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Why Business Owners Should Entrust Payroll to a Certified Accountant

Fri, 05 Jan 2024 17:24:04 GMT

Business owners are constantly juggling numerous responsibilities to keep their enterprises thriving. One vital aspect that demands careful attention is payroll management, as it ensures employees are accurately compensated. While some business owners may be tempted to handle payroll in-house or seek budget-friendly alternatives, hiring a certified accountant can streamline operations and mitigate risks. This article delves into why professional accounting assistance for payroll management is a strategic choice.

Ensuring You Are Following the Law

Navigating the labyrinth of tax and employment laws can be a daunting task. Certified accountants are well-versed in the ever-evolving landscape of payroll compliance, ensuring that your business adheres to all relevant laws and regulations. From tax withholding to overtime pay, a certified accountant possesses the expertise to keep your payroll processes compliant, minimizing the risk of costly penalties and legal complications.

Spending Less Time on Payroll

Handling payroll involves a multitude of time-consuming tasks, from calculating wages and deductions to staying updated on tax codes. By entrusting this responsibility to a certified accountant, business owners can free up valuable time to focus on core competencies, strategic planning, and business growth. This not only enhances productivity but also allows for a more concentrated effort on activities that directly contribute to the success of the business.

Reducing the Risk of Errors

Payroll errors can have consequences that affect employee morale, as well as potentially lead to legal issues. Certified accountants bring a level of attention to detail that is crucial in payroll processing. Their expertise minimizes the likelihood of errors, ensuring that employees are compensated with accuracy and satisfaction. This accuracy is not only vital for maintaining employee trust but also for building a solid financial foundation for the business.

Saving Money With Professionalism

While some business owners may view outsourcing payroll to a certified accountant as an added expense, in contrast, it is a cost-effective solution in the long run. Certified accountants are equipped with the knowledge to optimize payroll processes, identify potential cost-saving measures, and reduce the risk of financial discrepancies. The investment in their services often results in significant savings by improving overall financial efficiency.

Keeping Data Safe From Criminals

Payroll processing involves handling sensitive employee information, making data security a top priority. Certified accountants employ advanced security measures to protect payroll data from unauthorized access, ensuring confidentiality and compliance with data protection regulations. Entrusting payroll to a certified professional provides business owners with peace of mind, knowing that sensitive information is handled with the utmost care and security.

Adapting as Business Growth Changes

Businesses are dynamic entities that can experience fluctuations in size and structure regularly. Certified accountants are equipped to handle the scalability and adaptability required for the changing payroll needs during periods of change. Whether your business is expanding, downsizing, or implementing new compensation structures, a certified accountant can seamlessly adjust payroll processes to align with your evolving business requirements.

Integrating Modern Payroll Technology

Certified accountants leverage cutting-edge payroll software to streamline processes, enhance accuracy, and provide real-time insights. This integration not only improves efficiency but also ensures that businesses stay ahead in the digital age. Adapting to the latest payroll tools is a good strategy for optimizing payroll management to achieve the most accurate results without a lot of stress involved.

Beyond the day-to-day tasks of payroll processing, certified accountants bring a wealth of financial knowledge to the table. Their expertise extends beyond simple number crunching, allowing them to offer valuable insights and strategic advice. Business owners can benefit from an accountant's financial sharpness, gaining a partner who contributes to long-term financial planning and decision-making. Contact us at Williams & Associates Tax Services for more information about our payroll services.

Full-Service Accounting Firms: The Affordable Alternative to Hiring a CFO

Mon, 06 Nov 2023 17:52:16 GMT

Business financials can feel like a maze, especially for small to medium-sized enterprises that can't afford a full-time Chief Financial Officer (CFO). However, the good news is that there are viable alternatives that can still ensure your business's financial health.

Turning to a full-service accounting firm to outsource key CFO responsibilities might just be the solution you're looking for. This approach helps manage costs and gives you access to a wide range of professional expertise for your diverse financial needs.

Here are a few crucial CFO tasks that you can effectively outsource to ensure smooth financial operations without the hefty cost of hiring a full-time CFO.

Financial Reporting

A full-service accounting firm can immensely help with financial reporting, an important responsibility that a CFO typically oversees. These firms have teams of seasoned professionals who are skilled in creating detailed, accurate, and timely financial reports.

These reports, including balance sheets, income statements, and cash flow statements, are crucial for understanding the financial health of your business. For example, balance sheets can help you identify your assets, liabilities, and equity, while income statements show your revenues and expenses.

Cash flow statements provide an overview of the movement of cash in and out of your business. The aim is to help you make informed decisions and set realistic business goals since you'll have a pretty good idea of your company's financial standing.

A full-service accounting firm can also provide a broader perspective and deeper insights into your financial data. They can interpret complex financial reports and translate them into understandable, actionable strategies. This is particularly beneficial for small to medium-sized businesses that may lack the in-house expertise to analyze such information.

The firms can identify patterns, trends, and potential issues, offering guidance and recommendations to improve your financial standing.

For instance, they can advise on cost-cutting measures or revenue-boosting strategies, helping you achieve long-term financial success. Such in-depth reporting can not only reduce costs but also elevate the quality of financial management within your organization.

Risk Management

Outsourcing risk management to a full-service accounting firm brings a distinct advantage, as these firms have a comprehensive understanding of various financial risks due to their extensive experience dealing with diverse businesses.

They can devise and help you implement effective strategies to manage risks related to credit, market, operational, and liquidity, among others. Their proficiency in identifying potential risks and their consequences allows them to implement precautionary measures, reducing the likelihood of financial losses.

For instance, they can help draft policies for managing debt, ensuring you don't fall into a crippling cash crunch. These firms keep abreast of constantly evolving financial regulations and compliance requirements, giving you the benefit of staying compliant without spending time navigating complex financial laws on your own. This helps mitigate risks that could arise from non-compliance, such as fines or other legal consequences.

A good accounting firm can also design recovery plans to ensure your business's resilience in the face of unexpected financial setbacks. This level of risk management usually requires a team of experts, which a CFO conventionally leads. However, a full-service accounting firm can offer the same level of service at a fraction of the cost.

In addition to risk management, these firms can help develop a robust internal control system—a conventional CFO responsibility. They can ensure that your company's assets are used efficiently and protected against fraud. They can also verify the accuracy and reliability of your accounting data while ensuring compliance with policies, laws, and regulations.

Such quality service delivers value beyond cost-saving, paving the way for sustainable business growth. Reach out to Quality Bookkeeping Services today to learn more about how we can help you with CFO responsibilities and other financial services for your business. Our expert team is committed to providing top-notch, personalized solutions to meet your unique financial needs.

Full-Service Accounting Firms | Quality Bookkeeping Services

Tue, 10 Oct 2023 14:21:42 GMT

Turning to a full-service accounting firm to outsource key CFO responsibilities might just be the solution you're looking for. Read to learn more.

Business Tax Returns: Mistakes and Precautions

Mon, 28 Aug 2023 14:07:36 GMT

Many businesses might make mistakes when filing their tax returns. These mistakes can waste time and cost money. Below are examples of mistakes and tips on how to avoid the mistakes.

Common Mistakes

Multiple mistakes can affect your tax filing and sour your relationship with the Internal Revenue Service (IRS). Below are some of these mistakes.

Missing Deadlines

Missing tax-filing deadlines complicates your situation in several ways. For one, you must request an extension to file the returns past the deadline, which gives you more work. Secondly, you might incur a penalty depending on how late you are. Lastly, you also incur interest on the taxes you owe. The more you delay, the more these complications and penalties accrue.

Sending the Wrong Forms

Your business nature determines the forms to use when filing your taxes. The industry, number of employees, ownership, and legal structure determine the specific forms, with the legal structure being the largest determinant. For example, limited liability companies (LLCs) and C corporations use different forms. Filing with the wrong forms is a mistake you must correct.

Making Erroneous Entries

The IRS expects you to fill all the forms with the correct information. Mistakes that complicate your filing include:

Using an incorrect Social Security number
Making a typo in your or your business name
Making calculation errors
Entering the wrong address
Entering incorrect bank account numbers

In short, any mistake in any of the documents requires correction.

Forgetting Backup Documents

The IRS expects you to provide supporting evidence or documents for relevant submissions. For example, you must provide documentary evidence such as:

Receipts for expenses
Bills
Cancelled checks
Invoices

Any claim you make without supporting evidence might trigger complications.

Mixing Expenses

Many people experience taxation complications because they mix business and personal lives or finances. A common mistake is submitting personal expenses as business expenses. For example, you should not submit personal travel expenses as business travel costs. Again, this risk underscores the need for keeping impeccable records.

Making Incorrect Deductions

Incorrect deductions are wrong whether you make them intentionally or unintentionally. The IRS expects you to deduct only the ordinary and necessary expenses your business needs to run. Your business determines which deductions are legitimate.

Making unnecessary deductions exposes you to the risk of a tax audit, which wastes your time and exposes you to further tax risks. On the other hand, leaving out necessary deductions costs you money.

Tips to Avoid the Mistakes

Take relevant measures to get things right the first time and avoid complications. Below are tips that can help.

Use the Right Team

Ensure the right person or team in your business handles the tax returns if you are not doing it alone. The person should understand the business and its tax obligations. Experience with business tax returns is also advisable.

Remember, you don't have to handle all your tax issues outside. Outsource the services if you don't have the right in-house talent. Outsourcing is beneficial because you get a professional with extensive experience handling tax matters for similar businesses.

Don't Leave Things for the Last Minute

Your path to smooth and accurate tax filing does not begin when the filing is due. Rather, it never ends because you need to keep immaculate records daily in business. Do not wait until the last minute to start scrambling for documents and records to use. Always maintain impeccable bookkeeping (that you can also outsource) so you just plug in data at filing time.

Contact Williams & Associates Tax Services for all your tax and accounting services, and stay focused on your core business services. We have an incredibly professional team with over 50 years of experience.

6 Accounting and Bookkeeping Tips for Your Online Business

Mon, 10 Jul 2023 18:44:38 GMT

Online businesses face many accounting challenges. From managing inventory to keeping track of evolving tax laws, your e-commerce business should remain up-to-date with bookkeeping to avoid fines and losses.

Proper accounting will also help you evaluate business performance so you can make the right decisions to maximize profit and reduce your tax bill. Here are six tips to consider when setting up your accounting and bookkeeping workflows.

1. Don't Mix Business With Pleasure

When running an online business, you may find it convenient to mix personal and business transactions. This happens when you use a personal bank account or credit card to process payments and collect revenue.

However, pooling your personal and business expenses makes it challenging to keep track of cash flow, profits/losses, and business receipts. Furthermore, you'll have difficulty reconciling business expenditures for tax purposes.

A better strategy is to set up a business account and use expense-tracking software to compile incoming and outgoing transactions. A dedicated business account will streamline your bookkeeping tasks because you won’t need to comb through personal transactions.

2. Use Efficient Bookkeeping Software

One advantage of running an online business is that most transactions are in digital form. Therefore, you can leverage software to keep track of company operations in a quick and error-free manner. While there are many bookkeeping tools in the market, ensure that your chosen software can automatically reconcile transactions, calculate tax rates, and store records securely in the cloud.

Using the right bookkeeping software will save you time and money while making collaboration easy. For example, you can share financial statements and transaction history with a tax accountant in real time. This helps you receive an ongoing tax review and appropriate guidance throughout the year. You can also adjust permissions for your employees to maintain the accuracy and security of your financial records.

3. Develop a Plan for Reimbursing Business Expenses

During day-to-day operations, you may have to pay for business expenses using personal funds. Because such transactions are tax deductible, it's a good idea to reimburse yourself for these expenses.

Record the dates when reimbursements were made, along with a description of each expense. Reimbursement records will be critical in reducing your tax liability and streamlining the tax filing process.

4. Maintain Liquidity

A healthy cash flow is critical to the success of your online business. With enough cash, you can keep up with business expenses, minimize debt, and invest in growth opportunities.

The challenge your e-commerce business will face is accurately calculating income. For example, a $500 sale doesn't necessarily equate to $500 in revenue. You may need to deduct merchant fees, affiliate marketing fees, or payment processing fees from each transaction.

Good accounting practices will help you manage cash flow and avoid unnecessary spending. Additionally, if you offer payment plans for your products/services, maintain a ledger of accounts receivable and ensure that your customers are making payments on time.

5. Plan Your Expenses and Forecast Sales Revenue

When operating online, don't forget to keep track of critical business expenses such as inventory, website costs, and software licenses. Having a budget will increase transparency and help you manage expenditures.

Use bookkeeping software to balance your revenue versus expenses. You can also identify cost-saving opportunities and forecast sales to estimate profits and losses.

6. Keep Up With Tax Requirements

Tax laws can change quickly in the world of e-commerce. For example, you may have varying tax requirements based on sales volume, business assets, and where you sell your products. Physical assets such as factories and warehouses may also be subject to property taxes. Ensure your business complies with all tax requirements to avoid fines and liens.

With proper bookkeeping, you'll cut costs and increase the margins for your online business. If you need professional accounting and bookkeeping services, look no further than Williams & Associates Tax Services . We have years of experience in accounting, tax, and bookkeeping services to help your business mitigate costs and boost efficiency. Contact us to get started today.

Reasons Why You Shouldn’t Ignore Potential Bookkeeping Problems

Mon, 19 Dec 2022 14:29:17 GMT

Do you find yourself doing the minimum bookkeeping required to function, handing it off to others, or procrastinating because you aren't sure you're doing it right? If so, you're not alone. But rather than hiding from your bookkeeping, a smart business owner is proactive with it in order to avoid problems.

Most small business owners do bookkeeping — not because they enjoy it or because they're good at it, but because they have to. How can embracing the good, the bad, and the ugly of your bookkeeping help you in the long run? Learn four reasons why proper bookkeeping matters more than you might think.

1. Small Problems Turn Into Big Ones

Small problems can be easy to ignore, but many of these will eventually fester into bigger ones. An employee who skims a little off the top a few times will often become emboldened to take more and more.

A small imbalance in an account each month will eventually add up to a large amount of missing money. Forgetting to bill a single customer could turn into forgetting to bill many customers.

