Small businesses need major tax help

Despite the widespread belief that small businesses are a target for IRS audits, nearly a third of small-business owners think they overpay their taxes, according to a survey by B2B research firm Clutch of over 300 small-business owners and managers.

“If they think they’re paying too much, they’re questioning the accuracy of their tax return,” said Roger Harris, president of Padgett Business Services. “They’re somehow missing a deduction, or there are parts of the code they just don’t know about. If a business owner did their own accounting and bought a piece of equipment in October 2017, what’s the chance they knew the rules for the new 100 percent bonus depreciation?”

The small businesses in the survey listed unforeseen expenses (35 percent) as their top financial challenge, followed by the mixing of business and personal finances (23 percent) and the inability to receive payments on time (21 percent). Clerical errors in financial records, and outdated financial records, were both listed by 11 percent of respondents.

The majority of small businesses in the survey said they use the accrual method for tracking finances, although the smallest businesses, with fewer than 10 employees, were more likely to use the cash basis method.

“Actually, use of the cash method versus the accrual method has nothing to do with number of employees but with revenue,” said Harris. “In fact, the Tax Cuts and Jobs Act increased the ability to use the cash method for businesses with up to $25 million in annual revenue. Cash accounting is available to many businesses, and many small businesses prefer it because it’s simpler. They like taxable income to track as closely as possible to their checkbooks. In fact, most of our clients would be happy with a simple profit and loss financial statement: Money in minus money out equals money left, or what some of them call ‘my money.’”

“But the accrual method creates expenses that sometimes aren’t yet paid and sometimes defers costs that are already paid, and defers them into the future,” he continued. “In that case, taxable income can vary dramatically from using the cash method.”

“The cash method is easier for everyone to understand,” he said. “Money in is income, money out is expense, and what’s left is your money, which is what you pay taxes on.”

Most use a hybrid method — accrual for income because they have inventories, and cash for expenses, according to Harris.

“If I asked what method of accounting they use, most small-business owners would just stare at me,” Harris said. “But if I explained it to them and they made a pick, most would choose cash. I would be stunned if I asked a small-business owner without giving a choice, and anyone said ‘accrual.’ Most of them wouldn’t even know the term. If you go to the coffee shop in your building and ask the owner what method they use, they won’t know what you’re talking about.”

“In a classroom or to an accountant, the accrual method is favored,” said Harris. “But in the eyes of most owners, if they don’t have the money it’s not income, and if they haven’t paid money, it’s not an expense.”

Surprisingly, the survey found that more than a quarter — 27 percent — of small-business owners and managers said they do not have a separate bank account for their business. Naturally, established businesses are more likely to have separate bank accounts than start-ups. Nearly 80 percent of small-business owners of five years or more said they have separate accounts, compared to 68 percent of small-business owners of two years or less.

Source: accountingtoday.com Written by: R. Russell

When should I hire an Accountant?

There are good reasons for hiring an accountant at different stages of your company's growth. From a business plan to company formation, loan application to government audit, an accountant can make life easier for you at each step.

That doesn't mean you always need to employ an accountant full-time or hire one on a retainer basis. Sometimes just a couple of hours of their time will be enough.

Like all small business owners who are looking to save money, you may think you can’t afford an accountant. But look at how long it would take you to do certain tasks (such as taxes), and ask yourself, is that a good use of your time?

If you involve an accountant while you're writing your business plan, they will be able to use accounting software to add financial projections and other reports to it. This will help you create a business plan that's realistic, professional and more likely to succeed.

Not all businesses have the same legal structure – there are different types that are determined by a number of factors. Some might be called limited companies, limited liability partnerships or corporations, others could be sole traders or proprietors. These vary from one country to another.
You should carefully consider each type before deciding which one best suits you.

Small business accounting can quickly become complex if you do it on your own. If you feel you're losing control of who owes you money and how much, an accountant can help you get back on track.

You may also want to measure key business metrics, such as the ratio of salaries and other employee payments to total revenue. An accountant can help here by managing your payroll and producing graphs so you can see how the ratio changes over time.

As a small business owner, no doubt one of the things you like best is that you have control. You can set your own working hours, craft your business strategy, regulate your workload (at least to some extent) and determine your own finances. And being the master of all of these things is a wonderful and liberating feeling.

But sometimes it can stop you from delegating. Business owners can feel overworked, partly due to a reluctance to allow other people to help out. You might feel that no one can possibly know your business as well as you do, therefore nobody can handle any part of your business as well as you can.

Inability to delegate can mean you’re left feeling overworked and stressed. At some point you will have to let go, and learn to trust other people to handle some parts of your business so that you can look after the rest.

