Poor record-keeping can easily mask cash flow issues by obscuring important financial details:
When records aren’t updated or accurately maintained, it’s challenging to see where money is going, leading to:
1. Missed Expenses: Incomplete tracking of expenses makes it hard to see true spending patterns.
2. Unpaid Invoices: Overlooked or delayed invoicing can cause unexpected revenue gaps.
3. Inaccurate Forecasting: Without accurate data, it’s difficult to make informed cash flow projections.
4. Surprise Costs: Hidden fees, penalties, or forgotten obligations can drain cash unexpectedly.
Accurate records are essential to reveal these hidden cash flow issues and keep finances healthy.
Wanna hear about Tax planning?? Tax planning is essential for several reasons:
Minimizing Tax Liability: Effective tax planning helps individuals and businesses reduce the amount of taxes they owe by taking advantage of deductions, credits, and tax-efficient investment strategies.
Maximizing Savings: By planning ahead, you can structure your finances in a way that maximizes your after-tax income, allowing you to retain more of your earnings for personal or business use.
Avoiding Penalties: Tax planning ensures that you are compliant with tax laws, helping you avoid costly penalties or interest from underpayment or late filing.
Cash Flow Management: Proper planning allows for better cash flow management, as you can anticipate tax payments and avoid any unexpected financial strain.
Retirement and Estate Planning: Tax planning is crucial in maximizing retirement savings and ensuring a smooth transfer of wealth to heirs with minimal tax implications.
Achieving Financial Goals: Tax strategies can be aligned with broader financial goals, such as purchasing a home, expanding a business, or investing in education, while minimizing the tax impact.
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Mastering Invoice and Payment Tracking: A Guide for Small Business Owners!
For any business, maintaining accurate financial records is crucial. Whether you’re a freelancer, small business owner, or running a larger enterprise, having a streamlined process for tracking invoices and payments can save time, reduce stress, and ensure you get paid on time. In this post, we’ll walk through the essential steps to tracking invoices and payments efficiently.
Why Tracking Invoices and Payments Matters
Effective invoice and payment tracking ensures:
• Steady Cash Flow
• Accurate Financial Records
• Avoiding Missed Payments
• Better Client Relationships
Tracking invoices and payments effectively is key to keeping your business’s finances in check. By using the right tools, setting clear payment terms, and maintaining organized records, you can ensure that you get paid on time, every time. Investing time in a proper invoicing system can save countless hours of stress and financial uncertainty, leaving you free to focus on growing your business.
Reach out to us for more information on how we can help streamline your process and get your bookkeeping in order.
Tax Tip (Maximize Retirement Contributions):
Tax Tip (Maximize Retirement Contributions):
• Contributing to retirement accounts, such as a 401(k), IRA, or SEP IRA (for self-employed individuals), can lower taxable income. This provides both long-term financial security and immediate tax benefits.
• For 2024, the contribution limits for 401(k) plans are $23,000 (or $30,500 for individuals aged 50 and older), and for IRAs, it's $6,500 (or $7,500 if 50 or older).
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Personal & Business Expenses
Separating business and personal finances is crucial for managing your business effectively and avoiding financial complications.
Open Separate Bank Accounts:
Business Checking Account: Open a business checking account to handle all income and expenses related to the business.
Business Savings Account: For taxes or emergencies, it’s wise to have a business savings account as well.
Personal Accounts: Keep personal income and expenses strictly in personal checking and savings accounts.
Accounting Software tip:
Use accounting software to streamline your processes and keep your finances in order. Organization is the backbone of effective bookkeeping, ensuring that every transaction is accurately recorded and easily accessible. This is crucial for any business to track expenses, manage cash flow, and prepare for tax season without unnecessary stress.
Let us help you get started by setting you up on our software, which is designed to simplify your financial management and provide you with real-time insights into your business’s financial health.