The best way to prevent these big, expensive problems is to catch them when they're small and less costly. You may need to ask more questions, seek out professionals, and accept advice to make changes.

2. You May Be Legally Responsible

Both business owners and employees who handle certain accounting tasks may be held liable for both fraud and errors. One of the biggest examples is your income tax return. When a sole proprietor signs their income tax return, the IRS holds them responsible for everything it contains — regardless of whether or not they knew anything was wrong.

In addition, you may be held personally liable for missing payroll tax remittances, misclassification of employees, failure to buy workers' compensation, or mingled business and personal money. Protect yourself by ensuring that things are done right according to legal and accounting standards.

3. You Could Be Making More Money

If you aren't sure of the accuracy of your books, how do you know what your business is really earning? Are your product expenses correct? Have you billed all customers? Are employees handling cash properly? Are your financial statements right? If you can't answer yes with confidence, you don't know what you may be missing.

The best way to build confidence is to develop a strong bookkeeping system, work with professionals, ask questions, and do research to find satisfying answers or implement better processes.

4. Problems Are Eventually Found

Even though some problems — both intentional and unintentional — may not be found for a long time, they usually will eventually show up. The question is, how do you want them to be found? Do you want the IRS to find them in an audit? Do you want employees to uncover things that cause bad word of mouth? Or do you want future buyers or investors to find them during due diligence?

The answer to all these questions is probably no. So the best approach is to be determined to find potentially embarrassing, expensive, or legally questionable issues yourself and make them right as soon as possible.

Where Can You Start?

Which of these reasons to dig deeper into your books is the most compelling to you? Whether you want to ensure the best profit, prevent fraud and theft, or protect your company's reputation, start by meeting with the bookkeeping professionals at Quality Bookkeeping Services Inc .

We'll work with you to identify your concerns and goals, craft a solid bookkeeping system, and answer all your accounting questions. Call today to make an appointment or learn more.

How to Reduce Your Small Business Tax Bill

Wed, 12 Oct 2022 16:12:58 GMT

For a small- or medium-sized business owner, taxes may be frustrating. Luckily, you can lower your tax burden as a sole trader by using a variety of tax-saving measures. Explore these preceding strategies to find a means to lower your tax liability for the rest of your life.

Fund a Retirement Plan

You may reduce your tax liability by putting up and supporting a retirement plan for you or your staff. Make sure it is a qualifying plan so you will enjoy the tax breaks. For postponement of taxes on profits until their collection, it needs to be a method accepted by the IRS. IRAs and designated contribution options like 401(k)s and 403(b)s are examples of these retirement funds.

Take Tax Credits to Lower Your Business Income

The national government uses tax credits to incentivize organizations to take action. In turn, there are expectations that society will benefit as a whole. Because of this, you can claim tax credits for employing staff and following policies.

Also, offering health insurance to staff is grounds for a tax credit. Many plans are a component of the general business credit. It works as a broad category, so it's workable that you meet some of its requirements.

Adopt an Accountable Plan

Put in place an accountability plan if you have workers that make business-related purchases. You can compensate them for driving their cars for work-related purposes, for example. This plan can help the firm avoid making payroll taxes and employee revenue taxes. You pay employees' expenditures without requiring them to classify the money as income, and you’ll avoid some payroll taxes like FICA and income taxes.

Additionally, the W-2 statement won’t have a recording of the repayments because the staff members do not get charged for the payments.

Time Your Business Income and Expenses

You may time your revenue by shifting something from one year to the next. But make sure you determine which year you expect to pay the highest taxes first. Examine your costs at the end of every year and prepay part of those sums.

Making purchases can also increase spending and a drop in revenue because it involves loading up on merchandise at the close of the calendar year. This can help ensure you have enough for the inaugural quarter of the following year.

Write Off Bad Debts to Reduce Income

A company using accrual accounting closes at an excellent time to check accounts. First, find the clients who are least likely to pay. To avoid paying taxes on those amounts, you may write off the money they owe as bad debts; consider loans given to customers, merchants, or workers that fail to repay as bad debts. Exclude these debts from your revenue from operations.

Check With a Qualified Tax Advisor

Speak with a tax expert to save taxes before adopting a plan that may impact your business's tax filing. Choose someone who can assist you all year long and not just during tax season. If you ever have an IRS audit, consider hiring an expert to represent you. Choose an agent who has gotten approval from the IRS and who has completed a three-part test to get the accreditation required.

As a small company owner, you may use thoughtful planning to keep much more of your funds in your pocket. This approach will help lower your taxable revenue. Speak with a tax expert to confirm if you are eligible for the possible savings mentioned in this blog. Contact Williams & Associates Tax Services for extra information on how to lower your small business's tax burden. We remain committed to assisting you.

Which Type of Accounting Help Does Your Business Need?

Mon, 01 Aug 2022 20:00:25 GMT

Every business needs one or more individuals who manage and guide its finances. But business owners also have a wide range of choices in who they hire or work with to do this job. Which is right for your small enterprise? The answer depends on what you need done and what your goals are.

Here are a few key things to know about the primary accounting functions in companies and what they mean for the business.

1. Bookkeeper

One of the most common positions that small businesses hire is a bookkeeper. This person does most or all of the day-to-day management and entry of financial data. They often enter transactions, balance bank accounts, create invoices, write checks, correct errors, manage payroll, and assign costs to the right places.

Depending on how large the workload and what your budget is, you may work with a bookkeeping service to provide trained professionals or hire one on a part-time or full-time basis. Eventually, this position might even oversee data entry clerks as well. However, keep in mind that a bookkeeper does the legwork and guides you in correct accounting procedure, but they're not trained business strategists.

2. Controller

A controller is a key accounting position, but it's not one with which many people are familiar.

Controllers, as their title suggests, oversee (or control) the daily accounting operations of a business. They may manage other people — like bookkeepers, accountants, and assistant controllers — who do the on-the-ground work of data entry and analysis. The controller is responsible for ensuring regulatory compliance, proper application of accounting standards, preventing fraud, and overseeing other high-level finances.

3. Chief Financial Officer (CFO)

The CFO position is a management position. But, unlike the controller position, the CFO's job is largely to look forward rather than backward. A CFO makes recommendations to management, participates in high-level meetings, and helps implement overall business strategy. They serve as a captain for your financial ship.

For example, a CFO would take a past quarterly report prepared by the controller (using data entered by a bookkeeper) and use it to decide how to budget for the next quarter. They look for trends in the data to determine if costs are rising, for example, and determine if the company should renegotiate certain contracts or raise prices on a product line. They oversee the controller in implementing these changes.

4. Certified Public Accountant (CPA)

Not all accounting work for a small company must be handled by dedicated employees. A certified public accountant, or CPA, often works independently for client businesses. This allows you to contract with them for a few things, such as quarterly reviews or tax preparation, or a lot of tasks. CPAs generally don't do the daily work of transaction entry, but they can oversee your staff or their own bookkeepers in doing so.

By working with the right outside CPA, you gain access to highly trained individuals and an array of services without breaking the bank. They can help by answering questions about accounting procedures and how to handle specific situations. They’ll spot trends and patterns in your reports, protect against fraud, set up systems, and make business decisions.

Where to Start

Which of these important — but different — accounting positions does your small business need? Is it time to work with more than one person or add a new position to your staff?

No matter how you already manage the company's finances and what your budget or goals are, the best place to begin is by meeting with the team at Williams & Associates Tax Services . We'll assess your situation and recommend the right services to fit it. Call today to make an appointment or learn more.

Do You Need Forensic Financial Services?

Wed, 08 Jun 2022 21:16:59 GMT

Running a business requires a lot of work, and much of that work involves finances. With all the constant changes in laws and regulations, it can be hard to keep up. Luckily, forensic financial services are available to help in many sticky situations.

They can run a simple analysis of your business's finances, or they can spot embezzlement and fraud. If you would like to know more, check out these three reasons you may need forensic financial services.

1. Audits
An audit is a review of your finances to ensure everything is being reported and calculated correctly. Many businesses hire their own auditors to ensure their business is compliant with the IRS to prevent future complications. However, the IRS may also force your business to undergo an audit.

Computer screening and random selection may pick your business for audit if your returns don't match what is considered normal. However, many IRS audits are triggered by red flags on your tax return. This may include misreporting your income to reduce your income taxes, but it can also include excess deductions. If you deduct more than you claim to bring in, the IRS may believe you are under-claiming income or over-claiming deductions.

Similarly, if you have excess expenses that don't match your income, the IRS may fear you are misreporting income. Other possible red flags include large cash transactions, misclassification of employees, and frequent business loss claims, especially in the first year of business.

In addition to ensuring you are compliant with the IRS, audits can help identify other problems, such as missing money that may indicate theft. It can also help determine if you are spending too much or too little money on a specific area.

2. Embezzlement
Simply put, embezzlement is theft, and it usually involves stealing money. There are two main ways an embezzler steals money. First, they may do it slowly by "skimming off the top." However, others take large amounts at once and then flee. Naturally, it's easier to spot embezzlement if someone takes a large amount at once, but slow embezzlement may take your company years to realize while the employee continues to steal.

Forensic financial services can help spot any potential embezzlement even if you aren't sure it's happening. This allows you to catch the criminal in the process. If the embezzler is already gone, you may need forensic financial services to help track them down.

Regardless of how fast the money was stolen, you also need to identify exactly how it happened, so it can't happen again. This may mean putting in new policies or system upgrades. Forensic services help spot where and how the embezzlement occurred.

3. Fraud
Fraud comes in all shapes and sizes, which can make it hard to identify. Above all, however, someone who partakes in fraud does so willingly. Therefore, unless there is glaring proof of willing fraud, you won't get arrested for a few mistakes on your taxes. However, if you have an employee who is willingly committing tax fraud (perhaps to better steal money from your company), you may be in trouble if the IRS discovers the fraud.

However, fraud may come in other forms too. An employee may be lying about their identity, their status, and much more. If an employee is not legally allowed to work or isn't reporting their income under their real name, you may get in trouble for not doing your due diligence. Even if the employee is legally allowed to work, a fake degree and job history may make them "qualify" for a job they can't handle, which can impact your business's bottom line.

Proper bookkeeping and finance recording are paramount to a business. It helps prevent money loss and IRS issues. If you would like to know more, or if you are ready to partner with a great financial and tax services provider, contact us at Williams & Associates Tax Services today.

5 Types of Bookkeeping Errors and How to Avoid Them

Tue, 26 Apr 2022 16:11:23 GMT

Errors in bookkeeping can have a large impact on your finances compared with their size and the ease at which they happen. The best way to combat these errors is to understand what can happen and the best ways to either catch them or prevent them outright. Here are five of the primary forms of bookkeeping data entry errors and what you can do about them.

1. Errors of Omission

Simply put, this error describes a transaction that was not recorded. These are vendor invoices that get lost on someone's desk, checks that aren't recorded, or cash payments that don't get added to the cash balance.

The most common way to prevent missed transactions is to increase organization, standardize procedures, and ensure enough time for bookkeeping tasks. In addition, regular reconciliation helps identify missing items after the fact.

2. Errors of Transposition

Transposition refers to switching two digits in a string of numbers. It's a simple and common data entry error, particularly in busy offices. Rather than entering an invoice for $490, the amount is recorded as $940.

The good news is that the transposition of two adjacent numbers is often identified because the resulting imbalance is divisible by 9. In this example, the difference of $450 is divisible by 9. If a transposition does get by you, diligent reconciliation of bank statements, payment accounts, credit card entries, and other accounts will help make them visible.

3. Errors of Commission

To make a commission error means to enter a transaction into the wrong sub-ledger. It's a payment applied to the wrong customer account or the wrong invoice. It could also be an expense recorded as being office supplies when it should really be shipping supplies. In this case, your financial statements will be correct, but the sub-account (such as the vendor's amount due) is incorrect.

Reconciliation is a good way to catch these errors. Compare vendor statements as they arrive, for instance, to confirm that your accounts payable ledger has the same information as the vendor's accounts. Having an outside bookkeeper or accountant do checkups on your books can also provide an independent eye to notice changes in patterns that may indicate errors of commission.

4. Errors of Reversal

Double-entry bookkeeping keeps everything balanced through the use of either debits or credits. But this means that you can occasionally post a transaction to the wrong side of this equation. An incoming vendor invoice might be accidentally posted as an outgoing customer invoice, for example.

One way to prevent this category of mistakes is to separate accounting tasks, both physically and when they are done. Keeping income transactions apart from expense transactions — and keying them at different times — creates more continuity and leaves less chance of making the wrong choice.

5. Errors of Principle

As you manage the books for your small business, you'll learn about the Generally Accepted Accounting Principles (GAAP). GAAP creates standards that businesses abide by in order to ensure that statements are reasonably reliable and can be compared on equal terms. So when an entry does not follow GAAP standards, it creates an error of principle.

The more you and your staff learn about GAAP, the better you will be at following its guidelines. If you have questions about how to enter a transaction, consult with an accountant or bookkeeper rather than guessing. And as you come to understand why certain rules are important or beneficial, you can reason better on how to apply them in your bookkeeping.

Where to Learn More

Want to know more about preventing and fixing these or other common mistakes made during bookkeeping? Start by meeting with the accounting pros at Williams & Associates Tax Services . We'll help you devise better bookkeeping systems, reconcile and do regular reviews, and understand how GAAP helps you. Call today to make an appointment.

What Business Owners Should Know About Embezzlement

Fri, 25 Feb 2022 20:36:21 GMT

Embezzlement constitutes a serious crime and can lead to the collapse of a business. From small businesses to the largest multi-national corporations, embezzlement can wreak havoc on the financial health of both the business and its shareholders and owners.

How Embezzlement Typically Occurs in a Business Setting
Embezzlement comes in many varieties, but the most common forms include:

Theft. The most common form of organizational embezzlement, theft, involves the direct transfer of funds from business-controlled bank accounts to the thief's account.
Check/invoice fraud. This method involves creating doctored checks or forged invoices. The perpetrator then sends the invoice to the business for payment.
Credit card fraud. With credit card fraud, the perpetrator uses a company-owned credit or charge card to make personal purchases.

Other methods of embezzlement include payroll fraud, fraudulent lending, and outright property theft.

