QuickBooks Online Updates

Not sure how many of you QuickBooks Online users out there follow the QBO Blog, but I recommend it.  It’s not very sales-y, the posts are generally short and to-the-point, and the information is often pretty solid.  Case in point, the most recent QBO Update review of changes, here: QuickBooks update: June 26 2015 • QuickBooks Online

One thing to be aware of on their blog is that they often like to tout “pretty” updates, like changes to formatting and styles that they feel make things easier to read or navigate.  (I generally find these types of changes to be annoying wastes of time, especially when there are serious bugs that need desperately to be addressed.  Furthermore, in their effort to look more sleekly Apple i-design-y, they often increase the number of clicks it takes to accomplish a given task — a no-no in my book.  Case in point, the new version of bank registers.  Avoid it for now, is my suggestion.

However, something truly useful they recently included is the long-awaited ability to copy journal entries!  As they put it, especially convenient when you need to duplicate long journal entries.  Of course, saving a JE as a “Recurring” transaction (“Memorized” in the Desktop version) is still your best bet, but sometimes that’s not an option or not the most efficient option.  Here’s all you do:

Create (+) > Journal Entry > Recent Transactions > choose an entry > More > Copy.

Try it out.  You’ll love it.

Also, this update allows you to import invoice styles from Word, which I don’t think is a big deal, but clients LOVE.  So, go make a client happy and tell them they can now do this.  Another feature folks have been waiting for a long time that will win some smiles.

Main point is: follow the QBO Updates.  They’re often quite useful — and a handy archive is located here: http://quickbooks.intuit.com/blog/quickbooks-update-archive/

Chicago sales tax going back up to 10.25% in 2016

The Cook County Board has approved a 1-percentage-point sales tax increase to bail out the county worker pension system.  This increase is effective January 1, 2016.

More here: Cook County Board votes to raise sales tax – Chicago Tribune

This means that small businesses in Cook County — which includes the City of Chicago — need to make plans to update their POS and sales tax systems so that they don’t get caught charging the old, lower rate to customers, but paying the new, higher rate to IDOR.  It’s surprising how often I see this happen, so: businesses, mark your calendars!  Accountants, reach out to your clients!  A 1% spread over the course of a month or a quarter could mean a lot of cash out-of-pocket for companies, especially retail stores, that do not plan ahead.

As for why this is happening:

“The immediate problems is pensions. The city of Chicago alone has a $20 billion unfunded liability and when Moody’s Investors Service dropped the city’s debt rating to junk, it forced $2.2 billion in accelerated debt payments. So Cook County has to borrow more money now at higher interest rates to pay those newly due bills AND it has to increase sales taxes to that whopping 10.25% rate effective in January to help pay the interest on it all.”

Source: http://www.cnbc.com/2015/07/16/sticker-shock-sales-taxes-in-chicago.html

As for what it means for the poor, and for our communities… well, this is entirely my own opinion, so feel free to stop reading here if what you wanted to know about were the ramifications for accounting.

But, in my opinion, it’s important to remember that sales tax hikes, unlike income taxes, affect even the poorest among us. If you don’t make a lot of money, then you have to spend 100% of it just to keep going. That means 100% of it is subject to sales tax. It’s not the same for someone with disposable income, who can choose not to buy something because sales tax makes it too expensive.

Furthermore, an over-ten-percent tax rate hurts the local economy, causing businesses to avoid locating here and customers to avoid shopping here, choosing the suburbs instead.  (This is not just my opinion — studies have shown this is exactly what happens:
http://www.chicagotribune.com/business/ct-cook-county-tax-0719-biz-20150717-story.html#page=1 )

Lastly, this hike is entirely to shore up a pension fund that they’ve known for years was underfunded. An emergency measure now, when this is obviously something that bad planning caused in the first place, smacks of crappy governance.

But that’s just my opinion.  The important take-away as a small business owner or accountant?  UPDATE YOUR POINT OF SALE AND SALES TAX SYSTEMS BEFORE JANUARY 1.

Fixing QuickBooks Online Accountant Chrome Login Problems

I’d say that a solid 65% of the time — possibly more — that I have issues with QuickBooks and research the web for solutions, I end up at the Sleeter Group blog.  You’ve heard me rave about Greg Lam, Bonnie Nagayama, and Charlie Russell, and of course, about the annual Sleeter Technology Conference.  I’m raving once again.  Here’s Charlie’s simple list of “what to do” when once again, QuickBooks Online won’t let you sign in using Chrome, for whatever reason.

Fixing QuickBooks Online Accountant Chrome Login Problems – Sleeter Report — QuickBooks and Beyond

Supreme Court Upholds ACA Subsidies

By now, we all know that the Supreme Court upheld the Affordable Care Act, also known as Obamacare.  But are you one of the many that doesn’t really understand how it was being challenged in the first place?

