I love the Bud Light commercial where the girl pins a boutonniere on her date’s lapel. First it falls, which is too light. When she staples it on his suit, it’s too hard. I just saw this commercial again during Monday Night Football this week, and it makes me laugh every time. GO GIANTS!
Anyway, the same is true in business when you’re selling a product or service. Barnum Financial Group does a great job at this. Fees are clearly documented, so you know up front what to expect. No one likes hidden fees and they always come back to bite the business owner in the end, figuratively speaking, of course. So consider the following elements while reviewing your 2010 price list:
1. Think with the end in mind, starting with your desired net profit margin and list all your cost components; direct, indirect, variable and overhead costs. In order to price effectively, you need to have a thorough understanding of these cost components.
2. Take it a step farther, and calculate costs for each product you sell. It’s not enough to calculate net profit without thinking about the contribution margin of each item you sell, as variations between profit margins are likely to exist from one product to another.
3. Consider the role product mixes can play in determining price. It’s o.k. to sell a product at a low margin, if compatible products keep customers coming back. This is when forecasting can help measure the effect of changes in sales volume.
For more tips and information regarding price setting and cost management call Campanelli & Associates CPA LLC at 203 243-6999.
Thursday, December 24, 2009
Sunday, December 6, 2009
Employee or Contractor
Sometimes it is unclear whether a worker is an employee or contractor. Yet improper classification may not only result in fines and penalties by the IRS, but can also leave the employer open to other liabilities and lost income. The criteria I use to determine if an individual is deemed to be an employee or an independent contractor is based on the following three principles:
1. Determine who has control over how the work is performed. When the work is done according to employer’s specification, the worker is typically classified as an employee. Control can be acknowledged in a number of ways. For example, a restaurant employs a food service worker, who prepares meals according to instructions by management. The worker is considered an employee.
2. The amount of time and payment terms. When the person is paid based on completion of an assignment, and/or wages are agreed to be paid upon satisfaction by the employer, the perception is that the worker is independent. Other factors indicating an independent relationship are that the worker determines when the work is completed and splits his time between several employers.
3. The behavior of the parties and agreement between the parties. Here is when actions speak louder than words. An employee cannot send in a replacement, but an independent contractor can subcontract the job. Who provides the tools, who can terminate the relationship, and who determines the rate charged are all factors to consider when classifying worker status.
When in doubt, the IRS can make a determination on a case by case basis. For more information, go to http://www.irs.gov/newsroom/article/0,,id=173423,00.html.
1. Determine who has control over how the work is performed. When the work is done according to employer’s specification, the worker is typically classified as an employee. Control can be acknowledged in a number of ways. For example, a restaurant employs a food service worker, who prepares meals according to instructions by management. The worker is considered an employee.
2. The amount of time and payment terms. When the person is paid based on completion of an assignment, and/or wages are agreed to be paid upon satisfaction by the employer, the perception is that the worker is independent. Other factors indicating an independent relationship are that the worker determines when the work is completed and splits his time between several employers.
3. The behavior of the parties and agreement between the parties. Here is when actions speak louder than words. An employee cannot send in a replacement, but an independent contractor can subcontract the job. Who provides the tools, who can terminate the relationship, and who determines the rate charged are all factors to consider when classifying worker status.
When in doubt, the IRS can make a determination on a case by case basis. For more information, go to http://www.irs.gov/newsroom/article/0,,id=173423,00.html.
Wednesday, November 25, 2009
10 Important Facts about the Extended First-Time Homebuyer Credit
Here are the top 10 things the IRS wants you to know about the expanded credit and the qualifications you must meet in order to qualify for it.
- You must buy – or enter into a binding contract to buy a principal residence – on or before April 30, 2010.
- If you enter into a binding contract by April 30, 2010 you must close on the home on or before June 30, 2010.
- For qualifying purchases in 2010, you will have the option of claiming the credit on either your 2009 or 2010 return.
- A long-time resident of the same home can now qualify for a reduced credit. You can qualify for the credit if you’ve lived in the same principal residence for any five-consecutive year period during the eight-year period that ended on the date the new home is purchased and the settlement date is after November 6, 2009.
- The maximum credit for long-time residents is $6,500. However, married individuals filing separately are limited to $3,250.
- People with higher incomes can now qualify for the credit. The new law raises the income limits for homes purchased after November 6, 2009. The full credit is available to taxpayers with modified adjusted gross incomes up to $125,000, or $225,000 for joint filers.