Courtesy of Xero

For more information contact Neikirk, Mahoney and Smith at 502-896-2999

Do I need an Accountant?

As a small-business owner, up until this point, you may have managed your money successfully. Software programs like QuickBooks make it possible, even if you don’t have much financial knowledge or experience.

However, as your business — and revenue — grow, managing your financials may become a task you don’t have the time or knowledge to manage. Specifically, when it comes avoiding legal and compliance issues.

An accountant can talk to you in straight terms, weed through terminology, and teach you how to manage your own finances. In addition, you don’t want to miss key information or make mistakes early that could cost you down the road. An accountant can start you and your business off on the right track.

An accountant can advise you early on so that you can comply with all tax regulations. More importantly, an accountant can inform you of tax credits and deductions you can take, and predict the taxes you’ll owe.

Managing your books is preventing you from accomplishing tasks that could directly grow your business (for example, acquiring new clients or moving into new markets) or managing your business effectively (such as dealing with performance issues or troubleshooting service problems). Hire an accountant so you can focus on winning more business, innovating, building your team, and other development activities.

Accountants can create detailed, accurate reports that keep your investors happy and allow you to focus on tasks like growing the business. Additionally, if you are looking for a loan or funding from an investor, you will need to present a polished business plan. An accountant can help you flesh out the financial portion of your plan

If you want to grow through an acquisition, sell off parts of the business, or sell the entire business, an accountant can walk you through the process and determine how to structure the transaction so that you aren’t hit with overwhelming taxes.

Courtesy of QuickBooks

For more information contact Neikirk, Mahoney and Smith at 502-896-2999

Before you hire an accountant...

Every dollar counts for business owners, so if you don't know where you stand on a monthly basis, you may not be around at the end of the year. And while using do-it-yourself accounting software can help monitor costs, the benefits of hiring good accountants extend far beyond crunching numbers.

Before you hire one though, make sure you understand the four basic areas of expertise in a general accounting practice:

Business advisory services. Since an accountant should be knowledgeable about your business environment, your tax situation and your financial statements, it makes sense to ask them to pull all the pieces together and help you come up with a business plan and personal financial plan.

Accounting and record-keeping. These are perhaps the most basic of accounting disciplines. While it makes sense for many business owners to manage their day-to-day records, an accountant can help set up bookkeeping and accounting systems and show you how to use them. A good system allows you to evaluate profitability and modify prices.

Tax advice. Accountants that provide assistance with tax-related issues usually can do so in two areas: tax compliance and tax planning.

Auditing. These services are most commonly required by banks as a condition of a loan. There are many levels of auditing, ranging from simply preparing financial statements to an actual audit.

The best way to find a good accountant is to get a referral from your attorney, your banker or a business colleague. You can also check in with the Society of Certified Public Accountants in your state, which can make a referral.

Courtesy of Entrepreneur

For more information contact Neikrik, Mahoney and Smith at 502-896-2999

Need last minute help with business taxes?

Is there something about your taxes that have you confused? Join the club.
You have some options - search endlessly through IRS documentations, tips, etc. or you can do it the smart way and that is by contacting Neikirk, Mahoney and Smith CPAs.
at 502-896-2999.

Are You Ready for Tax Season?

According to the Internal Revenue Service, nearly a third of Americans wait until the last minute to file their taxes. And once again  this year, with the April 15 deadline looming, millions of Americans still aren't ready to file their tax returns.

Business taxpayers are no different. The process for filing business taxes can always be counted on to add a little bit of a dark cloud to even the prettiest spring morning! And no matter how carefully you documented expenses and reported earnings, every business owner secretly frets over the liklihood of an IRS Audit!

The tax professionals at Neikirk, Mahoney & Smith, understand what you're going through and they stand ready to help you get through the process intact!

Need some help filing your business taxes? Give us a call today at 502-896-2999. Visit our website to learn more and we look forward to being of service!

IRS Instructions for Requesting Copy of Fraudulent Returns

From Neikirk, Mahoney & Smith, the IRS has published the following instructions for requesting copy of fraudulent returns.

A victim of identity theft or a person authorized to obtain the identity theft victim’s tax information may request a redacted copy (one with some information blacked-out) of a fraudulent return that was filed and accepted by the IRS using the identity theft victim’s name and SSN. Due to federal privacy laws, the victim’s name and SSN must be listed as either the primary or secondary taxpayer on the fraudulent return; otherwise the IRS cannot disclose the return information. For this reason, the IRS cannot disclose return information to any person listed only as a dependent.
Partial or full redaction will protect additional possible victims on the return. However, there will be enough data for you to determine how your personal information was used.
To make the request, you will need to prepare a signed letter with the information described below and mail it and any additional documentation to the following address:

IRS
P.O. Box 9039
Andover, MA 01810-0939

The IRS may return your request if it is missing the required information and/or documentation, or is made in a manner other than described in these instructions.

