Reasons To File Your Taxes Early

Many taxpayers tend to wait because they see no harm in waiting until April 15th or are not aware of the positive effects from filing their taxes early. This year, try and file your taxes early because there are a number of benefits you can gain. The following are some of the main reasons as to why you should file your taxes early.

1. Tax refunds are processed faster

One of the main benefits of filing your taxes early is that you get your tax returns processed faster. One of the fastest ways to get your tax returns quickly is by filing it electronically. The IRS has been able to introduce the e-filing system that is quicker and allows you to deposit into your bank account directly. Therefore, most CPAs and software file your taxes electronically instead of mailing your papers as this is bound to take longer. It usually takes around 21 days for your tax return to be processed. The earlier you can file, the quicker you are likely to receive the returns.

Only the IRS has the status of your tax refund when it’s processing. After you file your taxes early, you can check with them to determine the status of your refund. This can be done by using the Where’s My Refund tool that is on their website or calls them using their number.

2. Avoid penalties for file extension

Most people who wait until the last minute to file their taxes usually opt for an extension from the IRS. An extension is simply filing for more time to be able to get your financial information together to file your taxes.

Filing for an extension can be beneficial if you pay the balance due on your taxes. However, if you file for an extension and fail to pay the balance, the IRS will charge you interest and other penalties. This will only increase the balance due and cause more strain to your financial situation. To avoid all this, you can file taxes early and have a stress free tax return period.

3. Avoid identity theft

The tax return period is a business to many fraudsters. They usually use this time to rob millions of people of their tax returns by claiming them instead. It is easy to avoid identity theft by filing your taxes early. This way no one can steal your social security number and claim your refund because you have already taken the necessary steps to avoid a mistake in haste.

Tax fraud has reduced over the years, but it is still a crucial issue. It is important for you to gather all your financial information and secure it before a document or tax form is accidentally lost or falls into the wrong hands. This can only be done by filing taxes early.

4. Plan your financial information accordingly

Filing your taxes early gives you plenty of time to plan your financial information. This is essential for people that are not aware of the balance that is due and need to get a hold of all their financial records.

It can also be helpful for individuals that are trying to make huge financial decisions like purchasing a house or a car. Ensure that you prepare your 1040 form early to get time to arrange how you will pay before the April 15 deadline. This is also important because you can decide how you will pay. Whether it is by credit card or debit card you can choose that which best suit you.

5. Have a stress free tax period

This may sound absurd, but it is likely to happen to individuals that wait till last minute to file their tax returns. It can be stressful to file taxes late especially if you do not have a tax professional helping you. This is because you have limited time to prepare your financial records and mode of payment. The rush that comes with last minute filing can also cause you to make errors in your financial record. For instance, you may miscalculate the balance due and end up paying more or less. Paying less will only lead to additional charges in the form of penalties.

Filing your taxes early gives you the opportunity to be in control of your financial situation. Filing taxes late is never good for your finances. It can cause a financial strain especially if you are late on your payment because you will need to pay more. All these can be avoided by filing your taxes today.

Best Ways to Avoid a Tax Audit

With the new year underway, many people are looking to receive their W-2 or 1099 forms to reveal their income for the past year. Therefore, tax season is approaching and many people need to prepare to file their tax returns. When filing tax returns, most people expect to receive a tax refund which is a lump sum of money given back to them. As well as receiving refunds, there is also a possibility that one may get audited by the IRS. An audit is when the IRS wants to examine your tax return and make sure that it is properly completed. While the overwhelming majority of taxpayers don’t get audited, there are some that do.

To limit your chances of getting audited, there are a number of things that you can do. These include checking your returns, being honest, and using necessary deductions. It will also be important to file your return on time at the end of tax season. These things will help you avoid getting audited by the IRS.

Check Your Returns

The first thing you will need to do in order to avoid getting an IRS audit is to check your returns. It will be important to go over every form you fill out and make sure that they are filled out properly. You will want to evaluate each form and make sure that you have all of the correct and accurate information on each line. This will be a vital first step in the process of checking your returns.

When checking your tax returns, you will want to use software so that you can more efficiently enter the correct information. Software speeds up the process and allows you to fill out a tax return more accurately. Tax software programs simplify the process of getting tax returns filled out and filed. They will also check all of your forms to make sure that they have been filled out accurately.

If you are looking to check your tax returns, you may want to get help from tax professionals. These include certified public accountants and enrolled agents. These professionals are authorized by the state and the IRS to file and prepare tax returns for you. They have an in depth knowledge of the tax laws and will help look over your returns to make sure that they are accurate. With their expertise, you will be in better position to prepare your tax return accurately and avoid an audit.

Checking your tax returns is one of the best ways to avoid getting audited. It will help prevent you from entering information inaccurately and thus triggering an audit. You can check your returns yourself which is the most convenient way to do this task. However, you can also use tax software or consult with a tax professional in order to ensure that your tax returns are properly completed.

