- Check fraud is a reality, so make sure that you keep your company's checkbooks in a secure location. Create monetary limits for checks, set-up a special account for paychecks and keep all other checks made out to business and not individuals.
- Making sure to keep up-to-date records of all of your financial activities is important. This includes, paying bills, payroll, expenses, and profits. This information is required in order to properly file taxes and can cut accounting costs at tax time.
- Checking all your billing statements should be routine. Often times spotting extra, hidden or incorrect charges soon after they happen may help resolve issues that cost you extra money for nothing.
- While looking at your statements or invoices, it's a great time to review the expense of doing business. If you appear to be spending too much money in one area, you may wish to find a cheaper, more cost effective alternative.
- If you find yourself too busy to balance your own financial records, they you should not hesitate to hire an accounting professional to keep track of your transactions. An accounting professional can be your greatest asset while doing business. Accounting professionals have access to information and knowledge to help you make the best decisions for your business. This will help you stay on top of your financials while still being able to focus on your business.
The IRS has issued the 2011 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable or medical purposes.
For Business: 51 cents per mile, up from 50 cents in 2010.
For Medical: 19 cents per mile, up from 16.5 cents in 2010.
For Charitable: 14 cents per mile, same as in 2010.
If you have any questions regarding using actual expenses or mileage rates, please call us!
Biffle & Associates Accounting Tips
When should I deduct a credit charge?
You can deduct a credit charge in the year it was charged, rather than when you pay the bill. So if you charge a deductible expense on December 20th, but don't pay the credit card bill until January 17th, you should take the deduction for the prior year.I can't afford to pay my taxes now. What should I do?
If you owe money on your tax return but you can't afford to pay it, don't fail to file timely. Instead, file the return timely and enclose what you can afford. Many taxpayer's do not realize that the penalty for "Failure to File" is 10 times greater than "Failure to Pay."I was issued a 1099. What's my best course of action?
If you have self-employed income or you were issued a form 1099, you should strongly consider making a SEP contribution rather than and IRA contribution. A SEP contribution (Simplified Employee Pension) is fully tax deductible and can usually be larger in amount than an IRA. Further, the SEP gives you other options an IRA doesn't.I took some courses this year to improve my work skills. Can the cost of those be deducted?
You can deduct certain educational expenses. In general if the education is required by your employer or is to improve your skills in your existing profession you can write it off. Nowadays, with the need for higher education to secure employment, this is a deduction that can save big bucks and should not be overlooked.What should I do about charitable contributions?
If you make a charitable contribution of $250 or more, you should obtain written acknowledgement from the charity and keep it with that year's tax file. You do not have to enclose the receipt with your filing to the government. This is an ever changing area of the tax law.What do I need to claim an exemption for my child?
If you have a child you must have his/her social security number in order to claim an exemption. This is true regardless of your child's age. You can contact Social Security at 1-800-772-1213. Make your life easy and just fill out the forms in the hospital when your child is born.
Though we try to answer the most common accounting questions here, there are always more questions when it comes to your personal finances. Give us a call so that we can answer all your questions based on your own financial situation and your needs.
Phone: (614) 436-8611
5 Year End Tax-Planning Moves for Business Owners
The end of the year is usually a hectic time for business owners who are scrambling with not just the holiday activities, but wrapping up the business activities while planning for the new year. This December is particularly challenging because of the continuing tax uncertainty. Here are five things to focus on, what is known, instead of what not is known about the tax rules. These steps will be helpful regardless of possible tax changes.
1. Bring your books up-to-date. Before you can tax plan, you need to know if you made or lost money for the year. Don't let this step slide into the new year.
2. Consider a retirement plan. Profits can be sheltered in qualified retirement plans and the 2010 rules remain relatively unchanged from 2009. If you have a retirement plan, try to contribute the maximum amount allowed. If you don't, you need to complete the paperwork by December 31st. Talk with us or your financial advisor if you have are unsure what your options are.
3. Don't forge health coverage. Small business owners (other than c-corporations) who pay for their health insurance can deduct it, but only as a personal expense. However, if you are self-employed, the premiums can be used to offset the net earnings used to calculate self-employment taxes. You may also want to consider pre-paying your 2011 premiums to boost your 2010 write-offs. You may also want to consider an HSA account.
4. Donate to charity. Business owners who have a good year should share their good fortune with charities and churches. For those that itemize, it's helpful to note a change for 2010: There's no phase-out of itemized deductions for high-income taxpayers. That's a shift from prior years.
5. Upgrade Equipment. If you need to invest in new business equipment or upgrade old machines, now is a great time to act. Whether your business is profitable or not, there is a tax break to help.
These are a few steps to help you prepare not only for the end of 2010 but also for 2011. We're here to help you every step of the way!