If you are the victim of identity theft requesting a copy of fraudulent returns, you will need to provide the following information and documentation:

• Your name and SSN
• Your mailing address
• Tax year(s) of the fraudulent return(s) you are requesting
• The following statement, with your signature beneath: “I declare that I am the taxpayer.”

If you are a person authorized to obtain the identity theft victim’s tax information however, you will need to provide quite a bit more documentation.

For more information on what that documentation is, you can see the full IRS article here.
You can also contact Neikirk, Mahoney & Smith PLLC at 502-896-2999, or through our website contact form.

IRS, States, Industry Continue Progress to Protect Taxpayers from Identity Theft

From Neikirk, Mahoney & Smith, the Internal Revenue Service, state tax administrators and leaders of the tax industry announced today continued progress to expand and strengthen protections against identity theft refund fraud for the 2016 tax season.

The public-private sector partnership announced success in identifying and testing more than 20 new data elements on tax return submissions that will be shared with the IRS and the states to help detect and prevent identity-theft related filings. In addition, the software industry is putting in place enhanced identity requirements and validation procedures for their customers to protect accounts from identity thieves.

“This unprecedented partnership continues to put strong new safeguards in place for the 2016 tax season,” IRS Commissioner John Koskinen said. “We are breaking new ground in the battle against identity theft. Taxpayers will have more protection than ever when they file their tax returns.”
Known as the Security Summit, the unprecedented collaborative effort began in March and culminated in the development of several recommendations in June between the IRS, leaders of tax preparation and software firms, payroll and tax financial product processors and state tax administrators. Security Summit participants also identified additional topics for collaboration in the months ahead, and have continued to work together as a group to leverage their collective resources and efforts to protect taxpayers.

Koskinen and other leaders met in Washington, D.C., Tuesday to update the effort. To date, 34 state departments of revenue and 20 tax industry members have signed memorandums of understanding regarding roles, responsibilities and information sharing, with more expected to sign later.

As part of the Security Summit process, members from the IRS, states and industry are co-chairing and serving on several teams. The teams have focused on a number of areas including improved validation of the authenticity of taxpayers and information included on tax return submissions, increased information sharing to improve refund fraud detection and expand prevention, as well as more sophisticated threat assessment and strategy development to prevent risks and threats.

The industry and government groups identified numerous new data elements that can be shared at the time of filing with the IRS and states to help authenticate a taxpayer and detect identity theft refund fraud. There are more than 20 new data components that will help detect possible identity theft. The data will be submitted with the tax return transmission for the 2016 filing season, a step that will help detect and prevent refund fraud on both the federal and state level.

Another component will enhance identity validation for taxpayers using tax software. These stronger steps will protect taxpayer accounts by creating stronger verification of customers. This effort will include creation of security questions and device identity recognition at the time of log-on — both steps being used in the financial sector.

“We are taking new steps upfront to protect taxpayers at the time they file and beyond,” Koskinen said. “Thanks to the cooperative efforts taking place between the industry, the states and the IRS, we will have new tools in place this January to protect taxpayers during the 2016 filing season.”

In addition to the states and companies from the private sector, the summit team includes several groups including the Federation of Tax Administrators (FTA) representing the states, the Council for Electronic Revenue Communication Advancement (CERCA) and the American Coalition for Taxpayer Rights (ACTR). A wide variety of groups have also joined in supporting the summit effort, including Free File Inc., the National Association of Computerized Tax Processors, the Network Branded Prepaid Card Association and the Financial Services Roundtable.

If you have any questions or concerns, contact Neikirk, Mahoney & Smith PLLC at 502-896-2999.

Do you know what a tax inversion is?

The president is blaming CPAs for the trend towards corporate tax inversions.

That's is his opinion, I suppose, but in reality it's a technique accountants and accounting firms employ in their efforts to help American companies remain profitable as our tax burden continues to rise at a time when the economy might not have itself back on a sufficiently firm foundation to support continued growth after the worst recession/depression since the 1920s.

So what, exactly, is a corporate tax inversion?

If you don't know, you aren't alone. But suffice it to say that its one of the issues that gets the hackles up of those groups that accuse big corporations of being the "bad guys" when it comes to creating jobs and rebuilding our economy.

According to Investopedia, a corporate tax inversion is the reincorporation of a company overseas in order to reduce the tax burden on income earned abroad.