Be Honest

Another way to avoid an audit is to be honest. It will always be in your best interest to tell the truth on all of your tax returns. Taxpayers will need to reveal all of their income, all of their allowable deductions and also provide supporting documentation. This will ensure that they provide a tax return that is accurate and truthful. One of the reasons why tax returns are audited is because the IRS will get suspicious if there are any abnormal or irregular deductions that of above normal amounts. There are some taxpayers that may even hide income. This can be a problem for taxpayers when it comes to audits. Therefore, taxpayers who are looking to avoid an audit will want to always use honesty when filing and submitting a tax return.

Avoid Filing Complex Tax Returns

When looking to avoid an IRS audit, taxpayers will need to avoid filing complex tax return deductions. These are deductions that are uncommon among average taxpayers. While they are legal, an excess of these deductions can result in an audit. Those who make charitable donations, file schedule C returns and who make capital gains will be the most likely to get audited.

One of the most common red flags for audits is claiming charitable donations as a deduction. Many taxpayers donate to charitable causes and this is often allowed. However, there are some taxpayers who make charitable donations that can be excessive. They also make these charity donation claims without any supporting documentation. As a result, they are likely to get audited. When claiming charitable donations, it will be very important to have supporting documentation proving that you made the amount of donations that you claim. This will prevent a tax audit as well as potential criminal charges for fraud.

Another type of return that is complex and often gets audited is a Schedule C. This type of return is one that you fill out when you are self employed or own a small business as a sole proprietor. Since there are a number things that you can deduct, you can also get on the IRS radar for an audit. The best way to avoid an audit is to claim business deductions that are ordinary and necessary for your type of business. It will also be vital to have supporting documentation so that you can back up the deduction claims you make.

Capital gains are another thing on a tax return that can result in an audit. A capital gain is a sum of money you receive when you sell an asset such as a stock or a real estate property. Since capital gains transactions can be quite complex, it will be important to fill out the necessary forms properly. As long as you fill out capital gains tax forms properly and provide supporting documents, you will reduce your chances of being audited.

Other Ways to Avoid an Audit

When looking to avoid an IRS audit, there are a couple of other things that you can do. You can file your returns electronically as well as file your returns at the end of the tax season. These two things will help you lower your chances of getting audited.

The first thing you can do is file your returns electronically. When using this method, you will be in position to file your returns instantly and accurately. With an e file return, the IRS will get your returns and be able to process them quickly. As a result, they will assume that the return has been done properly and will therefore be less likely to reexamine the return.

Another good way to avoid a tax audit is to file your returns in mid April. While there may be a delay in your refund, it will help you avoid an audit. Most audited tax returns are ones that were filed at the very beginning or middle of the tax season. When returns are filed at these times, they are likely to give the IRS time to examine them and seek more information. By filing the returns in April, there will be less time for the IRS to go over a tax return and they will just process it without any second guessing.

Laws That Will Affect Your 2018 Tax Return

Congress has passed the largest piece of reform legislation in more than three decades. The Tax Cuts and Jobs Act (TCJA) went into place on the 1st of January, 2018. This means that the changes on this Act will affect the incomes of most taxpayers for the 2018 year. It may not be clear to some how the tax changes impact them. This article samples some of the major tax provisions in the new tax bill and how they could impact taxpayers.

Lower Tax Rates & Income Ranges

This Bill retains the seven tax brackets found in the current law but lowers a number of the tax rates. It also changes the income thresholds at which the tax rates apply. The current tax bracket: 10%,15%, 25%,28%,33%,35% and 39.6%. The new tax bracket will be: 10%,12%,22%,24%,32%35%,37%. Five of these new rates are lower. The income thresholds at which these brackets kick in have changed. Some who were in the 33% marginal tax bracket in 2017, will be in the 35% bracket in 2018. This change will mainly affect singles and heads of households with taxable income between $200,000 and $400,000.

Increase In Child Tax Credit

For families with children, your 2018 tax return will double the Child Tax Credit from $1,000 to $2,000 per child. Additionally, the amount that is refundable grows from $1100 to $1400. This means that one can collect it even if you don’t actually owe any federal income tax.

The TCJA adds a new, non-refundable credit of $500 for dependents other than children. This Bill also raises the income threshold at which these benefits phase out from $110,000 for a married couple to $400,000.

Increase In Standard Deductions

The new tax law almost doubles the standard deductions amount. Personal and dependent exemption deductions were eliminated. These could have been $4150 each for 2018. These deductions are particularly burdensome to those with a lot of dependents. The 2018 standard deduction amounts are as follows:

  • $12,000 for singles (up from $6350 from 2017).
  • $24,000 for married jointly-filing couples (up from $12,700)
  • $18,000 heads of households (up from $9350)

Additional standard amounts for the elderly and blind are allowed by TCJA, as under prior law. These increases means that fewer people will have to itemize. Today, approximately thirty percent of taxpayers itemize. However, this percentage is expected to decrease under the new law.

