Filing an Amended Tax Return

From Neikirk, Mahoney & Smith CPAs, here are the Internal Revenue Services' Top 10 Tax Tips about Filing an Amended Tax Return

We all make mistakes so don’t panic if you made one on your tax return. You can file an amended return if you need to fix an error. You can also amend your tax return if you forgot to claim a tax credit or deduction. Men with big dogs won't show up at your door if you goof, but here are some tips to help you handle this sort of thing.

1. When to amend.  You should amend your tax return if you need to correct your filing status, the number of dependents you claimed, or your total income. You should also amend your return to claim tax deductions or tax credits that you did not claim when you filed your original return. The instructions for Form 1040X, Amended U.S. Individual Income Tax Return, list more reasons to amend a return.

Note: If, as allowed by recent legislation, you plan to amend your tax year 2014 return to retroactively claim the Health Coverage Tax Credit, see IRS.Gov/HCTC first for more information.

2. When NOT to amend.  In some cases, you don’t need to amend your tax return. The IRS usually corrects math errors when processing your original return. If you didn’t include a required form or schedule, the IRS will send you a notice via U.S. mail about the missing item.

3. Form 1040X.  Use Form 1040X to amend a federal income tax return that you filed before. Make sure you check the box at the top of the form that shows which year you are amending. Since you can’t e-file an amended return, you’ll need to file your Form 1040X on paper and mail it to the IRS.

Form 1040X has three columns. Column A shows amounts from the original return. Column B shows the net increase or decrease for the amounts you are changing. Column C shows the corrected amounts. You should explain what you are changing and the reasons why on the back of the form.

4. More than one year.  If you file an amended return for more than one year, use a separate 1040X for each tax year. Mail them in separate envelopes to the IRS. See "Where to File" in the instructions for Form 1040X for the address you should use.

5. Other forms or schedules.  If your changes have to do with other tax forms or schedules, make sure you attach them to Form 1040X when you file the form. If you don’t, this will cause a delay in processing.

6. Amending to claim an additional refund.  If you are waiting for a refund from your original tax return, don’t file your amended return until after you receive the refund. You may cash the refund check from your original return. Amended returns take up to 16 weeks to process. You will receive any additional refund you are owed.

7. Amending to pay additional tax.  If you’re filing an amended tax return because you owe more tax, you should file Form 1040X and pay the tax as soon as possible. This will limit interest and penalty charges.

8. Corrected Forms 1095-A.  If you or anyone on your return enrolled in qualifying health care coverage through the Health Insurance Marketplace, you should have received a Form 1095-A, Health Insurance Marketplace Statement. You may have also received a corrected Form 1095-A. If you filed your tax return based on the original Form 1095-A, you do not need to file an amended return based on a corrected Form 1095-A.  This is true even if you would owe additional taxes based on the new information. However, you may choose to file an amended return.

In some cases, the information on the new Form 1095-A may lower the amount of taxes you owe or increase your refund.  You may also want to file an amended return if:

 You filed and incorrectly claimed a premium tax credit, or
 You filed an income tax return and failed to file Form 8962, Premium Tax Credit, to reconcile your advance payments of the premium tax credit.
Before amending your return, if you received a letter regarding your premium tax credit or Form 8962 you should follow the instructions in the letter.

9. When to file.  To claim a refund file Form 1040X no more than three years from the date you filed your original tax return. You can also file it no more than two years from the date you paid the tax, if that date is later than the three-year rule.

10. Track your return.  You can track the status of your amended tax return three weeks after you file with “Where’s My Amended Return?” This tool is available on IRS.gov or by phone at 866-464-2050.

Still have questions? Contact Neikirk, Mahoney & Smith at (502) 896-2999.

Is your small business growing?

That's the thing about small business. It's either growing or its dying!
If you're among the lucky ones - we all know it isn't just "luck" - your accounting needs are going to be changing as quickly as your business is growing.
That's why you should seek out the advice of one of Louisville's leading accounting firms, Neikirk, Mahoney & Smith.
They can help you plan the right financial strategies you're going to need to make sure your business is ready to meet the challenges that lie ahead.
Do something good for your business. Call Neikirk, Mahoney & Smith today. 502-896-2999.

Tax Laws Slowing Growth of Small Business

In a recent testimony before Congress, Troy Lewis, CPA, CGMA, and chair of the American Institute of CPAs’ (AICPA) Tax Executive Committee, claimed that that compliance with federal tax laws can act as a road block in the growth of small businesses, according to Seth Fineberg, writing in Accounting Web.

 “It is imperative that small businesses and their tax return preparers have the ability to communicate with the IRS when preparing their taxes and addressing compliance issues,” Lewis told committee members. “However, there has been increasingly limited access to the agency. Taxpayer service must remain a high priority in order for small businesses to receive the assistance they need on tax issues.”

Click here to read the complete article.