- The IRS will issue a December 2009 revision of Form 5405 to claim this credit. The December 2009 form must be used for homes purchased after November 6, 2009 – whether the credit is claimed for 2008 or for 2009 – and for all home purchases that are claimed on 2009 returns.
- No credit is available if the purchase price of the home exceeds $800,000.
- The purchaser must be at least 18 years old on the date of purchase. For a married couple, only one spouse must meet this age requirement.
- A dependent is not eligible to claim the credit.
For more information about the expanded First-Time Home Buyer Credit, visit IRS.gov/recovery.
Sunday, May 17, 2009
New Vehicle Sales Tax Deduction
The following message was received from a friend and colleague who is a financial planner. I am forwarding the information to you, as it captures the important rules to qualify for this new deduction:
If you're purchasing a new car by the end of the year, you may benefit from a temporary new deduction created by the American Recovery and Reinvestment Act, which was signed into law in February. As a result of this legislation, if you purchase a new passenger automobile, light truck, or motorcycle (vehicles must have a gross weight rating of no more than 8,500 pounds) on or after February 17, 2009, and before January 1, 2010, you'll generally be able to deduct any state or local sales and excise tax you pay on the purchase on your 2009 federal income tax
return. New motor home purchases can qualify as well.
Individuals who itemize deductions on Form 1040, Schedule A, can include state or local sales and excise tax as part of their deduction for taxes paid. If you don't itemize deductions, you can deduct the qualifying sales and excise tax as part of your standard deduction.
There are, however, a couple of limitations:
• The amount of sales and excise tax that you can deduct is capped at the amount that would be paid on a vehicle with a purchase price of $49,500. So, if you purchase a $100,000 motor home, only the sales and excise tax attributable to the first $49,500 of your purchase price is deductible.
• You're not entitled to a deduction if your modified adjusted gross income (MAGI) is greater than $135,000 ($260,000 if you are married and file a joint return). And you're only entitled to a partial deduction if your MAGI is between $125,000 and $135,000 (between $250,000 and $260,000 if you are married and file a joint return).
Note: For 2009, you already had the option to deduct general state and local sales tax in lieu of state and local income taxes--the new rules allow you to deduct the state or local sales and excise tax attributable to a new vehicle purchase in addition to state and local income tax. The new rules are also more generous in cases where your state imposes sales tax on a new vehicle purchase at a rate that's higher than the general sales tax rate: the temporary deduction rules allow you to deduct the actual tax paid (subject to the limits noted above) instead of limiting you to the tax that would have been paid under the general sales tax rate.
If you're purchasing a new car by the end of the year, you may benefit from a temporary new deduction created by the American Recovery and Reinvestment Act, which was signed into law in February. As a result of this legislation, if you purchase a new passenger automobile, light truck, or motorcycle (vehicles must have a gross weight rating of no more than 8,500 pounds) on or after February 17, 2009, and before January 1, 2010, you'll generally be able to deduct any state or local sales and excise tax you pay on the purchase on your 2009 federal income tax
return. New motor home purchases can qualify as well.
Individuals who itemize deductions on Form 1040, Schedule A, can include state or local sales and excise tax as part of their deduction for taxes paid. If you don't itemize deductions, you can deduct the qualifying sales and excise tax as part of your standard deduction.
There are, however, a couple of limitations:
• The amount of sales and excise tax that you can deduct is capped at the amount that would be paid on a vehicle with a purchase price of $49,500. So, if you purchase a $100,000 motor home, only the sales and excise tax attributable to the first $49,500 of your purchase price is deductible.
• You're not entitled to a deduction if your modified adjusted gross income (MAGI) is greater than $135,000 ($260,000 if you are married and file a joint return). And you're only entitled to a partial deduction if your MAGI is between $125,000 and $135,000 (between $250,000 and $260,000 if you are married and file a joint return).
Note: For 2009, you already had the option to deduct general state and local sales tax in lieu of state and local income taxes--the new rules allow you to deduct the state or local sales and excise tax attributable to a new vehicle purchase in addition to state and local income tax. The new rules are also more generous in cases where your state imposes sales tax on a new vehicle purchase at a rate that's higher than the general sales tax rate: the temporary deduction rules allow you to deduct the actual tax paid (subject to the limits noted above) instead of limiting you to the tax that would have been paid under the general sales tax rate.
Monday, May 11, 2009
Commuter Tax Breaks Benefit Business!
