Posts

Business women using magnifying to review financial summary report. Concept of Internal audit, Auditing tax,  Analyze return on investment.

What You Should Know about Business Tax Audits Conducted by the IRS

1. Most of these audits are conducted in person by the IRS.

2.
These audits are very comprehensive and cover issues such as income tax, employment tax, and payroll tax. Proper preparation is crucial for the audit.

3.
The determination of the IRS agent is not final. You have the right to appeal against their determination.

The audit of your business tax return is conducted in order to verify the authenticity of the information that you have filed. Questions such as whether you included all of your income and filed only for deductions that are permitted by the law are looking into. These audits aren’t conducted at random. Returns likely to have some errors in them are selected by the IRS through a set intricate criteria. The audits begin within a year of filling and are completed mostly within that year.

The Returns of Audits are Conducted in 3 Ways

1. By mail: This type of audit is known as a correspondence audit.

2. At an IRS Office: This type of audit is known as a desk or office audit.

3. In person: This audit is conducted at the site of your business or your home and is known as a field audit.

As mentioned above, the majority of business audits are conducted in person, i.e. they are mostly field audits. Field auditing is an extensive task and considered a physical inspection of all aspects regarding owners and their businesses. The IRS takes a close look at the accounting system and business records while physical inspections are carried out to deem the authenticity of those records. It can take up to a year for a business audit to be completed (in most cases). However, the audit time can be reduced if a business properly prepares for the audit with prompt responses to the requests and questions raised by the audit team.  

While the audit is being conducted, the IRS requires you to submit all necessary documents (such as bookkeeping records) that are used to determine your financial position. You should be accurate and precise when providing the information requested by the IRS. It is recommended to have a licensed tax professional to handle your audit-related tasks. You will need to provide your tax professional with the facts needed to handle the audit.

Understanding the Scope of an Audit

The scope varies according to the type of audit being conducted. Here’s what you should keep in mind:

  • Mail Audits are very limited. They include a check on a few items, which are mentioned in the audit letter that the IRS mails you.
  • Office Audits go into more detail. They are generally less complex than field audits but, in certain situations, they may have a scope similar to that of a field audit.
  • Field Audits are the most time consuming. They include questions that probe into the activities of your business and your business’ financial position. It is a wise decision to hire the services of a tax professional to represent your business in front of the IRS.

Preparing Responses to Questions Asked by the IRS

Mail Audit: Preparing for a mail audit is a relatively easy task. You will only have to prepare complete responses to the questions included in the audit letter you received via mail.

Field and Office Audits: These can be more complex. In this, you will need to:
  1. Prepare for the meeting session you will have with the IRS agent/officer who will be conducting the audit
  2. Prepare and compile the information that has already been requested by the IRS
  3. Prepare for any sort of questions that the IRS and the IRS Agent/Officer might ask

In simpler words, you must be prepared to answer any sort of question related to your financial activity that has happened during the year for which you are being audited. You will also need to recreate documentation for anything that isn’t documented (or if relevant documents have been misplaced). Third party records or other records must be used for reconstructing such documents.

Respond to any request for documents/information promptly and on time

  • The IRS will increase the number of questions if they think it is necessary for you to change your returns. If you get an IDR (Information Document Requests) which asks for more information about finances, it is important to respond by the deadline in order to avoid any sort of suspicion on the IRS’ side.
  • The IRS may tell you that items such as income and deductions have been misreported. If you disagree with their conclusion, you must represent your interpretation to the IRS.
  • Finally, the audit is closed with the IRS either recommending some adjustments to your returns or accepting your returns as they are. You would, however, be given a 30-day window to appeal their decision.

Check out America's Best Bookkeepers

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.




 

An accountant using an online program to do income taxes.
When business finances are relatively simple, DIY tax prep software can be used to complete your own tax returns. Initially, the magnitude and frequency of financial transactions stay within the range of the software, which is a healthy sign for businesses who prefer using DIY financial tools to cater to their daily and evolving financial needs. Since humans always strive to make our lives easier, DIY accounting tools and software can greatly ease our way through to achieve brilliance in the accounting and financial aspects of our business. They are ideal for small businesses who don’t have complicated financial transactions as they are known to file a clean tax return. As soon as a small business grows, its financial needs also grow. In the expansion phase, businesses need to reevaluate the effectiveness of their DIY tax prep software in order to achieve intended results.