Patterns of Embezzlement in Organizations
Often, when a perpetrator embezzles company property or funds, they typically do not make large transfers. Instead, they usually spread their crimes across several smaller incidents in order to stay undetected by audits and existing organizational accounting controls.

A forensic accounting firm can make use of specialized pattern detection audits to root out possible embezzlement through careful analysis. However, organizations also benefit from implementing specialized controls to both deter and detect embezzlement and mitigate the financial damage.

How Businesses Protect Themselves Against Embezzlement
While embezzlement remains a challenging problem for many businesses of all shapes and sizes, there are several tools that even the most cash-strapped organizations can implement to prevent more overt attempts at theft:

Staff more than one team member for each transaction. Staffing more than one employee on matters affecting financial transactions can deter embezzlement.
Periodic audits of key financial statements. Owners and senior management should regularly review key financial statements for discrepancies and variances.
Make use of employment and criminal background checks. Querying potential hire backgrounds can reveal previous financial crimes.
Purchase business insurance. Some types of insurance policies can help owners to recover from losses derived from embezzlement.
Retain the services of a professional accounting firm. A seasoned accounting firm can bring a wealth of experience to bear on forensic investigations of embezzlement.

Ultimately, a combination of these deterrents and controls can help to reduce the incidence of embezzlement in an organization.

Embezzlement Appears More Common at Smaller Businesses
While small businesses bring many benefits to local communities, they unfortunately also must contend with higher rates of embezzlement and other financial crimes. The reason for this higher incidence rate may stem from a lack of professional and dedicated financial controls within the business.

Another unfortunate downside of embezzlement comes from the loss of faith in the business by owners, shareholders, and employees. Each of these stakeholder groups inevitably suffers from financial crimes, including lost profits, wages, and job security.

Common Themes of Embezzlement in Small Businesses
Based on research into embezzlement practices, certain patterns appear to follow those individuals who have tendencies to steal property or redirect funds to their own accounts:

They have pressure to steal, such as debt or medical bills.
They have access to company accounts or funds with limited oversight or financial controls.
They have sufficient knowledge of how the firm operates to evade detection from senior management or accountants.
They can rationalize their behavior to justify the misdeeds.

With all four attributes of pressure, access, knowledge, and rationalization, perpetrators can start with small-scale theft and move toward larger embezzlement incidents.

Learn More about Forensic Accounting Services
At Williams & Associates Tax Services , we offer specialized forensic accounting services for businesses of all types and sizes. Get in touch today to learn more!

Employer Gifts/Taxes | William and Associates Tax Services

Thu, 30 Dec 2021 21:31:13 GMT

The end of the calendar year means different things to different businesses. For some, it can be their busiest time of the year, filled with holiday shoppers and administrative tasks. For others, it's a slow time when employees tend to take the most time off with their families. But for nearly all businesses, it also means doing some gift-giving.

While giving gifts to employees and recognizing them in other ways is an important part of the season, employers must be careful to abide by tax rules in order to avoid causing trouble for themselves and their employees. What should you know about employee gifts and taxation? Here are some answers to your questions.

Are Employee Gifts Taxable?

Many employee gifts are taxable to the employee, especially if they involve some sort of cash or cash equivalent (such as a gift card worth a particular amount of money). This includes gift cards or vouchers given in lieu of a traditional gift provided by the company. These gifts are considered a form of compensation, and the employer is expected to include their value on the employees' Form W-2.

However, there are a few exceptions. A limited number of gifts can be given without tax consequences to employees. While your choices are more limited, the benefits can sometimes outweigh the limitations.

How Can You Make Nontaxable Gifts?

Giving taxable or nontaxable gifts is a decision for each employer to make themselves. Some companies choose to avoid taxable items in order to reduce the workload involved in tracking values and processing them through payroll. In addition, taxable gifts raise the employee's taxable income. Small gifts may not raise it much, but larger gifts can create more taxes for staff.

So, how can you prevent this? The primary way is to give gifts and recognition that qualify under the IRS's de minimis benefit rules. De minimis benefits are those which are of low value and not given on a regular basis. For most of these items, it's also not reasonably practical to track the value, and therefore, they can be exempted.

While one factor that makes de minimis benefits nontaxable is that they are of low value. Keep in mind that cash and cash equivalents generally do not fall under de minimis rules, no matter how large or small the value. This is because it is possible and reasonable to identify their value and track it for payroll purposes. And even in categories that normally fall under de minimis rules, gifts over $100 may not qualify.

What Are Common de Minimis Gifts?

The IRS publishes some examples of de minimis gifts so employers can apply this rule in their own business. These examples include the following:

Holiday parties for employees as a whole
One-time sports or theater tickets
Low-value holiday or birthday gifts
Occasional snacks, coffee, cakes, or doughnuts
Occasional meals while working overtime
Condolence or congratulatory baskets, flowers, or gifts
Personal use of some business equipment

Notice a few common threads that can help you identify de minimis gifts on your own. They are generally of smaller value and don't have a cash value. Unlike standard compensation, they are given irregularly. And it may be impossible to determine the actual value per person, such as at a holiday party or for a company cake.

Where Can You Learn More?

As an employer, learning how to give taxable and nontaxable gifts will help you and your employees. But it can be complicated and the rules are not always clear. So the best place to begin is to consult with William and Associates Tax Services . We'll help you analyze your gift options, avoid unwanted tax effects, and find the best ways to show your employees you value them. Call today to make an appointment.

What To Know About Gifts/Taxes | Quality Bookkeeping Services Inc

Thu, 30 Dec 2021 21:28:44 GMT

Are Employee Gifts Taxable?

How Can You Make Nontaxable Gifts?

What Are Common de Minimis Gifts?

The IRS publishes some examples of de minimis gifts so employers can apply this rule in their own business. These examples include the following:

Holiday parties for employees as a whole
One-time sports or theater tickets
Low-value holiday or birthday gifts
Occasional snacks, coffee, cakes, or doughnuts
Occasional meals while working overtime
Condolence or congratulatory baskets, flowers, or gifts
Personal use of some business equipment

Where Can You Learn More?

As an employer, learning how to give taxable and nontaxable gifts will help you and your employees. But it can be complicated and the rules are not always clear. So the best place to begin is to consult with Quality Bookkeeping Services Inc. We'll help you analyze your gift options, avoid unwanted tax effects, and find the best ways to show your employees you value them. Call today to make an appointment.

8 Tax-Deductible Business Expenses

Mon, 18 Oct 2021 14:49:17 GMT

Businesses regardless of size, type, and sector incur different expenses, ranging from startup costs to operational and asset expenses.

According to the Internal Revenue Service (IRS), helpful and reasonable expenses that assist a business in generating income are tax-deductible. As a result, you reduce your tax liabilities and improve your bottom line. Learn eight tax-deductible business expenses so you can leverage them to lower your business taxes.

1. Administrative Costs

Almost every enterprise incurs administrative costs to keep it operating smoothly and profitably. Fortunately, most of these expenses are tax-deductible and include rent, utility costs, payroll, office supplies, equipment rental, and permits.

Other deductible administrative costs are computer software, bank charges, office renovations, consultant fees, and postage and delivery.

2. Auto Expenses

When vehicles are used for business purposes, the costs incurred are tax-deductible. However, commuting to and from work is not regarded as a business expense and is exempted in this category.

The two main ways for determining your business' vehicle deductions are using the standard mileage rate ( which varies year to year ) and the actual expense approach. In the latter, the vehicle's operating costs - insurance, gas, maintenance, and depreciation are considered.

3. Employee Benefits

Apart from salaries, employee benefits such as bonuses, retirement programs, health insurance, and training costs can be subtracted from your taxable income. Retirement plans, for instance, allow businesses to enjoy tax advantages since the employer's contribution is a deductible business expense. Similarly, the costs incurred training employees to enhance their skill sets get a tax break.

4. Travel Expenses

If you are traveling for work-related purposes, the expenses incurred are deductible. Whether you are traveling to meet with clients, partners, and suppliers, or attending seminars and conferences, expenses such as airfare, accommodation and meals, and car rental are fully deductible. However, some restrictions may apply to certain types of travel like overseas travel.

5. Advertising Costs

Advertising is a crucial part of any enterprise to increase awareness and visibility. Every year, businesses spend significant amounts of money on both digital and traditional advertising. Fortunately, advertising is deductible, and any funds used to promote a business get tax advantages. It includes the cost of printing flyers, brochures and business cards, launching a new website, and running online campaigns.

6. Business Insurance and Interest

If you have a business loan, you can deduct the interest as a business expense. However, loans used for both business and personal purposes are not fully deductible. Only the portion used for business is a business expense.

Businesses purchase various insurance coverages to protect themselves and assets. Whether you have auto insurance, fire insurance, or liability insurance, your premiums are deductible and you can attain significant tax savings.

7. Business Use of Home

Business owners using part of their home for business purposes - perhaps a business office - are eligible for substantial tax deductions. The prominent home office deductions include rent, home insurance, utility costs, mortgage interest, and repairs. The deductible depends on the amount of space in a home used. While this type of deduction has numerous restrictions, 1.6 million people use it annually.

8. Professional Fees

Your business may require the expertise and experience of professionals such as accountants, lawyers, surveyors, and tax professionals. However, you don't have to shy away from these professionals since they are deductible business expenses. At the end of the year, you deduct their fees from the taxable income.

Deductible business expenses are an excellent way to decrease the tax you pay and save money while increasing profitability. However, these deductibles are complex and time-consuming to file and require the expertise of professional tax services.

Get in touch with William and Associates Tax Services for consulting and guidance to navigate deductible business expenses and other tax issues.

4 Mistakes to Avoid During Payroll Processing

Tue, 17 Aug 2021 16:55:40 GMT

Payroll processing is an integral part of any business - whether big or small. But the process can be quite complicated, and employers can make unintentional mistakes.

Besides weakening your business reputation, payroll errors can also severely affect your payroll structure. You may have a hard time tracking all the employee records in your organization, in addition to accumulating non-compliance fines.

Still, as your business grows, you need to understand how these mistakes happen and what they can cost you. Learn more about common payroll errors and their impact on your business.

1. Assigning a Worker to the Wrong Tax Category
Placing one of your employees in the wrong tax category can leave you vulnerable to hefty fines. Generally, workers can be categorized into any of these four groups:

Employee
Independent contractor
Statutory employee
Statutory non-employee

Each of the categories has different tax requirements. You can go over the IRS guidelines to get a better understanding of employment categories.

Unfortunately, classification mistakes are possible, and your business could be flagged for audit if such errors are suspected. You could be on the receiving end of unexpected penalties, whether the errors were made on purpose or not. Avoid such inconsistencies by keeping meticulous employee records, something that a qualified accountant can help with.

2. Missing Tax Deadlines
Businesses usually must pay taxes on behalf of their employees. However, due to the complexity and effort involved, you might miss tax deadlines. In doing so, your company reputation takes a hit, and you risk having disgruntled employees in your business.

Unfortunately, delays are subject to heavy penalties that could cripple your business operations. If you have trouble keeping up with bookkeeping and meeting remittance deadlines, a qualified tax accountant can make things easier for you. They can keep you updated on every crucial development and ensure that your payroll information is submitted to relevant authorities on time.

3. Miscalculating Overtime Pay
Miscalculation of overtime hours can be a nightmare for both your business and its workers. Correcting such errors could take time and disrupt the business atmosphere. Your employees may feel discouraged if they have to pay the money back to the company because of overpayment issues.

Similarly, underpayment could make your employees sue your business over unpaid wages. You'd eventually have to deal with the financial burden that comes with miscalculations, including back pay and penalties.

To avoid inaccuracies with overtime pay, you could split normal wages from overtime pay. A clear distinction between the two payments helps you avoid any consequences of wrong calculations. Keep your state's overtime wage laws in mind to be on the safe side.

Hiring an experienced payroll services expert can take the load off you, and you'll have time to focus on other critical aspects of your business.

4. Failure to Maintain Accurate Payroll Records
The payroll record process can be rather tedious. You have to double-check employee information step by step, ensuring that you accurately document the hours they've worked, commissions and leave earned, and other relevant information.

Payroll records can hold large volumes of information that may be difficult to keep up with. Besides, these records have many compliance requirements, specific to all your employees.

Sometimes, certain authority agencies may want to go through your payroll records to validate unclear data. If you can't get a hold of all the relevant records, you could face heavy fines and penalties. Additionally, an employee may sue your business because of a payment problem. Your records can serve as good evidence but only if you keep accurate payroll information.

The payroll process doesn't have to be a nightmare for your business. With the help of an expert, you can avoid unintentional mistakes that could complicate your operation. If you need reliable payroll services, contact us at Williams & Associates Tax Services today.

Investing in a Venture? 5 Reasons to Hire an Accountant

Tue, 15 Jun 2021 21:27:51 GMT

Do you want to invest in a local business, either established or new? Are you an investor with hard assets, such as art, wine, or cars? If so, you may want to hire your own accountant as soon as possible. Why? Here are a few important reasons to work with your own CPA no matter what type of investment you want to get into.

1. To Vet the Business or Venture
Before you invest in any new project, you should perform a diligent check on its potential. If you are becoming a silent or limited partner, for instance, you may need to analyze the business's current activities, profits and losses, cash flow, leverage, and structure. If the venture is new, the business plan needs to be analyzed and the numbers need to be double-checked for accuracy.

While you can do some of this research, your accountant will better crunch the numbers. With their experience analyzing many other small businesses and investments, they can offer impartial and reliable guidance.

2. To Handle Your Own Taxes
Investors usually see their own income taxes become more complex. Your income may be reported through various new forms, including a Schedule K-1, various forms of a 1099 form, and Schedules B and D. Some income or expenses may not even be reported by others and must instead be tracked and declared independently. Your investment income may cross state or international borders. And it may be taxed at different rates.

Even if you have done your own income taxes in the past, this new complexity usually calls for the help of an accountant, especially in the early years. You may be able to learn the ropes over time, but the best way to do this is with a pro to help you.

