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Accountants In West Palm Beach

(561) 842-1304

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West Palm Beach, FL 33407

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The New Law Regarding Tax Cuts and Jobs Act for Corporations

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Tax Cuts and Jobs Acts information for Corporations in 2018

There are new tax laws regarding corporations in the 2018 tax year. If you fall under any of the following situations, please reach out to a qualified tax professional to clarify your tax requirements.

  • You converted an S-Corp to a C-Corp.
  • You had a PSC (Personal Service Corporation).
  • Your corporation earned capital gains or paid out dividends.
  • You changed or should change your accounting methods.

 

If you have any questions on how these criteria may affect your 2018 taxes, please read the brochure below or contact us by using the online form to the right to discuss your unique situation. You can also call us at (561) 842-1304.

Tax_Cuts_and_Jobs_Act_-_Corporations_2018

Filed Under: Tax

A Charitable Contributions Guide for 2018

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Information on what is and is not a charitable contribution in 2018

Do you have questions about what qualifies as a charitable contribution? If you answer with a yes to any of the following questions for this year, you may qualify for a tax break.

  • Did you volunteer for a charitable organization? If so, the expenses you incurred during your service, but not your time, are considered cash contributions and are deductible.
  • Did you contribute to a “donor-advised” fund? Check with your tax professional as this may or may not be deductible.
  • Did you donate used clothes or furniture to a charitable organization? If such items were in good to excellent condition they may qualify for a tax deduction. If they are well-used and of limited monetary value, they may not qualify.
  • Did you donate a vehicle? There are limits placed on how much you can deduct for vehicle donations.

 

If you have further questions on what sort of contributions qualify for tax deductions and how to keep proper records for them, please read our brochure below or contact us about your specific situation.

Charitable_Contributions_Guide_2018

Filed Under: Tax

What exactly should I do to avoid tax refund delays?

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avoid tax refund delays, IRS Tax Help, Tax Consultant West Palm Beach

As a taxpayer, you may suffer from a tax refund delay for many reasons. These include computational errors, incomplete tax returns, and incorrect deposit information. You may also observe refund delays in case of social security number mismatches, early or late tax filing returns, and tax return amendments.

However, there are ways you can avoid these delays. Here are just a few:

  1. Keep copies of your prior tax records

Inaccuracies and incomplete information in returns cause many tax refund delays. Having and using information from prior years tax returns can help you minimize these as much as you can. Ideally, you should maintain copies of your prior tax records for at least three years.

  1. Top 3 Tax Frauds

The IRS is carefully screening tax returns with an eye towards preventing fraud. There are three things they look at: earned income tax credit, child tax credit, and the American Opportunity Tax credit. When you file, there are due diligence questions that must all be answered.

If your return has any of these items, your return may be delayed because it’s under review.

  1. Be well prepared

If you’re not well prepared to file your tax return, this will delay the filing of your taxes. Which will, in turn, delay when you receive your refund. You should strive to create a file of all necessary tax forms, such as W-2s, 1099s, and other mandatory forms. You should receive these from the related institutions and banks throughout the month of January.

If you have not received all the forms you need to file your taxes accurately and completely, you can attempt contacting your employers or the related institutions.

In addition, the IRS requires you to indicate whether you had an individual health insurance plan throughout the course of the year. You are also required to indicate if you qualify for an exemption or have received the premium tax credit.

  1. E-filing

You can minimize the amount and extent of computing errors on your tax returns by electronically filing your taxes. Keep in mind that more than 90 percent of all tax returns are filed electronically nowadays, by using either tax software or a tax professional.

It is much easier for the e-filing software to spot and check for errors. Whereas paper returns may increase the likelihood of mistakes. Most tax professionals are required to file electronically.

  1. Direct Deposit 

You also have the option of having your refund check deposited directly into the bank account of your choice. This reduces the chances of your refund check getting lost, stolen, or undeliverable. However, you must double-check your bank’s routing number and account number to make sure your refund isn’t deposited in the wrong account.

Want to make taxes easier? Contact us for a free consultation.

