Here at Fuel Bookkeeping we have many types of clients, some with large and complicated payroll requirements and others with a small shop of one or two employees. The process of selecting a qualified payroll preparer is just as important if you run a small shop or a large seasoned business. In our practice we have helped many who thought that a friend, or a family member was qualified to take care of their books. Unfortunately when your a smaller shop tax and or payroll errors can have a larger negative impact. Driving home the point and importance of selecting a knowledgeable payroll preparer.

A valuable lesson learned many times over by many business owners is to make sure your tax and payroll preparer knows what they are doing. Fuel Bookkeeping ensures all payroll and taxes are prepared properly following the guidelines layout by the IRS.

If you have any questions related to bookkeeping, payroll and or payroll tax, or simply anything related to tax please feel free to give me a call.  I hope this blog post was helpful and as always if I can help you with any accounting needs please feel free to call. 1-866-969-FUEL (3835)

This by no means is an exhaustive list of advantages and is also aimed at those individuals who are new to working from home as a self-employed contractor. It also doesn’t touch on the IRS home office exemptions – for those explanations, we suggest you contact us here at Fuel bookkeeping for an in depth review of all your home office advantages.

A major oversight many first time self employed persons forget about is self employment tax. Remember as a self employed person you need to report yourself employment income and pay the taxes that are due on that income.

You don’t have to undertake a complicated bookkeeping system to track your income and expenses however they should be tracked. Utilizing Fuel Bookkeeping for your tracking system can be very helpful and inexpensive.

A “business expense” is something for which you have paid money out of your pocket in order to maintain your business. A phone line is an example, as long as it is used exclusively for business.  If you have a home phone you may need to install a second/business line in order to properly track the deduction. With the business line, you can deduct 100% of the costs of that phone line including hook up and installation. With a shared line you will need to speak to Fuel Bookkeeping to determine the most appropriate approach. The IRS has guidelines that must be followed here.

Anything that you use to legitimately and specifically run your business – office supplies, equipment – can be considered a business expense.  If you have a room in the house used exclusively for your work, you can write off the costs of having purchased furniture and equipment for that room.

Here are a few steps to keep in mind when tracking business expenses:

• Set up a filing system from the first business purchase.  Track the amount of the purchase, purchase date and what it was used for.  It can be as simple as logging the expense and dropping the receipts into an envelope.  Or simply write on the receipt itself what it was for, keep in mind that many receipts fade over time so it can be a good idea to make a copy of the receipt and then right on the side of the paper what it was used for.  Remember to keep the receipts even if you are tracking expenses on a spreadsheet.
• Separate business and pleasure by having separate business and personal bank accounts.  This is very important from an IRS standpoint as well as a legal stand point. Use the business account for business expenses and the personal account for personal expenses. The IRS frowns on the commingling of funds.
• Calculate annual expenses at the end of the year.  Match paperwork to the calculated expenses so you are ready for your appointment with Fuel Bookkeeping come tax time.

Tracking business expenses is not a huge chore as long as you keep up with it. It is simply a matter of taking the time “at the time” to copy write down what it was and file it properly. The more quickly you take care of receipts the easier it will be to manage your business expenses.

Our team here at Fuel Bookkeeping will thank you for your diligence and tracking your expenses will assure that you do not miss any deductions that you are due.

If you have any questions related to bookkeeping, payroll and or payroll tax, or simply anything related to tax please feel free to give me a call.  I hope this blog post was helpful and as always if I can help you with any accounting needs please feel free to call. 1-866-969-FUEL (3835)

1.      Know due dates: This includes credit cards, loans, utility bills, mortgage or rent, car payments and dependent expenses or payments.

2.      Have a bill location: A clearly marked container is a great option. Tell everyone in your household that is where bills (and only bills) are to be placed.  With the evolution of online billing and banking, the place may be a white board.

3.      Organize your bills: Whether it’s the calendar we just mentioned or placing paper bills in an accordion folder, know your due dates. It is important to pay your bills on time.

4.      When will this end?: Know how much you owe, how you will pay it off and the payoff date. Having a goal will make you more accountable.