Corporate inversion as a strategy is used by companies that receive a significant portion of their income from foreign sources, since that income is taxed both abroad and in the country of incorporation. Companies undertaking this strategy are likely to select a country that has lower tax rates and less stringent corporate governance requirements.

President Obama doesn't like the practice. According to Accounting Today, Obama said, “You have accountants going to some big corporations—multinational corporations but that are clearly U.S.-based and have the bulk of their operations in the United States—and these accountants are saying, you know what, we found a great loophole—if you just flip your citizenship to another country, even though it’s just a paper transaction, we think we can get you out of paying a whole bunch of taxes.”

As is so often the case, some are blaming lawyers for the existence of this "profit loophole."

Accounting Today editor Michael Cohn points out that an article in The Wall Street Journal on Wednesday attributed the trend to the legal profession, describing how the international law firm Skadden, Arps, Slate, Meagher & Flom persuaded a number of corporate clients to do inversions, with the help of banks such as J.P. Morgan Chase and Deutsche Bank. So far, many of the deals have occurred among pharmaceutical companies such as AbbVie's recent acquisition of Shire in the United Kingdom. On Wednesday, Walgreen's CEO announced that his company plans to acquire the rest of the European drug store chain Alliance Boots, but its tax address will remain in the U.S. (see Walgreen Stays in U.S. in $15.3 Billion Alliance Boots Deal)

Obama argued that inversions place an unfair burden on other taxpayers. “Well, it’s not fair. It’s not right." Read more

And if you're interested in getting sound tax advice for your business, contact Neikirk, Mahoney & Smith PLLC at (502) 896-2999.

Thomson Reuters Releases Report on IRS Examinations

BY MICHAEL COHN, Accounting Today

Thomson Reuters has released a special report for tax professionals on how to respond to Internal Revenue Service examinations.

The report, Handling the Increasingly Common Automated IRS Examination, examines two compliance programs used by the IRS to address underreporting: the correspondence examination, also known as the “corr exam,” and the automated underreporter, or AUR, program.

In fiscal year 2013, the IRS conducted over 1 million corr exams and closed 4.1 million AUR cases, compared to 344,000 field exams, according to the report.

The report discusses these compliance programs, addresses problems associated with automated examinations, and offers step-by-step guidance on how to respond to a letter or notice from the IRS.

Read more

Supreme Court decides against unions

Fox News - WASHINGTON –  The Supreme Court, in a 5-4 decision, ruled Monday that public-sector unions in Illinois cannot collect fees from home health care workers who don't want to be part of a union.

The ruling is a setback for labor unions that have boosted their bargaining power -- as well as their bank balance -- in states like Illinois, by signing up thousands of in-home care workers and forcing them to fork over union dues.

The ruling, however, was limited to health care workers and not all private-sector unions. It also stopped short of overturning decades of practice that allowed public-sector unions to pass representation costs to non-members.
Read More

In celebration of Small Business Week

Smallbiztrends.com has a running list of national events slated this week and I thought I'd share them today. If you run a small business and you're looking for ways to increase your bottom line, contact Neikirk, Mahoney & Smith PLLC, a Louisville based accounting firm serving American with small business accounting, tax preparation and consulting. Our telephone number is 502-896-2999.

National Small Business Week in the United States runs May 12 – 16, 2014.  This year, like past years, is expected to kick off with a proclamation by the President affirming the country’s commitment to small businesses.

Each year the U.S. Small Business Administration holds a series of national events taking place in Washington and elsewhere, covering important issues such as financing, growth strategies and innovation.

But it’s not just the federal government getting in on the act. States, cities and companies also hold activities, educational events like webinars, and perform special activities in honor of Small Business Week.

So to help you all participate in some way — whether sitting at your computer or out in your local community — we’ve started collecting a list of activities, events, announcements and other information you need to know about Small Business Week.

THIS IS A RUNNING LIST OF SMALL BUSINESS WEEK ACTIVITIES – WE WILL BE ADDING TO IT DAILY!

Monday, May 12

A kick off at Twitter HQ. A kick off event for National Small Business Week will be held at Twitter Headquarters in San Francisco from 7:30 am to 12:00 p.m. Pacific Daylight Time. The event is currently sold out, but you can get yourself on the waiting list here.

Saying Thank You to Guilford’s Small Businesses. Running May 12th through May 18th is an event organization of over 25 non profits to use National Small Business Week as an opportunity to say thank you to all the small businesses in town who support their organizations by “asking all their supporters, board members, staff, and friends to make it a point to do business locally during National Small Business week.”

Tuesday, May 13

Making Kansas City an International Hub. National Small Business Week continues with a series of seminars in Kansas City with discussion on making the city an international trade hub and more. Events will be 8 a.m. to 4 p.m. Central Standard Time at Burns and McDonnell.