3. To Work With Your Financial Planner
Do you have a financial plan? As your income and assets grow, a financial planner is a valuable tool to ensure a stable future. But while they have training in many aspects of your financial life, they aren't usually accountants. You may need a skilled accountant to work with your planner in areas like tax planning and strategies, how your investment might affect income in retirement, and business entity choice.

4. To Understand Your Profit
Are you making money from your investment? The answer is often tricky. Even a simple investment in a hard asset like an antique car can be complicated. Your profit isn't just the sales price minus the purchase price. You may also have to factor in things like depreciation, taxes, repairs, maintenance expenses, overhead, and the opportunity cost in time and money.

Certainly, if your profit from either a business or collecting investment isn't as much as you want it to be, you should have an accountant analyze the venture before deciding what to do next. You may be able to trim expenses or taxes and make it a profitable investment. Or the business you bought into may have little chance of turning a profit in the foreseeable future.

5. To Keep You Organized
Most Americans think of accountants as something only a business uses. But a personal accountant can manage your finances and keep you on track. They might pay your bills, track income, move money between accounts, retain records as legally required, organize documentation, pay quarterly taxes, and make retirement contributions for you.

Investors with multiple sources of income, lots of paperwork, and a busy schedule do well to use outside services. Look at this in the same way a business would look at hiring an accountant to ensure it functions well and earns a profit.

Where to Start
Could you use the help of an accountant as you prepare to become a serious investor? Then start by calling on the team at Williams & Associates Tax Services . We will work with you to provide the assistance you need so you can focus on turning your investment into a profit.

Should You Have an Accountable Employee Reimbursement Plan?

Wed, 14 Apr 2021 14:25:57 GMT

Do you have an accountable plan for employee reimbursements? Accountable plans provide benefits both for the employer and its employees. But they require planning to set up and effort to maintain. Here's what you need to know about why you should make this effort and how to do so.

What Are Accountable Plans and Nonaccountable Plans?

Both accountable and nonaccountable plans refer to the means by which employees are reimbursed for expenses they incur on their employer's behalf. These expenses include things like buying last-minute office or job supplies, using personal vehicles for company business, paying for travel expenses, taking customers out for meals, or paying a fee for the company.

Accountable plans require that the employee submit receipts or another type of approved tracking method to account for all the money submitted for reimbursement. Nonaccountable plans do not require tracking. That money is usually given in the form of allowances - which the employee may or may not return a portion of - given either on a regular basis or per event.

How Do Accountable Plans Benefit Companies?

Accountable plans are extra work for the company, since staff must follow IRS rules and reconcile what was given out versus receipts. But the employer benefits because it discourages abuse of expense allowances. When employees must return receipts, they are more likely to use the money solely for what it was intended. This is a system of checks and balances that prevents misuse as well as errors.

In addition, the employer has a reliable written record of expenses. Ultimately, the company paid these expenses via the employee, so it is responsible for ensuring that they are properly categorized and fit all IRS rules to be deducted on income taxes. And customers can see where their money is going should the company ever need to justify its invoices.

Finally, accountable systems ensure that staff members are treated equally. When everyone from the CEO to accounting clerks must turn in receipts or track their mileage, everyone has the same experience. There is less resentment than there may be when unaccountable expense allowances are handed out only to some but not the vast majority.

How Do Accountable Plans Benefit Employees?

Employees also benefit from accountable plans because they reduce taxes. Under IRS rules, reimbursements through a nonaccountable plan are deemed taxable wages or salary for the employee. This is added to their Form W-2 each year and increases their tax bill. While the employee may have once been able to deduct their expenses to offset this, current tax law doesn't allow any deductions.

What Does an Accountable Plan Require?

If you want to set up an accountable plan, you will first need to understand what makes a plan accountable and therefore tax-free to employees. The rules can be somewhat complex, but they include the following major areas:

The expense must be business-related and deductible by the employer. Partially personal expenses must be divided.
The expense must be substantiated by the employee. This is generally done through receipts or logging.
Excess money must be returned to the employer, usually between 30 and 120 days of receipt.

Some types of expenses, such as mileage or per diem, have their own unique rules and methods of tracking. Each employer would set up a personalized standard for these.

Where Can You Get Help?

Clearly, the benefits of accountable reimbursement plans are many. But your business must get the steps right in order to reap the rewards both for employees and the company.

Start by learning more about reimbursement plans in consultation with the accounting team at Williams & Associates Tax Services . We help our clients analyze their expenses and processes to find the best way to maximize profit and minimize paperwork. Call today to make an appointment.

5 Times Your Church Should Work With an Accountant

Fri, 12 Feb 2021 17:20:25 GMT

Your church's mission and focus should be about serving the needs of its congregation rather than worrying about its money. But finances are also an important part of carrying out that mission. And one of the best ways to ensure that the church's finances aid its services rather than create more problems is to work with an outside accountant on a regular basis.

While you likely don't need a full-time accountant for the congregation's finances, the church should engage one on a regular basis for specific reasons. Here are five of these situations.

1. To Perform a Checkup of Procedures

Many businesses have a regular audit by an outside accountant to ensure that their financial statements meet generally accepted accounting principles (GAAP). Occasionally, a church may need to have a traditional audit to comply with loan terms or when required by a covenant.

However, most churches are more in need of an audit that focuses not on GAAP rules but on how it's protecting and managing funds. This type of audit could assess your internal checks and balances, separation of duties for fraud protection, cash controls, use of restricted funds, insurance coverage, and account balancing procedures. The accountant will also offer recommendations and adjustments.

2. To Set Up Accounting Software

Are you still entering things into books by hand? If so, now is the time to update your systems. Accounting software specifically designed for nonprofit entities is reasonably priced and accessible to all. It will improve accuracy and budgeting ability, ensure no missed payments, and help you cross-train staff so you always have accurate records. An accountant can help you choose and learn how to use a system.

3. To Handle Annual Tax Obligations

Even a tax-exempt organization like a church has various federal and state tax responsibilities. Most churches need to file an annual Form 990 with the IRS and may have state obligations as well. If you have employees, you will need to collect and remit payroll taxes. You likely must provide tax receipts for donors. And certain income-producing ventures may need to be tracked and checked for tax obligations.

Your accountant will help you complete all these responsibilities correctly. They can often help you create an internal system to handle the day-to-day work while engaging them at designated times of the year to do the final stages, like filing with the IRS.

4. To Ensure Good Payroll Practices

If the church has employees or contractors, its leadership should make sure that it's meeting all legal obligations regarding the employees and contractors. From the beginning, an accountant can help you avoid misclassification of independent contractors and create payroll records that meet government rules. They will also aid you in managing payroll remittance obligations. And you get help navigating the unique IRS rules for church employees.

5. To Help You Learn to Budget

Planning ahead helps you meet the changing and growing needs of your congregation and your community. Whether you want to build a new church, fund a missionary trip, or just replace worn-out equipment, you'll need to plan ahead to pay for various projects or they may never happen.

Budgeting, though, can be difficult even for professionals. Accountants are trained in forecasting and budgeting, and they can help you set contribution goals and decide how (and when) to deploy restricted funds or not.

Where to Learn More

Could your church use assistance in any of these areas? Whether you've had financial or legal issues already or you just want to assure your congregation that their funds are used wisely, working with an independent accountant could be an easy solution.

At Williams & Associates Tax Services , our team of finance professionals is ready to provide ongoing services or help with specific projects. Call today to make an appointment.

Estimated Tax Payments - Some Answers to Your Questions

Tue, 15 Dec 2020 19:49:21 GMT

Are you self-employed, a partner, or an owner of a business? If so, one of the most important tax tasks you must accomplish each year is to pay estimated taxes. What are estimated taxes? Why should you be concerned with them? And how do you know what to pay? Here's an introduction to estimated tax payments for the beginner.

What Are Estimated Taxes?

Estimated tax payments are the arrangement by your state income tax agency and the IRS to make payments toward your tax bill throughout the year. Most wage earners and salaried workers have a portion of their projected tax bill withheld from each paycheck. However, because a self-employed worker, partner, or business owner isn't subject to withholding, they must send in payments on a regular basis instead.

Why Should You Pay Estimated Taxes?

Estimated taxes are an additional burden for self-employed persons and business owners and can be complex to figure out. So why should you concern yourself with them? First, it is mandatory. The IRS, for instance, sets rules to let you know payment deadlines, how much of your estimated tax bill is due each quarter, and what percentage of last year's tax bill you must pay.

Perhaps just as importantly, estimated taxes help you avoid a huge tax bill in the spring. The goal is usually to have paid your obligation in more manageable portions throughout the year and have little or no additional tax due when you file your returns. Meeting this goal also avoid penalties and fines for underpayment, which may be quite large depending on your income.

What Are the Guidelines for Estimated Taxes?

If you are subject to them, an estimated tax payment is due once per quarter. The normal due dates are April 15, June 15, September 15, and January 15. You pay an equal percentage of your estimated annual tax bill with each payment unless you have other sources of withholding. However, certain cyclical businesses or new businesses can sometimes use different schedules based on when they earn income.

Each state has its own rules regarding when to pay estimated taxes for state income taxes. North Carolina, for instance, usually follows the payment schedule set by the IRS.

How Can You Calculate Estimated Taxes?

Most people need help with calculating their estimated tax liability. It can be difficult to project what you may earn either as a self-employed person or as a business, especially when new at it. Generally, you must pay at least 90 percent of the current year's tax or 100 percent of the prior year's tax (if applicable) over the course of the year. It may be recommended to overestimate your bill rather than underestimate it.

The amount of your estimated tax payments is affected by some other forms of tax payments. If you or your spouse on a jointly-filed return have withholdings from another job, this may reduce how much you need to pay in estimated payments. You may also apply overpayments from the prior year as well as overpaid FICA if you have two jobs. You can also make additional voluntary payments at any time.

Where Can You Get Help With Estimated Taxes?

Does this sound confusing to you? If so, you're not alone. Figuring estimated tax payments and executing them can require calculations and forecasting. The best way to do this is by consulting with an experienced accountant. They will work with you to ensure you meet your minimum obligations while avoiding unnecessary overpayments. And they may offer a reminder service to ensure you don't miss a payment.

Williams and Associates Tax Services can help. Call today to make an appointment with a member of our qualified team.

How Does Timing Affect Your Income Tax Bill? Some Examples

Wed, 14 Oct 2020 23:01:40 GMT

When it comes to income taxes, timing can be a critical component of any strategy. How does timing affect your tax bill? This effect could come in a variety of ways throughout the tax calculation process. Here are a few examples for taxpayers in a variety of different situations.

1. Deferral or Acceleration of Income

Some taxpayers have the ability to alter the timing of their income sources. For instance, a bonus paid in December increases taxable income in the current year. Deferring it to January would generally affect the following year's income. A salesperson who earned less in the current year may benefit from including this income in December rather than risking higher taxable income in the upcoming year.

2. Deferral or Acceleration of Deductions

Just as you can sometimes adjust the timing of income, you may be able to do so with deductions too. Business owners can often choose to make deductible business purchases in one year or another, for instance. Some prepaid expenses can also be paid (and deducted) before the end of the year, particularly if the expense is for the first quarter of the new year.

Homeowners can often make this move with regards to property taxes too. You are generally allowed to pay and deduct property tax for the current year either in the current year or in the following one.

3. Timing of Capital Gains

Capital gains taxes come into play when you sell an asset considered to be held for investment. Long-term assets - held for more than one year - are taxed at a lower rate than short-term investments. So if you wait until the year has passed before selling an investment, you pay lower taxes. In fact, with the right income levels in one year, you may pay 0% tax on long-term asset sales.

Anyone who owns their own home (or a rental unit) must pay attention to capital gains tax rules in order to avoid paying taxes on the home sale. Generally, if you sell the home too early, you may not qualify for the $250,000 per person homeowner tax exemption. But if you wait too long and haven't lived in the home for several years, you end up with the same problem.

4. Retirement Account Withdrawals

Retirement accounts have very specific rules regarding when you can and can't withdraw money. Failure to abide by their timing rules could mean extra taxes and penalties. You must begin to take required minimum distributions from traditional IRAs by April 1 of the year following the year in which you turn 70 1/2. Taking money out before this may cost extra, and failure to take out these RMDs on time will cost you.

5. Depreciation Options

Depreciation allows you to distribute the cost of larger business or income-generating assets over a period of years. However, you currently have several options as to how to time these depreciation deductions.

If your business has had a good year, you may opt to accelerate the schedule by taking the entire deduction in the year of a particular asset purchase. As an alternative, you may choose from one of the allowed accelerated depreciation schedules to choose one that works for you.

Obviously, the timing of purchases, sales, withdrawals, and deductions can all make a big impact on your tax bill. But you must know how to deploy them for the maximum benefit within legal limitations. A professional accountant is your best ally in this endeavor. The finance and tax pros at Williams & Associates Tax Services are ready to help. Call to make an appointment today so you can start saving tomorrow.

How Much Debt Should Your Small Business Have?

Wed, 12 Aug 2020 20:21:05 GMT

Some amount of corporate debt is normal for nearly all businesses. Sometimes it's advantageous to carry certain debts even when the business may have the cash to cover it. But too much debt puts the company at risk.

So, how can you decide the right level of debt? And what can you do to manage business debt levels? Here are a few answers.

Why Manage - Not Eliminate - Debt
Not all debt is a bad thing. Credit allows a company to expand product lines, buy new equipment, and find the most advantageous locations. It can also cover cash flow failures or ensure that payroll can be made no matter how the business is doing. And low-interest debt is often an inexpensive way to fund projects. So your goal generally shouldn't be to eliminate all forms of debt.

However, you need good control so that debt doesn't become a burden. A company that over-leverages will risk losing assets it needs to continue operations. Too many debts take away from the financial condition of the business - potentially turning off lenders, bankers, and vendors who may extend more credit. And because debts must be paid each month, they can put pressure on cash during tight times.

How to Know If Your Debt Is Reasonable
If your business doesn't actively manage its use of debt, now is the time to start. You may need to analyze how much your debt costs the company overall - including fees, interest charges, and even lost opportunities to use the money spent on debt. Use this information to calculate your debt-to equity ratio - the amount of debt per dollar of owners' equity - and compare it with industry standards.