State-based marketplaces lag behind federal exchange

Brian M. Kalish, writing in the Employment Benefit Advisor, reports that state-based health insurance marketplaces aren't performing up to the Obama Administration's expectations.

As they struggle to become financially stable, state-based marketplaces are lagging behind the federally-facilitated marketplace and are likely to continue to do so in the near future.

Despite improvement efforts, it is safe to “say that the experience for issuers on the public exchange has been challenging,” said Scott Rathke, vice president of government relations at Tampa, Fla.-based Health Plan Services, a third-party administrator which works in the FFM and eight state-based marketplaces.

“Pretty much from the get-go, while the marketplaces have been improving, you still have lots of nuances and problems.”

If you have questions about your company's employee benefit structure, contact Neikirk, Mahoney & Smith at 502-896-2999.

Then read the rest of the article here!

Treasury Exec Blasts Tax System

Mark Mazur is a heavyweight numbers guy and he didn't mince words about the current state of American business tax policies during a recent speech.

“The business tax system today is inefficient, overly complex, and too riddled with loopholes,” Mazur said, making it difficult for US business to function as a world-class system.

Mazur, assistant secretary for tax policy at the U.S. Department of Treasury, a position to which he was appointed in 2011 by President Barack Obama, made the comments while addressing the NYU/KPMG Tax Lecture Series, according to an article in Accounting Today.

Chances are, Mazur's patience is wearing thin from having to help his employer deal with the intense criticism aimed at the Treasury Department's red-headed stepchild - the Internal Revenue Service - over the past few years.

Worse news came today when, writing for Forbes Magazine, Robert W. Wood reported that the IRS doled out $3 billion in erroneous business tax credits to corporations that did not qualify and handed out $5.8 billion in erroneous tax refunds in 2013 alone.

The tax credits are for business taxpayers, Wood said, and covered such varied activities as providing childcare for their employees’ children. In 2013, corporations claimed more than $93 billion worth of tax credits, the report reveals. But it turns out many of those credits were wrong. Mistakes were found in over 3,000 electronically filed corporate tax returns.

Ironically, just last week, IRS Commissioner John Koskinen said that the agency is significantly under-funded, and those cuts mean there will be a decline in service for taxpayers, and pledged that service would improve if they got more money.

"Customer service -- both on the phone and in person -- has been far worse than anyone would want," Koskinen said. "It's simply a matter of not having enough people to answer the phones and provide service at our walk-in sites as a result of cuts to our budget."

But a congressional panel report found recently that the IRS had cut customer services while continuing to hand out bonuses to employees, allowing staff to conduct union activities, failing to collect debt owed by employees of the federal government and spending over $1.2 billion on implementing ObamaCare, according to Fox News.

The panel reported that even though the IRS’s budget for taxpayer assistance remained flat from fiscal year 2014 to 2015, the level of over-the-phone customer service significantly decreased, with the agency shifting staff in customer service to focus on written correspondence instead of telephone calls. Meanwhile, the number of calls doubled in that period.

The panel found that wait times increased from 18.7 minutes to 34.4 minutes, and answered calls decreased from 6.6 million to 5.3 million.

“In January 2015, the IRS commissioner estimated that taxpayer service would decline while delays in tax refunds would increase. While the IRS commissioner has blamed this solely on budget cuts, in reality the IRS deliberately diverted resources away from taxpayer services,” the report found.

Despite the drop in service, there was no significant decrease in bonuses for IRS employees. Notably, in November 2014, despite another round of budget cuts at the IRS, Koskinen announced that employees would receive bonuses at the same level as for the previous year, unless they had substantiated conduct issues, the report said.

So clearly, Mazur has reason to be concerned. The IRS is a complete mess. The question, though, remains...what will be done about it?

Last Minute Input from IRS

Your friends at the Internal Revenue Service today want to threaten remind taxpayers that quick and easy solutions are available if you can’t file your returns or pay your taxes on time, and you can even ask for an extension, make a payment or request payment options online at IRS.gov.

Most taxpayers have already filed their 2014 returns. Figures released today show that as of April 3, the IRS had already received just over 99 million returns and issued more than 77 million refunds averaging over $2,800.

For those who have yet to file, the IRS says don’t panic. Tax-filing extensions are available to taxpayers who need more time to finish their returns. Remember, this is an extension of time to file; not an extension of time to pay. However, taxpayers who are having trouble paying what they owe may qualify for payment plans and other relief.

- WARNING - this is tedious reading. If you'd like to discuss tax issues with a real person and a tax professional, contact Neikirk, Mahoney & Smith PLLC at (502) 896-2999. Or if you have nothing better to do, then continue -

Either way, taxpayers will avoid stiff penalties if they file either a regular income tax return or a request for a tax-filing extension by this year’s April 15 deadline. While taxpayers should pay as much as they can to minimize any penalties and interest, they should always file even if they can’t pay the full amount due. Here are further details on the options available.

