Anyone interested in IRS publication 17 and small businesses will be interested in the Intuit study that demonstrates how the cloud will change small businesses. Many more businesses are moving to cloud computing in some way, for efficiency and success in the long term. Cloud technology offers numerous opportunities for small and large businesses alike.
Specialized services present one opportunity for small businesses, particularly in their seamless integration into back-office functions. Cloud services represent an efficient, tailored solution for small businesses, allowing them to concentrate their efforts on their specialties. They need not spend time and resources on tasks that are not critical to their area of expertise. Personnel who understand the scope of IRS publication 17 are not otherwise required to understand all sections or be completely versed in the finer details of taxes and finance.
Virtual office configurations, sometimes called hives, offer further opportunities for small businesses. Smaller organizations can recruit talent from anywhere, and these employees can collaborate effectively using cloud technology. Highly flexible staffing creates broad opportunities for small companies.
The opportunities inherent in cloud technology allow smaller outfits to compete in a real way with much larger organizations. When small businesses need not be concerned with staffing an entire accounting department, for example, they are free to focus on what they do best. This allows them to put their best foot forward in areas in which it counts when competing for business.
In a similar way, freelancers may come together using cloud technology to accomplish things as a collective, each bringing their specific skills and ideals to the group. Cloud infrastructure and its myriad possibilities and services allow entrepreneurs to put away IRS publication 17 and focus on their business interests. Payroll services delivered via the cloud, for instance, can take an unnecessary burden from professionals, allowing them to concentrate on their industry goals.
The thought of doing your own bookkeeping is pretty daunting right? That’s the general consensus. Having your own business involves enough work as it is. Why not just leave the accounting bit to the professionals. Fair enough. If you never want to deal with tax offices and worry about learning financials so be it. But you would be surprised how easy it can be.
These days there are superb accounting package and courses. You can sort out your tax online. Even the small things like recording invoice amounts into an excel sheet can save you precious time and money with your accountant.
The first thing you should do is set up a system where everything is filed in the right place every month. All money coming in and out should be recorded on computer, like in an excel sheet. Make sure all your files have dividers for each month. Then get your office organised with the following:
Keep bank statements in a file and print electronic bank statements and file them (these help to cross reference what you have recorded). At the end of the month input this onto your computer in the excel table, or similar.
You will need 2 separate files for these. One for your company sales invoices and one for invoices which have been made out to your company. Separate each file into paid and unpaid. As the amount gets paid, mark the invoice paid with the date it was paid and move it into the paid section of your file. Again, at the end of the month input this onto your computer sheet.
Make sure your staff and you keep all expense slips. From petrol to stationary anything spent on the company from your own pocket needs to be claimed back at the end of the month. Your driver must have a log book where mileage is recorded with the date and client visited. All petrol slips must be handed in with this log book at the end of the month.
If an employee needs cash in advance for expenses then a petty cash box must be topped up at the beginning of every month. Every time money is taken out the box, a note must be made and put in the box. The employee should sign this and they should also bring the invoice afterwards.
Again this must be recorded each month on a computer spread sheet.
Following these guidelines will prepare you for the end of the financial year calculations.
Donna Van Wyk writes on behalf of Oxbridge Academy, a provider of long distance accounting courses, among other study programs.
Occurrence of disputes during the course of business operations is accepted as normal and considered a part of business. Nevertheless, there could be times when you might require taking up legal services for the settlement of these disputes. Business legal fees could be very steep at times making it difficult for small business owners to use such services. However, there are ways by which you can save money on the business legal fees. Some of these tips are as follows:
Choice of attorney
It is very essential to choose the right attorney for your case. Lawyers specialize in different areas of law and therefore, you should choose a lawyer who is adept at handling business related cases. Taking recommendations from friends, peers and relatives is the best way to find the relevant lawyer. The choice of lawyer should be done after much contemplation and research as this could mean saving money on your legal fees. You should remember that the flashiest or the most advertised might not be the best lawyer for your case.
To get the best deal for your legal requirements, the most appropriate way is to compare the services and rates of various lawyers. After following the recommendations of your friends and relatives, you can shortlist a few lawyers, visit them and get quotes for your case. After comparing the services offered and the rates charged, you can come with the best deal. You should certainly be aware of the technicalities in your case so that you may find the most suitable lawyer for the job.
Do your research
Several procedures and processes during the course of a legal settlement are such that they can be handled by an individual. Therefore, instead of assigning these tasks to the lawyer, it is better to do them your self. This would save you money as they would have otherwise been billed by the lawyer. It is also essential to provide the lawyer the required information and documents so that there is no unnecessary delay or extra work involved.