Sources:

“Get Ready for Taxes: Plan Ahead for 2018 Filing Season to Avoid Refund Delays.” Internal Revenue Service. Accessed April 01, 2018. https://www.irs.gov/newsroom/get-ready-for-taxes-plan-ahead-for-2018-filing-season-to-avoid-refund-delays.

 

Guess What? Mileage rates increased in 2018

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mileage rate 2018, standard mileage rate, IRS tax mileage allowance

As of December 2017, new 2018 optional standard mileage rates are in effect. These standard mileage rates help compute your business, medical, charitable or moving deductions. All you have to do is multiply them by the number of miles you’ve traveled to get the related deductible expenses. If you and your employees use your vehicle for personal and business use, make sure to keep accurate supporting records.

Effective as of January 1, 2018, these are the new mileage rates to take into account. They are related to your car, van, pickup or panel truck use:

  • For business miles driven, 54.5 cents per mile (or an increase from 53.5 cents in 2017)
  • For moving or medical purposes, 18 cents per mile (or an increase from 17 cents in 2017)
  • For charitable purposes, 14 cents per mile

Since your business’ employees may be using your vehicles for various purposes, it’s possible to use many rates on your tax return. You should keep in mind that the business rates depend on the results of an annual study of the fixed and variable costs of operating a vehicle.

Yet, there are limits to claiming your deduction. You either use the standard mileage rate or actual expenses, which include claiming the Section 179 deduction or any depreciation method.

Under Notice 2018-03, business employees driving their own vehicles are entitled to nontaxable reimbursements of their costs. The Fixed and Variable Rate Allowance (FAVR) plan is the most favorable or fair program for employees.

There are other methods available. These include:

  • The Cost per Mile (CPM) reimburses employees’ vehicle costs on a per-mile basis. This is on the condition that it adheres to IRS reporting requirements;
  • Car or vehicle allowance: This is a specific amount that employees can use over a certain time to cover the costs of employees’ use of their vehicles for business purposes. As an employer, this type of compensation program is easiest for you. Yet, allowances are taxable to your employees and constitute a tax burden for the latter.

It is uncertain whether these 2018 mileage rates will impact business owners. Yet, it is important to keep these in mind as you account for your employees’ mileage expenses.

Contact us for further details on how we can help you keep track of IRS changes.

 

Sources:

  • “IRS issues 2018 standard mileage rates.” Journal of Accountancy. December 14, 2017. Accessed January 26, 2018. https://www.journalofaccountancy.com/news/2017/dec/2018-irs-standard-mileage-rates-201718061.html.
  • Erb, Kelly Phillips. “IRS Announces 2018 Mileage Rates Even Though Tax Reform Talks May Limit Use.” Forbes. January 03, 2018. Accessed January 26, 2018. https://www.forbes.com/sites/kellyphillipserb/2017/12/14/irs-announces-2018-mileage-rates-even-though-tax-reform-talks-may-limit-use/#13c8ab7d7631.
  • “IRS Announces Higher Standard Mileage Rate for 2018.” SHRM. January 10, 2018. Accessed January 26, 2018. https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/2018-standard-mileage-rate.aspx.

 

The Major Differences You Should Know About Cost Accounting and Financial Accounting

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accounting services, financial accounting, cost accounting

 

Many people wonder about the differences between cost accounting and financial accounting. Both accounting methods can help make more effective decisions as a business manager. Yet, there are significant differences between the two.

Let’s first start by defining each one.

  • Cost accounting applies costing methods and techniques to reduce business costs. Its main goal is to calculate the cost per unit of your business’ products or processes.
  • Financial accounting classifies, stores, records, and analyzes a company’s financial statements. The goal is to improve the business’s profitability and increase its transparency. Financial accounting presents an accurate financial picture of a company to the stakeholders.