More Time to File
People who haven’t finished filling out their return can get an automatic six-month extension. The fastest and easiest way to get the extra time is through the Free File link on IRS.gov. In a matter of minutes, anyone, regardless of income, can use this free service to electronically request an automatic tax-filing extension on Form 4868.

Filing this form gives taxpayers until Oct. 15 to file a return. To get the extension, taxpayers must estimate their tax liability on this form and should also pay any amount due.

By properly filing this form, a taxpayer will avoid the late-filing penalty, normally five percent per month based on the unpaid balance that applies to returns filed after the deadline. In addition, any payment made with an extension request will reduce or eliminate interest and late-payment penalties that apply to payments made after April 15. The interest rate is currently three percent per year, compounded daily, and the late-payment penalty is normally 0.5 percent per month.

Besides Free File, taxpayers can choose to request an extension through a paid tax preparer, using tax-preparation software or by filing a paper Form 4868, available on IRS.gov. Of the nearly13 million extension forms received by the IRS last year, almost 8 million were filed electronically.

Those who owe taxes and need a tax-filing extension can get a two-for-one deal. Use IRS Direct Pay or one of the other electronic payment options to pay by April 15 the estimated amount of tax owed, designate the payment as an extension payment, and the IRS will count that as a validly-requested extension – no need to separately file a Form 4868.

Some taxpayers get more time to file without having to ask for it. These include:

Taxpayers abroad. U.S. citizens and resident aliens who live and work abroad, as well as members of the military on duty outside the U.S., have until June 15 to file. Tax payments are still due April 15.
Members of the military and others serving in Afghanistan or other combat zone localities. Typically, taxpayers can wait until at least 180 days after they leave the combat zone to file returns and pay any taxes due. For details, see Extensions of Deadlines in Publication 3, Armed Forces’ Tax Guide.

People affected by certain recent natural disasters.

Easy Ways to E-Pay
Taxpayers who owe taxes can now choose among several quick and easy e-pay options, including the newest and easiest, IRS Direct Pay. Again, making a payment through one of these electronic options and designating it as an extension payment counts as filing for an extension. Available options include:

• Direct Pay. Available at IRS.gov/directpay, this free online tool allows individuals to securely pay their income tax directly from checking or savings accounts without any fees or pre-registration. No need to write a check, buy a stamp or find a mailbox. Payments can even be scheduled up to 30 days in advance, and the tool is available round the clock. Any taxpayer who uses the tool receives instant confirmation that their payment was submitted. More than 3.5 million tax payments totaling more than $7.2 billion have been received from individual taxpayers since Direct Pay debuted during last year’s tax-filing season.
• Electronic Federal Tax Payment System. This free service gives taxpayers a safe and convenient way to pay individual and business taxes online or by phone. Pre-registration is required. To enroll or for more information, visit EFTPS.gov or call 800-316-6541.
• Electronic funds withdrawal. E-file and e-pay from a checking or savings account in a single step.
• Credit or debit card. Both paper and electronic filers can pay their taxes online or by phone through any of several authorized credit and debit card processors. Though the IRS does not charge a fee for this service, the card processors do. For taxpayers who itemize their deductions, these convenience fees can be claimed on Schedule A Line 23.

Taxpayers who choose to pay by check or money order should make the payment out to the “United States Treasury.” Write “2014 Form 1040,” name, address, daytime phone number and Social Security number on the front of the check or money order. To help ensure that the payment is credited promptly, also enclose a Form 1040-V payment voucher.

More Time to Pay
Taxpayers who have finished their returns should file by the regular April 15 deadline, even if they can’t pay the full amount due. In many cases, those struggling with unpaid taxes qualify for one of several relief programs, including the following:

Most people can set up a payment agreement with the IRS online in a matter of minutes. Those who owe $50,000 or less in combined tax, penalties and interest can use the Online Payment Agreement to set up a monthly payment agreement for up to 72 months. Taxpayers can choose this option even if they have not yet received a bill or notice from the IRS. With the Online Payment Agreement, no paperwork is required, there is no need to call, write or visit the IRS and qualified taxpayers can avoid the filing of a Notice of Federal Tax Lien if one was not previously filed. Alternatively, taxpayers can request a payment agreement by filing Form 9465. This form can be downloaded from IRS.gov and mailed along with a tax return, bill or notice.
Some struggling taxpayers may qualify for anOffer in Compromise. This is an agreement with the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. The IRS looks at the taxpayer’s income and assets to make a determination regarding the taxpayer’s ability to pay. To help determine eligibility, individuals can use theOffer in Compromise Pre-Qualifier, a free online tool available on IRS.gov.
Details on all filing and payment options are on IRS.gov.

GAO Says IRS' Internal Controls Could Result in Security Breaches

Neikirk, Mahoney & Smith, an accounting firm based in Louisville, reports that in their most recent audit, the General Accounting Office (GAO) has slammed the Internal Revenue Service, citing ongoing weaknesses in internal controls and management that could result in taxpayer security vulnerabilities.