Small business discount day. The Greater Philadelphia Chamber of Commerce will sponsor a Discount Day with special deals and offers from participating members of the local organization.

Integrated Marketing TNT Webinar - Join Rajatish Mukherjee, Sr. Vice President of GoDaddy and Raj Nijje, Sr. Director of Product Management of GoDaddy – along with host Brent Leary. They will cover how to enhance your small business’s online presence and get found online.  From 7 to 8 pm Eastern.

Twitter chat on business signage and marketing. Small Business Trends along with sponsor FedEx is hosting an educational chat on May 13, 2014 at 8p.m. EST on Twitter.com, under the hashtag #SMBSignage. Join in and share your marketing tips about creating signs and other marketing.

Wednesday, May 14

Small Biz Success in the Mobile World. Conduit Mobile will host a special summit from 8 a.m.to 1 p.m. EST at the IAC Building in New York City. Discussions will revolve around the small business opportunities created by mobile.

100% Royalty Day.  iStock will give 100% of the sales on May 14 from cash and credit downloads of millions of files to the artists (many of them entrepreneurs) who create the content.  iStock will also pay double royalties to artists on subscription-based downloads of exclusive content.

Webinar on top U.S. cities for small business growth . As part of National Small Business Week, Biz2Credit and Small Business Trends will host a free webinar at 3:00 p.m. EDT which will delve into the best areas of the country to start and expand a company.

Wix and Infusionsoft – Small Business Breakfast.  Wix and Infusionsoft will have their monthly Small Business Breakfast during Small Business Week. Hosted by Ramon Ray, this month’s event brings together small business owners to hear from Emily Miethner, owner of FindSpark and a master of online and offline networking.

PayPal – Engage New York. PayPal and the SBA bring together small business retailers to learn best practices in selling online, online marketing, technology, finance and more. Hosted by small business pundit Gene Marks and Infusionsoft’s Ramon Ray,  this event will be informative, high energy and fun.

Small Business Success Stories.  Four small business owners will share their stories of success. May 14, 6:30 p.m. at the Burton D. Morgan Center for Entrepreneurship Research at the Hudson Library, Hudson, Ohio.

Thursday, May 15

Constant Contact chief speaks. Constant Contact CEO Gail Goodman is scheduled to give a keynote address at 10 a.m. EST in Boston at the Microsoft New England R&D Center. Her topic will be how to forge enduring customer connections.

Webinar on small business follow through. The Greater Philadelphia Chamber of Commerce will sponsor a webinar on small business follow-through with Mark Goulston, M.D, of Heartfelt Leadership from 10 to 11 a.m. EST.

Veterans in entrepreneurship. A special panel on veterans and entrepreneurship will be the highlight of an afternoon of activities in Washington D.C. at the U.S. Chamber of Commerce building from 3 to 8 p.m. EST.

St. Johns County Small Business Expo. Sponsored by Vystar Credit Union, Constant Contact and Microsoft, St. Augustine, Florida’s Business Solutions Unlimited, LLC, will host a free Small Business Expo on May 15, 2014, from 10:00 a.m. to 5:00 p.m., at the St. Johns River State College. Classes on topics ranging from marketing to accounting will be conducted throughout day.

Friday, May 16

Author gives Philly keynote. The Greater Philadelphia Chamber of Commerce will sponsor a keynote address from adjunct professor at Temple University’s Fox School of Business Chris Rabb, author of the book “Invisible Capital: How Unseen Forces Shape Entrepreneurial Opportunity.”  The event will be at Liberty Ball Room at the Independent Visitor Center 8:30 a.m. to 10:00 a.m Eastern Standard Time.

Legal Zoom Small Biz Twitter Chat. Join senior USA Today small business columnist, speaker and best selling author Steve Strauss and LegalZoom for the next in a monthly series of Twitter discussions focused on start-ups, small businesses and entrepreneurship. This months Twitter chat guest, during Small Business Week, is Infusionsoft’s Ramon Ray sharing insights.

Business (E)ssentials Bootcamp Atlanta. Join dozens of small business owners Friday May 16 and Saturday, May 17, 2014; 9:00 a.m. to 5:30 p.m. for two power-packed days where they will develop their own customized Internet marketing and communications plans. Participants will gain essential SEO, CRM and Internet marketing skills.

All Week Long

Google Business Community.  Members who join The google Business Community between May 12 – 16 will get a promotional code from Google for $20 toward Helpouts in areas like online advertising, branding and web design.

Add Your Announcements and Events!

Everyone is welcome to share their own Small Business Week activities, events and announcements.  Email your event or announcement to our tips box:  sbtips@gmail.com.  Or just leave a comment below.  We will add it.