The Importance of Bookkeeping in Your Business:
Bookkeeping is the backbone of any successful business. It involves the meticulous recording of financial transactions, ensuring that every dollar in and out of your business is accounted for. Proper bookkeeping not only helps you keep track of your expenses and revenue but also provides a clear financial picture that is essential for making informed business decisions.
Whether you're a small startup or an established company, consistent and accurate bookkeeping is key to maintaining financial health and compliance with tax regulations. Don't overlook the value of professional bookkeeping services; they can save you time, reduce stress, and ultimately contribute to the growth and success of your business.
AICPA joins coalition to fight intensifying tax scams, schemes:
To read full article: https://www.journalofaccountancy.com/.../aicpa-fighting...
The Coalition Against Scam and Scheme Threats (CASST), convened at the request of IRS Commissioner Danny Werfel, includes federal and state tax agencies, software and financial companies, and national professional associations.
ICPA involvement:
"Since its inception, the AICPA has worked tirelessly to protect the profession's interest, benefiting taxpayers, tax practitioners, and tax administration. For over a decade, the AICPA has been vocal about identity theft and the need to protect taxpayers and practitioners," said Melanie Lauridsen, vice president–Tax Policy & Advocacy for the AICPA.
"We believe that together, through the reduction of fraud, we can work to protect taxpayers from those that look to exploit the vulnerable," she said.
Types of scams:
CASST is needed because of "a rising tide of scams and schemes that try to exploit taxpayers and find gaps in government and industry defenses" by bad actors and on social media, Werfel said. "Our goal is to have a mass effect on this expanding problem."
During the past tax season, more scams and schemes have circulated, including ones involving the fuel tax credit, household employment taxes, and the sick and family leave credit. The IRS has seen hundreds of thousands of dubious claims where it appears taxpayers are claiming credits for which they are not eligible, leading to refunds being delayed and taxpayers being required to provide documentation for the claims.
Numerous other scams and schemes continue to circulate on social media. They are highlighted through efforts including the annual IRS Dirty Dozen list. The new approach, the IRS said, will increase collaborative efforts to raise awareness and education about schemes, not just during tax season.
Coalition's plans:
The coalition will work toward new protections by the 2025 filing season, including steps to combat "ghost preparers," who prepare tax returns for a fee but do not sign the tax return. This leaves the taxpayer at risk for what often are claims for inflated tax refunds since their name is the only one on the return.
The scams do not target individual taxpayers only. CASST also will focus on scammers who exploit weak points in government systems and the private sector, the IRS said.
Background:
The coalition is an outgrowth of the Security Summit, which the same groups started in 2015 to stem the growth of tax-related security theft. While tax-related identity theft remains a concern, improved protections initiated through the summit have protected millions of taxpayers and prevented billions of dollars of fraudulent payments, the IRS said.
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Our team of experienced professionals is committed to delivering personalized and efficient financial solutions. Whether you're a small business owner or managing an established company, we tailor our services to meet your unique needs. From daily bookkeeping to strategic financial and tax planning, we're here to support your success.
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AICPA joins coalition to fight intensifying tax scams, schemes:
AICPA joins coalition to fight intensifying tax scams, schemes:
To read full article: https://www.journalofaccountancy.com/.../aicpa-fighting...
The Coalition Against Scam and Scheme Threats (CASST), convened at the request of IRS Commissioner Danny Werfel, includes federal and state tax agencies, software and financial companies, and national professional associations.
ICPA involvement:
"Since its inception, the AICPA has worked tirelessly to protect the profession's interest, benefiting taxpayers, tax practitioners, and tax administration. For over a decade, the AICPA has been vocal about identity theft and the need to protect taxpayers and practitioners," said Melanie Lauridsen, vice president–Tax Policy & Advocacy for the AICPA.
"We believe that together, through the reduction of fraud, we can work to protect taxpayers from those that look to exploit the vulnerable," she said.
Types of scams:
CASST is needed because of "a rising tide of scams and schemes that try to exploit taxpayers and find gaps in government and industry defenses" by bad actors and on social media, Werfel said. "Our goal is to have a mass effect on this expanding problem."