Those who take public transportation can use pretax dollars for commuting expenses. Commuting benefits include mass transit costs, vanpools and certain types of parking arrangements. Employers save by paying less in payroll taxes, while reducing their carbon footprint, and boosting employee morale. The cost to administer the program is minimal making the program a win-win situation for all parties. For more information, go to www.exercisetheright.com
Sunday, April 12, 2009
This year, the Internal Revenue Service is offering a new way to file an extension request for free.
This year, anyone, regardless of income, can e-file their extensions at no cost from a home computer using IRS’s traditional FreeFile or the new FreeFile Fillable Forms introduced this season. E-filing a request for an extension using either form of FreeFile is safe and secure, the IRS said, and taxpayers will receive a confirmation to keep with their records. However, as always, the extension requests need to be filed by April 15.
The IRS expects to receive 1.9 million extension requests electronically this year. A total of almost 10 million extension requests are expected during 2009 compared with 9.5 million extensions received during 2008.
The extension gives taxpayers until Oct. 15 to file their tax returns. An extension does not give the taxpayer an extension of time to pay. Those who owe taxes can make a payment when they file the extension either by mailing a check or by several electronic payment methods, such as electronic funds withdrawals from bank accounts and credit card payments. Taxpayers can get an automatic six-month extension of time to file their tax returns by filing Form 4868, "Automatic Extension of Time to File."
Taxpayers can e-file the extension from a home computer or through a tax professional who uses e-file.
Some taxpayers can wait until after April 15 to file a return, pay any taxes due and make IRA contributions for 2008. As a general rule, those eligible get the extra time without having to ask for it. Eligible taxpayers include members of the military serving in Iraq, Afghanistan or other combat zone localities. Normally, the postponement is until at least 180 days after the service member leaves the combat zone.
This year, anyone, regardless of income, can e-file their extensions at no cost from a home computer using IRS’s traditional FreeFile or the new FreeFile Fillable Forms introduced this season. E-filing a request for an extension using either form of FreeFile is safe and secure, the IRS said, and taxpayers will receive a confirmation to keep with their records. However, as always, the extension requests need to be filed by April 15.
The IRS expects to receive 1.9 million extension requests electronically this year. A total of almost 10 million extension requests are expected during 2009 compared with 9.5 million extensions received during 2008.
The extension gives taxpayers until Oct. 15 to file their tax returns. An extension does not give the taxpayer an extension of time to pay. Those who owe taxes can make a payment when they file the extension either by mailing a check or by several electronic payment methods, such as electronic funds withdrawals from bank accounts and credit card payments. Taxpayers can get an automatic six-month extension of time to file their tax returns by filing Form 4868, "Automatic Extension of Time to File."
Taxpayers can e-file the extension from a home computer or through a tax professional who uses e-file.
Some taxpayers can wait until after April 15 to file a return, pay any taxes due and make IRA contributions for 2008. As a general rule, those eligible get the extra time without having to ask for it. Eligible taxpayers include members of the military serving in Iraq, Afghanistan or other combat zone localities. Normally, the postponement is until at least 180 days after the service member leaves the combat zone.
Monday, April 6, 2009
Highlights of Connecticut Amnesty Program for 2009:
- Connecticut has established a state tax amnesty program effective May 1, 2009 through June 25, 2009, for persons that owe any tax imposed by any Connecticut law and required to be paid to the Department of Revenue Services for any affected taxable period.
- At this point, the Commissioner has been directed to prepare the amnesty application. Connecticut’s Voluntary Disclosure Program remains in effect. In many instances, Voluntary Disclosure will be the preferable option.
- The program is for individuals, corporations, or other taxpayers who owe any Connecticut state taxes other than motor carrier road taxes.
- The amnesty covers any taxable period ending on or before November 30, 2008 for which no return was filed, or for which a return that underreported taxes was filed and the return has not been examined by DRS.
- The state tax amnesty program eliminates civil penalties and provides for a 25% interest reduction for a taxpayer that files an amnesty application. Interest will be computed at a 9% annual rate. In addition, the Commissioner will not seek criminal prosecution for those taxpayers that file an amnesty application.
For additional information:
http://www.ct.gov/drs/cwp/view.asp?Q=430130&A=1436
- Connecticut has established a state tax amnesty program effective May 1, 2009 through June 25, 2009, for persons that owe any tax imposed by any Connecticut law and required to be paid to the Department of Revenue Services for any affected taxable period.
- At this point, the Commissioner has been directed to prepare the amnesty application. Connecticut’s Voluntary Disclosure Program remains in effect. In many instances, Voluntary Disclosure will be the preferable option.
- The program is for individuals, corporations, or other taxpayers who owe any Connecticut state taxes other than motor carrier road taxes.