Also, see the Small Business Events Calendar for more.

Rates Likely to Remain Low, Fisher says

by Michael S. Derby, the Wall Street Journal

Federal Reserve Bank of Dallas President Richard Fisher said Friday he supports ending the central bank’s bond-buying stimulus program this year, while adding it is very likely that very low interest rates will prevail for some time to come.

“There is abundant liquidity to finance economic expansion, and the [Federal Open Market Committee] will assure that it remains affordable as long as the prospect of inflation rising above its 2% target remains in abeyance,” Mr. Fisher said in the text of a speech prepared for delivery before a local group in New Orleans.

Mr. Fisher is a voting member of the Fed’s monetary-policy setting FOMC this year. He has been a persistent critic of the recent round of Fed moves to stimulate growth, done mainly by buying longer-dated Treasury and mortgage bonds in a bid to lower borrowing costs to stimulate growth and lower unemployment. Heartened by signs of economic improvement, the Fed has been cutting the pace of its bond-buying program this year — the monthly buying rate now stands at $45 billion — and officials broadly agree the effort will be wound down this year.

“Barring some destabilizing development in the real economy that comes out of left field, I will continue to vote for the pace of reduction we have undertaken, reducing by $10 billion per meeting our purchases and eliminating them entirely at the October meeting with a final reduction of $15 billion,” Mr. Fisher said.

Positive news for your weekend from your friends at Neikirk, Mahoney & Smith PLLC, a Louisville based accounting firm serving clients across the south and midwest.

Read more

Time to Re-evaluate Your Accounting Resources

Now that tax season is over for most of us, now would be a good time to re-evaluate your resources to make sure you're getting the most bang for your accounting buck.

How do you feel about the way your 2013 taxes were done? Did your accounting firm keep you informed of changes in the tax code that could impact your business?

Did your accounting firm take the time to really understand how your business operates? Did they provide you with suggestions and ideas that would positively impact your bottom line? Were they proactive or reactive? And at the end of the day, do you feel like you were getting what you expected at the cost your expected?

If the answer to any of the questions above is anything but a resounding "yes", contact Neikirk, Mahoney & Smith today. We'll spend some time together, discussing and learning what really matters to you, not to us.

In a world of fast talkers and false guarantees, Neikirk, Mahoney & Smith stands out from the white noise. That's because we really do care about you and your business.

Here's a great article for your reference from Entepreneur.com. And after you've read it, give us a call today.

HOW TO HIRE AN ACCOUNTANT

Every dollar counts for business owners, so if you don't know where you stand on a monthly basis, you may not be around at the end of the year. And while using do-it-yourself accounting software can help monitor costs, the benefits of hiring good accountants extend far beyond crunching numbers. Potentially, they can be your company's financial partner for life, with intimate knowledge of not only how you're going to finance your next forklift, for instance, but also how you're going to finance your daughter's college education.

Before you hire one though, make sure you understand the four basic areas of expertise in a general accounting practice:

1. Business advisory services. Since an accountant should be knowledgeable about your business environment, your tax situation and your financial statements, it makes sense to ask them to pull all the pieces together and help you come up with a business plan and personal financial plan. Accountants can offer advice on everything from insurance (do you really need business interruption insurance or is it cheaper to lease a second site?) to expansion (how will additional capacity affect operating costs?). Accountants can bring a new level of insight, simply by virtue of their perspective.
2. Accounting and record-keeping. These are perhaps the most basic of accounting disciplines. While it makes sense for many business owners to manage their day-to-day records, an accountant can help set up bookkeeping and accounting systems and show you how to use them. A good system allows you to evaluate profitability and modify prices. It also lets you monitor expenses, track a budget, spot trends and reduce accounting fees required to produce financial statements and tax returns.
3. Tax advice. Accountants that provide assistance with tax-related issues usually can do so in two areas: tax compliance and tax planning. Planning refers to reducing your overall tax burden. Compliance refers to obeying the tax laws.
4. Auditing. These services are most commonly required by banks as a condition of a loan. There are many levels of auditing, ranging from simply preparing financial statements to an actual audit, where the accountant or other third party provides assurance that a company's financial information is accurate.

Choosing an Accountant
The best way to find a good accountant is to get a referral from your attorney, your banker or a business colleague. You can also check in with the Society of Certified Public Accountants in your state, which can make a referral.

While accountants usually work for large companies, CPAs (certified public accountants) work for a variety of large and small businesses. Don't underestimate the importance of a CPA. This title is only awarded to people who have passed a rigorous a two-day, nationally standardized test. Most states require CPAs to have at least a college degree or its equivalent. Several states also require post-graduate work.