New Deduction Limits for State & Local Taxes

The bill limits the amount of state and local property income and sales taxes that can be deducted. The combined income of deductions is $10,000 or $5,000 if one is married and filling under separate status. Under prior law, itemized deductions could be claimed for an unlimited amount of personal state and local income and property taxes. This means that these taxes have generally been fully tax deductible. Under prior law, taxpayers could choose to forego any deduction for state and local income taxes. Instead, they would deduct state and local general sales taxes.

Under TCJA, taxpayers cannot deduct foreign real property taxes. As in prior law, they can choose to deduct state and local general sales instead of state and local income taxes. State and local general sales taxes are also subject to the overall $10,000/$5,000 limitations.

Alternative Minimum Tax Exemptions

This tax is triggered when taxpayers make more than the exemption and use common itemized deductions. This bill eases the burden of the individual AMT. The ease comes in by raising the exemptions and phase-out levels. As a result, AMT will affect two hundred thousand tax filers instead of the five million affected in 2017. AMT has only two tax rates; 26% on incomes that are below the AMT threshold and 28% on incomes above the AMT threshold.

For the 2017 tax year, the threshold was $187,800 for AMT taxable income or $93,900 for those married filling separately. In 2018, the threshold is $191,500 dollars for taxpayers filling as single and married filling jointly. It is $95,750 for married filling separately. Those who will still pay AMT will owe significantly less due to the TCJA changes.

New Limits on Home Mortgage Interest Deductions

This bill is applicable to mortgages taken out after December 15, 2017. TCJA reduces the mortgage debt used to acquire a first or second residence. Taxpayers can also claim itemized interest expense deductions. Under prior law, the mortgage debt limit was $1 million or $500,000 if you’re married and filed under separate status. For 2018-2025, the debt limit is $750,000 or $375,000 if you use married filing separate status. However, this change does not affect home acquisition mortgages taken out under binding contracts that were effective before December 16,2017.

The old law $1 million/$500,000 debt limits still apply to home acquisition mortgages that were taken out under the old law rules. However, this applies as long as the refinanced old principal does not exceed the old loan balance at the time of refinancing. TCJA disallows 2018 interest deductions for most home equity loans.

Healthcare Coverage

The bill eliminates the tax penalty for not having health insurance after December 31, 2018. It also temporarily lowers the floor above which out-of-pocket medical expenses can be deducted. This is from the current law floor of 10% to 7.5% for 2017 and 2018. This means that taxpayers can deduct medical expenses that are more than 7.5% of their adjusted gross income as opposed to the higher 10%.

Moving Expenses Tax Deduction

It used to be that if you could relocate to start a new job or seek work in another city, you could deduct some of your cost of moving. The TCJA eliminated this deduction, except in the case of certain military personnel.

Qualifying expenses include cost of packing and shipping belonging and cost of travel and lodging. Meals are not deductible as a moving expense. People who work outside the US then retire and move back to the US can deduct their moving expenses. This is despite that they would not start work at their new location. Under the TCJA, one can deduct moving expenses if their new job location is at least fifty miles further from their former home, than their old job location was.

New Limit on Itemized Deductions for Personal Casualty Losses

As of 2018, taxpayers can only deduct personal and non-business casualty losses if they are due to federally-declared disasters. Under the old tax law, you were able to reclaim an itemized deduction for property losses that are not reimbursed by insurers. These losses also would have to occur unexpectedly. This would include damage from fire, vandalism, accidents, theft and natural disasters. Like in the previous tax laws, one can deduct the losses to the extent they exceed ten percent of their adjusted gross income.

No More Miscellaneous Itemized Deductions

Starting with 2018 tax returns, taxpayers will not be able to deduct expenses such as union dues, investment fees or hobby expenses. Gambling losses and investment interest are examples of personal expenses that remain deductible. These miscellaneous itemized deductions were deductible up to over 2% of Adjusted Gross Income.

Do I Have To File Taxes?

You’ve probably heard it’s tax filing season again. Like clockwork, it is back and you have seen the marketing efforts by companies notifying you to file your tax return: television commercials, pandora ads, billboards shouting for you to file your return. Do you find yourself left baffled at the whole process of filing taxes, are you a first time filer, or are questioning whether or not you have to file in the first place?

It’s true, filing your taxes can be an overwhelming affair. Gathering the right paperwork and entering numbers seems like a chore, let alone proofing such numbers and making sure you entered them correctly. There are a number of methods that one can adhere to during tax season to ensure the process isn’t as demanding as it may seem at first. Of course, the first step needs to be addressed before going any further this tax season. Determining whether or not you need to file.

Who Needs to File?

Tax season officially opened just days ago on January 29, 2019. This is when the Internal Revenue Service begins to receive tax returns. Those people whose earnings don’t meet certain thresholds each year don’t have to file taxes. There are three main categories to look at when you are determining whether to file: age, your filing status, and your income. The income amounts are adjusted annually to factor inflation. Let us look at each factor in more detail.