Citing "serious control deficiencies", the GAO says the corrective actions the IRS has taken have fallen short because of the failure of the IRS to fully address the system enhancements that will be required to fix the problems. System weaknesses cited in the audit include weaknesses in information security, including missing security updates, insufficient monitoring of financial reporting systems and mainframe security, and ineffective maintenance of key application security.

The most frightening aspect of the GAO's report is until the problems are resolved, there is an increased risk that taxpayer data will be vulnerable to "inappropriate and undetected use, modification or disclosure."

From the audit report, the "IRS did not maintain effective internal control over financial
reporting as of September 30, 2014, because of a continuing material weakness in internal control over unpaid tax assessments. GAO’s tests of IRS’s compliance with selected provisions of applicable laws, regulations, contracts, and grant agreements detected no reportable instances of noncompliance in fiscal year
2014.

The material weakness in internal control over unpaid tax assessments was primarily caused by financial system limitations and errors in taxpayer accounts that rendered IRS’s systems unable to readily distinguish between taxes receivable, compliance assessments, and write-offs in order to properly classify these components for financial reporting purposes. These deficiencies necessitated the use of a compensating estimation process to determine the amount of taxes receivable, the most material asset on IRS’s balance sheet.

Through this compensating process, IRS made almost $17 billion in adjustments to the 2014 fiscal year-end gross taxes receivable balance produced by its financial systems. Serious control deficiencies related to unpaid tax assessments are likely to continue to exist until IRS significantly enhances the capabilities of the systems it uses to account for unpaid tax assessments, and improves
controls over the recording of information in taxpayer accounts so that reliable transaction-based balances for taxes receivable can be ultimately recorded in its general ledger system.

However, IRS’s current corrective action plan does not fully address all of the system enhancements needed to accurately classify unpaid tax assessment transactions, and IRS has yet to identify the underlying control deficiencies causing the errors in taxpayer accounts.

During fiscal year 2014, IRS continued to make important progress in addressing deficiencies in internal control over its financial reporting systems. However, GAO identified new and continuing deficiencies in internal control over information security, including missing security updates, insufficient monitoring of financial reporting systems and mainframe security, and ineffective maintenance of key application security, that constituted a significant deficiency in IRS’s
internal control over financial reporting systems.

Until IRS fully addresses existing control deficiencies over its financial reporting systems, there is an
increased risk that its financial and taxpayer data will remain vulnerable to inappropriate and undetected use, modification, or disclosure.

In addition to its internal control deficiencies, IRS faces significant ongoing financial management challenges associated with (1) safeguarding the large volume of sensitive hard copy taxpayer receipts and related information, (2) its exposure to significant invalid refunds from identity theft, and (3) implementing the tax provisions of the Patient Protection and Affordable Care Act. The difficulties confronting IRS in its efforts to effectively manage each of these challenges are further magnified by the need to do so in an environment of diminished budgetary resources.

Read the full audit report here. http://www.gao.gov/assets/670/666863.pdf

Interesting article from the Old Gray Lady...

"Tax Tactics Threaten Public Funds" says New York Times' Eduardo Porter.

"When the European Commission charged this week that Ireland’s sweetheart tax treatment of Apple amounted to an illegal corporate subsidy, the company said that it had done nothing wrong. Apple executives might have added that whatever they did, they were not alone.

"Corporate tax strategies intended to minimize global taxes, by hook or by crook, are by now standard practice. Google and Facebook move money through Ireland to lower their taxes. Starbucks uses the Netherlands, a practice that is under review by Europe as well."

Here's the rest of the article - definitely worth your time - http://www.nytimes.com/2014/10/02/business/economy/multinational-tax-strategies-put-public-coffers-at-risk.html?ref=todayspaper&_r=0

And if you have questions about this or any tax related issues, call Neikirk, Mahoney & Smith at (502) 896-2999.

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IRS Issues Alert for Telephone Scams

WASHINGTON — The Internal Revenue Service issued a consumer alert today providing taxpayers with additional tips to protect themselves from telephone scam artists calling and pretending to be with the IRS.

These callers may demand money or may say you have a refund due and try to trick you into sharing private information. These con artists can sound convincing when they call. They may know a lot about you, and they usually alter the caller ID to make it look like the IRS is calling. They use fake names and bogus IRS identification badge numbers. If you don’t answer, they often leave an “urgent” callback request.

“These telephone scams are being seen in every part of the country, and we urge people not to be deceived by these threatening phone calls,” IRS Commissioner John Koskinen said. “We have formal processes in place for people with tax issues. The IRS respects taxpayer rights, and these angry, shake-down calls are not how we do business.”

The IRS reminds people that they can know pretty easily when a supposed IRS caller is a fake. Here are five things the scammers often do but the IRS will not do. Any one of these five things is a tell-tale sign of a scam. The IRS will never:

1. Call you about taxes you owe without first mailing you an official notice.
2. Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
3. Require you to use a specific payment method for your taxes, such as a prepaid debit card.
4. Ask for credit or debit card numbers over the phone.
5. Threaten to bring in local police or other law-enforcement groups to have you arrested for not paying.

