Category Archives: Tips

Illinois, POS - Point of Sale, Tips

Chicago sales tax going back up to 10.25% in 2016

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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.

QuickBooks Software, Tips

Fixing QuickBooks Online Accountant Chrome Login Problems

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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

IRS, Tips

Tax Penalty Starts Today on Small Business Health Insurance HRAs

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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

Education, IRS, Tips

IRS Webinars for Small Businesses

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Did you know the IRS offers free webinars for small business owners?  From topics as diverse as the ACA to disaster recovery to tangible property regulations, I recommend to many of my clients that they bookmark the site and check back regularly to see what new topics are being offered.

Check it out here: Webinars for Small Businesses

Spread the word — why?  Because educated clients are more likely to run successful businesses.

Illinois, Tips

Open Co-working Week at Free Range Office Chicago, June 15-19

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Open Co-working Week at Free Range Office Chicago is coming up!

From Mon. June 15th through Friday, June 19th, Free Range Office (2nd Floor, 2141 W North Ave, Chicago, IL 60647) will be offering free workspace for a day, educational seminars, workshops, complimentary food and drinks, and a happy hour to get folks acquainted with their space and with the co-working movement. Email carly@freerangeoffice.com for a free Day Pass.

http://www.freerangeoffice.com/open-coworking-week/

The idea behind the co-working office space movement is to offer alternatives to both the corporate box and the isolating home office. “You set the pace, and the terms, in an environment that promotes comfort, innovation, networking and collaboration. The welcoming ambiance provides extra amenities to make your life easier, including ergonomic chairs and spacious desks; private telephone room; outdoor terrace; chef’s kitchen; gourmet coffee and tea; video blogging studio; laundry and dry cleaning delivery service; and even a weekly chair massage day to work out those knots.”

According to an article in last year’s Chicago Tribune, “coworking spaces are the front lines of Chicago’s new economy.”

http://www.chicagotribune.com/bluesky/series/coworking-spaces/chi-bsi-series-chicagos-coworking-spaces-ngux-story.html

(Note: I’m not affiliated in any way with Free Range Office, or any other co-working space — I just think they’re a genius idea for small businesses and have a few clients who get a lot out of the arrangement, so I wanted to spread the word.)

QuickBooks Software, Tips

Resolving Inactive Inventory Items with Quantities on Hand

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Read this great little blog post by The Inuitive Accountant on Resolving Inactive Inventory Items with Quantities on Hand.  It’s a common problem — your client deactivates an inventory item, but there’s still a quantity on-hand left… how do you best troubleshoot this?  The Intuitive Accountant gives some suggestions to QuickBooks Professionals using the “Troubleshoot Inventory” tool with some nice tips for filtering and adjusting entries.

Education, IRS, Tips

Small Business Health Insurance Credit ONLY Available to “SHOP” Participants

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(Inspiration for this post: I just met my FOURTH health insurance agent that did not enroll their small business employer client in a SHOP Marketplace plan. And this client is a not-for-profit that was counting on the credit.  It’s thus far been one of my major sources of stress this tax season.)

PUBLIC SERVICE ANNOUNCEMENT — The small business health insurance credit is ONLY available in 2014 & 2015 IF the small business buys employee health insurance through SHOP. Please check with your agent for 2015 to avoid any unpleasant surprises.

See if you qualify to purchase insurance through SHOP, here:
https://www.healthcare.gov/small-businesses/provide-shop-coverage/qualify-for-shop-marketplace/

We’re talking about a 35-50% credit for what you paid for employee health insurance. Insurance agents are often not doing this on behalf of clients; be proactive. And please spread the word to your small-business-owner friends:  https://www.healthcare.gov/small-businesses/provide-shop-coverage/shop-marketplace-overview/ .

Also — The U.S. Small Business Administration has numerous articles and webinars on the Affordable Care Act for small business owners.  A great resource for non-tax-professionals.  More SBA resources and a link to an archived audio recording on the topic, here: https://www.sba.gov/content/affordable-care-act-training-materials .

