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Filing Taxes Remotely Goes Viral in Wake of Coronavirus

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coronavirusCoronavirus continues to affect day to day life, and the new concern is it could potentially threaten conventional in-person tax-filing activities, such as heading to your local tax return center to review your tax documents and sort out your tax return.

If the spread of the virus worsens, this could result in more people staying home for weeks on end, and tax office visits may not be possible. This makes it particularly taxing for those tax filers with complicated returns, or who may have questions about their return.

Now may be a good time to consider filing remotely with a tax professional. Additionally, taxpayers are urged to file before the deadline to avoid any delays with their tax return. Some professional tax services provide remote services, allowing taxpayers to securely upload documents, electronically sign their tax return, and file the return securely and safely from the comfort of their home. Whether you are an individual, or a business, it’s a good idea to play it safe and file remotely with the assistance of a qualified tax professional.

Reviewing Last Year’s Business Records Gives You an Idea of What Worked and What Didn’t

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Rikard & Neal - Best Business PracticesBusy is good. Most small business owners would rather things were too hectic than too slow. As the year winds down, though, let your staff handle the busy-ness while you look at the business — where you are, what you’ve accomplished in the past year and where you’re headed in the new year and beyond.

Your Bottom Line

The quickest way to figure out where you are is to check your bottom line. Are you making money? Are profits better or worse than they were last year at this time? Are you meeting your expectations? If not, why not?

Your Business Plan

Change is inevitable. And businesses have a way of outgrowing their business plans. But if you don’t have a current plan, you don’t have a way of measuring your progress. So if you’ve been “off road” without a plan for a while, it’s time to formalize a plan that reflects past growth and sets new goals for the next several years.

Your Competition

The more you know about your competition, the better. Who are they? How are they different? How are they the same? Where do you overlap each other? Understanding their business model will help you prepare strategically for possible changes in the marketplace.

Your Secret Weapon

Your workforce is your secret weapon, especially if you’re in a competitive market. Dedicated, well-trained employees providing top-notch customer service can help put you out front of even the largest competitor. A rich, competitive benefits package will help you attract — and retain — a high-caliber workforce. Health insurance and retirement plans are highly valued benefits. You can offer a variety of other benefits to suit your employees’ needs and your budget. Ask your financial professional for information.

Your Future

Do you have a formal succession plan? Are you grooming someone to take over? A well-trained successor could help in the successful — and profitable — transfer of your business. And you can use life insurance to prefund all or part of the sale.

Don’t get left behind. We offer a free initial consultation for business owners. Call us at 901-685-9411 to discuss your specific needs.

Who Owes You? 5 QuickBooks Online Reports That Can Tell You Fast

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Rikard & Neal CPAs - QuickBooksKeep a constant watch on your accounts receivable to improve cash flow.

Quick: How many of your invoices are unpaid? Have any of your customers gone over 30 days past due? Did you bill all of the time and expenses for that project you just completed for a customer?

If you’re doing your accounting manually, there’s simply no way to get that information quickly. Depending on your bookkeeping system, you may not be able to get it at all.

QuickBooks Online has more than one solution for this problem. You see the first one every time you log in. The Dashboard contains a graphic in the upper left corner that tells you how many invoices are overdue and unpaid. Click on the colored bar labeled OVERDUE, and you’ll see a list of invoices with the unpaid ones right at the top.

You can tell at a glance how much of your money is tied up in unpaid invoices.

While this is important information for you to have as you start your workday, it doesn’t tell the whole story. To get that, you’ll need to access some of QuickBooks Online’s reports – five of them in particular. Click Reports in the left vertical pane, and then scroll down to the heading labeled Who owes you.

These reports are listed in two columns. Each has the outline of a star next to it. Click on the star, and the report will be added to the Favorites list at the top of the page. Click on the three vertical dots next to it, and you’ll be able to Customize the report. And as you hover over the title, you’ll see a small, circled question mark. Click on this to get a brief description of the report.

There are several reports in this list that can provide insight into where your outstanding revenue is. We recommend you run five of them at least once a week – more frequently if your business sells large quantities of products and/or services. The suggested are:

Accounts receivable aging detail

This report provides a list of invoices that are overdue, along with aging information. There are several columns in the report, but you’ll want to pay special attention to the last one: OPEN BALANCE.

Tip: If you have many customers or simply a high volume of unpaid invoices, you might consider running the Accounts receivable aging summary instead.