If you get a phone call from someone claiming to be from the IRS and asking for money, here’s what you should do:

• If you know you owe taxes or think you might owe, call the IRS at 1.800.829.1040. The IRS workers can help you with a payment issue.
• If you know you don’t owe taxes or have no reason to believe that you do, report the incident to the Treasury Inspector General for Tax Administration (TIGTA) at 1.800.366.4484 or atwww.tigta.gov.
• If you’ve been targeted by this scam, also contact the Federal Trade Commission and use their “FTC Complaint Assistant” at FTC.gov. Please add &quotIRS Telephone Scam&quot to the comments of your complaint.

Remember, too, the IRS does not use email, text messages or any social media to discuss your personal tax issue. For more information on reporting tax scams, go to www.irs.gov and type “scam” in the search box.

Additional information about tax scams are available on IRS social media sites, including YouTubeand Tumblr where people can search “scam” to find all the scam-related posts.

Weekly Roundup from the Accounting World

Today's Hot Accounting Topics - Inversions (cont.)
Our friends at Accounting Today have posted three related stories dealing with Obama's and congressional liberals' vendetta against accepted and legal businesses they don't like. Rather than paraphrase them, check them out yourself and draw your own conclusions.

1. Obama Won’t Return Donations Stemming From Tax Deals He Dislikes

2. Schumer Seeks Interest Deduction Limits to Slow Inversions

3. Democrats Urge Obama to Deny Federal Contracts to Companies Using Tax Inversions

Accounting For America lending accounting support to small businesses
A new non-profit organization, Accounting For America, modeled after the hugely successful program developed by Teach for America, connects "greenhorn accountants, presumably recent college graduates, with small businesses in desperate need of accounting services," according to the Wall Street Journal. Read More

Accrual Accounting Proposal Meeting Resistance
According to Accounting Today, nearly half the members of the U.S. Senate have signed a letter expressing concern about a tax reform proposal to require the use of accrual accounting and are urging the leaders of the Senate Finance Committee to preserve the option of the cash method of accounting for tax purposes. Read More

Women Are More Successful Than Men at Raising Money Online

Thanks to peer-to-peer crowdfunding websites like Indiegogo and Kickstarter have made the challenge of raising capital more attainable thank traditional financing for small businesses and causes. Interestingly, female business owners are meeting with more success than male business owners.

Accordingly to the Wall Street Journal, "on Kickstarter, where backers make contributions in exchange for rewards, women-led companies account for less than 10% of technology projects. But roughly two-thirds of women-led technology ventures reached their fundraising goals versus just 30% of technology ventures with male founders, according to a new academic study."

"Overall, women are 13% more likely than men to meet their Kickstarter goals, even after controlling for project type, amount being raised and other factors, according to the analysis, which examined 1,250 projects in five categories that sought at least $5,000 between 2010 and 2012." Read More

IRS Says Lost Data on Lerner's Computer is Not Recoverable

(Bloomberg) The Internal Revenue Service told a judge its technicians made repeated futile efforts to save data on a malfunctioning computer hard drive used by Lois Lerner, the former official at the center of a dispute between Congress and the Obama administration over scrutiny of Tea Party groups.

In a series of sworn statements submitted by the IRS in its effort to fend off a lawsuit by the activist group Judicial Watch, government technicians described the step-by-step processes they followed to try to recover the data.

The IRS in June told a congressional committee investigating the agency’s review of Tea Party groups seeking nonprofit status that the hard drive crash on Lerner’s computer prevented it from obtaining much of her e-mail from 2009 to 2011. Read More at Accounting Today

If you'd like to learn best practices for making your business more profitable in a time when it seems like everyone wants a piece of you, contact Neikirk, Mahoney & Smith, a Louisville-based CPA firm that is dedicated to your personal and professional profitability. Call for an appointment today 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

Check out our new calculators

Should you refinance your mortgage? What type of retirement account should you set up? As accounting professionals, these are some of the questions that are posed to us on a daily basis by our accounting firm's customers and clients. Neikirk, Mahoney & Smith is providing some interactive financial calculators and other tools to assist you with some of the day-to-day questions and concerns that may arise. While these financial tools are not a substitute for financial advice from a qualified professional, they can be used as a starting point in your decision making process.

GAO slaps IRS' internal controls

The Internal Revenue Service is suffering from several new deficiencies in its internal controls, although it has managed to address a number of older problems, according to a new report from the Government Accountability Office.

The report comes in the midst of lingering questions over the IRS’s loss of two years of emails between the former director of its Exempt Organizations unit, Lois Lerner, and people outside the agency, after her computer crashed in 2011. The agency has been struggling with a series of budget cuts in recent years that have negatively affected taxpayer service.
If you have any questions or concerns regarding the status of your own business' internal controls, contact Neikirk, Mahoney & Smith today!