Then talk with lenders and banking professionals to find out how your debt profile appears to outside funding sources. And consider how much difficulty you have organizing and paying debt each cycle. A company with many small debts to different lenders - equipment loans, SBA loans, credit card charges carried over, lines of credit, and accounts payable - may work hard to juggle everything.

What You Can Do About Debt
If you have any concerns about the company's use of debt, start by meeting with an accountant or business consultant. With experience in managing debt ratios, the accountant can help you target specific areas to control debt without harming the business. For instance, the accountant may help you consolidate small, high-interest loans or avoid anything that could damage your credit rating.

You may also want to reorganize debt to take advantage of the right forms of debt and get rid of the wrong types. A line of credit used solely to smooth the cycle of cash flow when customers pay late, for example, is a useful but limited debt. If you keep that but work to ensure that all higher-interest credit cards are paid off each month, you have exchanged bad debt for good debt.

An accountant can also help if your debt-to-equity ratio is too low. A fear of business debt could hold you back from exploring ways to improve the business, such as by expansion or updating technology. With the guidance of a qualified accountant, you can craft a strategy to use limited debt to gain a larger return on your investment.

The sooner you craft a strategy for debt use, the better it will be for your company. Start by calling Williams & Associates Tax Services for an appointment. Our team of accounting and business professionals will work with you to create the right plan and execute it successfully so that your business stays healthy and thriving for years to come.

6 Components of a Good Bookkeeping Office

Wed, 17 Jun 2020 18:19:42 GMT

No matter how much or how little of your small business's bookkeeping you do, you need a place to do it and the right tools. But this doesn't mean you have to go overboard buying materials, equipment, and a dedicated office space. In fact, you can accomplish a lot more by focusing on just the right elements for your bookkeeping office. Here are six key things every business should include.

1. Comfortable Desk

To begin with, you'll need a comfortable desk and chair. Some bookkeeping tasks will take longer than planned, so you need to be ready to spend the extra time. The desk and chair don't need to be fancy, but an ergonomic setup is best. The less comfortable your desk arrangement, the more likely you are to procrastinate or avoid taking the time to research issues.

2. Physical Storage

Even if you plan to do everything using the cloud or digital storage, be prepared for at least a little physical file storage and accessories. Most companies continue to receive physical documents like invoices, statements, employee paperwork, and legal notices - some of which may need to be maintained in original form for a period of time.

Depending on the size of your business, you might be able to start with a two- or four-drawer file cabinet alongside your desk. You can then scale up your storage or work on moving more to the digital realm over time.

3. Organization System

Bookkeeping can get disorganized quickly, particularly for new business owners. And, unfortunately, disorganization in your accounting work easily leads to missed deadlines, penalties and interest, payroll issues, or incorrect billings.

Plan your organization system by following the flow of documents or data through your office. For accounts payable, for instance, you likely need a place to keep incoming invoices before they are processed, a way to match them against orders or receipts, a location for invoices awaiting payment, and a filing system for paid invoices.

4. Computer and Internet Access

While you can do most bookkeeping tasks in actual ledger books, most businesses can't grow using a paperonly system. Plan ahead by using a computer and accounting software - even if you don't take full advantage of it when the business is small. If you get used to the software early, build on that to use more features as you need them.

5. Mobile Device

Today's business owners have many options for using mobile apps and devices to handle bookkeeping jobs on the go. Ideally, you should be able to do such things as track and approve time, track jobs, create invoices, invoice customers, take payments, look up invoices, or check bank balances on a connected app. The more access you have, the better you can keep up with your bookkeeping.

6. Locked Doors

No matter whether you use software or hard copies, a bookkeeping office should be locked when not in use. There is a lot of sensitive data on hand - including personally identifiable information for employees or customers and company financial information. You may have cash, checks, or credit card information. And computers, equipment, or mobile devices can be expensive.

Never leave the bookkeeping office unsecured, even if you use it for other tasks. Additionally, lock the individual storage cabinets and petty cash boxes. Ensure the use of good passwords. And, finally, purchase a safe to keep cash and cash equivalents.

These six components will result in a bookkeeping office that you'll enjoy and find functional - without busting your budget. Want to know how to incorporate any element into your particular space? Start by consulting with an experienced bookkeeper. At Williams & Associates Tax Services , we can help you get started and create a useful system. Call today for an appointment.

Create a Practical and Useful Category System for Business Accounting

Fri, 10 Apr 2020 19:11:28 GMT

How you categorize expenses may not seem like a significant part of running your small business, but it can have a major impact. When you group together expenses in the right way, you can learn much more about how you spend and earn money as well as how you can improve your bottom line.

If your business is starting to categorize expenses within its accounting system, you may find it hard to know where to begin. To help you with this important, but often little-understood, task, here are four key tips for organizing costs within your books.

1. Talk With a Bookkeeper

Before embarking on a project that involves so many aspects of your books, sit down with an experienced bookkeeper to plan ahead.

Creating a chart of accounts (the standard numerical method for organizing income and expenses) can be time-consuming and somewhat confusing. Not all categories will be easily understandable. Some may sound misleading, and miscategorizing could cost time and money.

Meet with your bookkeeper to brainstorm ways to approach this project that will give the information you need without using excessive time and effort. They will also know what categories are generally important. Separating entertainment expenses from meals, for instance, will help your business have the maximum correct deductions at tax time and be more ready for the tax preparer.

2. Set Some Goals

You have almost limitless choices for how to categorize income and expenses, so set some parameters before beginning. What do you want to learn about your costs or earnings? Do you want to rein in expenses in certain areas? Do you want to increase the profit margin on products? Do you want to learn which purchases could be bought in bulk? Do you want leverage with vendors?

Your goals will inform how much work you put in and where. For instance, what if you want to know which products are more or less profitable? In this case, you might focus efforts on correctly identifying 'cost of goods sold' or inventory and expenses for particular product lines. Unrelated categories might be left more broad for now.

3. Start Broad

Some well-meaning businesses actually start out with too much detail in their organizational system, leading to frustration or wasted time.

Most businesses don't need to spend time differentiating between 'Office Supplies, Pens' and 'Office Supplies, Erasers', for example. In this case, you might simply use 'Office Supplies' to save time and work. However, if you need to track excess paper use, you could add 'Office Supplies, Paper' to do so.

Remember that your organizational chart of accounts can be altered later. If you eventually find that you do need to know how many pens are being used, it will be easier to separate these costs with journal entries and add the account rather than overthink things early on.

4. Use Account Numbers

You may have the option to set up categories (accounts) without a numbering system. But even though you can skip this step, it may still be advisable. Why?

First, it helps you better group expenses and income now. Everyone on staff will know, for instance, that categories starting with '1' are income - even if their title may be confusing. Second, account numbers will speed up data entry as you grow your business.

The key to a good category system for your books is to understand how much effort to go to while avoiding unnecessary detail. An experienced bookkeeper can help. At Williams & Associates Tax Services , our bookkeeping team is available for businesses of all sizes. Call today to make an appointment and start preparing your accounting for the future.

In a Partnership? What You Need to Know About Basis

Mon, 16 Mar 2020 03:42:17 GMT

If you are a partner in a partnership, you will need to understand a few accounting concepts in order to protect your financial interests. One accounting idea that many people are unfamiliar with is called basis. To help you understand basis, here are a few key things to know.

The Basics of Basis

At its core, basis is the accounting terminology for the amount of money a person or company spends on the purchase or improvement of an asset. If you buy a vehicle, the purchase price is the biggest element of your basis in it.

However, for business purposes, you might also add certain costs like sales tax on the purchase and freight costs to get it from the manufacturer. Together, these form the basis of the vehicle, which would represent your cost if you contribute it to the partnership. This is of great importance because the amount of basis determines the profit you will potentially pay taxes on or the loss you may deduct.

Inside Basis vs. Outside Basis

When you contribute an asset - whether it is cash, a building, a piece of equipment, a vehicle, inventory, or something else - your basis in that individual item is known as the inside basis. This basis is assigned to each asset and exists inside your overall basis in the company. On the other hand, the outside basis is your overall contribution to the partnership.

For example, if you contribute that vehicle (for which you paid $10,000) as well as $10,000 cash, your outside basis in the partnership is $20,000. This is how much you stand to lose if the business fails, and it is generally the limit of how much you can deduct if there is a net loss at the end of the year. However, the individual $10,000 basis in each individual asset would be used to calculate certain losses or gains later on.

Partner and Partnership Basis

In addition to inside and outside bases, each asset may also have two different bases for the partner and the partnership.

If you contribute that vehicle, for instance, the partnership's basis may be the fair market value of the vehicle. But your outside basis (stake in the business) is based on your own basis (cost) of the vehicle. So, if the vehicle is worth $15,000 when your investment is $10,000, there will be two different bases to calculate.

Adjustments to Basis

Basis is not a fixed number. It can be adjusted up or down based on many factors. If you make capital improvements to the asset - something that extends its useful life or boosts its financial value - your personal basis would be increased.

In addition, your partnership basis is affected by profit, loss, and partnership transactions. If there is an annual net loss for the business, it will generally be split up per the partnership agreements and assigned to the relevant owners. If you contribute additional money or property to the partnership, your outside basis would increase. And if you take a distribution, this may decrease your stake in the business.

Finding Help

Both the partnership and each individual partner should track the various bases for reporting purposes. The partnership would need to know, for instance, how to record distributions of assets to the partners.

But the bigger responsibility is on the partners, since they are more directly affected by basis. Each basis and adjustment to basis will either increase or decrease your taxable income at some point, so you should have this information available when you need it.

Since basis is a difficult concept to understand and utilize, consult with an experienced accounting service. Quality Bookkeeping Services Inc can guide you through the tracking of your relevant bases as well as how to use them on your books or taxes. Call today to make an appointment and learn more.

Freelancers: Tax Documents to Give Your Accountant

Fri, 13 Dec 2019 01:08:23 GMT

Freelancers have different work arrangements than traditional employees do, and their tax situation is likewise different as well. If you completed freelance work this year, there are several tax documents to give your accountant. While not every freelancer has each of these items, any of the following that you do have should be shared with the person who will prepare your taxes.

1099-MISC

One of the most common official documents freelancers get is a 1099-MISC. This is like the freelancer's W2, which is the standard tax form that traditional employees receive from their employers. The specific details on each form differ, but both show how much a company paid to someone who worked for them.

You can expect to receive a 1099-MISC if you earn $600 or more from a single company in the calendar year, and companies that paid you less might still send you this form. If you worked with multiple clients on big projects, you should receive several of these documents

Moreover, you could also receive a 1099-MISC if you won a substantial prize, resold fish, made a crop insurance claim, or had any number of other miscellaneous sources of income in the year.

1099-MISCs won't be sent until after the end of the calendar year because companies have to include all of the payments made to you during the year - and that includes money sent on December 31. Sometime after the first of the new year, though, companies will send these documents.

All of the 1099-MISC forms you receive should be given to your accountant, who can help you determine which are from your freelance work and which (if any) are from other sources. They'll then record the various 1099-MISCs appropriately for your taxes.

1099-K

If you do a substantial amount of freelance work and are frequently collect payments via an online platform, you might also receive a 1099-K. This is another official IRS document, and many part- and fulltime freelancers receive one now that online payments are so common among freelance workers.

An online payment processor (formally called a payment settlement entity) is legally required to send you a 1099-K if you receive at least $20,000 through their system and collect a minimum of 200 payments on the platform. If neither of these requirements is met, you probably won't get this document.

Unless you collect payments through multiple online processors, you'll probably receive only one 1099-K related to your freelancing work. You could get additional ones if you participate in a ridesharing, house-renting or other shared-economy platform, but these wouldn't be tied to your freelance work itself.

Additionally, your freelance-related 1099-K may show income that 1099-MISC forms also report. If this happens, don't fret. Explain that the documents report the same income, and your accountant can help you file the documents correctly so that you aren't doubly taxed because of the duplicate reporting.

Income Statement

Regardless of whether you receive the aforementioned official IRS documents, you should have your own income statement to show your accountant. This should show your revenues and expenses for the calendar year, and you should break out revenue by client. The document will be useful in a few ways.

First, your list of revenues will show any income sources that aren't reported on 1099-MISC forms. If you did work for a company that paid less than $600, they may not send a 1099-MISC but you still need to report that income.

Second, your accountant can check your revenue records to make sure the 1099-MISC forms that clients send are accurate. Finally, your expenses can be counted against your revenues to determine what your profit actually is.

If you're a freelancer and need assistance with tax services , contact Williams & Associates Tax Services.

Landlords, Can a Like-Kind Exchange Help Your Business Grow?

Tue, 20 Aug 2019 01:37:33 GMT

As a landlord, you hold significant real estate assets that are often valuable but not very easy to buy, sell, or adjust. But a landlord can find the mobility that they want — or need — by understanding some of the more complicated parts of tax law regarding property.

How can tax law help you make adjustments to your rental business? The key is often found in the form of like-kind exchanges. What are these? And when should you consider making use of like-kind exchanges? Here is a short guide.

What Is a Like-Kind Exchange?

A like-kind exchange is, as its name implies, an exchange of one business asset for another asset of a similar kind. A landlord could, for example, sell a rental home and purchase another qualifying home within the allotted time under like-kind rules. The main purpose of such an exchange is to avoid paying tax on the profit made from selling a business asset.

There are, of course, rules as to how you may qualify for special tax treatment. Both parties generally have to identify a qualifying replacement property within about 45 days and complete their transactions within about 180 days. And related parties (certain family members as well as owners of corporations and partnerships) are subject to further restrictions. Work with an experienced accountant to meet these rules.

One reason that landlords find like-kind exchanges useful is that most real estate doesn't need to be exactly equal in use or nature in order to qualify for tax deferral. You could switch from an active business to a simple investment property or from commercial to residential while still qualifying. You can also delay the exchange by using an intermediary (similar to an escrow account).

When Would You Benefit From a Like-Kind Exchange?

So, when is a like-kind exchange the most useful? Consider these three most common situations.

First, if you need to defer the tax bill for a sale, this is the best way to do so. A landlord who had higher income than normal may find that their effective tax rate for that income is high enough as to eat into any profits from selling a property in the same year. While like-kind exchanges don't eliminate the tax bill on profits, they do defer that tax bite until a future date.