The major differences between cost accounting and financial accounting are as follows:

  1. Cost accounting helps you determine the expenses associated with each of your products. Financial accounting helps better understand a company’s profitability through its financial statements.
  1. Cost accounting is a tool used by management to improve business process efficiency. Financial accounting presents the business’s performance.
  1. Cost accounting focuses on the internal aspects of a company. Financial accounting focuses on its external aspects. While cost accounting helps improve a company’s processes, financial accounting is profit-oriented.
  1. The use of cost accounting is not mandatory in all companies. Only those using manufacturing processes or activities must use cost accounting. Yet, the use of financial accounting is a must for all organizations.
  1. Cost accounting is not performed as per any particular period. Rather, it’s performed in a short interval of time as in the production of a unit or product. Financial accounting records an organization’s financial activity for a given financial period.
  1. Additionally, estimation is important in cost accounting. It helps determine the per-unit cost of sales. In contrast, every transaction in financial accounting is reporting based on actual data.
  1. Cost accounting uses tools to help improve the efficiency of business operations. These include the cost of sales, product margin, and selling price of products. Financial accounting uses financial statements, journals, ledgers, and trial balances.
  1. There are also differences in presentation between the two methods. Financial accounting requires specific format parameters. As for cost accounting, the format of reports can vary.

 

It’s clear that cost accounting and financial accounting are quite different. There are many benefits to using both approaches. Combining these methods is a powerful tool to propel your business to the next level.

Are you looking for accounting help? Contact us for a free consultation at (561) 842-1304.

Sources:

  • “The difference between cost accounting and financial accounting.” AccountingTools. Accessed January 06, 2018. https://www.accountingtools.com/articles/what-is-the-difference-between-cost-accounting-and-financial.html.
  • “The Difference Between Cost Accounting and Management …” Accessed January 6, 2018. http://www.bing.com/cr?IG=DC12E060B6F343D8881D72E81566233C&CID=26D6ADED7CBE6DE625CEA69D7D186C87&rd=1&h=_v5M4ek30sfZxx67H46YHkBpFKpSLonFUTndzw_8l7c&v=1&r=http%3a%2f%2fwww.businessessentials.co.za%2f2017%2f04%2f07%2fdifference-cost-accounting-management-accounting%2f&p=DevEx,5059.1.
  • Anjali «╬♥Áńĵáĺℐ♥╬«, — Follow. “Difference between financialaccounting and cost accounting.” LinkedIn SlideShare. February 18, 2017. Accessed January 06, 2018. https://www.slideshare.net/anjali106/difference-between-financialaccounting-and-cost-accounting-72297700.

 

How to Survive an IRS Tax Audit

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IRS tax audit, IRS Tax Help, accounting servicesTax time is already stressful enough without mentioning the incidence of tax audits. Both businesses and individuals are exposed to IRS tax audits, which ensure that the income and expense deductions are in compliance with tax laws.

While an IRS tax audit might be a scary prospect, it can be handled in a way that minimizes its negative impact. While you may still incur penalties and/or fines, understanding the process can help you prepare adequately.

The first step is to understand the type of IRS audit you are subjected to. In general, there are three types of audits the IRS may decide to use for you or your business:

  1. Audit by Correspondence: Through this type of audit, the IRS will be requesting supporting information through the mail. This is the most common and easiest type of audit and involves only one or two tax issues. Follow the instructions explicitly. Do not try to read between the lines, give them exactly (and only) what they ask for.
  1. Office Audit: This type of audit will require you to go to the IRS office for the audit to be performed. This is quite similar to the correspondence audit. It usually only deals with one or two items, and the IRS will provide you with a list of what they need. These audits are usually limited to a certain part of your taxes. While you may request for the meeting to take place at your business or home, it is preferable to conduct it at the IRS office.
  1. Field Audit: In this case, an IRS agent will be assigned to your case and will perform the audit on site at your business or location. This is a more serious type of audit, through which you will need the help of a tax professional. This is a serious deal, get help!

Here are a few steps you can follow to survive an IRS audit:

  • Understand the process

It’s important to understand the audit process. Usually, it is rather simple and includes a notification from the IRS, as well as the documentation to gather and submit by the appointment date or deadline. The IRS usually reviews the submitted documentation and information and determines a final decision.

  • Prepare adequately

Preparing for an audit and getting organized is crucial! Having a reliable accounting system like QuickBooks or Xero will help in preparing more adequately. It will also contribute to a smoother audit.