5.      Dedicate time each week for looking over your finances.  You also want to be sure your bank didn’t have a glitch and that your bills are really paid. Tell your family you need an hour of uninterrupted time for this activity.

6.      Balance accounts via financial software such as Quickbooks. The online version will cost a monthly fee but will save you the time of manually entering transactions. As soon as you log in you can see the bank balance vs. your ledger balance and in a few clicks your accounts can be reviewed and reconciled. If this is too much for you, our solution is allow Fuel Bookkeeping to manage your books for you. Its simple and inexpensive.

7.      Have a budget & stick to it! You really don’t want to spend more than you are making so it is important to know how much you can spend in categories such as dining out, groceries, gas, cable/internet, phone, utilities and personal expenses.

8.  You are not the Bank of Mom & Dad. Teaching children the value of money benefits the entire family. Create a schedule or list of chores for them to do in order to earn an allowance of a specific amount. Not only will you have some household tasks off your to-do-list but you will know the maximum amount you will have to pay out to the kids. You add that amount to your budget and tell the kids that is the money they have to spend eliminating the variable from your budget.

If you have any questions related to bookkeeping, payroll and or payroll tax, or simply anything related to tax please feel free to give me a call.  I hope this blog post was helpful and as always if I can help you with any accounting needs please feel free to call. 1-866-969-FUEL (3835)

An executive of a corporation wishing to go public interviewed the partners of these various “Big Eight” accounting firms.  He needed their seal of approval on his financials in order to enhance the valuation of his corporation’s stock offering.  In each interview, all he asked of the partners from each public accounting firm was the following simple question:  “How much is 2 plus 2?”  Virtually all of the partners of the Big Eight accounting firms, thinking that the executive was a complete idiot, simply replied, “4, of course”,—that is, all but one partner from a Big Eight firm, who paused and remained silent for a considerable period of time, not replying with the obvious answer that the other interviewees had immediately spurted out.  His response, after some serious reflection, was, “What number did you have in mind?”  Needless to say, upon hearing what he wanted to be understood, the executive selected this partner’s public accounting firm.

Back then in 1972 when the book was written, Abraham Briloff did not think very highly of GAAP (Generally Accepted Accounting Principles), preferring his own acronym, CRAP (Cleverly Rigged Accounting Ploys), to describe the profession’s accounting methodologies.  In fact, Briloff felt that the Big Eight firms in particular had been selling out their requisite professional posture of independence, especially in regard to their audit clients.

The question today, of course, is how much has really changed in the last 40 years?  I would be interested in hearing Briloff”s reply; I suspect that he might say, “not very much”.

Of course you must trust your CPA, and your CPA must obey the law. You will always find Fuel Bookkeeping following the law in the best interest of their clients. Taxes and bookkeeping can be an art as much of a since, having a knowledgable and experienced CPA is a must.

If you have any questions related to bookkeeping, payroll and or payroll tax, or simply anything related to tax please feel free to give me a call.  I hope this blog post was helpful and as always if I can help you with any accounting needs please feel free to call. 1-866-969-FUEL (3835)

Here are three important guidelines to keep in mind:

• You are responsible and liable for the content of your tax return.
• Anyone who promises you a bigger refund without knowing your tax situation could be misleading you, and
• Never sign a tax return without looking it over to make sure it is accurate.

Beware of these common schemes:

Return Preparer Fraud:
Dishonest tax return preparers can cause many headaches for taxpayers who fall victim to their ploys. Such preparers derive financial gain by skimming a portion of their clients’ refunds and charging inflated fees for return preparation services. They attract new clients by promising large refunds. Choose carefully when hiring a tax preparer. As the saying goes, if it sounds too good to be true, it probably is. No matter who prepares your tax return you are ultimately responsible for its accuracy and for any tax bill that may arise due to a questionable claim.

To increase confidence in the tax system and improve compliance with the tax law, the IRS is implementing a requirement that all paid tax return preparers register with the IRS and obtain a preparer tax identification number (PTIN). Later this year, registered preparers will have to pass a competency exam and take continuing education courses.