Second, a landlord may decide that they don't want to continue operating in a specific area. If the neighborhood is going downhill - or if it's gentrifying more than your tenant pool will support - you may want to get out of that specific investment at a good opportunity. If you wish to move your rental efforts to another city, change to another state, or switch between urban and rural housing, a like-kind exchange gives you the freedom to move your business.

Third, landlords who wish to switch from residential to commercial (or the reverse) often find that a like-kind exchange promotes this lateral move with less cost. Is it time for your business to grow from one rental home to a building with multiple units? Time to add retail or office space to your portfolio? Then why not trade in one or more of your single-family homes for something that brings in more money?

To be sure, like-kind exchanges should be managed carefully. You will usually need professional accounting assistance to choose and report the sales or purchases as well as to follow all the documentation needs for a nontaxable event. At Williams & Associates Tax Services , our tax experts are ready to help. Call today to learn more about what a like-kind exchange can do for you.

Proper Record-Keeping for Income Taxes

Mon, 24 Jun 2019 13:52:47 GMT

Now that your income taxes have been filed, you need to know how to keep good records in case you need to refer to them in the future. In addition to the possibility of an IRS examination, tax records can also affect future tax years' calculations and even be required to show income or document ownership.

So, to keep sufficient tax records — but not so much as to open yourself to additional liability — what should you do?

Know the Statute of Limitations

The IRS has a set period of time in which to assess tax (the statute of limitations). Generally, this is three years after the due date (or date the return was filed) as well as two years after you paid the tax. When this statute of limitations expires, you generally can safely destroy records that are now out of date.

The statute of limitations can be longer than three years, though, for special circumstances. If you claim worthless securities for a loss, you need to keep records for seven years. If you significantly under-reported income, keep records for six years. And records of properties claimed on your taxes should be kept for as long as you own the asset.

Know How to Store Items

Of course, the storage of proper tax records can add up to a lot of extra paperwork. If you do keep paper records, use a locked file cabinet that's fireproof and within your control. Maintain records away from potentially damaging elements like moisture, pests, and pets.

Fortunately, the IRS allows taxpayers to keep records digitally as long as they meet the IRS's standards. This will save you a lot of space and ensure that you don't lose your only copy of a document. However, if you opt for digital storage, make sure the storage location is secure since it will hold plenty of personal information.

Most taxpayers benefit from a two-part system that duplicates hard copy files with digital versions. When the statute of limitations comes, be sure to completely destroy both versions. Failure to destroy records in a timely manner may lead to unnecessary liability if the IRS does audit your files.

Know What to Keep

So, once you know how long to keep tax records, what should you keep in that file? Of course, you should begin with full copies of your state and federal tax returns and all accompanying schedules. If you used a tax preparer, maintain record of their contact information in case you need to request any information that they keep.

With that, include documentation showing how you reached expenses or deductions — including child care expenses, tuition information, and records of income. Did you claim business travel or entertainment?

Maintain receipts and statements that show the date, location, attendees, and business purpose. Similarly, charitable deduction records must show what was contributed, when, and how you valued it.

Special situations call for maintenance of more detailed tax records. If you depreciated any business property, keep a file that shows what you paid for the asset and any improvements you made. This is known as the asset's basis, and it’s the foundation of depreciation deductions. If you had employees, too, you'll also need more detailed records of any employment taxes paid.

Not sure what is the statute of limitations for any particular tax item you have? Don't know if your storage method complies with the IRS? Or do you need help determining your state's record-keeping requirements? Contact a qualified CPA or Enrolled Agent for more information. At Williams & Associates Tax Services , our knowledgeable staff can help. Call today to make an appointment.

Thinking Beyond Theft: 5 Times Your Business Needs Forensic Accounting

Tue, 23 Apr 2019 15:02:30 GMT

When most business owners think about forensic accounting, they generally think about the search for theft. But, in reality, forensic accounting is a valuable tool for many occasions that don't involve someone stealing funds from your business.

What types of situations call for using a forensic accountant? Here are five of the most common.

1. During a Divorce

When a business owner or one of the partners becomes involved in a divorce, the business also becomes involved. No matter whether the owner is seeking a divorce or responding to their spouse's petition, the business needs accurately valued. This valuation must be impartial and reliable, or the business could be embroiled in an uglier battle than it needs to be.

2. When Buying or Selling a Business

If you're planning to buy an established business, you need to know exactly what you're getting for your money. Simply looking at the financial statements isn't enough because you don't know where those numbers are coming from.

A forensic accountant will look at the original documents, asset values, and cash flow to verify that the books are accurate, and they will search for hidden dangers like unfinished lawsuits.

Similarly, you may want to work with a forensic accountant if you want to sell your own business. It will help solidify the correct valuation so you get what the business is really worth. For example, a forensic accountant may adjust asset values from book value to market value to determine what their real potential is.

3. When Distributing Assets

If you have partners, everyone needs to have confidence in the business books and its valuation. A forensic accountant is an objective third party that can confirm the accounting practices and help you decide how to split assets or interest equitably.

This step is particularly valuable when a partner leaves the company or when one passes away. Your business avoids legal or reputation trouble by establishing the value of that person's interest to the satisfaction of all parties.

Even if you're not adding or losing partners, forensic accounting services helps a partnership avoid conflict and disputes by demonstrating that the finances are being kept above board. Since most partnerships rely on certain members to manage the operations of the business, this helps everyone have confidence in the transparency of how their business is run.

4. Before an Audit

Is the business going to be audited by a government agency? Most agency audits are severely limited in scope, but a few can be daunting. A state or federal tax audit is one of the most potentially harmful audits because everything involving the company's finances could be involved.

Prepare for a big audit by conducting an audit of your own books with a forensic accountant. That way, you learn in advance about anything that might raise a red flag for the auditor — and you have a chance to correct it or determine how to handle it.

5. After a Disaster

As natural disasters become more commonplace — and often more devastating — your company faces the potential loss of records from dangers as diverse as floods, fires, earthquakes, or landslides.

Recovery from such a disaster is a specialty for some forensic accountants. They can help your business reconstruct financial records, determine the value of what you lost, account for business interruption, isolate non-covered damages, and prepare a recovery plan.

There are many other times, of course, when forensic accounting can help your company. If you think that your business might benefit from working with a professional in this field, Williams & Associates Tax Services can help. Call today to make an appointment to assess your specific needs.

Which Accounting Tasks Should Be Done Every Day, Week, or Month?

Mon, 25 Feb 2019 15:46:32 GMT

As your one-person business grows, keeping the books will naturally become more important and require more attention. That generally means moving away from paper and pencils and shoe boxes of receipts and starting to use software and checklists and professional services.

To help you smooth this transition, here are the primary accounting tasks that your business should be accomplishing daily, weekly, and monthly.

Daily Tasks

Daily accounting work is generally about entering data to keep up with business activities and keeping your books organized.

You should enter payment information, including checks or cash received and sales receipts, as soon as possible. Similarly, enter bills due as soon as you receive them so that you have accurate records of what you owe. How often to create invoices depends on your volume and the speed at which your business operates. If you have a lot of activity, then consider billing on a daily basis. Remember that the sooner you bill, the sooner you can get paid.

In addition to entering income and expense information, reconcile your bank accounts and onsite cash daily if possible. If there are any surprises among your bank transactions or with your cash on hand, you want to know about them as soon as possible to avoid creating a major cash flow issue.

Weekly Tasks

Weekly accounting tasks are all about staying on top of potential problems and providing your business with the information they need to make decisions.

Start by ensuring that all the above tasks — particularly data entry and bank reconciliation — that aren't being done every day are at least done once per week. If data entry stacks up, you don't have real-time information about how your business is doing, and you don't know who owes you and who you owe.

This is also a good time to do miscellaneous data entry work that isn't quite as time-sensitive. That could include entering automatic transactions or fees, printing client statements and sending reminders of past-due payments. Check on the payroll to verify that it's being tracked properly and everyone is being paid correctly. File documents that have built up over the week. And pay any accrued taxes as needed.

Once you've done these mid-size data entry tasks, take this time to look at your main financial reports. The cash flow report tells you how much cash you have and how it's moving. The balance sheet identifies things like whether you need to bill more, call customers for payment, or pay some vendors off.

Monthly and Quarterly Tasks

Finally, there are a few, more advanced jobs that need to be done once per month (usually at the beginning or end of each month) and every three months (quarterly). First, make accrual entries. These are entries in your books for things like prepaid expenses or income that should be accounted for in the current or next month. Check for accuracy in all your financial reports, close the month's books, and file permanent monthly reports for future use.

Once you know how the month went, take time to do some financial planning. Compare recent months' activities to see the overall trends. Is your cash flowing positively? Are customers paying slowly? Are expenses in certain areas growing too fast? Are all accrual accounts being paid out on time? Are sales matching projections? Are quotes being turned into sales at a good rate? And do you have enough cash for any upcoming expenses?

If you and your employees don't have time to get to all these operations in a timely manner or if you have trouble understanding them, it may be time to hire outside help. Depending on where you need specific help, you may want to hire a bookkeeper to help with entry and accuracy or work with an accountant to firm up your processes and create planning tools. At Williams & Associates Tax Services , we can help with all your accounting work — daily, weekly, or monthly. Call today to learn more.

Goodwill and How to Account for It

Mon, 29 Oct 2018 00:00:00 GMT

The concept of goodwill is hard to explain, but it's a key element of any business. You might be asking yourself: What is goodwill? How should your keep track of your business' goodwill? And why is it important?

Here are a few answers to these questions about this intangible business asset.

What is Goodwill?

Goodwill is what is called an intangible asset. An intangible asset does not have a physical form (like a building, equipment, or a vehicle) but still adds value to your business.

In this case, that value added is the value of your business reputation, your potential future earnings, your client relationships, your customer lists, your trade secrets, and your branding. It's how customers recognize your business and what they think of it, what growth is likely in the future, and how much they recommend you to their friends.

Most businesses are worth more than the sum total of their physical assets. That is positive goodwill. But you can experience negative goodwill if the total value is lower than the sum total of those other assets. This happens when a company is purchased for less than its assets are worth. The buying company then books the difference as income to them.

How is it Calculated?

Obviously, it's hard to calculate something as nebulous as your business' intangible value for profit. Many business owners, in fact, tend to overestimate the value of their goodwill. This is a normal affect of being too close to your subject, putting so much work and heart into it, and having less experience in business valuation.

But accountants can help you determine a good estimate of goodwill through several different methods. One method is to start with the big picture. For example, by making an estimate of your business's overall value as compared with similar business setups in your industry or region, you can subtract out the value of actual physical assets. The remaining amount is your business' intangible goodwill value.

You could also opt to determine goodwill by estimating how long it would take you to rebuild your business to its current state from scratch. Multiply the number of years by its current income levels to determine how much it's really worth.

The value of specific parts of the business — like the client list — is often estimated by noting how long it took to grow the contacts and how much future income potential the clients offer.

How is it Tracked?

So, when and how should you keep track of goodwill? There are a few situations where a goodwill value is necessary, such as when merging or selling your company. If you're thinking of doing either one, an accurate value is vital to getting what your business is really worth. And because it's considered an asset for accounting purposes, goodwill should often be included on the company balance sheet.

Obviously, goodwill rises and falls in value regularly. This makes it important to reassess your valuation on a regular basis — perhaps once per year or every other year. This way, you will always have a more accurate picture of your company's success and ensure things like proper insurance coverage and accurate loan requests.

What Should You Do Next?

Determining goodwill value is challenging, so don't attempt to calculate the numbers on your own. You're more likely to end up with an over- or under-estimated dollar amount.

A professional accounting service can help create the most accurate assessment no matter what you need it for. At Williams & Associates Tax Services , we are here to help with all your business needs. Call us today for an appointment.

Entertainment, Tax Reform, and Your Company's Bottom Line

Thu, 30 Aug 2018 00:00:00 GMT

Every business has to pay for at least some meals and entertainment as part of getting or transacting business. Being able to deduct these often-necessary business expenses is part of many companies' financial plans. But recent changes in the tax code made some surprising alterations to what you can expect to get as a tax break.

So how can your business adjust for the new circumstances? Here's a short guide to help you decide.

The Impact of Tax Reform

In the past, entertainment expenses (like taking a client to a ball game) were often fully deductible as long as the entertainment was either directly related or associated with the conduct of business. Meals were generally limited to 50% deductible on your taxes, although there were some exceptions that garnered full tax breaks.

The Tax Cut and Jobs Act made some big changes. Starting in 2018, entertainment expenses are generally not deductible at all. And some meals that used to be fully deductible are now only 50% deductible. This could have a big impact on businesses that spend a lot of time wooing clients or vendors at off-site locations.

The Exceptions

Of course, there are some important caveats written into these changes. Any entertainment that is considered part of an employee's compensation and included in their gross wages is 100% deductible. Similarly, expenses for recreational or social activities that are primarily for the benefit of employees are fully deductible. Business meetings involving various boards of trade or business leagues can be deducted as they were before.

There is also some remaining ambiguity about how to differentiate between a meal - which is likely to remain at least partially deductible - and entertainment - which is likely not deductible anymore. For instance, it's unclear in current wording whether or not a business meal with a client is equally deductible as a business meal with an employee.

The IRS is still expected to provide more guidance on this subject, so stay in contact with your accountant to receive additional information as the year progresses.

How You Can Adjust

Given these new limitations, what can you do if you're a business that relies on providing meals and entertainment during the course of your trade?

For one thing, stick with business expenses that are deductible when treating clients. Since most business-related meals remain at least 50% deductible, you may want to make interesting meal venues a priority rather than other entertainment locations. You can also fully deduct food provided at a marketing event or presentation.

If you currently use a reimbursement arrangement for employee expenses, you may want to consider moving to a non-accountable plan that's included in employee wages (and therefore generally fully deductible). This would be a big decision, so consult with your accountant for more information about accountable and nonaccountable plans.

If your company benefited significantly from the tax deduction for entertainment, you may need to adjust your budget plans to compensate for the loss. Work with your accountant to determine what your tax liability would have been in 2017 if entertainment expenses were not included, then plan for a similar outcome in the current year.