The basic idea is that there are certain people who are opposed to the ACA — whether for political, social, economic or other reasons — and they are taking every opportunity they can find to repeal or curtail it.  The best approach in this kind of legal challenge situation is to find language in the law that is ambiguous or incorrect.  In this case, the challenge was with the language “an Exchange established by the State.”

Tax credits “shall be allowed” for any applicable taxpayer, but only if the taxpayer has enrolled in an insurance plan through “an Exchange established by the State.” An IRS regulation interprets this as making the credits available on an exchange “regardless of whether the Exchange is established and operated by a State…or by [Health and Human Services].”

The best explanation I’ve seen for what happened in the end was by Bloomberg BNA state tax law editor Annabelle Gibson, quoted in Roger Russell’s article from Accounting Today:

“King V. Burwell upholds the validity of tax credits for individuals living in states that use the federal exchange, HealthCare.gov,” said Bloomberg BNA state tax law editor Annabelle Gibson. “That means individuals who purchase insurance through HealthCare.gov that are eligible for credits will continue to receive them to help pay for their health insurance.”

“The court focused on determining Congress’ intent when enacting the ACA when determining whether the words ‘Exchange established by the State’ include federal and state run exchanges,” she said.

“The court wrote that allowing credits for insurance purchased on any exchange will avoid the ‘calamitous result that Congress plainly meant to avoid’ when enacting the ACA, as the ACA was meant to increase access to health care throughout the United States,” Gibson remarked.

Applicable large employers who are subject to the employer mandate will continue to be liable for penalties for failing to offer minimum essential insurance coverage to their employees and their dependents, if employees purchase health insurance through any exchange and receive a tax credit, according to Gibson.

“If the tax credits had been struck down, employers in states using the federal exchange would not have been liable for a penalty even if an employee had purchased insurance through a federal exchange, because under the strict wording of the ACA, the penalty only applies if an employee received a tax credit to pay for their insurance,” she said. “Because the subsidies have been upheld, the employer mandate remains in place for all applicable large employers.”

Individuals in all states remain subject the individual mandate under the ACA, she indicated. “If subsidies had been struck down, then the cost of health care would have gone up for many people and it was possible that the cost of purchasing health care could have been greater than eight percent of those individual’s income, exempting them from the ACA’s coverage requirement,” she said. “That type of situation could have pushed insurance marketplaces into a ‘death spiral.’”

“However, because the subsidies remain intact, people can continue to use them to help pay for their health insurance, likely bringing the cost of their insurance under the 8 percent level,” said Gibson. “That means that the individual mandate would still apply if someone didn’t purchase health insurance.”

Great explanation — which had me presuming that there would be no accounting implications from the decision, since the status quo was being preserved.  The decision found that the IRS regulations could continue being interpreted as intended.

However, another, related article from the same publication and author illustrated that in fact, there are some important implications that stem from this decision.  In Serious Implications from the Supreme Court’s ACA Decision, Russell quotes Michael Greenwald, partner and corporate & business tax practice leader at Friedman LLP:

“If there were companies that were on the verge of not offering insurance, and sending their employees to the exchanges and paying the penalty, now they don’t have to worry about the exchanges not being there,” he said. “The bigger question was whether the law would be in place at all. The message is that the law will be in place for a while.”

Source: Supreme Court Upholds ACA Subsidies | Accounting Today News

Tax Penalty Starts Today on Small Business Health Insurance HRAs

MAJOR UPDATE AS OF DECEMBER 2016!  —  Please read new post here.

Small business groups are sounding a warning about an obscure Internal Revenue Service rule that takes effect Wednesday imposing heavy fines on small businesses for helping defray the cost of their workers insurance.

Health reimbursement accounts, or HRAs, are more simply known as the practice of reimbursing employees for the cost of insurance.  One problem: it’s illegal.  The reason behind it makes sense — an employee might have a personal tax situation whereby they can get Marketplace health insurance subsidized by the government, and it’s cheaper for the employer to simply reimburse the employee for that insurance than for the employer to provide an insurance plan.  However, that’s unfair to the rest of us, whose tax dollars go to paying for that subsidy.

Although that reasoning makes sense, in reality, most small business employers who provide this perk to employees do it because they avoid all the administrative costs and headaches involved with establishing and maintaining an insurance plan for their staff.

A huge issue is that a lot of these small business owners aren’t aware that the practice of reimbursing employees for health insurance now comes with extremely stiff penalties.

…employers who do not offer a group health plan, but give their workers additional pay to compensate for the purchase of health insurance or direct medical expenses, can be fined $100 per day, per employee. Over the course of a year that can add up to $36,500 per employee, up to $500,000 in total. In contrast, the penalty on businesses for failing to comply with the employer mandate is only $2,000 per year.

Please spread the word to your small business accounting clients or friends/colleagues who own businesses and have employees.  It is an extremely costly mistake to make, and according to this Accounting Today article, “14 percent of small businesses that do not offer group insurance reimburse their workers instead, unaware of the potential pitfalls of the regulation.”

Source: New Tax Penalty Starts Today on Small Business Health Insurance | Accounting Today News