Tips on Holiday Shopping for Your Clients

1. Check out the IRS regulations on gift giving:

Or ask your accountant. There is typically a spending limit on gifts of $25.00 for deductions. But there are exceptions and other important details that you’ll want to be aware of before purchasing a gift for a client or business. It’s also important to review the 2018 IRS publication when it’s released since some tax laws have recently changed under our current administration. The 2017 publication listed clarifications between what could be considered as gifts or as entertainment. Entertainment deductions are no longer allowable beginning in the 2018 tax year.

2. Create a holiday budget:

Or ask your accountant to set one up for you. It’s easy to let spending get away from us around the holidays. A couple extra bucks here, a few more dollars there, really does add up quickly. It’s important to set a budget. It’s even more important to stick to that budget. You can find nice, thoughtful gifts for your clients without breaking the bank.

3. Don’t send gifts with your company logo:

If you’re giving your clients a holiday gift that has your logo or your company name on it, it’s not really a gift, it’s more of a promotional advertisement. That could be considered tacky. There’s a time a place for giving out items with your company name and/or logo, holiday gifts is not one of those times. You’re not trying to sell to them, you’re telling them that you appreciate them and their business and wishing them a happy holiday season

4. You can send a holiday card instead:

If you chose not to send client gifts, that’s okay too. If you’d rather send a card instead, try to send out handwritten cards, if possible. They tend to be more personal and breed goodwill. As with tip #3 above, it can be tacky to put your company name or logo on your holiday card. If you must put it on, put it on the back, or under your signature but don’t make it the prime focus of the card.

5. Don’t re-gift:

If you must re-gift, please use caution not to re-gift back to the original sender or in a way where the original sender would find out. No one wants to hurt feelings or to damage good, working, professional relationships. I’ve seen this happen. It’s not worth it.

What is an 1120-S? Do I need one?

An 1120-S is a tax document used to report the income, losses and dividends of S corporation shareholders. It's one of many tax forms that you can find on irs.gov. This particular form is only needed if you own a business. If you don’t own a business, you can skip this one. But not every business needs an 1120-S. So that’s where it gets tricky. Does your business need one? If you are an S-corp, then the answer is yes, but which one?

When I went to irs.gov and searched all tax forms and instructions I got over 2,000 results. When I narrowed it down to ‘1120’, there were 72 results, when narrowed down again to ‘1120-S’, I still had 11 options. Thankfully, there are instruction forms as well. I clicked on the instructions for the standard 1120-S form. It is 44 pages long and included a multitude of links to various other sites and pages. This could take days to read through, maybe longer. And to add the icing on the cake, the following statement has been copied and pasted from the 1120-S instructions from page 40. “The average burden for taxpayers filing Form 1120 and associated forms is about 610 hours and $26,233; and the average for Forms 1120-REIT, 1120-RIC, 1120S, and all related attachments is 363 hours and $12,467.”

What? I don’t know about you but I certainly don’t have 363 hours and $12,467 to spend on the this form. It’s unclear whether this burden includes personal tax forms as well, but let’s be honest, if it does, does that really make it any easier?

Feeling overwhelmed? I was! Don’t spend 363 hours trying to figure this out on your own. Let us help. 

There may possibly be other tax forms that your business needs to file aside from the 1120-S, such as an 1120, 1099, 1065, K-1, 990, or schedules C, E, or F just to name a few, that will most certainly have similar estimations in time and money spent. Our federal tax system can be incredibly confusing, especially if you’re a new business owner. It’s incredibly important that you ensure you have all the proper tax documents filed on time, including quarterly forms throughout the year. We highly recommend contacting an accountant or other tax expert to help make sure that your business is taken care of. 

What Does an Accountant Do?

You probably don’t have daily contact with an accountant year-round. You probably send them your tax documents around March, they do your return, then maybe you reach out with a couple questions throughout the year if something out-of-the-ordinary arises. So, what else are they doing?

Accountants are busy year-round helping to keep your business on track. They are the financial backbone of your business. They help to come up with financial goals, plans on how to achieve them, and then put those plans into action. Simply put, the primary task of accountants is to prepare and examine your business’ financial records. This task is much more time consuming and difficult that you’d think. Business make 100s if not 1,000s of financial transactions per day. Your accountant tracks each and every one of those records and makes sure that they are accurate, and that all payments, including tax payments, are paid properly and on time.  

Accountants perform overviews of the financial operations of a business to help it run efficiently.  You accountant will use numbers and financial statements, to describe the health of your company by using their skills in math, accounting, and finance. They analyze profits and losses, provide information that you, as the business owner or potential investors, need to evaluate just how well your company is doing over a period of time. This information forms the basis of reports and legal filing reports.

Not only do accountants keep your day to day records, they also draft and file your tax returns, and help if your company (or you personally) ever gets audited. It’s incredibly important to have an accountant on retainer for your business if you want to thrive and grow.

Eight Questions You Should Be Asking When Hiring An Accountant

1. “What’s the best way to contact you and how often should we meet?”