The Right DIY Tax Prep Software must be Integrated

Although the tax cuts and jobs act, signed into law on December 27, is supposed to reduce and simplify income taxes paid by US citizens in the next year, there are a lot of DIY tax software that lack effective evaluation of tax returns. This is the reason why SMEs have become doubtful on whether to trust DIY tax software completely or not. Although, industry veterans have made claims on the authenticity and legitimacy of DIY tax prep software, you may be surprised to know that they are promoting different DIY tax software due to their own vested interests. Money talks! Perhaps this is the reason why industry veterans have played an active role in changing the perception of business owners on a massive scale.

The vast majority of tax preparers are actually small businesses who can’t afford to hire the expertise of in-house tax professionals. Since tax-related activities are seasonal, the extra cost that companies have to bear after tax season accumulates to become a mere burden on their shoulders. This is the core reason why small businesses prefer to use DIY tax prep software instead of hiring the expertise of tax professionals. That’s exactly why most industry veterans endorse DIY tax software as an ideal alternative to hiring in-house tax preparation expertise.

Does This Perspective Ever Change?

Yes, it does change from time to time, depending on the nature of the change. When a business grows, so do its bookkeeping and financial needs. The frequency of financial transactions helps trigger the change and, businesses who don’t deal with this change, should prepare for the worst. For example, let’s take a small business who has accumulatively 400-500 monthly business transaction now. When the business grows, so do its transactions and the tax-impact on those transactions. When this happens, the business needs to let go of  its DIY tax prep software and think of hiring a tax professional for their seasonal tax preparations.

Why Have People Started To Take More Interest In Tax Preparation?

The point is, tax preparation has become a big deal and that is the reason why people have been specializing in taxes. Preparing tax returns as a career can be pretty lucrative as it offers people safe and healthy financial returns. This billion-dollar industry is expected to speed up exponentially as more and more businesses are stepping into the industry. According to studies, tax preparers in the US alone generated about $24 billion in 2017. This indicates that the industry is expected to speed up the pace of growth and tax professionals are likely to make more money than ever in the 2018 calendar year.

There are a wide variety of tax prep software options on the market. All that you need to do is select the right platform fit to your business’s financial needs and requirements, especially if your business is of small-scale and desires to use DIY tax prep software to file a clean tax return. However, as soon as your business grows, you need to consider hiring a tax professional or third party vendor to file accurate tax returns.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

 

 

Young asian businessman carrying heavy box of TAX. Taxation concept
Remember the old saying ‘when pigs fly’? You may have heard your parents mumbling this phrase in response to your allowance increase request. You may also recall it when you saw a casual, unwanted email promising your business 1000 new clients. And, you have possibly even said it when someone recommended that you improve your bookkeeping habits in your business.

You might consider tax preparation a part-time job. However, the key to refining your tax season experience is continuous preparation for the entire year, not just at the time of filing. Developing healthy financial habits should be engraved in the entire culture of your organization. Someone who has suffered from a heavy tax burden would surely understand that ignoring financial responsibilities always results in misery. Bruises may still hurt but they remind you to embrace clever accounting habits, which will ensure the success of your business.   

Get Rid of Outdated Accounting Systems

If you have been struggling to manage a chaos of sales receipts, invoices, and financial reports, you definitely need to redefine your bookkeeping model from scratch. Cloud-based accounting software offers a realistic solution as they allow you to generate, send, and receive receipts and reports in real-time. You can also synchronize the software with your bank account to send or receive payments. All of this is possible remotely, from anywhere. Developing healthy accounting habits should always be a top priority.

As these cloud-based platforms have easy accessibility and functionality, your business will habitually adapt and develop healthy accounting practices that are key to surviving the tax season.

Develop Contemporary Accounting Habits

Most top businesses today have invested in developing a sagacity among their employees that allows them to stay current and engaged. Staying in touch with the latest laws and tax changes is crucial for any business and it is important that you know about them in time so that something could be done before it is too late. The latest tax reforms are a contemporary example, which need to be thoroughly investigated by a team of seasoned professionals. Though you might be outsourcing your business bookkeeping, you should still put an effort into learning about the changes so that you can comprehend things clearly.

Developing contemporary accounting habits also means that you stop procrastinating and start categorizing your expenses on a weekly basis. Leaving things on the back burner only cause them to add up and, when it’s time to file taxes, the situation becomes a fire drill for your whole team. Keeping a regular and consistent record of all of your financials will ensure that you avoid any such situation.