Once you have come up with some good candidates, it is important to determine how much of the work your company will do and how much will be done by the accountant.

Accounting services can be divided into three broad categories: recording transactions, assembling them, and generating returns and financial statements. Although the first two categories require a lower skill level than the latter, many firms charge the same hourly rate for all three. This is why it's important to determine exactly what work you want an accountant to handle.

The next step is to interview your referrals. For each, plan on two meetings before making your decision. One meeting should be at your site. The other should be at theirs. During the interviews, your principal goal is to find out about three things: services, personality and fees. Here's what to ask in each area.

1. Services: Most accounting firms offer tax and auditing services. But what about bookkeeping? Management consulting? Estate planning? Will the accountant help you design and implement financial information systems? A CPA may offer services that include analyzing transactions for loans and financing; preparing, auditing, reviewing and compiling financial statements; managing investments; and representing you before tax authorities.
   
   Although smaller accounting firms are generally a better bet for entrepreneurs, they may not offer all these services. Make sure the firm has what you need. If it can't offer specialized services, it may have relationships with other firms to which it can refer you to handle these matters. In addition to services, make sure the firm has experience with small business and your specific industry.
2. Personality: Is the accountant's style compatible with yours? Be sure the people you are meeting are the same ones who will be handling your business. At many accounting firms, some partners handle sales and new business, then pass the actual account work on to others.
   
   When evaluating competency and compatibility, ask candidates how they would handle situations relevant to you. For example: How would you handle an IRS office audit seeking verification of automobile expenses? Listen to the answers and decide if that's how you would like your affairs to be handled.
   
   Realize, too, that having an accountant who takes a different approach can be a good thing. Just be sure that the accountant doesn't pressure you into doing things you aren't comfortable with.
3. Fees: Ask about this upfront. Most accounting firms charge by the hour with fees ranging from $100 to $275. However, others work on a monthly retainer. Get a range of quotes from different accountants. Also try to get an estimate of the total annual charges based on the services you have discussed.
   
   Don't base your decision solely on cost, however, as an accountant who charges higher hourly rate is likely to be more experienced and able to work faster than a novice who charges less.
   
   Also be sure to ask for references -- particularly from clients in your industry. Call them to find out how satisfied they were with the accountant's services, fees and availability.

Make the Most of the Relationship
After you make a choice, spell out the terms of the agreement in an engagement letter. The document should detail the returns and statements to be prepared and the fees to be charged. This ensures that you and your accountant have the same expectations.

Also, hold up your end of the agreement. Don't hand your accountant a shoebox full of receipts. Write down details of all the checks in your check register, whether they are for utilities, supplies and so on. Likewise, identify sources of income on your bank deposit slips. The better you maintain your records, the less time your accountant has to spend and the lower your fees will be.

It's a good idea to meet or at least speak with your accountant every month. Review financial statements and go over problems so you know where your money is going. Your accountant should go beyond number-crunching to suggest alternative ways of cutting costs and act as a sounding board for any ideas or questions you have.

Excerpted from Start Your Own Business, Fifth Edition by the staff ofEntrepreneur.

Social Security to Stop Seizing Tax Refunds

BY MICHAEL COHN, EDITOR-IN-CHIEF, ACCOUNTINGTODAY.COM

A pair of senators have called on the Social Security Administration to end the policy of seizing taxpayers’ refunds to hold them accountable for decades-old errors made by the agency that led to the overpayment of benefits, and the agency has agreed to do so.

Senators Barbara Boxer, D-Calif., and Barbara Mikulski, D-Md., highlighted a story on the front page of the Washington Post last Friday morning that detailed the case of Mary Grice, whose tax refund was seized by the U.S. government to repay an overpayment of benefits made to an unknown member of her family in 1977. 

“While this policy of seizing tax refunds to repay decades-old Social Security overpayments might be allowed under the law, it is entirely unjust,” the senators wrote in a letter Friday to the Acting Commissioner of the Social Security Administration, Carolyn Colvin. “Grice and other families like hers are unfairly being held responsible for decades-old errors at the Social Security Administration – even though many of these taxpayers were children at the time the error was made. Too many of these families are now finding themselves trapped in a mess of paperwork and red tape that is both costly and time-consuming.” 

To learn more about how this measure might affect you, contact Neikirk, Mahoney & Smith PLLC

Read more at Accounting Today

Returns Are UP, According to IRS

The Internal Revenue Service said Thursday that only three weeks after the opening of tax season, it has already received about one-third of the individual income tax returns it expects to receive in 2014.