Identity Theft:
It pays to be choosy when it comes to disclosing personal information. Identity thieves have used stolen personal data to access financial accounts, run up charges on credit cards and apply for new loans. The IRS is aware of several identity theft scams involving taxes or scammers posing as the IRS itself. The IRS does not use e-mail to contact taxpayers about issues related to their accounts. If you have any doubt whether a contact from the IRS is authentic, call 800-829-1040 to confirm it.

Frivolous Arguments:
Promoters have been known to make outlandish claims such as that the Sixteenth Amendment concerning congressional power to establish and collect income taxes was never ratified; that wages are not income; that filing a return and paying taxes are merely voluntary; and that being required to file Form 1040 violates the Fifth Amendment right against self-incrimination or the Fourth Amendment right to privacy. Don’t believe these or other similar claims. Such arguments are false and have been thrown out of court. Taxpayers have the right to contest their tax liabilities in court, but no one has the right to disobey the law.

For more information about these and other tax scams visit the IRS Web site at http://www.irs.gov. Remember that for the genuine IRS Web site be sure to use .gov. Don’t be confused by internet sites that end in .com, .net, .org or other designations instead of .gov. The address of the official IRS governmental Web site is http://www.irs.gov.

If you have any questions related to bookkeeping, payroll and or payroll tax, or simply anything related to tax please feel free to give me a call.  I hope this blog post was helpful and as always if I can help you with any accounting needs please feel free to call. 1-866-969-FUEL (3835)

2. How long have you been preparing tax returns? Our recommendation is you should always choose someone with many years of experiance. We are not a fan of allowing a new accountant learning on you.

3. Are you open and available year-round? (Taxes are submitted once, however the preparation should be worked on all year. Therefore your tax preparers should be available year-round to help you as needed.)

4. Will I be receiving my refund by way of a direct deposit? (We recommend this method for refunds, it is the fastest and safest way to get your refund.)

5. If the IRS contacts me regarding my return, will you be the individual I contact to help me communicate with the IRS? (The answer should be yes! You must respond if this happens.)

6. Can I receive a copy of my completed tax return and return any original documents I provided? (Yes.)

7. Do you sign my tax return as the tax preparer? (Yes.) May I see your PTIN? (All signing preparers are required to have a PTIN)

8. What professional organizations are you affiliated with?

9. Do you have a professional license, Credential or training? If so, may I see proof including current status?

10. How do you learn about new tax laws? Your tax preparer should answer this question by explaining they regularly attend continuing education courses.

If you have any questions related to bookkeeping, payroll and or payroll tax, or simply anything related to tax please feel free to give me a call.  I hope this blog post was helpful and as always if I can help you with any accounting needs please feel free to call. 1-866-969-FUEL (3835)

Any tax guidance in this blog is intended for informational purposes only and is not guidance on which Fuel Bookkeeping intends for you to rely. All tax issues specific to your business or family are largely facts-and-circumstances based and you should consult with Fuel Bookkeeping to discuss how this might relate to you.

Taxes

For many, this is a true art form and an opportunity to turn as many essentially personal expenses into tax deductions as possible.  We all seem to know someone who is clearly too aggressive in the expenses they are claiming for their “business” (i.e. that trip to Cancun with their wife).   On the other hand, I find that many of my small business clients are a little too shy in claiming deductible expenses, worried to look as if they are abusing the system like Mr. Cancun above. 

While I would never encourage a client to deduct an expense that I wouldn’t feel comfortable putting on my own return, I do encourage clients not to be shy in tracking their expenses.  The IRS is not shy in the least about the tax burden levied on small business owners in the form of self-employment tax.   One of the primary tax benefits of being a business owner is the opportunity to deduct the expenses you incur in operating your business to reduce this burden.   Therefore, it is essential to strike a balance between being too aggressive and too passive in the tax deduction game. 

So what expenses can you deduct?  The IRS allows deductions for “ordinary and necessary business expenses.”  In the broadest terms, this means that if someone else in your line of work would consider it a legitimate cost of doing business in your industry, then it is likely a deductible expense.

