Monthly Archives: September 2018

Education, QuickBooks Software, Tips

Income Statement (Profit & Loss) Template, Example and Guide

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A colleague recently shared this link on her facebook page — first, I was just curious — and then, I was actually pretty impressed. Most of the Income Statement (also known as a Profit & Loss) descriptions I’ve read have been entirely too technical, assuming not only a familiarity with accounting, but also an old-world understanding of manual ledger-keeping. As a result, I developed my own way through the years of explaining the Income Statement to clients.

I felt this description, provided (surprisingly) by Intuit, the company that produces QuickBooks, did a nice, succinct job of explaining the relationship between the three main financial statements: Income Statement, Balance Sheet, and Statement of Cash Flows. It also walks through a few examples of how real financial data is expressed on each of the reports, and then how the Income Statement itself is organized between Operating and Non-Operating income.

They offer a free template for all three statements for those using the DIY approach or want to familiarize themselves with the structure before starting their own business. A guide to financial reporting is among the many resources on the site.

Source: Free Income Statement (i.e. Profit and Loss Statement) Template, Example and Guide

Tips

State Amnesty Programs React To Wayfair

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Monika Miles wrote recently for AccountingWeb about the various states responding to the Supreme Court’s Wayfair decision with amnesty programs designed to bring non-compliant retail businesses into the fold. Each program is different, but they’re all designed to waive some sort of penalty, be it fines, interest, or a statute of limitations.

She reports on the programs that four states have put into effect, as well as a proposed one, and points out:

As the states become more focused on economic nexus in light of Wayfair, we expect more states to consider amnesty programs or other relief.

With all the establishment of these amnesty programs, it is a good time for companies to evaluate their situations (e.g., determining if your company has nexus or not) and whether it’s more beneficial to participate in amnesty or whether a traditional Voluntary Disclosure Agreement (VDA) with states where you may have nexus may be more advantageous.

Source: The Amnesty Program Ripple Effect From Wayfair

IRS, QuickBooks Software, Software, Tips

Short-Term Rental Clients Need To Navigate Tax Concerns

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Rob Stephens of The Progressive Accountant recently shared his top four recommendations when advising clients to make sure they avoid costly mistakes when working with short-term vacation rentals:

1. Listing quality and rental rates.
2. Hotel occupancy taxes.
3. Get organized and find the right tools.
4. Administrative risk around taxes and regulations.

And I’d like to add that there’s an additional concern folded into the above, which is whether this is truly a Schedule C hotel operation business or a Schedule E rental property — a entire topic on its own.

He points out that:

More and more people are renting their homes, which triggers new and unique tax requirements. Being on the alert for these pitfalls can protect your client (or you) from hidden tax liability and operational problems.

He is recommending Avalara’s MyLodgeTax as a hotel occupancy tax solution. (Though, full disclosure, he sold his compliance software to them and it is currently being rebranded. Still, as Avalara is a trusted name in sales taxes, I feel confident sharing the recommendation.)

Source: Helping Your Short-Term Rental Market Clients Navigate Tax Concerns and Avoid Costly Mistakes | Sales Tax & Compliance

IRS, QuickBooks Software, Tips

Why Small Businesses Should Have an Accountant on Their Team

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QuickBooks Certified ProAdvisorYou may not know that Intuit, the owner of popular small business accounting software QuickBooks, has a resource center for small businesses on its website. And tucked away in there is a great article on the reasons to bring an accountant onto your team.

Now, I’ve often complained about Intuit’s sales pitch — whether it’s hawking QuickBooks Desktop, Online, Mobile or even one of its tax preparation solutions such as TurboTax — they make it sound like anyone can do their own books or taxes as long as they have the right tools. And it’s simply not true. To clarify: this is not a problem with the tools themselves — it’s an issue with the marketing and advertising. (The tools tend to be pretty great, in fact.)

The issue is that you need to know not only how to use the tools, but how the internal systems for using those tools should be customized to suit your specific situation. Accounting and bookkeeping rules — the basics, anyway — are pretty solid; but the workflow is extremely specific to each company. This is one reason it’s essential to work with a professional bookkeeper or accountant to interview you, get your books set up right, train you, and then review things on a periodic basis.

I’m not saying any of this because I’m trying to get more work — I have a waiting list that’s too long already. I share this because over and over, I’ve watched small businesses spend more time and money on clean-up or mistakes (some of which involved the IRS or state agencies) than they ever would have spent on proper set-up and training in the first place.