It’s important to discuss methods of communication that work best for both parties. Will there be more in person meetings or will things mostly be handled electronically? Does your accountant prefer having your documents (or copies) in hand or sent electronically?

2. “What services do you provide?“

Most accountants provide a range of services, from assisting with monthly bookkeeping, to payroll processing and payroll taxes, to tax returns and audits. If your small business is in need of services above and beyond monthly accounting, you may have just found yourself a one-stop-shop.

3. “What are your fees? What does that include? What is your fee structure?”

Typically, an accountant will either charge by the hour or at a flat rate for a particular document, form, or project. They may also use a combination of hourly and flat fees. Regardless of the billing approach, be sure to get an estimate of an accountant's fees.  Find out what you can do to keep your fees to a minimum. A great deal of your accountant’s time can be saved by keeping organized documentation.

4. “What information do I need to keep?”

Your accountant will need certain paperwork and receipts from your business to fill out your tax information. You need to keep track of business records to file taxes and measure profitability. An accountant can show you which records you need to keep. It’s also worth asking your accountant if they require you to use a specific software program or recordkeeping method.

5. “How should I prepare for tax season?”

Your accountant can draft and file your business taxes. But, there are steps you can take to organize your records and make the filing process quicker and easier for both parties. Talk to your accountant about their preferred way for you to organize your records. Your accountant should be willing to assist you throughout the year in gathering accounting documents that you’ll need at tax time. They should also be able to give you updated information when new tax laws are enacted that could impact your business.

 6. “How can you help me better manage my cash flow?”

Understanding your cash flow makes planning for future expenses much easier and safer for your business. Keeping a positive cash flow is an essential skill for a healthy, growing small business. Ask your accountant to help you understand your cash flow, analyze problems or areas to improve, and make plans to better manage it. Your accountant can point out cash-flow tendencies in your business that you may have overlooked.

7. “How can you help me grow my business?”

An accountant can help you pinpoint which opportunities best promote growth and can also help track your progress and see where spending brings your business down. It’s important for you and/or your accountant to update your plan on a regular basis so you have real time data and actual results. Doing so can help you get a better idea of opportunities for growth. Your accountant can help your business grow by helping you create goals driven by data, progress based on figures, and advice for financial strategies based on your cash flow.

8. “How can you help me with business financing?”

You may need additional funds to expand your business or take on a larger project. An accountant can help you determine the best financing option for your small business. An accountant can also assist you through the loan process and advise you about what to look for in a loan. When applying for a loan, you’ll need to have a business plan in place. This is something that an accountant can help you draft, as well as balance sheets and profit and loss statements for your small business.

Three Reasons Why Your Small Business Needs a Bookkeeper

As an entrepreneur and a business owner you have a multitude of tasks that need to get done every single day. It’s understandable that you would want to handle those tasks on your own and it can be difficult at first, financially, to pay someone to keep track of your books. Have you ever caught a simple mistake while balancing your checkbook or reconciling your bank account statements? I’m sure you have, haven’t we all? It is incredibly easy to make a simple error. “Is that a 3 or a 5? Is that decimal point in the right place? Did I carry the 1?” Now, imagine that simple error, which in your personal finances might be a matter of $50 or $100. Multiply it by the hundreds of transactions and the thousands of dollars coming in and out of your small business, and that simple mistake starts to look like a huge disaster that could take hours and hours to pinpoint and correct. You, as a business owner don’t have that kind of time to spend on this type of work. Your business and employees need you for other things.

1.  Keep your focus on your business

            As a business owner, especially a new business owner, you have a lot on your plate and you need to manage your time wisely to ensure that everything gets taken care of. You need to focus on core business needs such as marketing, advertising, and networking to grow your business or sell your product, you need strategies and funding. You need to manage your employees and potential and current consumers. Don’t spend extra time on something that someone else can handle for you, and probably more quickly and efficiently. 

2.  Stay away from areas that aren’t your expertise

            If you started your own business, chances are that your area of expertise is in what your business does and not in bookkeeping or accounting. Not many business founders have background in finance or even a working knowledge of accounts payable, receivable, and especially taxes. And what you don’t know can hurt you and your business. Entrepreneurs who hire accounting help usually discover they weren't doing nearly as well on their own as they thought they were. It could be devastating to your business, and potentially yourself personally, if you don’t know what you’re doing.  

3. Make sure everything is paid on time including taxes

            When you fall behind on bookkeeping, your books stop reflecting the actual state of your finances. That makes it significantly more difficult to understand your current financial situation. You could easily overdraft accounts trying to pay bills or miss a bill or tax payment. Paying your quarterly estimated taxes shouldn’t be guesswork. You should know how much to budget for these payments, but this depends on you knowing your current books. Calculating it can be tough if your bookkeeping is out of date or you don’t have financial statements on hand. I’m sure that no one wants to get a call from the IRS that mentions words like “audit” or “jail time”. The last thing you want is to get audited or have the IRS after you just because you forgot those quarterly or annual tax filings. You don’t want your business impacted by late or forgotten payments, so put a bookkeeper in charge to give you the confidence that everything has been handled and paid on time.