There are a few things that are specifically disallowed for deductions:

One-Half of Meals & Entertainment - Most people know that you can only take one-half of your meals and entertainment expenses as business deductions.  Since these expenses are so ripe for abuse, the IRS ensures that you do not receive the same benefit for these expenses as other business expenses. 

There are other expenses that fall into a somewhat grey area.  Here are some of these questions that I received on a regular basis:

Can I Deduct My Professional Wardrobe Expenses?  What about My Dry Cleaning?

I have heard people answer this question differently, but my answer is No and No unless you are required to wear a specific outfit (i.e. uniform) for your business.   The necessity to look professional on the job doesn’t make it a business expense.  Clothing is an inherently personal matter so unless you are restricted to wearing something you would never otherwise purchase then it is probably not deductible. 

What Part of My Travel Expenses Are Deductible?

It is not unusual to have travel expenses for a trip that is both business and personal.  For instance, if you go to a conference in New York that lasts three days and you stay over for another two days for some sightseeing, how much of that trip can you deduct? 

If the “primary purpose” of the trip is business, then 100% of your airfare is deductible.  If, however, you brought your spouse and they are not there on business purpose, then their airfare is not deductible.  You can deduct lodging for the nights you are on business, so in my example, the first three nights’ hotel is deductible. 

Can I Deduct Wellness Expenses Related to My Job?

Many business owners will ask something along these lines: “My business causes me a lot of stress.  Can I deduct a weekly or monthly massage as a business expense?”  Again, the answer is likely no.  The same goes for getting your haircut, your nails done, or anything else that is an inherently personal expense.  Would you need to get your haircut regardless of running your business?  Since the answer is yes, it doesn’t qualify as a business expense. 

If you have any questions related to bookkeeping, payroll and or payroll tax, or simply anything related to tax please feel free to give me a call.  I hope this blog post was helpful and as always if I can help you with any accounting needs please feel free to call. 1-866-969-FUEL (3835)

“Back in September, I sent Congress a jobs bill. And in it, I proposed a tax credit for any business that hires a veteran who’s been unemployed for at least four weeks. I proposed an even bigger tax break if a business hires a veteran who’s been unemployed for at least six months. And if a business hires an unemployed veteran with a disability related to their service, I proposed doubling the tax break that we already have in place.

Today, because Democrats and Republicans came together, I’m proud to sign those proposals into law. And I urge every business owner out there who’s hiring to hire a veteran right away.”

The bill gives employers tax credits of up to $5,600 for hiring veterans who have been unemployed longer than six months. It would also give employers a tax credit of up to $9,600 for hiring long-unemployed disabled veterans.

If you are looking to hire people in the next few weeks or months it may be a good idea to look for qualified candidates who meet this criteria.

If you have any questions related to bookkeeping, payroll and or payroll tax, or simply anything related to tax please feel free to give me a call.  I hope this blog post was helpful and as always if I can help you with any accounting needs please feel free to call. 1-866-969-FUEL (3835)

Personal vs. Business Miles

Business use of your car can include traveling from one work location to another work location; visiting customers; attending a business meeting away from the regular workplace; and traveling from home to a temporary workplace if you have one or more regular places of work. The costs of travel between home and a regular place of work, however, are nondeductible commuting expenses.

Standard Mileage Rate vs. Actual Cost Method

In lieu of proving the actual costs of operating an automobile owned by them, employees and self-employed individuals may compute the deductible costs for their business use of an auto using a standard mileage rate. The 2011 standard mileage rate is 51 cents per mile. You may not depreciate your car or deduct lease payments if you use the standard mileage rate method. If you use the actual cost method, you may take deductions for depreciation, lease payments, registration fees, licenses, gas, insurance, oil, repairs, garage rent, tolls, tires and parking fees. Regardless of the method used, if the vehicle is driven for personal as well as business purposes, only expenses or mileage attributable to the percentage of business use are deductible. There are separate considerations involved in leasing a car for business.