- The amnesty covers any taxable period ending on or before November 30, 2008 for which no return was filed, or for which a return that underreported taxes was filed and the return has not been examined by DRS.
- The state tax amnesty program eliminates civil penalties and provides for a 25% interest reduction for a taxpayer that files an amnesty application. Interest will be computed at a 9% annual rate. In addition, the Commissioner will not seek criminal prosecution for those taxpayers that file an amnesty application.
For additional information:
http://www.ct.gov/drs/cwp/view.asp?Q=430130&A=1436
Sunday, March 22, 2009
Six Reasons to Keep a Mileage Log
If you're haven't been tracking your business mileage, the article in the link below might convince you:
http://www.mileagewiz.com/WhyKeepALog.aspx
The company sells a product to make it easy for users to create a mileage log. It's $39.95 annually, but you can try it for free, or contact me, and I'll customize an electronic log especially designed for your needs. Whether you travel by plane, train, or automobile, you'll be in compliance with IRS regulations.
Remember, log it or lose it.
http://www.mileagewiz.com/WhyKeepALog.aspx
The company sells a product to make it easy for users to create a mileage log. It's $39.95 annually, but you can try it for free, or contact me, and I'll customize an electronic log especially designed for your needs. Whether you travel by plane, train, or automobile, you'll be in compliance with IRS regulations.
Remember, log it or lose it.
Monday, March 16, 2009
New Law Extends Net Operating Loss Carryback for Small Businesses
The following news release from the IRS provides tax relief for small businesses:
The Internal Revenue Service announced today that small businesses with deductions exceeding their income in 2008 can use a new net operating loss tax provision to get a refund of taxes paid in prior years.
To accommodate the change in tax law, the IRS today updated the instructions for two key forms – Forms 1045 and 1139 -- that small businesses can use to make use of the special carryback provision for tax year 2008. These forms are used to accelerate the payment of refunds.
The new provision, enacted as part of the American Recovery and Reinvestment Act of 2009, enables small businesses with a net operating loss (NOL) in 2008 to elect to offset this loss against income earned in up to five prior years. Typically, an NOL can be carried back for only two years. The IRS released legal guidance today in Revenue Procedure 2009-19 outlining specific details. Some taxpayers must make the election to use this special carryback by April 17, 2009.
“The new net operating loss provisions could throw a lifeline to struggling businesses, providing them with a quick infusion of cash,” said IRS Commissioner Doug Shulman. “We want to make it as easy as possible for small businesses to take advantage of these key tax benefits.”
With the economic downturn and the new law, the IRS expects record numbers of small businesses to be eligible for the refunds. The IRS is putting in special steps to ensure timely processing of these refunds to help small businesses during this difficult period.
Small businesses with large losses in 2008 may be able to benefit fully from those losses now, rather than waiting until claiming them on future tax returns.
The normal two-year carryback remains available if the small business does not elect the special carryback provision. If the loss exceeds the income for the carryback period, the taxpayer can continue to carry forward the remaining balance of the NOL for up to 20 years.
For small businesses that use a fiscal year, this special carryback may be used for an NOL in either a tax year that ends in 2008 or a tax year that begins in 2008. Once a taxpayer makes this election, it may not be changed.
To qualify for the new five-year carryback provision, a small business must have no greater than an average of $15 million in gross receipts over a three-year period ending with the tax year of the NOL. Businesses with more than $15 million in gross receipts still qualify to carry back their 2008 NOL for two years.
There are several methods that a small business uses to elect the new provision as detailed in the Revenue Procedure.
If a small business previously elected to waive the carryback of 2008 NOL but now wants to elect this special carryback, the small business may revoke its previous election to waive the carryback. The election revocation must be made on or before April 17, 2009.
Generally small businesses that are not corporations (including sole proprietorships filing schedule C with their Form 1040) may accelerate a refund by using Form 1045, Application for Tentative Refund.
Corporations with NOLs may also accelerate a refund by using Form 1139, Corporation Application for Tentative Refund.
The IRS will be closely monitoring these filings and will provide additional staff as needed to process these forms. The IRS will work to issue refunds within 45 days or even earlier to the degree possible.
In addition, Frequently Asked Questions have been posted on the IRS.gov web site. Small businesses that file Form 1040 can also call 1-800-829-1040 with NOL questions. Corporations can contact 1-800-829-4933 with NOL questions.