Age, Filing Status, and Income

The first factor that determines filing status is age. For IRS purposes, the only marker you have to worry about is whether or not you are younger than 65 or 65 or older on the last day of the tax year. For instance, if you are filing in 2019 for your 2018 taxes, you have to ask yourself how old you were on the last day of 2018, or on the first day of 2019 (The IRS states that you are considered 65 or older if you turn 65 on New Years Day and should consider yourself 65 for the prior year’s taxes).

Under 65 Years of Age

For those that are under the age of 65, they will look at certain number thresholds when determining whether or not they are to file a tax return. In order to not file, they will have had to make under $10,400 if they are single according to tax purposes. This number jumps to $13,400 if they are the head of household, and to $20,800 for those married and filing a joint tax return. For those that are considered to be a qualifying widow or widower with dependent child, the number has to be under $16,750 to not file, and under $4,050 for those married by filing separate returns.

65 Years and Older

For those that are considered to be 65 years and older for the filing of their 2018 taxes, the numbers change a bit. For those who are listed as single for filing purposes, they will be have to make under $11,950 to avoid filing. The number jumps to $14,950 for the head of the household and to $22,050 for one spouse filing jointly and to $23,300 for two spouses filing jointly. The 2018 threshold for those that are considered to be a qualifying widow or widower with dependent child is $18,000, and stays at $4,050 for those who are married but filing separate returns.

The IRS also has certain rules regarding dependents and their filing. Dependents are those that are claimed by the head of household when they file taxes: they have to be under a certain age and be deemed a dependent by the IRS. The IRS determines whether or not a dependent has to file by looking at money earned that is deemed to be earned and unearned.

Earned income is considered money earned from salary, wages, or tips. It also includes taxable scholarships and fellowship grants. Unearned income are things like dividends or investment interest, unemployment benefits, capital gains, and certain trust distributions.

You also might have to file a claim if you received health care as required by The Affordable Care Act. This would be the case if you received some federal help in buying your health care coverage through the health insurance marketplace. As always, it may pay to file even if you don’t think you need to. Make sure to do proper research in determining whether or not you have to file. If you determine you have to file, hiring a CPA may be an option for you.

Benefits of having a CPA file

Yes, filing taxes can be a hassle. That is why trusting a certified accountant to file your taxes for you may be just what you need. There is no stress involved; simply bring in all of the necessary paperwork (ask beforehand if you are questioning what paperwork you need) and let the CPA do the work. The process can go from hours to minutes. Make sure you find one that is reputable in your area and go from there.

Carry Over Business Expenses

While every entrepreneur seeks profits, it’s all too common to suffer losses. Carrying over expenses is when a business has undergone losses, and the business owner decides to carry over the loss to the next year; or even the previous year that your business was profitable. The carry over rule in business is an advantage as it enables business owners to offset their profits in the future with tax deductions. For you to reduce your taxable income, you can carry over home office deductions, net operating losses, and capital losses into future years of paying tax. If your business is currently facing operation losses, you can decide to carry back the two years’ loss for you to get a tax refund or you can take the option of carrying over the loss and offset your future taxable income. However, it’s important that you seek professional advice from an accountant or a tax expert for further guidance before you carry forward any business losses.

How A Carry Over Works

For you to carry over business losses, you have to generate a schedule that shows all the cumulative losses. The losses are then used to reduce profits in future years. When your capital gains are less than your capital losses for the year, you will have to deduct some of your losses from your income tax. However, annually you can only subtract losses up to a maximum of $3,500. The only way that one can get the tax benefit of any loss incurred in business is by applying the carry forward rule.

To carry over, you have to calculate the net operating cost for your business. Organizations find this easy, but it is very important that you ensure you have separated the business losses from the non-business ones. However, it’s impossible to carry over the business losses to the same extent as the non-business losses. The net operating losses can be calculated easily by deducting business expenses from work profits. For example, if your organization has made a profit of $7,000 and a loss of $25,000 your net operating loss will amount to $18,000. The carryover deduction is limited to the extent that it would surpass your tax liability. For example, if your net operating loss to carry over to year two is $18000 and your total earnings for the year is $7,000 you will have a limit of $7,000 to carry over losses for that year thus making you wait for future years to use up more of your permitted deduction.

How carry over businesses helps in saving money

One of the benefits of carrying over losses in business is that it helps you to save money and reduce business expenses. The carry over reduces the chances of you losing money on your investment because some asset sales are taxed more heavily than others. For example, if you are selling electronics or other things you can expect that your tax will be 28%. Most business bonds and stocks are taxed at 15%, thus enabling you to save a good percentage on your current earnings. If you are running a small business, you can easily reduce the taxable income and your tax burden through the carried forward losses.