Separate Personal and Business Expenses

Using your business account for personal use is never a good idea. The expenses will continue rising without you noticing and eventually they will add up to your tax bill. You may not consider it a big deal and think of it as a onetime thing. However, over the course of a year, the expenses may accrue to be substantial. This is one of the worst accounting habits you can adopt.

When you use business debit and credit cards only, it will create a paper trail for bank reconciliation which will eradicate the reimbursement process altogether. Don’t stop with only reconciling your bank accounts. All accounts that have an ending balance must be reconciled. Your bank accounts, loans, lines of credit, credit cards and payroll liabilities must all be reconciled on a daily or weekly basis and shouldn’t wait until the end of a month.

Have your Books Reviewed by a Professional

You may consider hiring a CPA an expensive and insignificant endeavor. However, that decision can prove to be one of the most valuable accounting habits that saves you from a hefty tax burden. Just because your books are reconciled, it doesn’t prove that they are also accurate. Having another set of eyes looking at your financials won’t hurt you. Instead, a CPA will offer critical input which could reduce your tax bill considerably. Because these are professionals who have the experience of looking at thousands of financials, they will surely catch any ambiguities and can offer you valuable advice to manage your taxes in the future.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

tax e-file (electronic filing) concept - a word cloud on a vintage slate blackboard
Finding affordable and comprehensive ways to E-File your taxes is not easy. Preparing for the tax itself is a challenging task. At times, we are occupied with so many things that we often forget to focus on minor details when preparing our returns and then ended up being audited. You have to keep your yearly financial history for tax returns. If you feel that you need help in filing your taxes, especially when you have multiple businesses, it is better to hire an accountant right away to do your bookkeeping. It will save your time when filing your returns. We came up with a few affordable ways to E-file your taxes.  

TurboTax

TurboTax is a very convenient software where you can file your taxes without paying a penny. Using an online software can be tricky, so you have to feel confident when using it. If you receive the regular W-2 form, you can use Turbotax for free. The process is simple and easy to understand; just follow the instructions. You can access TurboTax from your phone by downloading the mobile app. Based on the information provided, it also tells you if there is an audit risk on the return. Users can also access free live chat and seek advice from an expert.

TurboTax also offers more advanced services for a fee. One of those services is SmartLook which allows you to have a live conversation with a CPA through video chat. If you are filing 1040A or 1040EZ and fulfill the following requirements, you can qualify for the free edition.

  • Do not own a home
  • Income less than $100,000
  • No pending medical bills

H&R Block

H&R Block offers free tax filing through various mediums like phone, email, and one-on-one consultations at any of their branches. H&R Block has more than 12,000 branches. If you have a student loan or own a property, H&R Block is the right choice for you as it supports more forms, including 1040. You can say it is an advance edition of TurboTax. You can file federal and state returns with H&R Block.

 TaxAct

TaxAct is considered one of the best options compared to its competitors. It is easy to use and has features including email, resources, and guides to help you when filing your tax return. If your tax return requires more advanced support, you can purchase its “Freelancer” version for approximately $82.00 for state and federal tax returns. Whereas, TurboTax costs around $40.00. TaxAct does not offer a free desktop version, but you can still get the software for only $15.00. TaxAct is one of the cheapest software that you can use when filing for your returns.

eSmart Tax

eSmart Tax allows you to file basic federal returns for free. It offers you free live support and audit support from a CPA. If you have used any other software previously and want to migrate your tax information to eSmart, you can do that conveniently and free.  If you are filing for state tax, it will cost you around $30.00.

IRS Free File (IRS.gov)

Many counties in the United States offer free electronic filing for income tax returns. Although, they do have some requirements. If you qualify, they will actually file the return for you and suggest what you can do to get more money back. For example, Big Bend volunteers are IRS certified and offer free preparation for income tax returns in Leon County, Tallahassee, Florida.