Form 1045 or Form 1139, whichever the taxpayer uses, generally must be filed within one year after the end of the tax year of the NOL. In addition, the current year’s tax return must be filed by the date the Form 1045 or Form 1139 is filed. Form 1045 and Form 1139 are filed at the same place the taxpayer’s return is filed, as listed on the return instructions.
Accelerated refunds paid via Form 1045 or Form 1139 is described as “tentative” because the applications for refunds are potentially subject to review at a later date. Form 1045 Instructions and Form 1139 Instructions on http://www.irs.gov/ provide more information on the accelerated refund option.
The Internal Revenue Service announced today that small businesses with deductions exceeding their income in 2008 can use a new net operating loss tax provision to get a refund of taxes paid in prior years.
To accommodate the change in tax law, the IRS today updated the instructions for two key forms – Forms 1045 and 1139 -- that small businesses can use to make use of the special carryback provision for tax year 2008. These forms are used to accelerate the payment of refunds.
The new provision, enacted as part of the American Recovery and Reinvestment Act of 2009, enables small businesses with a net operating loss (NOL) in 2008 to elect to offset this loss against income earned in up to five prior years. Typically, an NOL can be carried back for only two years. The IRS released legal guidance today in Revenue Procedure 2009-19 outlining specific details. Some taxpayers must make the election to use this special carryback by April 17, 2009.
“The new net operating loss provisions could throw a lifeline to struggling businesses, providing them with a quick infusion of cash,” said IRS Commissioner Doug Shulman. “We want to make it as easy as possible for small businesses to take advantage of these key tax benefits.”
With the economic downturn and the new law, the IRS expects record numbers of small businesses to be eligible for the refunds. The IRS is putting in special steps to ensure timely processing of these refunds to help small businesses during this difficult period.
Small businesses with large losses in 2008 may be able to benefit fully from those losses now, rather than waiting until claiming them on future tax returns.
The normal two-year carryback remains available if the small business does not elect the special carryback provision. If the loss exceeds the income for the carryback period, the taxpayer can continue to carry forward the remaining balance of the NOL for up to 20 years.
For small businesses that use a fiscal year, this special carryback may be used for an NOL in either a tax year that ends in 2008 or a tax year that begins in 2008. Once a taxpayer makes this election, it may not be changed.
To qualify for the new five-year carryback provision, a small business must have no greater than an average of $15 million in gross receipts over a three-year period ending with the tax year of the NOL. Businesses with more than $15 million in gross receipts still qualify to carry back their 2008 NOL for two years.
There are several methods that a small business uses to elect the new provision as detailed in the Revenue Procedure.
If a small business previously elected to waive the carryback of 2008 NOL but now wants to elect this special carryback, the small business may revoke its previous election to waive the carryback. The election revocation must be made on or before April 17, 2009.
Generally small businesses that are not corporations (including sole proprietorships filing schedule C with their Form 1040) may accelerate a refund by using Form 1045, Application for Tentative Refund.
Corporations with NOLs may also accelerate a refund by using Form 1139, Corporation Application for Tentative Refund.
The IRS will be closely monitoring these filings and will provide additional staff as needed to process these forms. The IRS will work to issue refunds within 45 days or even earlier to the degree possible.
In addition, Frequently Asked Questions have been posted on the IRS.gov web site. Small businesses that file Form 1040 can also call 1-800-829-1040 with NOL questions. Corporations can contact 1-800-829-4933 with NOL questions.
Form 1045 or Form 1139, whichever the taxpayer uses, generally must be filed within one year after the end of the tax year of the NOL. In addition, the current year’s tax return must be filed by the date the Form 1045 or Form 1139 is filed. Form 1045 and Form 1139 are filed at the same place the taxpayer’s return is filed, as listed on the return instructions.
Accelerated refunds paid via Form 1045 or Form 1139 is described as “tentative” because the applications for refunds are potentially subject to review at a later date. Form 1045 Instructions and Form 1139 Instructions on http://www.irs.gov/ provide more information on the accelerated refund option.
Friday, March 13, 2009
10 Common Mistakes of Prospective Franchisees
Franchise ownership can provide a lucrative business opportunity with proper planning, but as with just about everything, there are some things potential franchisees need to watch out for. An article that may be of interest to people considering franchise ownership was recently posted by Roger C. Rule on www.inc.com. Refer to the attached link for the complete reprint of the article.
Monday, March 9, 2009
Business Leery of Obama's Tax Plan
The nations most successful small business owners could pay higher taxes under President Obama's budget plan. Read the entire article at http://www.msnbc.msn.com/id/29591172/.