During the past tax season, more scams and schemes have circulated, including ones involving the fuel tax credit, household employment taxes, and the sick and family leave credit. The IRS has seen hundreds of thousands of dubious claims where it appears taxpayers are claiming credits for which they are not eligible, leading to refunds being delayed and taxpayers being required to provide documentation for the claims.
Numerous other scams and schemes continue to circulate on social media. They are highlighted through efforts including the annual IRS Dirty Dozen list. The new approach, the IRS said, will increase collaborative efforts to raise awareness and education about schemes, not just during tax season.
Coalition's plans:
The coalition will work toward new protections by the 2025 filing season, including steps to combat "ghost preparers," who prepare tax returns for a fee but do not sign the tax return. This leaves the taxpayer at risk for what often are claims for inflated tax refunds since their name is the only one on the return.
The scams do not target individual taxpayers only. CASST also will focus on scammers who exploit weak points in government systems and the private sector, the IRS said.
Background:
The coalition is an outgrowth of the Security Summit, which the same groups started in 2015 to stem the growth of tax-related security theft. While tax-related identity theft remains a concern, improved protections initiated through the summit have protected millions of taxpayers and prevented billions of dollars of fraudulent payments, the IRS said. promoters are behind many of the questionable ERC claims.
Businesses with dubious ERC claims have another chance with the IRS:
Businesses with dubious ERC claims have another chance with the IRS: https://www.journalofaccountancy.com/.../irs-voluntary...
IRS Practice & Procedure:
The IRS will reopen its voluntary disclosure program (VDP), allowing businesses to correct questionable employee retention credit (ERC) claims at a discount (Announcement 2024-30).
The revised VDP, which will end Nov. 22, allows businesses to repay improper ERC credit amounts, less a 15% discount, and allows them to avoid future audits, penalties, and interest, the IRS said Thursday in a news release. The terms are not as favorable as the first VDP, which included a 20% discount. That VDP, which ended in March, resulted in over 2,600 applications from ERC recipients with disclosures totaling $1.09 billion in credits.
The IRS will not charge program participants' interest or penalties on any credits they repay on time. However, if employers cannot repay the required 85% of the credit at the time they sign the closing agreement, they will be required enter an alternative payment arrangement such as an installment agreement and may be required to pay penalties and interest in connection with that payment arrangement.
The Service also said Thursday that it plans to mail up to 30,000 new letters to reverse or recapture potentially more than $1 billion in improper ERC claims. Thousands more mailings on additional questionable payments will be made in the fall, the release said.
VDP participation "is especially important given increasing IRS compliance actions involving bad claims," Commissioner Danny Werfel said in the release. "[M]any of them are the result of aggressive marketing tactics to lure unsuspecting businesses into claiming the complex credit. This provides a final window of opportunity for those misled businesses to make adjustments and avoid future compliance action by the IRS."
To qualify for the VDP, employers must provide the IRS with names, addresses, telephone numbers, and details about the services provided by any advisers or tax preparers who advised or assisted them with ERC claims. The reopened VDP applies only to ERC claims from 2021; taxpayers cannot use the VDP to disclose and repay ERC payments from 2020.
The IRS has said repeatedly that unscrupulous promoters are behind many of the questionable ERC claims.
Tax news that affects retirees:
Really good article to read on tax credits! New forms and regulations are coming from the IRS. URL: https://lnkd.in/eZriA9p8
New forms, new regulations: Top changes out of the IRS
The Internal Revenue Service has been hard at work these last few weeks on issues ranging from streamlining reporting requirements for renewable-energy tax credits to finalizing rules on stock-repurchase taxes and crypto transactions. But accountants and tax professionals are keeping their eye on the upcoming election to anticipate more widespread regulatory changes on the horizon.
The Republican party's platform covers a wide swath of industry topics such as increased cryptocurrency interaction, unhindered artificial intelligence innovation and more, with further promises to prolong and make permanent the provisions of the Tax Cuts of Jobs Act of 2017 passed under former U.S. President Donald Trump.