If you are being billed by the hour, then you must be very careful about the way you communicate with your lawyer. Instead of going in for long talks and beating around the bush, keep your conversations short and to the point. In addition, you should not call the lawyer several times a day but make a list of your queries and get the queries cleared in a single call. This would save you considerable money over a short amount of time.
You can certainly save money on the business legal fees by negotiating with your lawyer. Instead of accepting billing by the hour, you should go for a flat fee. You should insist on getting the fee agreement in writing, so that there are no issues later. You may ask your lawyer about the cost of additional tasks that might come during the course of settlement. Ensure complete transparency as far as fees are concerned.
These tips can certainly help you get the best lawyer suited for the legal settlement of your case and save you money on the legal fees as well.
Sara Muler from loansforpeoplewithverybadcredit.net provided us with this free finance content.
Tax time is a very stressful time for a great majority of people. Small business owners can be especially nervous. “What form do I use? Is this the right attachment? What is a business expense, and what isn’t? What type of expense is this one? Can I prove if necessary? Is this fully deductible as a legitimate business expense, or can I claim only a portion of it?” Boil all those common questions down to the core issue that will prove or disprove legitimacy and type, and the battle is almost won. The most common mistakes small business owners make, though, is correct categorization of travel and entertainment expenses and how to properly document those receipts.
Entertainment v Travel Food Expenses
This is one of the most commonly misdirected-expense categories for businesses. The difference in deduction categories centers around purpose, timing and environment.
If you attend a seminar that causes you to travel away from your home city, for example, your transportation mode is a travel expense. If you drive a vehicle, that means your car rental and insurance costs are business travel expenses. Your fuel is also a deduction, but it may not at 100 percent; check with the IRS for current deduction percentages. Include mileage in your annotations.
Your hotel room rental amounts are travel expenses, but your food and drink bills may not be, and this is where people make costly mistakes.
If you pick up the tab for lunch during that seminar, and the intent and agenda during that meal was to discuss business, that’s a business lunch deductible under travel expenses. However, if you are “schmoozing” clients or colleagues, that is not a travel expense but an entertainment expense even if it’s during the same time frame or location as the seminar. Categorize it as such.
No longer is the IRS accepting just names, location and dates as proof of business deductions on taxes. You must also note a brief outline of what was discussed. No confidential or proprietary information has be recorded permanently on that receipt, but you must outline the gist of the content.
For example, as you drive from Denver, Colorado, to Lincoln, Nebraska, you stop for lunch in a diner. On that meal receipt, you ensure the date and the restaurant name is on the receipt. If the name of the server is noted, all the better. On the back, you note, “Meal during drive to…” and note the organization and reason you’re headed there. That is a travel expense.
If you travel with a client or colleague when you stop, and if you discussed the conference you will attending, that’s a travel expense. If you talk about families, hobbies or non-business topics, that bill is an entertainment cost.
Home v Away
Many small business owners do not know that you don’t have to be traveling away from your home city to incur travel-related or entertainment-related, tax-deductible expenses. You just won’t have a plane ticket to declare.
Mileage you drive a private vehicle can accumulate quickly. So can the amount of fuel that you use and its accompanying cost. Keeping accurate mileage and fuel consumption records can be tedious, boring and dreaded. It’s entirely necessary, however.
Whether you keep at-moment records or you use the voice memo option in your mobile phone to note starting-trip mileage, stop mileage, the cost of fuel at the time and your purpose in traveling – a very, very crucial element, your written records and your receipts for any money spent during that trip from start to finish, are exceptionally crucial. “Guestimates” are not acceptable to the Internal Revenue Service. The IRS has increased its investigation into deduction verification, and if you cannot present acceptable documentation, toss your deduction into the “due with interest and penalty” pile.
Be thorough. Be complete. Be conscientious, and be accurate. If you are, you can be assured that your tax filing will be less intimidating and fraught-filled than it used to be. Remember: It is far better to have a documented receipt that you don’t need than it is to discover too late that you really should have kept better expense records.
by Jaye Ryan, who loves writing about responsible financial management and taxes for Octopus Loans.
Bookkeeping serves as a foundation for sound financial decision making and planning and therefore it is essential that financial records are kept up-to-date. Some businesses procrastinate the mundane process of maintaining financial records because it involves a lot of time and effort. When this happens, it is better to find a bookkeeper so that you can get more time to concentrate on core business activities. Some common bookkeeping mistakes that can be avoided by paying more attention are as follows:
Inaccurate Record Keeping
Business managers can lose important receipts or ignore small expenses that seem insignificant to them and this can hinder proper maintenance of records. When its time to file tax returns or close accounts at the end of the financial year, it results in a loss of both time and money. In case of an IRS audit, you will not have the necessary documentation required for proper tax measures and this can result in fines and other expenditures when dealing with the auditor.