Conclusion

Preparing for tax returns is not at all fun, but it can be hassle-free with the right choice of your tax software. For simple tax returns, you do not really have to purchase an advanced version, however, it is important to find the software according to your needs. Many companies offer free software to their employees for E-Filing. If your income is more than $200,000, unfortunately, none of these will help you. The best thing to do in that situation is to hire a CPA who can prepare for your taxes and help you get the best results.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

Time for Taxes Planning Money Financial Accounting Taxation Businessman Tax Economy Refund Money

In A Nutshell

Preparing tax returns is no easy feat as it requires specialized expertise and skills in accounting. In the tax season, every business is supposed to file a federal income tax return under law and, those who fail to do so, face heavy penalties and fines. When specifically talking about costs, they vary according to the complexity and comprehensiveness of your tax information. Moreover, tax professionals have a different fee structure that needs to be duly tracked prior to making a contract. Costs vary widely for tax preparation, from DIY tax prep software to professional tax preparers. With so many options, you need to set your priorities based on your tax situation in order to create a clean tax filing record.

The Thought of Preparing Tax Returns can be Daunting

It can be quite an achievement when you come across and conceive an exceptional business idea, to which you are sure will work well for you. Your entrepreneurial skills and wisdom have created a business venture that is sure to yield significant gains at some point in time. Amidst all of this excitement comes a point when you have to file a federal income tax return in the tax season and you may have no idea how to deal with it. This is where the real misery starts and businesses shudder to lose their conscious and fall apart into pieces. In order to prevent this occurrence, businesses need to either hire tax professionals to prepare their tax returns or use DIY tax prep software to evaluate how much they are liable to pay to the government.

DIY Tax Prep Software vs. Tax Preparers

Depending on the complexity of your tax information, you need to decide which option is right for you and best suit your business’s tax needs. Preparing business tax returns is not as simple as it seems. It requires technical knowledge, skills, and expertise, which most of us lack. Most likely, it is ideal to spend a little portion of your hard-earned money on hiring the seasonal services of tax professionals if you expect to file a clean tax return and save yourself from the hectic process of the tax return process.

The point is, whatever you invest on, tax professionals will pay off in the long course of your business’s journey. Generally, for preparing a simple federal income tax return, tax professional may charge anywhere around $100-$150. However, they may add more fees to your final invoice or settlement if the complexity and depth of your tax refund grows. 

DIY Tax Prep Software

If you own a small-scale business, you may not be able to afford hiring a tax professional to prepare your tax returns. If not, you can use DIY tax prep software as an ideal alternative. It largely depends on the frequency of financial transactions and accuracy of taxable bookkeeping records. There is a wide variety of DIY tax prep software and online options that calculate accurate tax returns. Moreover, they are affordable, fast, and user-friendly, which means you can trust tax prep software, especially if you can’t hire a tax professional. The best thing about DIY tools and software is that they are cost-effective and anyone can afford to acquire them with very little or no subscription fee.

Conclusion

For fairly simple and straightforward tax calculations, DIY tax prep software can be used. However, for complex financial transactions, hiring tax professionals to prepare your tax returns is a smart choice. It is important to evaluate the effectiveness of your software and weigh its value of tax preparation against the cost prior to making the final decision of which option to go with—either DIY tax prep software or hiring tax professionals. Without a doubt, a well-organized yet clean tax filing can save you a lot of money and stress.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

Calculator with text "Tax Time" on tax forms and money. Business concept.
Having the right tax preparer at your service has numerous advantages. It can save you thousands of tax dollars. Tax experts are adept at finding critical information from your financial statements and reports and using them to your favor. They are experienced and have the ability to look beyond the obvious and offer value to your business. However, if you do not conduct research about the tax preparer, you may end up choosing the wrong one, which could be disastrous.

You don’t really need a high-end CPA who charges $200/hour for filing a simple return that has few ambiguities. However, you do need a tax preparer who is reputable and experienced enough to carry out this task. To get the most out of your money in the long run, below are some tips to get you on the way to choosing the correct way to file your taxes

File Free through the IRS

A free filing service is available at your convenience where you can file your returns without any cost. There are e-file services available online that can be used to fill out the necessary information and submit it electronically. This service is a partnership between the IRS and tax software companies. For individuals who have pretty simple financials, using an e-file service is easy and accessible from everywhere. Also, taxpayers who have a gross income of less than $57000 can use bookkeeping software that can also calculate their tax returns free of cost. The file can then simply be submitted through the same e-file.

Do It Yourself

Do it yourself is one of the most popular and cost-saving methods to filing your tax returns. Many software tax preparation programs are specifically designed for this purpose and they are easy to use. The software guides you through each step, highlights the inaccuracies and audits the document with red flags. These software services are not very expensive. You can get them online for $10 – $40.