Conduct an audit of reimbursed or company-paid entertainment receipts to determine where you should focus the company's money when it comes to nondeductible expenses.

While several aspects of the TCJA have made a big splash among businesses and individuals, quieter changes to meals and entertainment may have a big impact on your profitability. To find out more about what you can expect when tax time comes, talk with the business tax pros at Williams & Associates Tax Services today.

Preparing Your Small Business for an Audit

Sat, 30 Jun 2018 00:00:00 GMT

An audit can be a frightening experience, but it doesn't have to be. Though an IRS audit may involve some additional work, the IRS generally wants to work with you as a business owner. As long as any mistakes were truly mistakes, the IRS will likely just fix your issues for you and make some suggestions moving forward. Still, for the best possible outcome, you'll want to prepare in advance.

Take a Look at Your Tax Returns

An audit may go back several years. Your auditor will tell you which years are being audited. Pull out the copies of your tax returns and review them carefully for any mistakes. If you can find issues preemptively, you can explain why those issues occurred.

Many people are afraid of an audit because they believe they are in legal trouble. If you haven't knowingly misreported your income and expenses - if the issues with your tax returns truly are mistakes - the IRS will mostly be concerned about creating accurate records. Sometimes these errors are actually in your favor. If the IRS finds that you paid too much in taxes, they will issue you a refund.

Get Your Supporting Documents Together

For each expense and income item on your tax return, you should have the supporting documents available to defend your numbers. This includes bills, receipts, invoices, and deposit slips. You should be able to point to backup for every line item.

If you can, you may want to create a spreadsheet to document each of these expense items. The more well documented you are, the faster the audit is going to go. You want your auditor to be able to review your return at a glance, verify what they need to verify, and close your case.

If there are items that you can't substantiate, make sure you note why you can't substantiate them. For example, you may estimate that you spent $300 on office supplies in a month. You will need to be able to show your auditor why you made the estimates that you did.

Not everything does have to have a receipt. It is reasonable for a business owner to have some expenses that were jotted down, such as meals and entertainment expenses that were recalled after the fact. The auditor will only take issue with this if it happens excessively.

Collect Bank Statements, Credit Card Statements, and Investments

All of your bank and credit accounts are likely to be relevant, as the auditor is going to want to tie your expenses and income to real deposits and deductions in your account. If you can, you may also want to add account reconciliations and general ledger reports to show how your expense line items tie directly into your bank statements.

Most banks keep bank statements on file for a long time, so you should be able to refer to them if necessary. At this time, you can make sure that all of your checks were properly entered and that all of your expenses were coded correctly. If you find any errors at this stage, take notes for the auditor and describe how you will avoid these errors in the future (such as through additional review).

An audit can be less a stressful experience and more an opportunity to review your own accounting controls and improve upon them. Nevertheless, it is also a very important process, and you want to make sure you have all of the documentation you can to avoid a hefty tax bill.

If you've been notified that you're going to undergo an audit, you'll want the help of a professional. Contact Williams & Associates Tax Services for a consultation.

Financial Statements: What Do They Mean for Your Small Business?

Thu, 03 May 2018 00:00:00 GMT

The Three Reports

When people talk about financial statements, they generally mean a combination of three specific company reports. These are the balance sheet, the income statement, and the cash flow statement. While each report is generated using the same information from your bookkeeper or accountant, each report provides a different look at your business from a different angle.

The Balance Sheet

The balance sheet is a report that basically provides a snapshot of your company's assets and liabilities at a specific moment in time. It's static and gives high-level information. It shows what your company currently has that's worth value, what debts are owed to others, and what's left for you as a business owner.

Changes in the balance sheet from point to point can indicate whether your business owes short-term or long-term debts, changes in the values of your assets, whether customers are paying invoices in a timely manner, how much of your values are easily accessed, how much you owe vendors, and what your business may be worth if you want to make large-scale changes.

The Income Statement

Also called a profit and loss (P&L) statement, the income statement tells you how much money your company earned during a specific period of time and what your expenses were at the same time. The result indicates if you made money or lost it during that period.

It's easy to see why an income statement is a valuable tool for any business owner. You can track income and loss for any period of business - such as a month, a quarter, or a year - and even compare the results with other similar periods of time before and after. Since you can see both income and expenses, you can better target why you failed to make money or what your successes were.

The Cash Flow Statement

The third report is called the cash flow statement, and it also gives information over a period of time. It separates the actual cash your business received and spent into three categories: normal operating activities, investment activities, and financial activities.

Cash flow is vital to any business, and a lack of it is a significant reason small businesses go under. So you need to know how much cash you have on hand and whether it's flowing through your business in a smooth manner.

On a short-term basis, you can see if you have enough cash to meet payroll, cover debt payments, and pay vendor bills. Over time, you should see an increase in cash from operating activities and investments as your profits grow and your expenses stay in line.

You can also determine how much of your money comes through financing and whether investing in new or replacement assets is appropriate. And it will show if your customers are paying on time.

To learn more about these important financial reports and how you can make better use of them in your own business, meet with your bookkeeper or accountant on a regular basis. At Williams & Associates Tax Services , we have experts with years of experience to help guide you through understanding your company's financial health and how to improve it. Contact us today and schedule an initial consultation.

Filing Taxes Asa Self-employed Person? Bring These 5 Things

Mon, 05 Mar 2018 00:00:00 GMT

While few people enjoy the act of preparing their income taxes, self-employed taxpayers have an even larger challenge. Not only is there more involved in filing as a self-employed person, but you also may not even know what you need to bring to the interview with your accountant.

To help you gain confidence and reduce stress during this tax season, here's a guide to what sole proprietors should bring to their tax appointment.

1. Income Documents

Once the calendar year has ended, begin collecting a complete record of all your business income. The IRS expects everyone to declare all their income regardless of whether or not you receive a Form 1099 from your customers.

The easiest way to track business income throughout the year is to have a separate business bank account and use it to receive all your payments. If you haven't done this, though, you can still reconstruct income from your bank statements, customer invoices, canceled checks, and online payment reports.

2. Notated Receipts

Avoid acting out the old cliche about presenting your tax preparer with a shoe box of receipts to sort out. Why? First of all, you will likely have to pay them to organize all these receipts and documents for you, and that can add up quickly. In addition, your accountant won't have any context for the expenses, so they may not know if things are missing or what certain expenses are for.

As you organize your receipts, separate them into categories roughly equivalent to those on IRS form Schedule C , which is the form your accountant uses to claim your business deductions. You may also want to note on each receipt what items or services you purchased so that your accountant can ensure expenses are categorized properly. This will save a lot of time for both of you during the interview.

3. Vehicle Information

If you use any vehicles to carry out your business, failing to keep track of mileage or expenses can result in losing money. Most business owners or self-employed people who use a personal vehicle for work should track business mileage throughout the year. Keep a log book or an app that records the date of each trip, the reason, and both starting and ending mileage. If you haven't done this during the year, take the time to reconstruct your mileage before filing taxes.

In addition to mileage, if the vehicle hasn't been claimed on your taxes before, bring information on the year, make, and model as well as its cost of purchase and mileage (beginning and end of the year).

4. Expenses in Question

Many taxpayers aren't aware of what they can or can't claim as a business deduction, so it's wise to bring up anything you're not sure about to your accountant and let them guide you. If you don't keep track of a questionable expense, you may not have the ability to use it if it turns out to be a correct deduction.

Some common business expenses that may or may not be fully deductible include the space used for your home office, utility costs, new computers, phone and wireless subscriptions, and travel. Be prepared to talk with your accountant about how much business and personal use each item receives.

5. Estimated Payments

If you made estimated tax payments either to the state or the IRS, bring in records of all payments made. Cancelled checks, bank statements, or acknowledgments from the IRS are excellent ways to show your payments. If you make payments through the IRS' website, you may also be able to get a report by logging into your account.

By spending some time before your tax preparation appointment to get your documents in order, you and your accountant can ensure that you don't leave any money on the table when it comes to tax time. For more help preparing your sole proprietorship taxes, contact our tax pros at Williams & Associates Tax Services today.

Earn More and Save Time With a Chart of Accounts

Thu, 28 Dec 2017 00:00:00 GMT

What Is a Chart of Accounts?

Simply put, the chart of accounts is a numbered list of different types of business activities. It includes your assets, your revenue, your expenses, and your liabilities. Think of a chart of accounts as a sort of index guide to the different parts of your business. Rather than thumbing through a book to find information, you can skip straight to what you want to know.

Generally, a chart of accounts groups items together according to the way accounting reports do. So you would likely start with accounts listing your assets (account numbers beginning with a 1), liabilities (account numbers beginning with a 2), and owner's equity (account numbers beginning with a 3).

Following these permanent accounts that are used at the top level of your financial reports, you will probably see more temporary ones like income and expenses (account numbers beginning with 4 and 5, for example).

Of course, lots of room is left between assigned numbers so that you can add more accounts (or reduce them) as your needs change.

Why Is It Beneficial?

If your company is small, this list may seem like a higher level of accounting than you need to be doing. However, it's good to start thinking about the future, and setting up numbered and structured accounts is just the way to do so. Why? Here are a few great reasons.

First, assigning numbers to categories helps you use those categories consistently. Instead of choosing new titles or descriptions each time you enter an expense, for example, you can now choose from a set list and with the same description.

This option allows you to actually track expenses easier and more consistently. You'll be able to know what your office supplies cost each month (by using the same number) rather than searching for myriad descriptions like pencils, paper, or yellow notepads and blue notepads.

Second, grouping like items with each other also gives you the ability to see larger categories more thoroughly. You can have all your assets listed together, for instance, so that you know exactly what you own and how much is owed on these goods. This organization helps you track things as your business grows and know where you stand financially at any given moment.

Third, you can scale up your chart of accounts as your business grows. As you offer new products, expand the income category from just one business-income amount to sub-accounts that show the income from each product separately.

Break down expense categories, such as payroll, to show how much each department costs to run each month. And you can even track the cost or benefit from a particular asset, such as an expensive tool.

Or you may want to track how much things like business vehicles, operating a particular location, or maintaining a night crew all cost by themselves. How about knowing what exactly you're spending on meals, entertainment, or networking? By adjusting your accounts to show more specific categories, you can track all these things without much extra work by you or your bookkeeper.

How Can You Get Started?

If these benefits sound great but you're not sure where to begin, make an appointment with an accountant or professional bookkeeping service. Williams & Associates Tax Services is happy to help you find the right basic chart of accounts to start with. And they can help you learn how to grow your accounts along with your business' changing reporting needs.

5 Essential Tips for Staying on Top of Business Expense Tracking

Sat, 02 Sep 2017 00:00:00 GMT

If you forget to claim all of your eligible business expenses, you unnecessarily drive up your tax liability. On the other hand, if you claim expenses that don't qualify as business expenses, you risk audit and potential penalties for unpaid taxes.

Wondering how to stay on top of your small-business expenses? Here are five essential tips.

1. Understand Which Expenses Qualify

So that you don't overlook any expenses or claim any expenses erroneously, it's critical to understand the IRS's definition of business expenses. Basically, the IRS has two criteria for business expenses: they must be usual and necessary. “Usual” simply means that the expenses are relatively common or routine for your industry. For instance, a freelance writer may need to buy notepads for making notes while a restaurant owner would needs plates and a daycare provider needs toys.

“Necessary” simply means that the expense is helpful for your business. “Necessary” doesn't mean that your business absolutely can't function without incurring that expense. For example, imagine you travel for work and write off mileage on your vehicle. While you may be able to walk from place to place, the IRS doesn’t require you to walk. Similarly, you could work while sitting on the floor, but the IRS still allows you to write off the cost of a desk.

2. Try Tech Tools

There are numerous expense-tracking apps that can help you stay on top of expenses. Ideally, you need an app that engages with your accounting software so you can instantly upload your expenses to your accounting records or share expenses with your accountant through the cloud. You may also want an app that works on your mobile phone so you can record expenses on the go.

3. Develop a Routine for Tracking Expenses

Whether you work on your own or have multiple employees, it's critical to have a routine in place for tracking expenses. For instance, if you work on your own, you may want to establish a set routine of recording expenses as they occur. The process could be as simple as throwing the receipt in a shoebox. If you keep digital copies of your receipts, remember to keep the hard copy of the receipts or invoices too.

Similarly, if you have multiple employees, you may want to set a workflow that defines how employees request permission for certain expenses. For example, you could need policies for whether or not employees pay on their own or use a company card, how employees submit receipts, or how and when you put the expenses into your records.

4. Set Aside Regular Time for Expense Tracking

Ideally, you should not leave expense tracking until the last minute. If you're trying to organize all your expenses at tax time, you will likely find yourself in a time-wasting organizational nightmare. To avoid that, set aside time for expense tracking on a regular basis. Depending on the size of your business, you might track expenses once a week or even just once a quarter.

5. Get Professional Help

As a business owner, you have to deal with a lot of tasks. Rather than weighing yourself down with accounting and bookkeeping work, consider outsourcing those tasks to the pros so you can focus on other aspects of your business.

Accountants can help you organize shoeboxes full of receipts, and they can also help you create an expense-tracking system that makes it easy to stay on top of your expenses every day of the year.

At Williams & Associates Tax Services, we offer a wide range of accounting services, including expense tracking and tax return prep. We work with all kinds of businesses, from sole proprietorships and individuals to C- and S-corporations. To get the professional help you need for your books, contact us today.

4 Ways to Save Time and Money by Speeding Up Accounts Payable Processing

Sat, 02 Sep 2017 00:00:00 GMT

When trying to manage cash flow, most business owners investigate ways to make accounts receivables (those incoming payments) work better and faster. But along with speeding up the receivables, it's good to look at ways to better manage the payables.

Here are 4 ways to get payments out on time and at less cost.

Automate It

In accounting, the more you can automate, the less data entry and human error you'll have to deal with. This means not only making things go faster, but also making them more accurate. Automating accounts payable can be started simply by identifying recurring payments and instructing your software to generate an invoice, purchase order, or payment at the same time each month.

