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Tag Archive for tax preparation

How Long Should You Keep Business Records For Tax Purposes?

If you own a small business, you need to keep business records. These can include digital or hard copies. They may contain financial information and licenses. Business record retention is necessary for your annual tax filings. It’s also necessary for potential audits.

What Are Business Records?

You know saving business documents is important. Now, you need to figure out what documents to save. The term “business documents” can refer to many things, including: Read more

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Choosing The Right Tax Preparer

Harold Blotcher, Tax Connections

As we approach the new year, we will start seeing a plethora of television ads from competing tax preparation companies. They will make claims like promising “instant tax refunds” or they will tell you that you don’t need your W-2 forms to come in and prepare your taxes. Well, the IRS does not process tax refunds any faster for these companies than for anyone else. What they are offering, if you qualify, is a short term generally high interest loan to be paid back by having your refund sent to them or the financial institution providing the loan. They will also usually be charging an extra fee for this service. The interest and fees will be deducted from the total amount of the refund as well as the tax preparation fee. As for not needing a W-2, except in certain situations where a substitute W-2 may be used, if you are employed for salary or wages you will need a W-2 to file your tax return. The ploy is to get you in the office to “start” your return so that you fell you have to come back to finish once the actual W-2 arrives. Read more

Canadian FAQ #204 – Balance Sheet Series

Grant Gilmour

Tax Question:

What are the most common groupings of Asset and Liabilities on a Balance Sheet?

Read more

Tax Preparation Questions To Ask Yourself

Milton Boothe

When you leave your tax preparer’s office each year, there are two very important questions you should probably be asking yourself.

Question #1:

How secure is your personal information after you leave it with your tax preparer? Probably not very secure! Do they leave your paperwork lying about the place, accessible to all, after they have completed your taxes? Are their computers adequately protected by firewalls and effective anti-virus software? Is there adequate background checks done on their employees, who obviously will have unlimited access to your sensitive personal information? The honest truth is that you really don’t know.

Also, you should be concerned about hackers. These criminals have been successful in hacking into supposedly very secure government computer systems; the Office of Personnel Management, and even the IRS itself come to mind immediately. These people know that they will have access to a treasure trove of personal information if they were to hack into the computers of H&R Block, Liberty Tax, or any CPA or other tax preparation office. So what is to stop them from hacking into your tax preparer’s computer, which obviously will be a lot less protected than the government’s computers? Read more

Self Employed And Worried About Retirement Plans? Read On…

Manasa Nadig, EA

Manasa Nadig, EA

You did it! You quit your job and started that small business that had always been your dream! Exciting times, thrilling ups & downs, you are your own boss–but wait, you do miss the paychecks that arrived regularly every other week. You also miss the medical benefits that the company paid for & that retirement plan you contributed to. What’s more, you also miss that extra oomph on your paycheck-the employer contribution to the company 401(k).

In this post on Employer Retirement Plans for Small Businesses, let’s closely examine the Individual 401(k). This is also known as the Solo 401(k). Unlike other retirement plans, a solo 401(k) is only for sole proprietors or S Corps who have no employees. A spouse can contribute if he or she earns income from the business.
It comes in both the Traditional & Roth version. Just like IRA’s, Traditional is money put away pretax & is taxable when withdrawn. The Roth 401(k) is funded with after-tax dollars & is tax free when withdrawn. One can also split the contributions between the two. Loans can also be taken against savings in 401(k)’s.

Why I like these plans?

•They are ideal to sock away large amounts of money in the good years.

•It helps you save both as an employer & an employee. Here’s how for 2013 – you can contribute a maximum of $33500 (Up from $33000 in 2012) as an employer AND $17500 (Up from $17000 in 2012) as an employee- not to exceed a maximum of $51000 (Up from $50000 in 2012) or 100% of the employee’s compensation, whichever is lesser. Read more

Very Important, Yet Often Overlooked Considerations for a Tax Preparer

For tax preparers looking for additional business opportunities, pursuing the CPA credential may be a smart and strategic career move, even if tax prep is all the tax preparer desires to do. While many tax preparers and CPA’s may have similar backgrounds and training, the public perception is that a CPA is simply more of an expert. This perception may help bring bigger, more lucrative accounts for the accountant. Some other often overlooked advantages and considerations for pursuing the CPA credential include:

1. Versatility

In a tight economy it makes sense to invest in professional development that brings stronger potential ROI. Some firms will limit the promotion potential of accountants that do not hold the CPA credential. The main reason is the versatility factor. In many cases, only CPA’s can sign off on various audit reports. Also, companies generally want a CPA handling their more complex financials, simply because of the prestige that the credential holds.

2. Commitment

When accountants commit to the CPA certification process, they demonstrate to their employers and to their clients that they are invested in long-term participation in the field. In addition, CPA’s often are active in the local chapters of their professional organizations and help to shape the future of the field. Clients tend to view these sorts of professional involvements as a sign of stability and good standing. Allowing someone to handle financial information is an intimate association; the credential carries clout which can help build a loyal client base.

3. Follow-through

Nearly all accountants hold a four-year degree. If an accountant is going to complete a four year degree, it makes sense to put in the extra effort to carry that education as far as possible. Through online study groups and Internet-based review courses, accountants can continue working while preparing for the CPA exam.

The investment in education tends to pay off. In fact, the Bureau of Labor Statistics (BLS) reports that the lowest 10% of all employees in the accounting field earn less than $40,000 annually. At the same time, the top 10% of all accountants earn over $100,000 annually. Though this is not common for a CPA starting salary, it does represent what could be earned depending on experience. While geographic location, skill, and education all contribute to earning potentials over a lifetime, securing the credentials necessary for ongoing opportunity and career advancement can contribute greatly to securing the competitive edge for top jobs as a career unfolds.

4. Perception

As mentioned above, while many tax preparers may be as skilled as a CPA doing the same job, the perception among potential clients will generally sway the business toward the CPA. In addition, it looks good for a company to have the majority of the accountants in their firm fully credentialed, not just with a CPA license, but with additional niche credentials such as those supporting sustainable business practices. Additionally, peers in the field will tend to regard the CPA with higher esteem, which may lead to a more genuine engagement in team decision-making.

For tax professionals secure in their professional calling with a steady client base, it may seem counter-intuitive to seek additional credentials. The CPA credential can help secure longevity in the field, however. In addition, it may open doors through networking and increased client traffic. Taking fewer clients with bigger stakes may also free up time for other interests. Even for the best accountants, seeking a CPA license or investigating additional niche service certifications may help boost the versatility needed to secure resilience in the accounting field no matter what the economic future holds.