Changing the Content

Before you run the report, you should explore the customization tools provided for it. They won’t be the same for every report, but you can start to get an idea of what can be done. Hover over the report title and click Customize. A panel like the one pictured below will slide out of the right side of the screen.

QuickBooks Online provides deep customization tools for reports.

You can see some of your customization options in the image above. Beyond these, you can also work with filters and headers/footers. When you’re satisfied with your changes, click Run report.

If you want to run a report with its default settings, just click on the report title in the list to display it. You’ll have access to limited customization from there.

Four other reports you should be generating regularly are:

  • Customer Balance Summary: Shows you how much each customer owes your business
  • Open Invoices: Lists invoices for which there has been no payment
  • Unbilled Charges: Just what it sounds like: tells you who hasn’t been invoiced yet for billable charges
  • Unbilled Time: Lists all billable time not yet invoiced

We don’t expect you’ll have any trouble understanding reports like these; they’re fairly self-explanatory. QuickBooks Online offers many other reports, the standard financial reports that need to be generated monthly or quarterly, like Balance Sheet, Profit and Loss, and Statement of Cash Flows. You’ll absolutely need these should you apply for a loan or need to supply in-depth financials for any other reason. We can help you analyze them to get a comprehensive, detailed picture of your company’s fiscal health.

As Certified QuickBooks ProAdvisors, we can work with you to ensure that you are getting the most out of your QuickBooks accounting software. Send us an e-mail or call us today at 901-685-9411 to discuss your QuickBooks accounting needs with an experienced CPA. Or, request a free consultation online.

Take Advantage of the Small Business Administration

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Rikard & Neal CPAs - Small Business Accounting

What can the Small Business Administration do for your business? Probably more than you imagined! Click through for an introduction to the SBA and the many programs it offers to businesses like yours.

How can the Small Business Administration help you grow your business? Take a quick look at how the SBA works.

First, note that the SBA has a pretty wide definition of what is meant by “small.” You don’t have to be a mom-and-pop operation to take advantage of SBA loans. The cutoff limits vary by industry, but it’s possible to have hundreds of employees and still be eligible for SBA assistance.

However, there are four criteria all businesses must meet to obtain an SBA loan: They must be a for-profit business, they must do business in the U.S., the owners must have invested their own time or money in the business, and they must have exhausted all other financing options.

How does the SBA loan program work? The SBA doesn’t provide loans directly. If you need a loan, ask your lender whether it works with the SBA, or use the SBA to help connect with lenders. It means more paperwork and time to get an SBA loan guarantee, but getting the SBA involved can make the difference between getting the loan or not. You can connect with SBA lenders through the SBA Lender Match program. This speeds up the lending process.

There are multiple SBA loan programs. A basic loan program can help existing businesses and startups. These are flexible loans that can be used for lots of business purposes, including for working capital. There is also a special series of loans for property and equipment for businesses in specific areas targeted for development. The SBA also offers an array of special loans for veterans.

The SBA can provide disaster assistance to help small businesses that were hit by disasters — physical and economic assistance. For example, the SBA can provide loans to self-employed business owners who’ve lost their jobs due to disaster.

Help Beyond Loans

The SBA also offers, in partnership with other agencies, grants for research and development. The goal is to encourage businesses to do research that has the potential for commercialization. Some grants are for businesses run by socially and economically disadvantaged persons.

In addition, the SBA can help businesses get through the complex process of competing for government contracts; the SBA aims to level the playing field. After all, many government agencies require that some percentage of their purchases be set aside for small businesses, and you may be able to get in on these contracts.

Women and minority business owners can get specific assistance. The Office of Women’s Business Ownership provides help to women starting and running small businesses. Minority business owners, disabled and disadvantaged business owners, and immigrant and foreign national business owners can get special loans and help to start businesses.

The SBA also partners with SCORE, a network of volunteer expert business mentors with more than 10,000 volunteers in 300 chapters. You can find individual help for launching new companies or divisions and for business plan writing and marketing, for example.

Now that you see all that you can garner from the SBA, you may decide to visit your local SBA office to see what services and training are available in your area.

Our clients get personalized and responsive service from dedicated accounting professionals who will help you manage your business and keep your finances on track. We want you to feel confident that your accounting system accurately reflects your current situation so you can concentrate on running your business instead of trying to stay on top of your books. Send us an e-mail or call us today at 901-685-9411 . Or, request a free consultation to discuss your business needs with an experienced CPA.

Renting Residential Real Estate — A Tax Review for the Nonprofessional Landlord

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Woman inspecting house interiorInvesting in residential rental properties raises various tax issues that can be somewhat confusing, especially if you are not a real estate professional. Some of the more important issues rental property investors will want to be aware of are discussed below.