Read more in Accounting Today

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

Supreme Court issues pro Hobby Lobby ruling

Fox News -  The Supreme Court ruled Monday that certain "closely held" for-profit businesses can cite religious objections in order to opt out of a requirement in ObamaCare to provide free contraceptive coverage for their employees.

The 5-4 decision, in favor of arts-and-crafts chain Hobby Lobby and one other company, marks the first time the court has ruled that for-profit businesses can cite religious views under federal law. It also is a blow to a provision of the Affordable Care Act which President Obama's supporters touted heavily during the 2012 presidential campaign.

Read More

Accounting News Weekly Wrapup

As we prepare to wrap up the end of Q2 of 2014, here's a recap of the week's top stories and articles.

Businesses are cutting back on supplying cell phones to employees

Do you feel a tad screwed when your employer calls you on your personal cell phone and doesn't offer to reimburse you? Well, get used to it because, according to the Sage Mobile Device Survey, its not happening much these days.
Fewer businesses are supplying their employees with mobile devices this year over last, according to the second annual mobile device survey from Sage, with a little more than half of responding companies (54 percent) giving their staff devices, down from 69 percent in 2013.

Respondents are seeing the positive effects of mobile technology, however, with the biggest impact in customer service, according to 70 percent of the 1,090 U.S. small businesses polled. They also reported devices to be helpful for performing business in bad weather (32 percent), bringing more work to the company (21 percent) and enabling them to conduct meetings remotely (20 percent).

Despite these benefits, most businesses (more than three quarters) report they are not budgeting for mobile devices and instead purchasing them as the need arises. Five percent said that their business sets an annual budget for mobile items and sticks to it and 12 percent set an annual budget and adjust expenditures as needed.
Read More

Congress working to simplify education tax credits

The legislation, H.R. 3393, the Student and Family Tax Simplification Act, emerged from one of the 11 tax reform working groups that Ways and Means chairman Dave Camp, R-Mich., set up last year to study ways to improve areas such as education tax credits. Rep. Diane Black, R-Tenn., chaired the committee’s Education Tax Reform Working Group and she applauded passage of the bill Wednesday.

“It’s a well-known fact that the cost of education is climbing, and that for too many, the ability to save and pay for college without ending up under a mountain of debt is simply out of reach,” Black said in a statement.

Read More

CPA pleads guilty in Madoff corruption scheme

Peter Konigsberg, an accountant and lawyer who provided services to numerous clients of Bernard Madoff’s investment firm, and who was a personal tax and business adviser to Madoff, pleaded guilty Tuesday in a Manhattan federal court to various charges and faces up to 30 years in prison.

Konigbserg pleaded guilty to a three-count superseding information charging him with one count of conspiracy to falsify the books and records of Madoff Securities and to obstruct the administration of the tax laws, as well as two substantive books and records counts. In addition to pleading guilty, Konigsberg has agreed to cooperate with the government in its ongoing investigation of the fraud at Madoff Securities.
Read More

IRS hard drive failure ignites more furor in halls of Congress

(Bloomberg) U.S. lawmakers argued late into the night over a computer hard drive that crashed in 2011, taking the controversy surrounding the Internal Revenue Service to a new level of acrimony.

Republicans said the broken device that belonged to former IRS official Lois Lerner is crucial evidence in their investigation of the agency and said the IRS was covering up its misdeeds. Lerner headed the IRS office that gave extra scrutiny to small-government groups seeking tax-exempt status.

“I’m sick and tired of your game-playing in response to congressional oversight,” Representative Darrell Issa, chairman of the House Oversight and Government Reform Committee, said to IRS Commissioner John Koskinen at a hearing last night.

Read More

AICPA nixes IRS' Voluntary Tax Preparer Program

The American Institute of CPAs has sent a letter expressing strong concern with the Internal Revenue Service’s proposed voluntary certification program for tax return preparers, saying it “would cause significant legal problems that may ultimately frustrate the IRS’s goals, confuse the public, and lead to litigation.”

The AICPA expressed its concerns to IRS commissioner John Koskinen in a meeting and letter last month, but has increased its level of concern in the latest letter (see AICPA Opposes IRS Voluntary Tax Preparer Certification).

In a letter Tuesday to Koskinen, AICPA chairman Bill Balhoff and AICPA president and CEO Barry C. Melancon wrote, “We have repeatedly expressed to you and your colleagues that our members have very significant concerns regarding a voluntary certification program...

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Lerner is alleged to have targeted Sen. Grassley for audit

House Republicans are accusing Lois Lerner, the former director of the Internal Revenue Service’s Exempt Organizations unit, of emailing a colleague about subjecting Sen. Charles Grassley, R-Iowa, the former chairman of the Senate Finance Committee, to an IRS examination.