The IRS reported that tax season has gone smoothly so far, despite the two-week delay before kicking off tax season on January 31.  The IRS has processed almost 98 percent of the 49.6 million returns received so far. Each week this filing season, the IRS has processed a greater percentage of the returns received than during comparable weeks last year.

For more, check out Michael Cohn's article in Accounting Today. If you need help with preparing your 2013 tax returns, contact Neikirk, Mahoney & Smith PLLC.

Bloomberg BNA Has A Nice Offer

Bloomberg BNA is offering a free 7 day trial subscription to their Daily Tax Report. Even if you're already working with the accounting firm of Neikirk, Mahoney & Smith CPAs, you might find this a handy tool. 

Sign up here ->  FREE 7-day trial subscription to the Daily Tax Report and receive a complimentary copy of our highly-anticipated 2014 Outlook: Tax, Accounting and Pensions. This comprehensive report provides an overview of what to expect in 2014 including discussions on international tax, tax legislation, state developments, tax administration, and more!

Tax Tips of the Day

The Internal Revenue Service is warning taxpayers to be sure to notify your accountant or the Social Security Administration before they file their taxes if they have changed their own name or the name of one of their dependents has changed. Otherwise their tax refund could be delayed.
Read more from Accounting Today

__________

The Internal Revenue Service today announced the release of IRS2Go 4.0, an update to its smartphone application featuring new added features available in both English and Spanish.

The redesigned IRS2Go provides new features for taxpayers to access the latest information to help them in the preparation of their tax returns. In this version, IRS2Go highlights the addition of an innovative new refund status tracker, providing taxpayers an easy-to-use feature to follow their tax return throughout the process.

The newest version of the free mobile app offers a number of safe and secure ways for taxpayers to access other popular tools and the most up-to-date tax information, including:

• Refund Status. Taxpayers can check the status of their federal tax refund through IRS2Go. People simply enter their Social Security number, which will be masked and encrypted for security purposes, then select their filing status and enter the amount of their anticipated refund for their 2013 tax return. A new refund status tracker has been added so that taxpayers can follow their tax return throughout the process. Users can check their refund status 24 hours after the IRS acknowledges receipt of an e-filed return, or four weeks after mailing a paper return. The IRS reminds taxpayers the tool is updated just once a day, usually overnight, so there is no reason to check more than once a day.
• Free Tax Prep Providers. The IRS Volunteer Income Tax Assistance (VITA) and the Tax Counseling for the Elderly (TCE) Programs offer free tax help for taxpayers who qualify. This brand new tool on IRS2Go will help taxpayers find the nearest VITA site to their home by simply entering their zip code and selecting a mileage range. By clicking on the directions button within the results, the maps application on the device will load with the address, making it easy to navigate to your desired location.
• Tax Records. Taxpayers can request their tax account or tax return transcript from IRS2Go. The transcript will be delivered via the U.S. Postal Service to their address of record.

It's Tax Season!

The Internal Revenue Service began accepting individual tax returns on Friday. 

The IRS postponed the beginning of tax season this year until January 31 due to the two-week federal government shutdown, which delayed the testing and implementation of some of its computer systems. The IRS is also starting off this tax season with a new commissioner, John Koskinen. Newly approved by Congress, he has been brought in to fix some of the problems that emerged last year, including with the agency’s Exempt Organizations unit, as well as contend with budget cuts that have been reducing taxpayer service.

The IRS is encouraging taxpayers to use electronic filing, noting that last year, nearly 120 million taxpayers opted for IRS e-file. Since 1990, taxpayers have e-filed more than 1 billion Form 1040 series tax returns through e-file.

If you need any help preparing your own personal or business tax returns, contact the accounting professionals at Neikirk, Mahoney & Smith PLLC where you'll be dealing with a real Certified Public Accountant and not someone that will try to sell you a car when tax season is over!

Read the rest of the article here - Thanks to Michael Cohn and Accounting Today!

2014 Tax Planning - 5 Tips

Tax planning very rarely makes it on people’s new year’s resolution lists. But perhaps 2014 should be the year you vow to achieve a greater level of understanding about your taxes and to properly organize and plan for your liability, according to Fox Business.

Not only would this pledge make your life easier come tax season, it could also end up keeping more money in your bank account.

Check out some tips to get rolling on fulfilling this resolution:

1. Set up your 2014 tax file. This could be an electronic file in which you scan documents and transactions throughout the year that will affect your tax return, or a folder or bin that holds the information.

The beauty of an electronic file is that at tax time you can simply e-mail it to your tax professional, who will likely also maintain the file in the event of an audit. Just make sure you have adequate back up of your data in case something goes wrong. Adding notes on the tax documents to aid your tax pro in understanding the transaction can help the filing process.

-Click for more-