Wrong Categorization of Expenditures
For those of you who are not aware of bookkeeping methods and procedures, it easy to feed the wrong amounts into wrong accounts. When this happens, it is likely that income and expense accounts have the wrong balances and this could result in overvalued or undervalued profits and tax payments.
Mismanaging Liabilities and Receivables
Account receivables and payables must be properly recognized and dealt with otherwise they can result in inaccurate profit figures that depict poor cash flow planning. Separate accounts should be created for credit sales and prepaid expenses for proper tallying of accounts at closing.
Transactions Recorded In the Wrong Period
Sometimes lack of bookkeeping experience results in current transactions entered into previous reporting periods after financial statements have been generated. The resulting errors can complicate reconciliations and create a false picture of the financial position of a business.
Ignoring Bank Reconciliations
When you are engaged in a business, it is essential that personal accounts and bank accounts are kept separate to avoid confusions. Moreover, financial records should be updated and reconciled with any external records such as bank statements on a regular basis. If this is not done, it results in errors and chances of fraudulent practices rise.
Not Keeping Data Backups
Businesses rely heavily on technology in today’s world and with software and privacy issues on the rise, it is essential that backup is maintained of all the important information related to the business. System failures or crashes can result in a loss of important information which can be deleterious to your business’s health. It is better to be prepared for such unfortunate circumstances by keeping updated backups on an offsite location.
Keeping Employee Categories Separate
With increased dependence on contractual employees, it is essential that separate records are maintained for different employee categories. With accurate classifications and cost allocations, workers’ compensation, insurance payments and tax payments will not be wrongly computed.
Petty Cash Mismanagement
All businesses have small amounts of cash that have no ‘attached’ explanations. This petty cash can be properly managed when there is a system in place to keep track of cash transactions.
Losing track of Reimbursable Expenses
Sometimes, business owners pay for certain expenses out of their personal funds but fail to record them because of a lack of such a system. This can accumulate to profit losses and tax deductions that would otherwise have not happened. With a proper company policy to keep track of legitimate business expense claims, these expense claims can be reimbursed.
Find a bookkeeper who can prevent such mistakes so that you can effectively and successfully manage your business.
Anthony Azevedo, CPA is the managing member of EZCFO a bookkeeping company specializing in human resource, payroll, and employer solutions.
So, the holidays are over and you’re adding up your books (you’d BETTER be adding up your books-tax time is coming!). You know full well to add up your monthly income and common deductions like EI and CPP for your employees. But what are some deductions that you may have missed that could be costing hundreds of dollars? Here are some weird small business/self employed deductions that may never have occurred to you.
Cost of replacing materials. If you’re a writer/artist/photographer, etc and you need to buy new equipment, you can claim the new piece as a tax deduction. Even repairs can be deducted! Feel a little better about that new laptop now? (I know I do!)
Utilities/Telephone. If you work at home, you can claim a small percentage of your utility bills as business expenses (after all, you need power, heat and phone or internet to work!) Keep track of each bill because you may see a bit of it coming back to you.
Pet food. Did you know that if your animal is a service animal or are outdoor animals which guard your livelihood in some way, you may be able to deduct the cost of feeding the animals?
Child care. Even if you work at home and farm out the little monkey to a daycare or babysitter, you may be able to deduct the costs as a business expense so long as you worked while the kid was away.
Trips. If you headed off to a convention on entrepreneurship or on something related to your business, you may be able to deduct a good portion of your costs.
Transit passes. Don’t drive to see your clients but take the bus instead? Buy monthly passes, keep the receipts and claim them. Anyone can take advantage of this green friendly deductions, not just business owners.
Charity. Donating to others not only feels good, but can give you a good deduction come tax time.
Home maintenance. If you put in a new office for your business, new furniture, new plumbing, new power or something else that improves your business, you will be able to claim the expenses on your taxes. Neat huh?
Moving. If you’re moving to get closer to business opportunities, you can claim the move as a deduction. And don’t forget your pets! You can also claim expenses related to them such as pet carriers, vaccinations and having to pay deposits on hotel rooms
Erm… enhancements. That’s right, if you work in the… entertainment… business, you may be able to deduct a fairly busty amount from your taxes. But you have to show that the enhancements actually helped your work.
In short, keep receipts from anything even remotely related to your small or self-employed because you just never know when a small pile of minor expenses can add up to a solid deduction on your taxes this spring! If you’re unsure, you could always ask a qualified Canadian accountant or even get more specialized and search through specialty regional websites for the exact thing you want such as Halifax tax planning.