Sunday, February 22, 2009
Resources for Free Tax Advice
This weekend I attended a tax seminar for small business owners that was sponsored by SCORE and the Women's Business Development Center. The attendance was overwhelming, and there were really good questions like "How to determine the business structure" and "What are the reporting requirements." It just goes to show you that business owners need expert advice related to keeping their books of record and correct tax filing guidance.
Business owners may find the following links of interest:
http://www.irs.gov/businesses/small/ - IRS offers a plethora of information and learning resources for business owners on record keeping, filing requirements and tax information
http://taxtalk.nase.org/taxtalk.asp - Provides tax advice for the self-employed
http://www.taxalmanac.com/index.php/Discussion_Forum_Index - Tax help and searchable discussion boards on tax and accounting topics
http://www.CampanelliCPA.com - Business owners are welcome to contact me for personalized attention regarding their tax questions.
May you have many happy returns.
Business owners may find the following links of interest:
http://www.irs.gov/businesses/small/ - IRS offers a plethora of information and learning resources for business owners on record keeping, filing requirements and tax information
http://taxtalk.nase.org/taxtalk.asp - Provides tax advice for the self-employed
http://www.taxalmanac.com/index.php/Discussion_Forum_Index - Tax help and searchable discussion boards on tax and accounting topics
http://www.CampanelliCPA.com - Business owners are welcome to contact me for personalized attention regarding their tax questions.
May you have many happy returns.
Sunday, February 15, 2009
You may be eligible for a tax rebate check on your 2008 return
An interesting article in the Chicago Sun discussing last years tax rebate, and how to receive a check if you have not already done so. http://www.suntimes.com/news/nation/1425713,w-tax-rebate-credit-irs-021109.article.
The IRS reports that many tax payers have incorrectly filed for the rebate on their tax return, but don't worry. You can easily find out the amount of the rebate received in 2008 by calling the IRS at 1-866-234-2942. All you need is your social security number, filing status and number of exemptons from your 2007 tax return.
Follow the link for full details at http://www.irs.gov/newsroom/article/0,,id=203191,00.html?portlet=7
The IRS reports that many tax payers have incorrectly filed for the rebate on their tax return, but don't worry. You can easily find out the amount of the rebate received in 2008 by calling the IRS at 1-866-234-2942. All you need is your social security number, filing status and number of exemptons from your 2007 tax return.
Follow the link for full details at http://www.irs.gov/newsroom/article/0,,id=203191,00.html?portlet=7
Saturday, February 14, 2009
Pay it Forward
The news of Congress’ approval for the latest stimulus package (and there will be more, no doubt) inspired me to create my own stimulus package. I planned to spend Saturday purchasing gifts for Valentine’s Day, and the upcoming birthdays of friends and family.
This morning, I had received two unexpected Valentine’s presents. They were not expensive or lavish. It was such a nice surprise that it made me realize how grateful I am that I am loved, and it inspired me to wish everyone a Happy Valentine's Day. Now I must go shopping.
Happy Valentine’s Day
This morning, I had received two unexpected Valentine’s presents. They were not expensive or lavish. It was such a nice surprise that it made me realize how grateful I am that I am loved, and it inspired me to wish everyone a Happy Valentine's Day. Now I must go shopping.
Happy Valentine’s Day
Sunday, February 8, 2009
Where’s the 1099?
Many investors will receive their year-end tax statements later than in past years. A new law, enacted last fall, changed the deadline from Jan. 31 to Feb. 15, when brokers, including brokerage firms, mutual fund companies and barter exchanges, must furnish year-end Forms 1099-B to their clients.
This year, issuers get two extra days because Feb. 15 is a Sunday and the 16th is a holiday. The deadline refers to the date the forms need to be mailed, not received by the client. The change was needed to respond to the growing number of amended returns that were being processed due to revised year-end statements on stock sales and other transactions.
One client who received a revised 1099 late last year, after filing his 2007 taxes, asked if he could include the adjustment on the following year’s tax return. However, income and expenses have to be reported in the year in which they apply necessitating an amended return. The decision to file the amended return has to be weighed against the cost of filing the amendment, which in some cases can also be costly.
This year, issuers get two extra days because Feb. 15 is a Sunday and the 16th is a holiday. The deadline refers to the date the forms need to be mailed, not received by the client. The change was needed to respond to the growing number of amended returns that were being processed due to revised year-end statements on stock sales and other transactions.
One client who received a revised 1099 late last year, after filing his 2007 taxes, asked if he could include the adjustment on the following year’s tax return. However, income and expenses have to be reported in the year in which they apply necessitating an amended return. The decision to file the amended return has to be weighed against the cost of filing the amendment, which in some cases can also be costly.