Vehicle Fringe Benefits

The fact that an employer allows an employee to use an employer-provided car for personal purposes generally does not deprive the employer of a vehicle expense deduction. An employer who provides a vehicle to an employee as a fringe benefit may use one of the special valuation rules, rather than the fair market value (FMV) of leasing a comparable car, to calculate the amount of the benefit that is attributable to the employee’s personal use of the car. These special rules include the lease, cents-per-mile, commuting, and fleet-average valuation rules. An employer is not required to use the same valuation rule for all of the vehicles that are provided to employees. However, once a valuation method for a particular vehicle is elected, it must be used for income tax, employment tax, and reporting purposes for all employees who share the vehicle, as well as those who use it in subsequent periods.

Employers must report their employees’ personal use of the car on their W-2, Wage and Tax Statement. They are not required to withhold income taxes on this income, although social security and railroad retirement taxes must be withheld. An election not to withhold income taxes may be made on an employee-by-employee basis. However, affected employees must be notified in writing by the later of January 31st of the applicable year, or 30 days after the day on which the employee receives a car.

An employee with an employer-provided car must substantiate the business use of the car with adequate records or evidence in order to claim a fringe benefit exclusion from income for personal use of the car. An employee who uses a personal car in the performance of services for his or her employer is entitled to deduct the car expenses if the car is used for the convenience of the employer, and is required as a condition of employment. Any unreimbursed employee expenses attributable to such use are deductible only to the extent that they exceed two percent of the employee’s adjusted gross income (AGI).

If you have any questions related to your year end taxes and or expenses please feel free to give me a call.  I hope this blog post was helpful and as always if I can help you with any accounting needs please feel free to call. 1-866-969-FUEL (3835)

1. Refund Options You have three options for receiving your individual federal income tax refund: direct deposit, U.S. Savings Bonds or a paper check. You can now use your refund to buy up to $5,000 in U.S. Series I Savings Bonds in multiples of $50.

2. Separate Accounts You may use Form 8888, Allocation of Refund (Including Savings Bond Purchases), to request that your refund be allocated by direct deposit among up to three separate accounts, such as checking or savings or retirement accounts. You may also use this form to buy U.S Savings Bonds.

3. Tax Return Processing Times If you file a complete and accurate paper tax return, your refund will usually be issued within six to eight weeks from the date it is received. If you filed electronically, your refund will normally be issued within three weeks after the acknowledgment date.

4. Check the Status Online The fastest and easiest way to find out about your current year refund is to go to IRS.gov and click the “Where’s My Refund?” link at the IRS.gov home page. To check the status online you will need your Social Security number, filing status and the exact whole dollar amount of your refund shown on your return.

5. Check the Status By Phone You can check the status of your refund by calling the IRS Refund Hotline at 800–829–1954. When you call, you will need to provide your Social Security number, your filing status and the exact whole dollar amount of the refund shown on your return.

6. Check the Status with IRS2Go IRS2Go is a smartphone application that lets you interact with the IRS using your mobile device. Apple users can download the free IRS2Go application by visiting the Apple App Store. Android users can visit the Android Marketplace to download the free IRS2Go app. Simply enter your Social Security number, which will be masked and encrypted for security purposes, then select your filing status and the exact whole dollar amount of your refund shown on your return.

7. Delayed Refund There are several reasons for delayed refunds. For things that may delay the processing of your return, refer to Tax Topic 303 available on the IRS website at http://www.irs.gov, which includes a Checklist of Common Errors When Preparing Your Tax Return.

8. Larger than Expected Refund If you receive a refund to which you are not entitled, or one for an amount that is more than you expected, do not cash the check until you receive a notice explaining the difference. Follow the instructions on the notice.

9. Smaller than Expected Refund If you receive a refund for a smaller amount than you expected, you may cash the check. If it is determined that you should have received more, you will later receive a check for the difference. If you did not receive a notice and you have questions about the amount of your refund, wait two weeks after receiving the refund, then call 800–829–1040.

10. Missing Refund The IRS will assist you in obtaining a replacement check for a refund check that is verified as lost or stolen. If the IRS was unable to deliver your refund because you moved, you can change your address online. Once your address has been changed, the IRS can reissue the undelivered check.

If you have any questions related to your year end taxes and or expenses please feel free to give me a call.  I hope this blog post was helpful and as always if I can help you with any accounting needs please feel free to call. 1-866-969-FUEL (3835)