To really automate processing, consider switching to a paperless payables system. Paper invoices are scanned, and the digitized version can be used to enter the data into your system (or even entered by smart software) and receive approvals even from mangers who are in another location. You can use a simple email approval system, but accounting software packages are increasingly including an "electronic signature" method by which items are automatically routed to different people throughout the chain.

With over 50 years of experience in accounting, Williams & Associates Tax Services in Wilmington can help you use your own software to create a paperless system. They can also help with other automating tasks like standardizing your line item naming and creating vendor-specific terminology on paperwork.

Use Payment Schedules

Most accounts payable software offers the ability to assign a due date for payment as you enter the invoice. Noting this due date and entering it correctly will help you time your payments better. It prevents you from paying invoices before they're even due or allowing any to go beyond their terms. Print payables reports on a regular basis so that you can understand your cash flow needs over the week, month, and beyond.

As you enter payment schedules, be sure to take advantage of any invoices offering early payment discounts. While they may seem small individually, these .5% to 10% discounts add up and can rapidly reduce your costs.

Establish Communication

Communication with vendors is key to getting all your invoices processed in a timely manner and paid correctly. Vendors generally want to get paid, so they are often happy to answer questions, adjust some of their processes, or alter terminology if it will help toward that goal. The first step to arranging those positive adjustments is to have a good line of communication with the vendor.

Your accounts payable department or technicians should know how to reach vendors, salespeople, and accounts receivable managers at all of your major suppliers. They should also be able to directly contact your internal people responsible for purchasing, selling, and managing departments. Allowing employees to talk directly about approval questions is the easiest way to speed up processing with no extra investment.

Streamline Approvals

One of the biggest logjams at many small companies is trying to get approval for unusual invoices. The fewer people that your payables technician has to contact before entering an invoice for payment, the faster it will go and the more likely you are to save money.

Using a purchase order system generates written pre-approval that takes the guesswork out of invoice payment. Even though it may seem like an unnecessary extra step for a small business, it can help to keep things running smoothly when you have multiple people ordering, are on the road a lot, or when you want to control expenses better.

To be sure, improving your accounts payable processes may not be a quick fix for low cash flow. It is, though, an investment in the future of your business by allowing it to plan better and to meet the changing needs of the business world.

Hiring Your First Employee? What You Need To Know Beforehand

Thu, 06 Jul 2017 00:00:00 GMT

For many small businesses, there comes a time when you simply can't keep up with the workload on your own. Trying to do everything can result in added stress and burnout, and can even drag down your business profits.

If you've reached this crossroads, you're probably thinking of hiring some help. But hiring employees can be a big decision...perhaps bigger than you realize if you've never been an employer before. To help you make the best decision and reduce your stress, here is a brief guide to becoming a first-time employer in North Carolina.

Employee or Contractor?

The first thing you'll need to decide before hiring someone is whether you will be hiring them as an employee or an independent contractor. What's the difference? An independent contractor is treated as though they were their own business. You pay them an agreed-upon amount and they cover their own taxes, insurance, and expenses. This makes an independent contractor less expensive for most businesses.

However, before you run out and sign up an independent contractor, know that the IRS has specific guidelines about who can be classified as a contractor and who must be considered an employee. If you have control of when, where, with what, and by whom the work is done, the person is likely an employee. And misclassifying an independent contractor can be costly if the IRS or state determine that you must correct the error.

Understanding the Cost

While most people think of employees in terms of the hourly wage or annual salary, there is a lot more cost to the employer than just that. In truth, related expenses can add 25% to 40% to the rate paid to the employee. These added costs may include:

• FICA payroll taxes paid by both employer and employee
• Unemployment insurance paid by employer
• Workers' compensation coverage paid by employer
• Health insurance and other benefits
• Accounting costs to file additional forms
• Costs of additional work space and/or equipment

Obviously, it's important to ensure that your business budget can cover all these costs...both direct and indirect. If you need help determining how much to plan for in the company budget, work with your accountant or bookkeeping service to get specifics for your industry and region.

What You'll Need to Do

If you decide that you will, indeed, be hiring an employee, you will need to register with several agencies prior to the first payroll. The IRS issues Employer Identification Numbers through its official website. That EIN will allow you to file employer tax returns and pay withholding tax deducted from your employees' paychecks as well as your own payroll taxes.

In addition, in North Carolina, you will generally need to file with the Department of Revenue to pay any withholding for state income tax. North Carolina also requires that employers with three or more employees pay for workers' compensation coverage through the Industrial Commission. And the Division of Employment Security handles mandatory unemployment insurance coverage.

How to Get Help

There are a few ways to keep costs and your time investment at a minimum. If you're a first-time employer, it's a good idea to hire a service to handle the payroll and tax filing requirements. Navigating the process of getting registered with all necessary agencies, filing the right forms on time, and calculating paychecks can be overwhelming and leaves a lot of room for error. At least for a while, it's often best to use experienced professionals.

Your accountant can also suggest some additional ways to reduce the burden. This might include hiring your own minor children, which in some cases can free you of the requirement to pay some payroll taxes. You may also want to keep your payroll under certain thresholds for oversight or additional costs from state agencies. Outsourcing some of your work--such as administrative tasks, bookkeeping, or advertising--to other companies may also help you avoid having to hire your own employees.

Understanding the full costs and requirements of being an employer will help you make the best decision for your business. And, even if it doesn't turn out to be the right moment now, it will prepare you to move forward with confidence when the right moment comes along.

How a Forensic Accountant Can Help You With Employee Theft

Fri, 05 May 2017 00:00:00 GMT

Owning a business can bring the opening quote of Dickens' A Tale of Two Cities to mind: "It was the best of times, it was the worst of times." While the best of these times may come from the freedom and satisfaction you feel from paving your own way in the world, the worst may involve significant financial losses after a trusted employee steals or mishandles money.

Whether you suspect one or more employees of actively committing theft or worry that your existing anti-embezzlement efforts may prove inadequate in the future, untangling your business's financial history on your own can be a complicated and messy process.

Oftentimes, a forensic accountant can help you track down missing funds and build a strong case against any employees, vendors or others who may be doing you harm. Read on to learn more about the specific tasks a forensic accountant can accomplish and how you can get started toward building a more fraud-proof business.

Vulnerabilities of the Modern Business

Even industry leaders may feel lost when it comes to their business's bookkeeping needs amid an ever-increasing load of regulations, tax rules and other laws. Unless you already have some specialized education and training in accounting, learning to handle your business's finances can be a full-time job in and of itself.

On the other hand, hiring out this task to an employee can leave you vulnerable to embezzlement or fraud. Unless you physically witness an employee putting money into their pocket, you may not have the knowledge or background necessary to dig through your own books and pinpoint discrepancies.

Those who are inclined to defraud their employers know that doing so slowly over time is far more likely to evade detection than stealing significant or noticeable amounts all at once. While you may wonder why your business never seems able to turn a profit for long, without more evidence of fraud, you're not likely to dig much further.

Services Forensic Accountants Offer Businesses

A forensic accountant, much like an auditor, can sift through your business's bookkeeping records to spot any discrepancies or red flags that might signify an employee's fraud. Unlike a traditional auditor (like those employed by the IRS), a forensic accountant has specialized training in litigation and other non-accounting fields that can help them build a strong legal case.

For example, while an employee's confession of theft may be enough to spur you to go to the police, it might not be enough to carry a conviction in a criminal or civil court of law. With training on the rules of evidence, forensic accountants can gather documents and data that will help you back up your claims — regardless of how strong they may otherwise seem, which ensures that you will prevail at trial.

In addition to untangling any chains of theft, a good forensic accountant can help you set up your financial and accounting processes to avoid future fraud and embezzlement. This can be an invaluable service — even for businesses that have never experienced employee-based fraud.

By setting up redundancies and checkpoints in your financial process, you'll be far better able to gain a snapshot of your business's finances at any point in time. This will provide you with the tools you need to stay on top of your finances and assure employees that any discrepancies they may notice or create won't go unchecked for long.

By enlisting a forensic accountant to help you get your finances in order, you'll be ahead of the game when it comes to preventing, tracking down and prosecuting any fraud that may befall your business. Contact us at Williams & Associates Tax Services for more information.

8 Little-Known Tax Deductions That Could Make a Big Difference

Sun, 05 Mar 2017 00:00:00 GMT

You may think you know all of the deductions you can claim on your taxes. After all, you've done this a few times and you have a pretty good handle on it. What you may not know is that there are several little-known deductions you can claim that could make your tax season a little brighter.

1. Job Search

If you are looking for a job in the same field you are currently in, then you can claim job search expenses on your tax returns. Qualified expenses could include parking fees at an interview, cost of printing a resume and even the recruiter you hire to help find you a job.

2. Quitting Smoking

Whether you've been smoking for a month or 40 years, deciding to quit is favorable in the eyes of the IRS. Whatever method you choose, be it patches, programs or any other quit-smoking method, you may be able to deduct these expenses.

3. Poor Gambling Skills

If gambling is your thing and you're not very good at it, then there's good news. You can claim the losses from legal gambling as a loss of income on your tax returns. The only catch is that if you win some of those losses back later, then you won't be able to get back more than those winnings. If you lose big, it may be a good idea to cut your losses and get out.

4. Medically Necessary Home Renovations

If you are updating your home because of medical necessity, then you can deduct those expenses on your taxes. Approved renovations include adding a wheelchair ramp, installing an air cleaning system for someone with asthma, adding a bathroom to a lower floor for someone with arthritis, widening a door to accommodate a wheelchair, installing support bars in a bathroom and modifying stairs.

5. Work Attire

If your boss requires that you wear a certain uniform to work, be it a certain color of scrubs, protective wear or another type of uniform, then you can deduct the expense of purchasing them. The catch is that it has to be something you wouldn't wear on a normal day outside of work.

6. Canine Protection

Business owners have mountains of small expenses that can't be planned for. One of those expenses is taking care of your guard dog. Whether you run a scrap yard, a towing company or any other business that would benefit from a guard dog, you can deduct the expense of taking care of said dog the same way you would deduct the expense of hiring security guards.

7. Small-Business Expenses

Aside from the guard dog, small-business owners come across expenses every day that can be deducted. The office supplies you purchase on a regular basis, be it sticky notes, pens, paper or printer ink, are deductible. Office furniture, travel expenses and insurance premiums are also tax deductible. The list of deductible expenses is endless, so be sure to discuss this fully with your tax accountant.

8. Charity

You are likely aware that you can deduct charitable donations from your tax returns, but what you may not know is that out-of-pocket expenses qualify as well. These can include doughnuts you purchase or ingredients you buy to bake cookies for a fundraiser. Also, you can include the cost of items donated to charities and tithing donated to your church.

Just be sure to keep thorough records and remember that the organizations you're donating to have to be legitimate ones. Unfortunately the money donated directly to fire victims or the homeless doesn't count.

When you understand all of the deductibles you can claim, tax season doesn't have to be something you dread. Contact us at Williams & Associates Tax Services for all of your tax needs.

Why You Need Forensic Accounting

Tue, 03 Jan 2017 00:00:00 GMT

Accounting has many uses all over the business world. When people think of forensic work, they tend to think of a crime scene or lab for testing unfortunate evidence. The truth is that those who work in forensic accounting have an important job too.

Protecting from Fraud

Businesses and other institutions that rely on accurate financial solvency must protect themselves from fraud. A company is only as good as the honesty level of its employees and the strength that company can pull in cases of fraud. If necessary, a forensic accountant will be pulled in so that suspected incidents of fraud can be tracked by the numbers.

Keeping Things in Line

With a streamlined system for uncovering and handling fraud, a business can send the right message. This message can be for its employees and also adequately protect its customers by showing that investment into those institutions is a safe and positive thing to do.

Safety First

It is important to all to be working with trustworthy and safe co-workers and employees. Safe workers are happier workers who are more effective and can be more proactive in helping customers to know their place of business means business.

Having a plan in place to engage the right forensic accounting help for your business environment goes a long way toward ensuring safety for business assets and company integrity. Find out more about ensuring access to the right forensic accounting assistance by contacting Williams & Associates Tax Services at 910-392-1040.

Understanding What Forensic Accounting Is

Wed, 02 Nov 2016 00:00:00 GMT

When many people hear the term forensics, their minds automatically conjure images of those television shows that feature a crime. However, when it comes to forensic accounting, there is a different kind of crime being told. Forensic accountancy is a growing field that many businesses need.

How Numbers Add up to Find Crimes

The term forensics itself means to use scientific methods to investigate a crime. In many cases, a forensic accountant digs in the accounts of businesses to uncover discrepancies. These discrepancies could be as small as mismanagement of funds to larger cases of fraud or embezzlement.

Types of Companies That Use This Service

One obvious employer of forensic accountants is the federal government. The Internal Revenue Service uses forensic accountants during audit periods for individuals and companies. In addition, other agencies such as the department of education and the Federal Trade Commission provide funds to various industries and these industries are held to strict accounting standards in order to maintain funding. Industries found in violation of allocation of funds are often uncovered by forensic accountants. Industries themselves can also employ forensic accountants to ensure that their accounts are accurate.

There are many types of accountants out there, and they all aren’t boring number crunchers as people might suspect. For more about the exciting world of forensic accountancy, call Quality Bookkeeping Services Inc. at 910-452-0480.

Why Your Business Needs a Bookkeeper

Thu, 01 Sep 2016 00:00:00 GMT

Many business owners see hiring a bookkeeper as an extra expense. While every entrepreneur is welcome to manage his or her own finances, people usually find that all the time spent trying to keep track of spending and earning actually costs more than paying another party to handle those matters.

Reduce Clerical Errors

Any flaw in your bookkeeping can lead to huge problems with cash flow and future budgeting. If you think you’re saving money by not paying an accountant, consider how much it might cost you if you aren’t able to meet customer demands because of a clerical error. Unless you know exactly what you’re doing, the decision to not hire a bookkeeper can be a very shortsighted mistake.

Time Is Money

Instead of spending all that time crunching numbers, there are things you could be doing that actually generate revenue:

Marketing
Meeting with new clients
Increasing billable hours

Your attempts to save money should never eat into the time you could be using to make money.

Every business should make an attempt to cut frivolous expenses. Hiring an accountant, however, is not such an expense. For expert bookkeeping service , contact Williams & Associates Tax Services today.