Rental Losses

Currently, the owner of a residential rental property may depreciate the building over a 27½-year period. For example, a property acquired for $200,000 could generate a depreciation deduction of as much as $7,273 per year. Additional depreciation deductions may be available for furnishings provided with the rental property. When large depreciation deductions are added to other rental expenses, it’s not uncommon for a rental activity to generate a tax loss. The question then becomes whether that loss is deductible.

$25,000 Loss Limitation

The tax law generally treats real estate rental losses as “passive” and therefore available only for offsetting any passive income an individual taxpayer may have. However, a limited exception is available where an individual holds at least a 10% ownership interest in the property and “actively participates” in the rental activity. In this situation, up to $25,000 of passive rental losses may be used to offset nonpassive income, such as wages from a job. (The $25,000 loss allowance phases out with modified adjusted gross income between $100,000 and $150,000.) Passive activity losses that are not currently deductible are carried forward to future tax years.

What constitutes active participation? The IRS describes it as “participating in making management decisions or arranging for others to provide services (such as repairs) in a significant and bona fide sense.” Examples of such management decisions provided by the IRS include approving tenants and deciding on rental terms.

Selling the Property

A gain realized on the sale of residential rental property held for investment is generally taxed as a capital gain. If the gain is long term, it is taxed at a favorable capital gains rate. However, the IRS requires that any allowable depreciation be “recaptured” and taxed at a 25% maximum rate rather than the 15% (or 20%) long-term capital gains rate that generally applies.

Exclusion of Gain

The tax law has a generous exclusion for gain from the sale of a principal residence. Generally, taxpayers may exclude up to $250,000 ($500,000 for certain joint filers) of their gain, provided they have owned and used the property as a principal residence for two out of the five years preceding the sale.

After the exclusion was enacted, some landlords moved into their properties and established the properties as their principal residences to make use of the home sale exclusion. However, Congress subsequently changed the rules for sales completed after 2008. Under the current rules, gain will be taxable to the extent the property was not used as the taxpayer’s principal residence after 2008.

This rule can be a trap for the unwary. For example, a couple might buy a vacation home and rent the property out to help finance the purchase. Later, upon retirement, the couple may turn the vacation home into their principal residence. If the home is subsequently sold, all or part of any gain on the sale could be taxable under the above-described rule.

We offer financial management solutions for developers, property managers, realtors, brokers and other real estate businesses. Call us at 901-685-9411 today for more information or request a free consultation online now.

How to Improve Your Cash Flow

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businessman moneySlow paying customers, seasonal revenue variations, an unexpected downturn in sales, higher expenses — any number of business conditions can contribute to a cash flow crunch. If you own a small business, you may find the suggestions that follow helpful in minimizing cash flow problems.

Billing and collections. Your employees need to work with clear guidelines. If you don’t have a standardized process for billing and collections, make it a priority to develop one. Consider sending invoices electronically instead of by mail. And encourage customers to pay via electronic funds transfer rather than by check. If you don’t offer a discount for timely payment, consider adding one to your payment terms.

Expense management. Know when bills are due. As often as possible, pay suppliers within the period that allows you to take advantage of any prompt-payment incentives. Remember that foregoing a discount in order to pay later is essentially financing your purchase.

Take another look at your costs for ongoing goods and services, including telecommunications, shipping and delivery, utilities, etc. If you or your employees travel frequently for in-person meetings, consider holding more web conferences to reduce costs.

Inventory. Focus on inventory management, if applicable, to avoid tying up cash unnecessarily. Determine the minimum quantities you need to keep on hand to promptly serve customers. Systematically track inventory levels to avoid overbuying.

Debt management. Consider how you use credit. Before you commit to financing, compare terms from more than one lender and keep the amount to a manageable level. For flexibility, consider establishing a line of credit if you do not already have one. You will be charged interest only on the amount drawn from the credit line.

Control taxes. Make sure you are taking advantage of available tax breaks, such as the Section 179 deduction for equipment purchases, to limit taxes.

Develop a cash flow budget. Projecting monthly or weekly cash inflows and outflows gives you a critical snapshot of your business’s cash position and shows whether you’ll have enough cash on hand to meet your company’s needs.

Don’t get left behind. Contact us today to discover how we can help you keep your business on the right track.

Send us an e-mail or call us today at 901-685-9411 to discuss your business needs with an experienced CPA. Or, request a free consultation online.