Doing the returns yourself obviously has its advantages as you can save money. However, businesses must consult a professional if there are any complications. Some DIY software also comes with a helpline that can be contacted for queries. A DIY tax preparation service will typically cater to all common items such as mortgages, student loans, and charitable deductions. Anyone that has basic tax knowledge can figure out a way to perform the job.

Use a Storefront Tax Service

For some people, the DIY option may sound like too much of a burden. An alternative is to use a storefront tax service. The taxing code keeps on changing regularly and more than 3,500 changes have been observed in the past 18 years and that does not include changes from the latest tax reforms that were recently passed by the government. Therefore, clients may need face to face help in order to get some answers to their concerns. A personalized guidance from the right tax preparer is exactly what some clients want, which prompts them to use storefront services.

The role of a tax preparer should be quite dynamic and not just limited to data input. If they are not adding any value to your tax returns by thoroughly analyzing your financial information and using every possible deduction, they might not be the right choice for you. Someone who actually puts an effort in to educate you about possible tax deductions in accordance with your situation is a tax preparer who can be trusted.

A storefront service might not be able to help you a if you have to file tax returns for a developed business with multiple areas of concern. However, any common tax issue is easily handled by these companies.

Hire an Enrolled Agent

Getting your money’s worth also means that there are no discrepancies in your filed returns and you have managed to considerably reduce your tax bill through all legal channels. Finding a competent individual who can do this task can be a challenge. A proper tax preparer in this situation would be an enrolled agent. These individuals are endorsed by the National Association of Enrolled Agents and have the expertise and knowledge to manage your tax returns, offer you tax advice, and represent you in an audit. Individuals and couples who want to diminish the anxiety related to the possibility of being audited alone should consult an enrolled agent.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

Confused trainee working on line with a laptop in a difficult assignment at office
It’s a troubling time for the economy. What is even more troubling and perplexing are the tax bills. Accountant or not, all tax debates currently being held in the Senate will confuse you. For some, the debates in the Senate are like a spectator sport. All 529 members of the Senate use their time to recount their positions on many different subjects. But, what does all of this mean for you?

Don’t Let the Tax Bills Confuse You

Confused, are you? Most Americans are baffled and worried about their tax bills and, even hiring an accountant, won’t relieve them of their misery.  It’s not easy to understand or figure out what the consequential debate will represent for tax paying Americans. In the upcoming ten years, it is expected that residents of Florida and Texas will receive approximately $30 billion in tax cuts while, on the other hand, New Jersey and California are going to raise their taxes to the tune of $17 billion.

Not even TurboTax will help while waiting for the projections to be updated nor would anyone who is knowledgeable on the subject, because all of the laws are evolving and changing. The modification of a single law can have grave consequences if not understood adequately or if they are simply overlooked. It’s almost impossible to predict the result of the debates or forecast what kind of decisions the policymakers will eventually conclude. With confusion prevalent, software like TurboTax will only be able to give accurate results if the laws are programmed into it, but that’s not possible without understanding the current laws that are constantly evolving.

To be able to be in a better position to completely comprehend tax bills, even if you’re not an accountant, jeering or persuading your elected representative is irrelevant. Knowledge about their viewpoints on how they are going proceed with tax laws is crucial to be aware of. Their decisions have an impact on policies, so it is important to get a feel for what is to come. As a citizen, it makes total sense. But, as an accountant, things will be tough. Imagine the length of frustrations that these professionals will endure just to get the numbers right! They must predict, forecast and equip themselves with laws, tax bills and policies that are constantly being revamped or refurbished. 

Some client’s scheme and use this opportunity to slide one in. For example, a friend who is an accountant, has a client who wanted to pay him in advance for the cost of preparation of their tax and all documents related to it. By paying, the dedications would appear on paper per and under the current tax bills, allowing the client to save some $300 by prepaying the accountant. Proactive citizens understand, from experience, what is happening with their documentation. But, what about elderly clients or those uneducated on the subject? By generating medical expenses which may be lost if the House convenes it, how is one able to explain it in a positive manner? Many clients receive payables that are taxable such as pensions and retirement accounts used for necessities like medical in-home care and nursing homes.

If these deductions for such expenses go missing, it will mean higher tax bills. People will run out of money and cost the government, through the same tax bills, more money by going onto Medicaid. This isn’t cost effective. Prepaying, then, doesn’t seem like a bad idea, does it? Clients save money. But, at the same time, this will enable clients to withdraw more money from funds for retirement if the House proposes against it. There are no simple ways to understanding tax bills but, by being aware and knowledgeable, some of the confusion is diminished. Especially for home owners who would welcome simplification acts that were actually simple!