The accounting method used should account for inventories in the same manner as supplies and materials so as to confirm your inventories in a financial statement. The method you use in your organizations determines the timing that you recognize your expenditures on your tax return. However, if it’s hard for you to deal with the accounting issues, you can work with a CPA firm that will handle the accounting sector and the business plans in your organization. Here are some of the reasons why hiring a CPA firm for your business is a good option.

Reasons Why You Should Hire A CPA Firm For Your Business

1. Enhances Efficiency In Business Operations

An accountant is very helpful when it comes to handling financial issues and managing your business transactions. The accountants will help in overseeing the company’s payment and payroll process, ensure that your contractors are well classified, provides professional advice on the tax payments that should be made annually, submitting and complying taxes and financial records, and will explain your company’s financial statements. These will ensure that your business operations are running smoothly thus increasing efficiency.

2. Will Help In Decision Making

As a business owner, you end up having so many roles and responsibilities in your company thus making it hard sometimes to make decisions properly. Having an accountant that will handle some of the responsibilities will help you to make informed decisions because you will have time to analyze the situation and the consequences that may come as a result of poor decision making. Hiring a CPA firm with experience in financial health will help you to acquire quality information when making decisions. A CPA firm will have you’re back allowing you to be more effective when performing your other roles.

3. Cash Flow Management

Lack of track of cash flow in business can easily damage your organization. Behind the success of every business, there is a professional accountant who manages the flow of cash. However, any mistake made on cash flow will bring your business down regardless of how big or small your business is. A CPA firm is very reliable as it knows the financial reports to analyze and can detect a financial problem earlier before the company faces loss. For example, when there is a change in customer payments, a CPA firm will know that it can result in problems in the future. Besides the organizations depends fully on the money come in from their clients. An account or a CPA firm will help you minimize the risk of making losses and help you identify the ways to maximize profits for your business in future.

4. Growth Of The Company

It is every entrepreneurs’ dream to see their business reaching greater heights. For instance, if it’s a local business, you will want it to become a multi-billion-dollar global company in the future. However, planning is the best as it will give a clear picture of you want your business to be in the future. Making additions to the line of your product and expanding to a new location are some of the ways that you can use to analyze the growth of your company. Hiring a CPA firm at the time of expanding your business will help you to ensure that your following your company is following the right path. Also, the firm will ensure that your company remains profitable as you expand to different geographical areas.

5. Will Help You Avoid Costly Mistakes

A CPA firm will help you know and understand the numbers of your company. The firm will help you get all the data you need like non-compliance issues, cash shortfalls and missed due dates. This kind of mistakes will cost you more than you could spend on hiring a company that will help you avoid spending more money and time in the long run. Besides putting up a business is expensive spending some extra cash is worth the risk if it will make your business successful and more profitable.

6. Eases Employee Payment

Hiring a CPA firm will save you the stress of handling the payroll as they are well experienced in that. An accountant will manage and solve the payroll issues thus reducing employee complains because of delayed payments. A CPA firm will properly classify the workers and will realize in time when there is an exemption to be made.

7. Auditing Becomes Easy

In case of an audit, a CPA firm will help you handle and guide you through the process. Having a CPA firm that understands and knows your accounting books well enough will help you meet the required business standards. The CPA firm will also help you to avoid penalties and expensive fines as they ensure that your organization stays in compliance with the tax rules even when they keep changing annually.

8. Helps You To Stay Informed

Hiring a CPA firm will help you get information about the new laws that govern the businesses. Such as tax deduction rules, local regulations, state and federal laws that relate to your day to day business operations. Also, the accounting firm will save you the time to read and to search for information regarding finances in business.

9. The End Of Year Reports

The end of the year is not only the time to close for holidays but also the time for your CPA firm to give you an annual financial report. The financial report will give you information on the profits and loss the company has made over the year. Also, it provides ways that you can use to minimize tax deductions. An account will be one of the most important assets when it comes to performing a health check on your business.

10. Professional Reputation

Having a good CPA firm will build a good image for your company thus improving your reputation in the industry — this important especially when your organization is new and strives to build strong business relationships with key players in their success. Portraying a good image to your clients and the public will also boost your productivity levels thus increasing profits.

A CPA firm will not only see the financial information of the many businesses in the industry but also can see the practices that are working for your competitors and also what has caused failure of some organizations in the industry. Here are some of the reasons why you should hire a CPA firm in your company or organization.

Rising Cost of Health Insurance? Here’s How You Can Save

You have eventually sealed the deal with your prospective employee; however, they pop in one final question, “Do you have insurance?” Of course, it’s there, but it has been a pain for as long as you have been paying for the expenses. Maybe you have been considering lowering or even eliminating it. Catering for the welfare of your staff is as important as your productivity and profit generation. Look after them properly, and they are more productive. It is very hard escaping the obligation of managing your employee’s health coverage.

Why Get a Health Cover For Your Staff?