Jonathan Traub, Washington national tax leader and managing principal at Deloitte Tax LLP, told Accounting Today this month that both the TCJA and external provisions such as the New Markets Tax Credit and premium credits for Affordable Care Act beneficiaries would be "front and center" next year.
"It just has to be," Traub said. "It's going to start out with a debate on the debt ceiling, which will set the tone for thoughts around the appetite of the new Congress, whoever the president is, to tolerate additional deficit spending or deficit-financed tax cuts, or whether they will tolerate them at all or not."
Read more: Project 2025 goals would transform wealth management landscape
The Democratic party's platform is set to be released during the convention in August. In the meantime, experts are looking back at U.S. Vice President Kamala Harris' track record to see what legislative priorities the likely nominee could have.
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Harris has historically focused on providing tax relief to those in the sub-$100,000 per year income bracket, as seen through the LIFT (Livable Incomes for Families Today) the Middle Class Act bill she proposed in 2018. The legislation would have provided up to $3,000 in tax credits for those filing as individuals and $6,000 to those filing as joint taxpayers, provided their income was less than $100,000.
Other measures included a proposed bill known as the Rent Relief Act, again for those with income under $100,000 per year, that would establish a refundable tax credit for those paying in excess of 30% of their gross income towards rent and utilities. The legislation drew sharp criticism from those who held that it would benefit landlords more than renters.
"Ultimately, Senator Harris's rent relief bill would fail to address the root causes of the high cost of housing. … Instead, it would wind up benefiting landlords, not significantly improving the lives of renters and carrying a hefty price tag," said experts with the nonpartisan Tax Foundation in a 2018 blog post.
Read more: How Kamala Harris may shift the crucial tax debate in this year's election
For now, accountants and tax experts are accommodating new reporting requirements from the IRS for segments such as renewable energy, cryptocurrencies, corporate stock repurchases and more.
Read more about the agency's recent changes and how different forms are changing in the coming months.
Construction workers unload a turbine blade at the Avangrid Renewables La Joya wind farm in Encino, New Mexico.
Cate Dingley/Bloomberg
IRS introduces condensed reporting for renewable energy tax credits
To help hasten the reporting process for renewable energy and electricity tax credits, the Internal Revenue Service's Large Business and International Division is changing up its filing standards for Forms 3468 and 8835.
If a taxpayer has more than 200 of either Forms 3468 for the investment credits or Forms 8835 for the Renewable Energy Production Credit, they can instead file a single instance of each form with the aggregated credit tally. The filing must have an attached PDF file recording all the necessary information of each facility or property being reported.
This change is in effect for the 2023 tax year.
Read more: IRS offers relief on reporting renewable energy tax credits
Internal Revenue Service headquarters in Washington, D.C.
Andrew Harrer/Bloomberg
Regulations on corporate stock repurchase tax reach the finish line
The IRS, in conjunction with the Treasury Department, published a final rule on June 28 outlining the reporting and payment requirements for corporate stock repurchases encompassed by the Inflation Reduction Act.
Accounting Today's Michael Cohn writes that under the act, which took effect in 2022, stock repurchases are subject to an excise tax equal to 1% of the aggregate fair market value of stock repurchased by certain corporations during the taxable year, subject to adjustments. Eligible deals start after Dec. 31, 2022.
The IRS's final rule requires that tax to be reported on Form 720, "Quarterly Federal Excise Tax Return," which is to be filed alongside the Form 7208, "Excise Tax on Repurchase of Corporate Stock." The filing is required for the first full calendar quarter after the corporation's taxable year ends.
Read more: IRS finalizes regs on stock repurchase tax
The Internal Revenue Service headquarters in Washington, D.C.
Samuel Corum/Bloomberg
Rules on selling, exchanging crypto finalized by IRS
Brokers handling the possession of digital assets for their clients in specific sale or exchange transactions will see changes in reporting requirements under new final regulations from the Treasury and the IRS.