House Ways and Means Committee chairman Dave Camp, R-Mich., has been among those investigating the scandal that erupted after Lerner revealed that the IRS had been using terms such as “Tea Party” and “Patriot” to screen applications from groups applying for tax-exempt status. 

He revealed a series of emails Wednesday between Lerner and a colleague over an invitation that had been sent to Grassley to speak at a seminar to which Lerner had also been invited to speak. The unidentified group offered to pay for both Grassley and his wife to attend the event. In the email messages, Lerner says...

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Regions Bank hit hard by fraud charges

Regions Bank plans to pay $51 million to resolve charges related to the intentional misclassification of loans and accounting fraud.

The Securities and Exchange Commission said Wednesday it has filed fraud charges against three former senior managers of Regions Bank for intentionally misclassifying loans that should have been recorded as impaired for accounting purposes

The SEC said the scheme resulted in the bank’s publicly-traded holding company overstating its income and earnings per share in its financial reporting.

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IRS apparently ignoring AICPA and proceeds with program

The Internal Revenue Service is moving ahead with a voluntary tax preparer education program after legal challenges derailed an earlier mandatory testing and continuing education program.

The IRS said Thursday that guidance will soon be issued outlining the new voluntary program to encourage education and filing season readiness for paid tax return preparers. The program will be in place to help taxpayers during the 2015 filing season. It does not include a testing component, although the IRS hopes to add it in future years.

“Today we’re announcing a new program that will help taxpayers by improving the tax know-how and filing season readiness of paid tax preparers,” said IRS commissioner John Koskinen in a conference call with reporters. 

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ObamaCare could benefit from tax season enrollment

A new study suggests that tax filing season could be the best time to sign up clients for health coverage under the Affordable Care Act rather than the current open enrollment period.

The study, by Katherine Swartz of Harvard University and John Graves of Vanderbilt University, published Wednesday in the journal Health Affairs, offers strong evidence for why the ACA open enrollment period should be changed to align with tax season. Currently, Americans who are eligible for tax credits for assistance with paying health insurance premiums only have from until February 15 to apply. The open enrollment began last October 1 during a botched rollout that quickly revealed technical glitches in the federal government’s HealthCare.gov health insurance exchange, along with many state-run exchanges.

The study evaluates the misalignment of the financial calendar of average low-income Americans with the open enrollment period for ACA health coverage, along with the impact that financial stress has on purchasing decisions. The researchers used data on Google search engine queries to evaluate when people were using search terms such as “health insurance.”

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Startups concerned about US tax structure

Nearly two times as many startup business owners cite the U.S. tax structure over health care reform as the issue they anticipate having the biggest impact on their business this year, according to a new survey by the payroll technology provider Paychex.

Of the more than 250 business owners surveyed, 47 percent ranked the U.S. tax structure as the top issue affecting their small business, nearly double the number that selected health care reform (25 percent).

Overall government regulation (20 percent), potential government inaction (6 percent), and immigration reform (2 percent) ranked below those among the top issues.

by Michael Cohn, Accounting Today

Exports of unrefined American oil could begin soon

The Obama administration cleared the way for the first exports of unrefined American oil in nearly four decades, allowing energy companies to start chipping away at the longtime ban on selling U.S. oil abroad.

In separate rulings that haven't been announced, the Commerce Department gave Pioneer Natural Resources Co. and Enterprise Products Partners LP permission to ship a type of ultralight oil known as condensate to foreign buyers. The buyers could turn the oil into gasoline, jet fuel and diesel.

The shipments could begin as soon as August and are likely to be small, people familiar with the matter said. It isn't clear how much oil the two companies are allowed to export under the rulings, which were issued since the start of this year. The Commerce Department's Bureau of Industry and Security approved the moves using a process known as a private ruling.

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BMW looking to build new plant; choosing between US and Mexico

MUNICH—German luxury car maker BMW AG BMW.XE -0.13%  will decide before Bavarian summer vacations whether to build a new auto plant in Mexico or the U.S., Chief Executive Norbert Reithofer said on Wednesday.

Speaking at industry event in Munich, Mr. Reithofer said BMW would decide on the location of a second plant to serve the North American market "clearly before the summer break."

Summer school vacations in Bavaria begin on July 30 this year.

BMW said earlier this year that it was considering building a second factory in North America to meet growing demand. BMW delivered about 376,000 vehicles in the U.S. last year, according to Autodata, about 19% of its world-wide deliveries.

It is widely expected that BMW will locate the new plant in Mexico instead of Spartanburg, S.C., an existing factory that builds its X series sport utility vehicles. Earlier this year, the company said it would invest $1 billion over several years in Spartanburg to expand production, including a proposed seven-seat SUV.

by Hendrik Varnholt, Wall Street Journal

Lerner Loses Emails

Disgraced IRS official Lois Lerner and a number of her colleagues have lost their emails. That's right. The emails that congress had subpoenaed some 18 months ago are now mysteriously missing.
Here's what the media has to say about the subject:

Fox News

CNN 
Republican lawmakers are slamming the Internal Revenue Service, with one calling for an immediate investigation, after the agency notified Congress Friday that it was unable to recover former official Lois Lerner’s e-mails from January 2009 to April 2011 because of a computer crash.