Sunday, February 1, 2009
Office Organization Tips
I thought it would be a good idea this weekend to get my office in order before tax season is underway. This is not the first time I’ve tried to organize my filing system. In spite of my good intentions, the inbox tends to overflow, but this time is going to be different. Hey, no one likes filing, it’s boring. So I start anew, third time’s a charm, and I have a new attitude and focus. Instead of approaching this from the mundane task that it is, I am giving my filing system a new life and letting it evolve unto itself.
It’s not rocket science, so what was between me and a well organized office. Like many small business owners with a myriad of more important responsibilities, there is little time for playing with paper. Then, there’s the constant deluge of e-mails in that scream for attention. Yeah, we know your there! Finally, I attribute the problem to the lack of my expertise with technology. There has to be a better way.
Let’s face it, I’m way past the fundamental principles you hear over and over again about color coded files, scheduling a set time for filing, and prioritizing mail into categories for action, filing or the trash bin. No doubt, these tips are helpful, but I do have other priorities. That is, until I need to find or reference something that I read or wrote down. Am I the only one who has a hard time getting my arms around this task? Were other small business owners faced with the same dilemma? If so, read on, and I’ll share with you where my head is, as success seems to be on the horizon.
The light bulb went on when I let the system evolve on its own. The most important things I did to move from the fog to the sun drenched window where I sit at my desk may not be prophetic, but here goes:
· I set up two separate categories, one for ‘operating my business’ and one for ‘marketing my business.’ That’s all that really matters, and within those two categories are several subcategories that make it easier for me to determine how I want to retrieve the information when necessary resulting in no more lost data files.
· Then I replicated the same format that I set up for my manual paper system onto my PC. This is major because now I don’t have to second guess myself when I am looking for something that I thought I had set up in a file. Every time I come across a useful tool or article on the internet I can file it in the appropriate folder for later use. Taking it a step farther, I enlisted help to set up a network, so that I could access important data from either my laptop or my PC. Of course, I had to find a home for all those files on my desktop, which now also looks a lot cleaner, as well.
· Dusted off my day planner. I now keep it open on my desk to jot down tasks and phone numbers that I don’t need to store in my Blackberry. This eliminates the tiny post-it notes, which end up being misplaced anyway. The other benefit is that I get an immediate visual to let me know where I stand. I can also go back and see my progress, which makes me feel very good.
· No more than 30 unread e-mails in my inbox at a time. Take this a step farther and create folders for your messages that you want to save for future reference. It’s easy to do in most electronic mail systems.
· Finally, but most importantly, is prioritizing tasks. My new philosophy is tending to the most important task at hand and continually reprioritizing the list. This process is known as ‘segmenting’ to people familiar with the “Law of Attraction.” It’s a process where you set you mind in tune with what it is you want to accomplish and the wheels of motion are set forth to move you in the right direction towards completion. An esoteric concept, but it works. Try it.
It’s 5 P.M. on Sunday and my office is uncluttered and organized, my computer desktop is clean, my electronic files are neatly categorized and my unread e-mails are limited to one page. It will be interesting to see what happens as the week unfolds. Anyway, I’ll keep my fingers crossed.
It’s not rocket science, so what was between me and a well organized office. Like many small business owners with a myriad of more important responsibilities, there is little time for playing with paper. Then, there’s the constant deluge of e-mails in that scream for attention. Yeah, we know your there! Finally, I attribute the problem to the lack of my expertise with technology. There has to be a better way.
Let’s face it, I’m way past the fundamental principles you hear over and over again about color coded files, scheduling a set time for filing, and prioritizing mail into categories for action, filing or the trash bin. No doubt, these tips are helpful, but I do have other priorities. That is, until I need to find or reference something that I read or wrote down. Am I the only one who has a hard time getting my arms around this task? Were other small business owners faced with the same dilemma? If so, read on, and I’ll share with you where my head is, as success seems to be on the horizon.
The light bulb went on when I let the system evolve on its own. The most important things I did to move from the fog to the sun drenched window where I sit at my desk may not be prophetic, but here goes:
· I set up two separate categories, one for ‘operating my business’ and one for ‘marketing my business.’ That’s all that really matters, and within those two categories are several subcategories that make it easier for me to determine how I want to retrieve the information when necessary resulting in no more lost data files.