The Form 1099-DA, which the IRS previewed a draft of this year, requires brokers to report on gross proceeds for transactions, adjusted basis on certain transactions, fair market value of assets and other transaction details.
Eligible parties include providers of custodial digital-asset trading platforms and digital-asset kiosks, as well as specified digital-asset hosted wallet providers and processors of digital-asset payments.
"Because of the bipartisan Infrastructure Investment and Jobs Act, investors in digital assets and the IRS will have better access to the documentation they need to easily file and review tax returns," said Treasury acting assistant secretary for tax policy Aviva Aron-Dine in a statement. "By implementing the law's reporting requirements, these final regulations will help taxpayers more easily pay taxes owed under current law, while reducing tax evasion by wealthy investors."
Importance of budgeting
Budgeting and forecasting are essential components of financial management for small businesses. They provide a framework for managing financial resources, planning for the future, and making informed decisions. Here’s a comprehensive guide on budgeting and forecasting:
Budgeting:
1. Understand the Importance of a Budget:
A budget helps you plan for future expenses, control costs, and ensure that you have sufficient funds to operate your business.
It provides a financial roadmap, helping you to allocate resources efficiently and avoid overspending.
2. Components of a Budget:
Revenue Projections: Estimate your expected income from all sources (sales, services, investments).
Fixed Costs: These are regular expenses that don’t change, such as rent, salaries, insurance, and loan payments.
Variable Costs:
These fluctuate with business activity, such as utilities, raw materials, and commissions.
One-Time Expenses:
Include any significant, infrequent expenses like equipment purchases or office renovations.
Contingency Fund: Set aside funds for unexpected expenses or emergencies.
Reach out to learn more.
7/24/2024
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Bookkeeping is crucial for the success and sustainability of any business, regardless of its size or industry. Here are several reasons why bookkeeping is important for your business:
Financial Accuracy and Management
A. Record Keeping
Accurate Records:
- Ensures that all financial transactions are accurately recorded and organized, which is essential for tracking income, expenses, and profits.
Audit Trail:
- Provides a clear audit trail of all financial activities, which is useful for both internal reviews and external audits.
B. Financial Statements
Preparation of Financial Statements:
- Enables the creation of accurate financial statements, such as income statements, balance sheets, and cash flow statements, which are critical for business analysis and decision-making.
Compliance:
- Ensures compliance with legal and regulatory requirements by maintaining accurate and up-to-date financial records.
7/28/2024
Financial Coaching
Financial coaching is crucial for various reasons, touching on both personal well-being and broader societal benefits. Here is a detailed exploration of why financial coaching is important:
1. Enhances Financial Literacy
- Understanding Finances: Financial coaching helps individuals grasp complex financial concepts, such as budgeting, saving, investing, and debt management. This increased financial literacy empowers people to make informed decisions about their money.
- Long-term Benefits: Better financial literacy leads to more strategic planning and smarter financial decisions, which can have long-lasting positive effects on an individual’s financial health.
2. Promotes Financial Stability and Independence
- Building Savings: Coaches guide clients in establishing and maintaining emergency funds and other savings plans, which are crucial for financial stability.
- Reducing Debt: They help in creating effective strategies for debt repayment, thereby reducing financial stress, and promoting independence from debt cycles.
3. Improves Financial Behaviors
- Healthy Habits: Financial coaches encourage positive financial behaviors, such as consistent saving, mindful spending, and careful investment. This behavioral change is essential for long-term financial health.
- Accountability: Regular sessions with a coach provide accountability, ensuring that individuals stick to their financial plans and goals.
4. Customized Financial Planning
- Personalized Advice: Financial coaching offers tailored advice that suits an individual’s unique financial situation, goals, and challenges. This personalized approach is more effective than generic advice often found online or in books.
- Goal Setting and Achievement: Coaches assist in setting realistic financial goals and create step-by-step plans to achieve them, facilitating progress and boosting confidence in handling finances.