When health insurance is absent from your offer, what’s to stop a prospective employee from moving on to your competition? They offer a similar salary range and employee benefits, and their insurance is probably better. Providing health care coverage to your staff is the key to employee retention. Lack of it will expose you to high employee turnover and fewer hires for your small business. Small business medical insurance is one of the things that offer you a competitive advantage. The following are more reasons why you should go for medical insurance:

  • It is the law: Even if you are a small business, when you possess more than 50 employees, then you are legally obligated to provide your full-time employees with affordable health coverage.
  • Group coverage is better: A personal plan covers only you and your family, but with a group plan, you get some additional insurance advantages.
  • Tax benefits: You can enjoy some tax credits for your business when you have a health coverage for your staff. However, it is integral that you buy a plan via a Small Business Health Options Program Exchange. You can even write-off health insurance premiums as a business expense.
  • Improve your employee’s health: A health insurance plan encourages employees to get yearly checks, which means that they will be healthier and more productive.

Determining the best health insurance for your small firm is a cumbersome process. Many small businesses do not have an HR department to back you up, which means you are the eyes and ears everywhere. Comprehending how medical insurance works is the ultimate solution to eliminating your problem, and landing at the best insurance program for your employees. It can be a capital expense for your firm if you are not careful when choosing. How can you get the best medical insurance as well as cut down on the cost?

High-Deductible Mixed With Health Savings Account (HSA)

Such an approach motivates one to think about their costs at all times. With this, you can use your pretax employee money to cater for unpaid medical cost, and any unused funds are carried forward to the future. You have two options: either fund the account or request the employees to do so. HRA’s (Health Reimbursement Accounts) have high deductible insurance plans. The employer should reserve some money to facilitate the reimbursement of the employee deductibles. Staff can roll over any unused funds.

Buying Cooperatives

Small companies can massively save on their employee’s health insurance by increasing their bargaining power. How can they achieve this? These small businesses can join health-insurance cooperatives. Although the actual savings that a firm can make via joining these cooperatives vary, ultimately, the terms of the health coverage might be better than if the small firm went at it alone. Of course, insurance rates in the open market depend on underwriting laws in your state as well as other factors. Nevertheless, you are guaranteed of getting some extras that you would have paid for even if the insurance were not discounted.

Organization Wellness Program

There are very many initiatives that you can start to ensure that your employees maintain a proper wellness culture. You can offer them a gym membership, free screenings and so much more. Such a program can aid your firm in keeping the health insurance cost at a minimum via promoting better health awareness, as they take better care of themselves.

Write It Off As A Business Expense

Any firm that takes a groups health cover for its employees can claim these as business expenses when they are filing their taxes. How does it work? You might need the services of a CPA for perfect accounting of these expenses; however, it is basic.

Disease Management

The main aim of a disease management program is to cut down the effects of a disease that can be a chronic illness or any other condition via continuous screening. When you have an employee that gets extended stay at the hospital will expose you to huge expenses that will be a huge burden for your small organization. This is even harder when your resources are limited. When you offer your employees some personalized, preventive care, you prevent such an expense via proper disease management.

Entirely comprehending medical insurance is complicated. In fact, there are very many insurance firms that have tweaked plans; however, the expense to your firm will be unmanageable if you don’t tread carefully. You cannot afford to miss one, hence figure out a way to lessen the impact on your returns.

How To Save Money Starting Your Own Business

Starting your own business is an exciting time in your professional career. One of the most important things to do in the early days of your business is to save money. Here are some ways you can save money on your own business:

1. Work Out Of A Spare Room

Working from home is the number one cost saver. Ideally, if you can convert a room or garage into an office, then you will be able to deduct a portion of your home as an essential part of your business. Of course, this also saves time too since commuting involves heading to your office. Additionally, everything you use to decorate this space becomes a business expense. Overhead lighting, desks, file cabinets, computers, even a portion of your internet bill. When finding business expenses, spare no expense and fill your office with all the tools and technology you need to run your business effectively.

Of course, if customers or clients will be visiting your place of business, then you may want to consider an office outside of the main house. Choosing a location such as a remodeled garage, basement or garden office with a separate entrance may be less disruptive to your family — this is especially important for teachers and tutors who expect regular visitors. If that’s not an option, you can always meet a mutual location for clients and then — guess what — that meal or golf session becomes a write off.

2. Buy Used Equipment

One of your biggest expenses is your equipment. The advantage of purchasing used equipment is it prevents you from overspending on equipment that you ultimately do not use. What’s more, chances are your equipment — no matter how new — will be outdated and it’ll become another expense next year.

Saving money on older models of any technology will really help your wallet. Of course, we’re not saying purchase an archaic system, as you don’t want to decrease productivity with a slow machine. Instead, create a checklist for everything you may need. Then visit yard sales, as well as used technology stores (or go online) for items you may need.