Intuit lists some specific reasons to engage the services of a professional bookkeeper or accountant:

  1. Getting Your Business Properly Set Up
  2. Spending Your Time Wisely
  3. Providing Expert Advice and Help
  4. Focusing on Growth
  5. Staying Up-to-Date on Tax Laws
  6. Reducing Your Tax Bill
  7. Audit Prep and Representation
  8. Accounting Mistakes Are Expensive

So if you haven’t made the commitment to seeking at least an initial professional consultation yet, maybe this is the time. Ask around within your neighborhood or industry and see if other business owners are happy with their bookkeeper or accountant and schedule an initial session where you bring a list of questions and get some answers. If you feel a connection, then maybe this is the right person for your team. If you don’t — at least you got some questions answered, and you’re better off for the experience.

Source: Why Small Businesses Should Have an Accountant on Their Team – QuickBooks

IRS

2019 IRS Form W-4

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From today’s “e-News for Tax Professionals Issue 2018-38” —

Following feedback from the payroll and tax professional communities, the IRS announced the 2019 version of the Form W-4, Employee’s Withholding Allowance Certificate, will be similar to the current 2018 version, while important changes will be incorporated into the 2020 version of Form W-4.

A draft version of the 2019 Form W-4 will be available in coming weeks. The IRS will continue to work closely with the payroll and tax professionals as it makes changes to the 2020 version of the form.

Source: IRS Statement on Form W-4 | Internal Revenue Service

IRS, Tips

IRS Extends Deadlines for Victims of Hurricane Florence

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This past Monday, September 17th, was a big tax deadline for business returns on extension, as well as third-quarter estimated tax payments. Unfortunately, hurricanes don’t care that we’re in a tax deadline season. As was the case with last year’s natural disasters, the IRS is offering relief for taxpayers affected by Hurricane Florence. Most notably:

The tax relief postpones various tax filing and payment deadlines that occurred starting on Sept. 7, 2018 in North Carolina. As a result, affected individuals and businesses will have until Jan. 31, 2019, to file returns and pay any taxes that were originally due during this period.

This includes quarterly estimated income tax payments due on Sept. 17, 2018, and the quarterly payroll and excise tax returns normally due on Oct. 31, 2018. Businesses with extensions also have the additional time including, among others, calendar-year partnerships whose 2017 extensions run out on Sept. 17, 2018. Taxpayers who had a valid extension to file their 2017 return due to run out on Oct. 15, 2018 will also have more time to file.

Source: IRS extends upcoming deadlines, provides tax relief for victims of Hurricane Florence | Internal Revenue Service

QuickBooks Software, Software, Tips

Report Comparison Chart for Different Types of QBO Subscriptions

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QuickBooks Certified ProAdvisorA colleague recently shared this wonderful link that compares each type of QuickBooks Online subscription and which reports are available in each one:

Report comparison between QuickBooks Online subscriptions (US) – QuickBooks Learn & Support

Her note was, “Here’s a handy chart comparing all of the reports available in the different versions of QBO. I know I can use this reference all the time!”

I had no idea it existed and I was glad to see it… so I thought I’d pass along this convenient summary. Use it in good health. :)

IRS, Software, Tips

New Rules for Submission of 1099-MISC Forms

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Good article recently from one of my favorite publications, CPA Practice Advisor. They note two big changes for filing of 1099-MISC forms.

New IRS rules for submitting late 1099-MISC with Box 7

After January 31, 2019, 1099-MISC with Box 7 filled in should be filed separately from 1099-MISC with any other box filled in. As an example, on February 5, if you have a 1099-MISC with Box 7 and a 1099-MISC with only Box 1 filled in and your e-file provider has put them in the same record, as per last year’s format, the MISC with Box 7 will be flagged as late, which indeed it is. The challenge is, however, that the 1099-MISC with Box 1 may also be flagged as late, even though it is not, since it is not due until Mar. 31.

If companies do accidentally submit non-Box 7 1099-MISC along with late Box 7 forms and get a Notice 972CG (A Penalty is Proposed for Your Information Returns), according to the IRS they may respond and clarify the content of the submission, indicating the number of Forms 1099-MISC that did not report Box 7.

More on this from the IRS here:
https://www.irs.gov/forms-pubs/changes-to-current-forms-publications/filing-forms-1099-misc-with-nec-in-box-7-with-the-irs-dec-2017

New 1099-K State Filing requirements with Gross Amount more than $600

The IRS does not currently require companies to submit 1099-Ks unless the Box 1a Gross Amount for the year is at least $20,000. However, individual states have become attuned to the income reporting possibilities with this form and are mandating submission of the 1099-K for gross payments more than $600. This $600 is the same threshold for 1099-MISC Box 7 reporting.

At the moment, Massachusetts and Vermont have implemented the reporting requirement for 1099-K with more than $600. Be sure to stay up to date with your particular state’s rules as they may pick up this requirement in the future.

Source: New Rules for Submission of 1099 Forms | CPA Practice Advisor