· Then I replicated the same format that I set up for my manual paper system onto my PC. This is major because now I don’t have to second guess myself when I am looking for something that I thought I had set up in a file. Every time I come across a useful tool or article on the internet I can file it in the appropriate folder for later use. Taking it a step farther, I enlisted help to set up a network, so that I could access important data from either my laptop or my PC. Of course, I had to find a home for all those files on my desktop, which now also looks a lot cleaner, as well.
· Dusted off my day planner. I now keep it open on my desk to jot down tasks and phone numbers that I don’t need to store in my Blackberry. This eliminates the tiny post-it notes, which end up being misplaced anyway. The other benefit is that I get an immediate visual to let me know where I stand. I can also go back and see my progress, which makes me feel very good.
· No more than 30 unread e-mails in my inbox at a time. Take this a step farther and create folders for your messages that you want to save for future reference. It’s easy to do in most electronic mail systems.
· Finally, but most importantly, is prioritizing tasks. My new philosophy is tending to the most important task at hand and continually reprioritizing the list. This process is known as ‘segmenting’ to people familiar with the “Law of Attraction.” It’s a process where you set you mind in tune with what it is you want to accomplish and the wheels of motion are set forth to move you in the right direction towards completion. An esoteric concept, but it works. Try it.
It’s 5 P.M. on Sunday and my office is uncluttered and organized, my computer desktop is clean, my electronic files are neatly categorized and my unread e-mails are limited to one page. It will be interesting to see what happens as the week unfolds. Anyway, I’ll keep my fingers crossed.
Sunday, January 25, 2009
2008 Tax Law Changes
You’ve undoubtedly heard plenty of news about how the so-called “Wall Street bailout” law will help our troubled economy. One of the provisions of this new law provides a temporary “patch” for a looming problem that could cause you and millions of other taxpayers to owe thousands in extra taxes.
Did you know …..?
Alternative Minimum Tax (AMT), introduced by the Tax Reform Act of 1969, was initially intended to target 155 high-income households that had been eligible for so many tax benefits that they owed little or no income tax under the prevailing tax code of that time. AMT contains exemptions to prevent it from hitting middle-income taxpayers; however, those exemptions had not been indexed for inflation. So, left alone, the AMT could affect taxpayers well down the income scale. To prevent that from happening this year, a new law temporarily raises the AMT exemption amounts for 2008:
Did you know …..?
Alternative Minimum Tax (AMT), introduced by the Tax Reform Act of 1969, was initially intended to target 155 high-income households that had been eligible for so many tax benefits that they owed little or no income tax under the prevailing tax code of that time. AMT contains exemptions to prevent it from hitting middle-income taxpayers; however, those exemptions had not been indexed for inflation. So, left alone, the AMT could affect taxpayers well down the income scale. To prevent that from happening this year, a new law temporarily raises the AMT exemption amounts for 2008:
For tax-year 2008, Congress raised the alternative minimum tax exemption to the following levels:
- $69,950 for a married couple filing a joint return and qualifying widows and widowers, up from $66,250 in 2007
- $34,975 for a married person filing separately, up from $33,125 and
- $46,200 for singles and heads of household, up from $44,350
Under current law, these exemption amounts will drop significantly to $45,000, $22,500 and $33,750, respectively, in 2009 (Source: www.IRS.gov.)
Sunday, January 18, 2009
Choosing a Business Recordkeeping System
An accounting system provides an organized method to track all of business activities generated by each transaction and provides the information required by taxing and regulatory authorities. The system used should accomplish the following:
1. Maintain a record of all business transactions.
2. Provide financial statements (Profit and loss statement, balance sheet, cash flow statement and key financial ratios) that show operating results and the company’s financial condition.
3. Protect the assets of the business from errors, fraud and carelessness.
4. Provide a basis for business planning by showing the results of past decisions and facts needed for future decisions.
5. Generate information that is periodically required by taxing and other regulatory authorities.
Developing a sound accounting system can mean more profits because it provides a tool to evaluate the performance of your business. If you would like more information on setting up an accounting system appropriate for your business contact Campanelli & Associates CPA LLC.
1. Maintain a record of all business transactions.
2. Provide financial statements (Profit and loss statement, balance sheet, cash flow statement and key financial ratios) that show operating results and the company’s financial condition.
3. Protect the assets of the business from errors, fraud and carelessness.
4. Provide a basis for business planning by showing the results of past decisions and facts needed for future decisions.
5. Generate information that is periodically required by taxing and other regulatory authorities.
Developing a sound accounting system can mean more profits because it provides a tool to evaluate the performance of your business. If you would like more information on setting up an accounting system appropriate for your business contact Campanelli & Associates CPA LLC.
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