5. Stress Reduction and Improved Mental Health
- Reducing Financial Anxiety: Managing finances effectively with the help of a coach can significantly reduce financial anxiety and stress, leading to improved overall mental health.
- Empowerment: Feeling in control of one's financial future can be empowering and can positively impact other areas of life, including personal relationships and professional performance.
6. Enhances Wealth Building
- Investment Strategies: Financial coaches provide guidance on investment opportunities, helping clients build wealth through informed and strategic investments.
- Wealth Protection: They also educate on protecting wealth through insurance, retirement planning, and estate planning, ensuring long-term financial security.
7. Addresses Specific Financial Challenges
- Debt Management: Coaches help individuals tackle specific issues such as excessive debt or poor credit scores by developing customized plans and providing ongoing support.
- Major Life Events: They assist in navigating significant financial events like buying a home, starting a family, or retiring, ensuring clients make the best financial decisions during these times.
8. Increases Financial Inclusion
- Access to Resources: Financial coaches often provide access to financial resources and tools that individuals might not be aware of or know how to use effectively.
- Empowerment for All: By offering support to underserved communities, financial coaching can help bridge the gap in financial education and empower people from diverse backgrounds to improve their financial situations.
9. Encourages Long-term Financial Planning
- Future Preparation: Coaches emphasize the importance of long-term financial planning, ensuring clients are prepared for retirement, unexpected expenses, and other future financial needs.
- Sustainable Habits: They help cultivate sustainable financial habits that support long-term financial health and stability.
Conclusion
Financial coaching plays a vital role in enhancing financial literacy, promoting stability, improving behaviors, reducing stress, and aiding in wealth building. It provides personalized, actionable advice and ongoing support, which are essential for managing and optimizing financial health effectively.
6/12/2024
Choosing the right Accountant
Choosing the right accountant is crucial for several reasons, each impacting the financial health, compliance, and overall success of your business or personal finances. Here are key reasons why it's important:
Accurate Financial Management:
- A skilled accountant ensures that your financial records are accurate and up-to-date. This is essential for understanding the financial position of your business, making informed decisions, and planning for the future.
Tax Compliance and Optimization:
- Accountants keep you compliant with tax laws and regulations, helping to avoid penalties and fines. They also identify opportunities for tax savings, ensuring you take advantage of all available deductions and credits.
Strategic Financial Planning:
- A good accountant provides valuable insights and advice on financial planning and strategy. They can help you create budgets, forecast financial trends, and develop long-term financial goals.
Efficiency and Time Savings:
- Managing finances, bookkeeping, and tax preparation can be time-consuming and complex. An experienced accountant handles these tasks efficiently, freeing up your time to focus on core business activities.
Risk Management:
- Accountants help identify and mitigate financial risks. They can spot potential issues early and provide solutions to prevent financial problems, ensuring the stability and sustainability of your business.
Regulatory Compliance:
- Businesses must adhere to various financial regulations and reporting standards. Accountants ensure that your financial practices comply with relevant laws, reducing the risk of legal issues and audits.
Growth and Expansion Support:
- When considering expansion, mergers, or acquisitions, an accountant provides critical analysis and advice. They help assess the financial viability of these opportunities and structure deals to your advantage.
Financial Transparency:
- For businesses, especially those seeking investment or loans, transparent and well-organized financial statements are crucial. A competent accountant ensures clarity and accuracy, which builds trust with investors and lenders.
Problem-Solving and Adaptability:
- Financial challenges and unexpected issues can arise. A knowledgeable accountant is equipped to handle such situations, providing solutions and adapting strategies to navigate financial difficulties.
Long-Term Financial Health:
- By consistently monitoring and managing your finances, a good accountant contributes to the long-term financial health and growth of your business or personal finances.
In summary, choosing the right accountant brings expertise, reliability, and strategic support to your financial management, ultimately contributing to your success and peace of mind.
6/5/2024
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