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

 

young attractive and desperate woman suffering stress doing domestic accounting paperwork bills and invoices worried and stressed at home sofa couch with bank folders and receipts
I have a humiliating mystery: Until a couple of years back, my mother did all of my tax preparation. One spring, I knew it was the ideal opportunity for me to cut the rope and learn exactly how complicated this pay assess stuff truly was. I’ve been doing my own duties from that point onward.

Making sense of which preparer is ideal for you can be challenging. Do you remain at home and document your tax duties with the assistance of programming or wander out to visit a genuine bookkeeper? Furthermore, shouldn’t something be said about every one of those retail facade charge planning administrations?

We’re here to separate all your expense arrangement alternatives so you can settle on the correct decision when the next tax duty season comes.

1. Programming

You’re presumably comfortable with finishing your duties on the web or with programming. The greatest benefit of utilizing a site or programming is that they don’t cost much. Truth be told, numerous programs enable you to record your government expense form for nothing.

Furthermore, in the event that you make under $64,000 a year, you can record your tax return for free by utilizing the IRS’s free document programming. (There are some free state documenting alternatives accessible through the IRS program, also.)

These tax planning sites and projects make understanding all the charges simple since they walk you through each progression of the procedure, making inquiries to figure out which credits you may fit the bill for or what conclusions you ought to incorporate. You should simply connect to a few numbers and voila! Your duties are finished.

Obviously, you’ll need to pay increasingly for all the extravagant accessories you might need, for example, review assurance or additional direction on investment properties. TurboTax, for instance, ranges from $0 to $114.99, subject upon the level of administration you need. Those costs are for government returns— you’ll need to pay more to document your state returns.

In case you’re a contemplative person, a site or programming program implies you won’t need to go out or share your own monetary data with another live human.

In case your tax situation is super confusing, you might have the capacity to explore your duties while utilizing a site or programming platform. In any case, if you’re worried about precision, chatting with a tax duty master face to face may give you more genuine feelings of serenity.

2. Administrations

Tax preparation administrations with a storefront have flown up everywhere throughout the nation — you can even get your expenses arranged on your next trek to Walmart. Consider these administrations to be a level up from utilizing a software or a website — you’ll pay all the more, however, you’ll additionally work with a live human.

The people doing your assessments at these storefronts have different levels of involvement and certifications. Some are a selected specialist, which means that they’re perceived as expense specialists by the IRS and the U.S. Bureau of the Treasury. 

H&R Block, for instance, requires its representatives to take a 60-hour salary instructional class related to tax. For individuals who have a certification, the organization expects them to take and pass an exam. The organization mostly keeps all of its employees up to date.

Keep in mind — the IRS gives you a chance to deduct the charges of the tax preparation fee and a large number of these organizations offer advancements to get you in the entryway. Jackson Hewitt, for instance, will give you $100 when you discard your old tax preparer and work with its tax specialists.

3. Accountant- External or Internal

Not all bookkeepers plan charges. What’s more, not all private expense preparers are bookkeepers — some are lawyers and enlisted specialists. However, these professionals can be hired easily and offer a great deal of help.

They’re likewise most likely the most costly alternative accessible (however not generally). Similarly, as with customer facing facade suppliers, the expenses these bookkeepers and private selected specialists charge rely upon the many-sided quality of your duty circumstance. More tax documents imply work for them, which mean higher expenses.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

 

Word "Tax" with clock on the office workplace. Business concept.
Inventory management is one important aspect of retail and manufacturing businesses. Inventory is everything that needs to be sold in order for your company to make a profit. Some might think that businesses should be stocked up at all times, regardless of the demand because it isn’t a good notion to disappoint customers. However, there are many costs associated with holding inventory and it might not turn out to be such a wise notion. Furthermore, inventory costs are directly related to the amount of income tax you have to pay at the year-end. The costs of purchasing and storing the inventory are considered as your costs of doing business, which must be accounted for in the income statement. Depending on your method of stating your inventory, the costs may vary.

Inventory Management and Taxable Income

Before calculating taxable income, you need to determine the costs of acquiring the inventory. Commonly, inventory costs will include the purchase price, freight charges and amount of sales tax that has been paid. All of these expenses need to be included in your income statement along with the cost of goods sold. The cost of goods need to be calculated separately and reduces your gross income, which further leads to the reduction of income tax that needs to be paid. When your cost of goods sold is higher, it will reduce your net taxable income and eventually decrease the amount of tax paid.