It breaks my heart when I have to tell small business owners that they don’t qualify; then they put me in touch with their agent, who acts defensively and tells me to stop telling them how to do their job, instead of a being a partner to their client.  All I’m saying is I’ve seen it too many times and I’m not arguing with any more brokers.  I’m just sending them to this post.

For the record, I understand that there are other reasons than a tax credit to choose a particular health insurance plan, and that’s fine — if the client is informed that they will not qualify for the credit, and chooses to get a non-SHOP plan for other reasons, that’s fine by me.  But they need to know what they’re giving up to do it.

Education, IRS, Tips

S-Corp Accountable Plans

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UPDATE 2/25/17 — please don’t confuse partnerships with S-Corps.  The home office deduction for partnerships is completely different than what I’ve outlined below.  There’s a fabulous blog post about partnership home office deductions here, by an excellent CPA firm in Oregon.

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As you may know, many small businesses take a “home office deduction” on their personal return.  But that doesn’t include S-Corp shareholders.  Those business owners cannot take the home office deduction because they are considered employees of the business, as well as owners, and as such, they would be restricted under the same “2% of AGI” floor that regular employees are when they try to deduct unreimbursed employee expenses.

They also aren’t allowed to charge themselves rent — or if they do, they can’t deduct expenses against it, making that arrangement costly.

However, they can get reimbursed by the S-Corp for their out-of-pocket expenses.  It’s called an “Accountable Plan”, and it’s really quite simple.  Just keep decent records — which you’d have to do if you were claiming the home office deduction anyway.  Substantiate the portion of the space used by your business, divide it by the total square footage, and there you have your business-use-percentage.  Now multiply that by the expenses related to running an office out of your home — keeping in mind that you have to follow the same rules as sole proprietors: the space has to be used BOTH regularly and exclusively for business.  I have a couple of clients who wrote up an accountable plan (stating that the company would reimburse the shareholder-employee for these substantiated home office expenses) and attached a floor plan of the office space as further support for which portion is personal and which is business-use.  Nice touch.

I was really impressed by this lovely article that a CPA firm out in Colorado wrote on the topic, and they link to a “sample accountable plan reimbursement form” that’s quite nice (they even update it annually).  If you’re looking for a CPA in that area, I must say I was pretty impressed with their resources, offerings and pricing.

Pull Money Out of the S-Corp, Accountable Plan – Watson CPA Group- Tax KnowledgeBase and FAQs.

Education, QuickBooks Software, Tips

Determine an Accurate Cash Position in QuickBooks – March 11 Webinar

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I just got word in the latest edition of the “Intuitive Accountant” newsletter (one of my favorite resources) of an upcoming webinar on how to determine an accurate cash position in QuickBooks.  It’s designed by QB ProAdvisors for QB consultants, but I think it looks like a good resource for any small business owner who has a hand in doing his/her own bookkeeping as well.

Not only do they plan to walk through common issues with figuring out how much cash is “in the bank”, and how to fix them, but they also will discuss “adjusting entries and other reporting options for income tax preparation and GAAP-compliant financial reporting”, making it a worthwhile investment of time for staff accountants and bookkeepers.

If you decide to register for and take the webinar, let me know in the comments how you liked it, what you learned, and what you’d recommend for improvements.

The webinar will be offered twice on the same day — March 11 — at noon and 5 pm Chicago-time.  Click here for more information and to register:  Determine an Accurate Cash Position in QuickBooks – intuitiveaccountant.com.

Tips

Why you should take notes by hand — not on a laptop

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I switched back to making my to-do lists on paper about a year ago, and found it helped me organize my thoughts and remember what I wanted to get done better. Really neat to see that it wasn’t just a good hunch on my part… these studies show that taking notes by hand helps you remember better than if you type them on a computer.

Why you should take notes by hand — not on a laptop (Vox).