3. Watch Video Instruction

There is a plethora of free video instruction by online professionals. You can find experts who aptly demonstrate each step of building your business. Need a website — the best, passive lead generation tools — then follow a how-to on YouTube.

Need a logo? Check out Fiverr. Business cards? Of course there’s Vistaprint.

There are plenty of experts who can teach you how to code or master photoshop or manage an app. These online experts can save you money and teach you skills that you need for your business, especially if you want your business to grow. Eventually, you may want to hire an expert for advanced work, but for now, learn the basics and get the job done.

Speaking of hiring however…

4. Hire Contract Workers

When you are first starting your own business, you have to wear a lot of hats including product producer, marketer and payroll specialist. Eventually, you’ll have to relinquish some of those tasks because you prefer to focus on what you are more interested in working on. That, or you’ll need an experienced person to handle a challenging project.

Before hiring out full time employees, save your some money and utilize contract workers. Contract workers can actually live in your area and come into your work environment. Another option is to hire someone to work on a project virtually. There are many online sources where you can hire out contract employees to take care of graphics, payroll or other tasks.

 

5. Free Software & Apps

There is a cornucopia of software and apps that can jump-start your business and preserve the bottom line — this isn’t even considering the freemium tools out there as almost all apps offer deluxe versions that can give you all of the app’s high tech goodies. The benefit of the free software is you can see how often you use it and if it’s worth investing in the full price.

The types of free software and apps can run the gamut of your business needs including: social media scheduling, payroll processing or team communications. For images there are photo editing software as well as software for logos, infographics, and animations or video. There are even free business form templates and apps for online note taking.

As your business grows, you will want to take advantage of analytics to help discover what’s working for your business and what’s not. This way you can increase your efficiency.

Tax Breaks To Help You Save

Tax season is upon us again, and for most people, that means trying to find ways to save as much money as you possibly can. There are many ways that you can take advantage of the tax breaks the federal government offers; often, it’s simply a matter of knowing what those tax breaks are. While you are probably aware of some of the better known deductions – travel expenses, for example – others are not as widely known and can be just as advantageous for both individuals and small businesses. Here are a few lesser known tax breaks to help you save a pretty penny this tax season:

Going Green

Did you make any upgrades to your home this year? If so, did you take advantage of modern, energy-saving technology? If you did, you may be eligible for a tax break. For example, if you had energy efficient windows installed, this could mean a tax break of up to a few hundred dollars. Similarly, if you had a new and more energy-efficient furnace installed, you could be eligible to knock a few hundred more off of your taxes. If you’re an individual filing your taxes, take a look at part two of Form 5695 and see if you qualify for the Nonbusiness Energy Property Credit.

Job Hunting

If you found yourself seeking a new job this year, you may be able to claim some credits related to your job hunting expenses. While there are very specific rules related to whether you can claim any tax breaks from your job hunt, it’s worth looking into. If you are looking for new employment in your current field, make sure to keep detailed records of everything you have to spend.

For example, any fees you incur for resume preparation, or for employment agencies, are potentially deductible if they exceed 2 percent of your adjusted gross income. This is certainly possible if you are not working much; just make sure to keep a detailed record of all costs related to job-hunting expenses. This includes everything from gas mileage for driving to interviews to printing paper for resumes.

Education

Even if you graduated college a long time ago, you might just be eligible for further tax breaks if you are looking to continue your education. Whether that means signing up for one night class, or going back to class full time to earn an advanced degree, you can often write off up to $2,000 per year. This does depend on how much you have spent on further studies, and it also depends on your income, but is worth looking into as your age does not matter.

Child Care Costs

If you have children, there are a few lesser-known tax breaks you can take advantage of. For example, if you do charitable work and need to hire a babysitter while you’re doing it, you can deduct the cost of that babysitter. While you may be aware that you can deduct day-care fees while you’re working during the school year, did you know you can also deduct the cost of summer day camps once school has ended? As with all the other items on this list, just make sure to keep a detailed record of everything.

Medical Care

Deducting the cost of medical care can get complicated, as what deductions you can make varies widely depending on the work you do and the medical insurance you make use of. For example, if you are self-employed, you can usually deduct 100 percent of your health insurance costs. If you are not self employed, you will need to reach the AGI threshold in order to begin deducting itemized health care costs. This is easier to do if you make sure to keep track of miscellaneous costs such as mileage when traveling to doctor’s appointments.

What Does An Accountant Do With Taxes?

Accountant's desk riddled with forms, calculator, glasses and a sticky note saying tax time

Tax laws are constantly changing and quite frankly trying to keep up with all of these changes can be a complex tax. Tax accountants help companies and also individuals make sure they remain in alignment with tax laws by making sure they file their federal and state income returns. In fact, some tax accountants are even willing to offer tax planning advice to help businesses save more money in taxes.

While this may not be the path that all accountants choose to take it’s important to know that there is still some value in hiring a tax accountant because the wide array of services they tend to offer businesses both large and small.