Inventory Management using FIFO

There are basically four approved methods of recording your inventory. However, the two most commonly used are FIFO (first in first out) and LIFO (last in first out). As the name suggests, the inventory rotates chronologically in and out of storage. All of the inventory items that are bought first are sold first. As the inflation has a direct relation to the cost of inventory, you will have to use cheap units first and so on. Because your cost of goods sold is low, your net income increases, leading to increased income tax that has to be paid.

Inventory Management using LIFO

LIFO is quite the opposite of FIFO as you use your new inventory first and then move on to the oldest. Inflation always raises the prices of products, therefore, more expensive units are sold first. This, in return, increases your cost of goods sold dramatically and reduces your net income. A reduced net income means that that you will have to pay a lower income tax at the end of the year.

Conclusion

Both of these methods of inventory management have their ups and downs. Depending on the need of the hour, companies decide which one to use. Companies normally prefer to use LIFO more often but you have to ask for permission from the IRS by filling out the Form 970. You can also be held responsible for tax liability in case you change the industry of your business. The difference between FIFO and LIFO will be calculated and you will have to pay the tax on the balance.

Large tax payments are a huge concern for large corporations as their earnings are billions of dollars. Their top concern is to save every dollar from taxes. A small business may not have to worry about such issues at the start but, as your business grows, you will have to formulate a solid plan for inventory management. You have to account for every dollar that is spent in acquiring and holding the inventory because it can later come back and hurt you in the form of a significant income tax bill.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

 

 

 

 

 

 

1040 Tax Return Form with a Pen
We’ve all seen the commercials of people scratching their heads, trying to file their income tax return. We all know about sales tax and the taxes you pay at the gas pump, grocery stores, etc. But, specifically speaking of income tax, there is a requirement to file personal income tax returns once a year.

Certain people are exempt from income tax. For others, their financial information is simple and filing a tax return is no big deal. People that have simple financials file a single page 1040EZ form. However, those who have complex financials, such as homeowners, people with dependents, and business owners, often require the help of a bookkeeper or tax attorney in the process of filing their taxes.

In order to help you better understand, this guide will cover the basics of the process of filing your taxes. You can then check out federal websites, such as the IRS website, for further details and forms.

Do you need to File a Tax Return?

Any citizen or resident of the United States, who has reached a tax-paying age and meets the IRS requirements, must file an income tax return.

Filing Status

Filing status refers to a filer’s marital status. The option for ‘Head of Household’ is defined as someone who is not married, however, is responsible for supporting a household, a divorcee or a widower. Married couples can choose to file their tax returns jointly or separately.

Which Tax Form should you Use?

If you have simple assets and financials, you should use the simple 1040EZ form for filing your taxes. You can use it if you have a low taxable income (below $100,000) and if you are only utilizing the standard tax deduction, not claiming any others as dependents.

If you don’t meet the criteria for the 1040EZ, you’d need to use the 1040A form. If not that, then you will be required to file using the most complex 1040 form to file your income tax.

Should you File Electronically or use the Traditional Paper Form?

There are two methods of filing returns. You can mail a paper form that is signed or use the electronic method called E-File. There is an option for downloading and printing forms that you can fill out, which you can then sign and mail to the IRS. Otherwise, you’ll have to find an IRS E-File service provider, which may have a fee. You can also use a third party tax preparation software for E-Filing. If you E-File, you’ll get your refunds quicker if you’re eligible for a refund, compared to refunds received via mail.

When should you File your Taxes?

The filing is generally done around the 15th of April. If you are facing any kinds of problems, you can apply for an extension until the 15th of October.

There is also an automatic extension if you’re out of the US, along with other ways to extend your filing due date. Do keep in mind that the extension for filing is different compared to an extension to pay. There are a variety of payment options offered by the IRS.

Is there any Room for Error?

Everyone has different specifics regarding their taxes and they may be affected by a lot of things such as home ownership, investments, alimony, business, children and other dependents. It is easy to make mistakes when dealing with such complexities and the IRS allows you to correct such mistakes. However, you can save time and possibly money if you do it right the first time. It is recommended that you consult a tax attorney or an accountant/bookkeeper to help you with the tax filing process.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.