit ratings, and your financial attitudes, including your spending and saving habits. Do you share the same goals, such as having children, buying a home, or continuing your education? How will you finance your dreams?
How will you handle your finances as a married couple? For example, who will pay the bills? Will you maintain joint or separate checking accounts? If you maintain separate accounts, how will you split your expenses?
Premarital financial counseling. Every couple needs to work out their own style for handling money. Call upon your accountant to assist you in setting up a budget, controlling your taxes, and mapping out a financial plan for your future.
Premarital legal counseling. If you have substantial assets, discuss the merits of a premarital agreement with your attorney. If your partner has substantial debt, ask your attorney how you can protect yourself from his or her creditors.
Perhaps you plan on buying a house together or combining financial accounts. Your attorney can advise you on the best way to hold title to your assets.

Discussing your finances before you say "I do" may increase your chances for living happily ever after.