Tax Return Preparation

Do you find yourself often dreading tax return season? That’s one of the great assets of having a tax accountant. Tax accountants primary responsibility is to meet with clients to help them assess their financial needs. This includes but is not limited to gathering needed documentation, such as pay stubs, investment income statements and other financial documents.

Tax Planning

Every corporate business decision leads to tax ramifications, which is complex in general. Companies who typically do business outside of the United States typically experience complexities much more than other businesses do. In most cases, this leads could lead to a growing need for tax professionals.  

Many tax accountants choose to specialize in tax planning because it helps them develop strategy around their client’s financial situation to minimize income tax. Most companies hire internal and external tax accountants to help them develop long term plans that will ultimately help them save money.

Real Estate or Taxable Investment Dealings

Do you own a rental property? If you do it will be in your best interest to hire a tax accountant. Owning a rental company creates a lot of special tax situations that you’ll want to be sure you are taking advantage of and making sure you aren’t making any mistakes.

The same thoughts can also apply when you are buying and selling a home in addition to other real estate. While these laws are straightforward, it’s important to make sure you are doing things properly.

Help You File Your Taxes

For obvious reasons a tax accountant can help you file your taxes. This does not mean that you shouldn’t know what’s going on with your personal and business taxes.; however, it does mean that you must be willing to admit that you need some additional help as it relates to filing your taxes.

You Don’t Have To Do It On Your Own

It doesn’t matter how long you have been in business, it’s important for you to remember that you don’t have to do everything on your own. When necessary and possible make sure you are delegating anything that you aren’t able to do on your own.  By having someone help you with your taxes along the way you are insuring your businesses success even before the success comes. There is also a great deal of methodology around the idea that says that you shouldn’t wait until you need help to implore the help of a professional.

What Tax Documents Should You Bring To Your Accountant?

Man running from a tidal wave of tax documents

If you are anything like most people and specifically business owners, the idea of having to even do your taxes can be incredibly stressful. In most cases it’s because many are afraid that they don’t know what they are doing and may make numerous errors and in most cases these people are probably right. Not everyone should be managing their own accounting needs especially as a business owner. Because of this many must consider hiring an accountant and if they do here are just a few things you should bring with you.

Your Social Security Card

This is probably unnecessary if you have used the same accountant year after year; however, if the accountant you are meeting with is new you’ll want to make sure you bring in your social security card for identification purposes. Your accountant will want to verify the spelling of your name and bringing your social security card will help with that. You will also want to bring the insurance cards for your spouse and dependents as well. If for some reason you don’t have access to your social security card, it might be worth stopping by your local Social Security Administration Office in order to get a replacement card.

Income Related Documents

Depending on what kind of worker you are you will want to make sure you are bringing in plenty of income related documents. A list  of these documents include but are not limited to:

  • Form W-2 (wage and salary income)
  • Form W-2G (gambling winnings)
  • Form 1099-A (foreclosure of a home)
  • Form 1099-B (sales of stock, bonds, or other invest-ments)
  • Form 1099-C (canceled debts)
  • Form 1099-DIV (dividends)
  • Form 1099-G (state tax refunds and unemployment compensation)
  • Form 1099-INT (interest income)
  • Form 1099-K (business or rental income processed by third-party networks)
  • Form 1099-LTC (benefits received from a long-term care policy)
  • Form 1099-MISC (self-employment and other various types of income)
  • Form 1099-OID (original issue discount on bonds)
  • Form 1099-PATR (patronage dividends)
  • Form 1099-Q (distributions from an education savings plan)
  • Form 1099-QA (distributions from an ABLE account)
  • Form 1099-R (distributions from individual retirement ac-counts, 401(k) plans, and other types of retirement savings plans)
  • Form 1099-S (proceeds from the sale of real estate)
  • Form 1099-SA (distributions from health savings accounts)
  • Form SSA-1099 (Social Security benefits)
  • Form RRB-1099 (Railroad retirement benefits)
  • Schedule K-1 (income from partnerships, S corporations, estates, or trusts)

Expense-Related Documents

  • Form 1097-BTC (bond tax credit)
  • Form 1098 (mortgage interest)
  • Form 1098-C (charitable contribution of vehicles)
  • Form 1098-E (student loan interest)
  • Form 1098-MA (homeowner mortgage payments)
  • Form 1098-T (tuition for higher education)
  • Business expenses (summarized by type and amount)
  • Child care expenses (summarized by provider and amount)
  • Gambling losses
  • Medical expenses
  • Moving expenses
  • Personal property tax, such as car registration paid
  • Real estate tax bills
  • Realized gain/loss report for any stocks, bonds, mutual funds and other capital investments sold during the year
  • Receipts or acknowledgment letters for gifts to charity
  • Rental expenses (summarized by property, type, and amount)

What If I’m Missing a Document?

If you’re missing a document, you can ask your employer to give you a new copy. If you’re missing 1099 contact your client.