The agency made the disclosure in a letter sent to Congressional investigators Friday afternoon, according a statement from Rep. Charles Boustany Jr., R-Louisiana. Read More

Courier-Journal
Nada thing.

Wall Street Journal
From a June 16 letter sent by Cleta Mitchell, attorney for True the Vote, to the Justice Department. TTV sued the IRS over alleged harassment in 2013:

Late Friday, the IRS apparently advised the Ways & Means Committee that the IRS has "lost" Lois Lerner's hard drive which includes thousands of Defendant Lerner's e-mail records. However, several statutes and regulations require that the records be accessible by the Committees, and, in turn, must be preserved and made available to TTV [True the Vote] in the event of discovery in the pending litigation. . . . We are deeply troubled by this news and . . . seek your consent to immediately allow a computer forensics expert selected by TTV to examine the computer(s) that is or are purportedly the source of Ms. Lerner's "lost" emails, including cloning the hard drives, and to attempt to restore what was supposedly "lost," and to seek to restore any and all "lost" evidence pertinent to this litigation. Read More

New York Times
WASHINGTON — Six additional Internal Revenue Service workers lost emails sought by congressional investigators when their computers crashed, investigators announced Tuesday, escalating Republican suspicions that the employees may have been trying to cover up political targeting of Tea Party organizations.

The revelation follows the news last week that Lois Lerner, the former chief of the I.R.S. division that grants tax-exempt status to organizations, had also lost two years’ worth of files when her computer crashed in mid-2011. Together, the growing trail of disappearing records has heightened Republican concerns that the tax agency conducted politically motivated reviews. Read More

CBS News
The Internal Revenue Service says it has lost a trove of emails to and from a central figure in the agency's tea party controversy.

The IRS told congressional investigators Friday it cannot locate many of Lois Lerner's emails prior to 2011 because her computer crashed that year. Lerner headed the IRS division that processed applications for tax-exempt status.

The IRS acknowledged last year that agents had improperly scrutinized applications for tax-exempt status by tea party and other conservative groups. Read More

NBC News
Republican lawmakers called for a new probe of the Internal Revenue Service on Friday after it told congressional investigators that it had lost more than two years of emails from the central figure in a yearlong inquiry into improper IRS reviews of Tea Party tax documents.

House Republicans have already voted to hold Lois Lerner in contempt of Congress for refusing to testify about the special targeting of Tea Party and other conservative groups applying for tax-exempt status.

Lerner was placed on administrative leave from her position as head of the agency's section on tax-exempt organizations in May 2013, after she admitted that the IRS gave special attention to applications for tax-exempt status that included words like "Tea Party" and "patriot." She retired in September. Read More

ABC News
The Internal Revenue Service has lost more emails connected to the tea party investigation, congressional investigators said Tuesday.

The IRS said last Friday it had lost an untold number of emails when Lois Lerner's computer crashed in 2011. Lerner used to head the division that handles applications for tax-exempt status.

On Tuesday, two key lawmakers said the IRS has also lost emails from six additional IRS workers whose computers crashed. Among them was Nikole Flax, who was chief of staff to Lerner's boss, then-deputy commissioner Steven Miller.

Miller later became acting IRS commissioner, but was forced to resign last year after the agency acknowledged that agents had improperly scrutinized tea party and other conservative groups when they applied for tax-exempt status. Documents have shown some liberal groups were also flagged.

Investigators from the House Ways and Means Committee interviewed IRS technicians Monday. The technicians said they first realized that Lerner's emails were lost in February or March — months before they informed congressional investigators, said a statement by two top Republicans on the Ways and Means Committee, chairman Dave Camp of Michigan and subcommittee chairman Charles Boustany of Louisiana. Read More

Neikirk, Mahoney & Smith PLLC won't lose your emails. Call if you have a business accounting question. 502-896-2999 or by clicking here!

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.

IRS Expecting Millions of Edited Returns This Year

By Michael Cohn, Accounting Today

The Internal Revenue Service anticipates that nearly 5 million taxpayers will amend their returns by filing Form 1040X this year. If you're considering doing the same thing, contact Neikirk, Mahoney & Smith CPAs at (502) 896-2999.

Nearly 46 million returns were electronically filed from home computers as of April 18, more than the total from home computers for all of 2013. The IRS said Friday that it has received more than 131 million tax returns, of which 88 percent were e-filed.

Taxpayers who need to amend their returns should file this form only after filing the original return, the IRS noted. Generally, for a tax credit or refund, taxpayers must file Form 1040X within three years, including extensions, after the date they filed their original return or within two years after the date they paid the tax, whichever is later. For most people, this means that returns for tax-year 2011 or later can still be amended. 

Read more here

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.