If you haven’t been using a good accounting system, it is possible to reconstruct your transaction history. You can do this by contacting vendors and financial institutions, using the online platforms of your banks, or gathering your receipts and invoices.

An additional tip is to make copies of your original documentation and organize your supporting information well. This will help the audit be more organized and yield more positive results.

  • Get reliable professional advice

If your audit is either a field or office audit, you may want to consult a professional. A Certified Public Accountant (CPA), tax attorney, or Enrolled Agent (EA) can help you prepare your case, get organized, and negotiate a just resolution. The right tax professional can even help you minimize the negative impact of a tax audit.

In conclusion, keep in mind that IRS tax audits are common occurrences that can be managed effectively. Having the proper understanding, organization, and strategies can make the difference between a successful case and a failing one.

Contact us if you need any help with your taxes or with preparing for an audit. We’re here to help!

 Sources:

  • Laurence, J.D. Beth. “Checklist: How to Survive a Tax Audit.” Www.nolo.com. Accessed January 06, 2018. https://www.nolo.com/legal-encyclopedia/survive-irs-tax-audit-29478.html.
  • Murray, Jean. “How to Survive an IRS Tax Audit of Your Business.” The Balance. Accessed January 06, 2018. https://www.thebalance.com/how-to-survive-an-irs-tax-audit-of-your-business-398979.
  • Taulli, Tom. “4 Ways To Survive A Dreaded IRS Audit.” Forbes. August 06, 2017. Accessed January 06, 2018. https://www.forbes.com/sites/tomtaulli/2016/11/26/4-ways-to-survive-a-dreaded-irs-audit/#5dd.

 

 

 

 

 

 

 

 

 

7 Tax Tips to Avoid an IRS Audit with Your Small Business

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tax filing, tax accounting, tax accountantBeing subject to an IRS audit can be a monumental challenge for your small business. In fact, the IRS has been getting more vigilant in their approach toward such businesses in recent years. However, there are ways to avoid an audit.

As you file your small business tax return this year, here are seven tax tips you can use to protect yourself against an IRS audit:

1. Use a good record-keeping system

A reliable record-keeping system is the key to not only save money but also maintain adequate tax documentation. Research what kind of documentation you need to gather and maintain for your tax needs. Ensure that you have processes in place to keep this support at tax time.

2. Decide on the best accounting method for your business

Businesses use one of two tax accounting methods: cash and accrual. Depending on the nature of your small business, its legal structure, and its credit situation, you may consider one of these accounting methods. Even if you happen to pick one not suited for your business at first, there are ways to resolve any discrepancy.

3.  Stay current on tax filing and file any past due returns

If there is an issue, and you’re current, your tax professional has a lot more options to help you resolve it. If you happen to have any past due tax returns related to your business, make sure to file them as soon as possible. This will help you avoid any penalties and interest and get on the right track with your taxes.

4. Clarify any unusual circumstances

If you or your business encounter any unusual circumstance (such as an inheritance) discuss it with your tax professional. They will likely ask all sorts of clarifying questions to determine whether or not you A) owe taxes on it and B) it is a reportable event.

5. Report all your business income

One of the things the IRS looks at in determining their audit cases is whether all income is reported. Make sure to obtain and maintain records of all your business income. Ensure that you have matched all your records and reported the right amount.

6. Review your tax return

There are many details that can fly under the radar during the tax review process. Make sure to carefully go over your tax return before submitting it. Even if you’re using a tax professional to help you file, ensure that you also review and understand your return before final submission.

7. When in doubt, use a tax professional

Filing your business’s tax return can be a complex process. If you have doubts as to how to undertake this process, consider consulting with a tax professional. They can help you better navigate the filing process and submit a more accurate return.

Are you wondering how to survive an IRS tax audit?

Contact us for a free consultation at (561) 842-1304.

Sources:

  • “Avoiding Problems.” Internal Revenue Service. Accessed January 08, 2018. https://www.irs.gov/businesses/small-businesses-self-employed/avoiding-problems.
  • “Six Tips to Avoid an IRS Audit.” Six Tips to Avoid an IRS Audit | NAEA. February 12, 2013. Accessed January 08, 2018. https://www.naea.org/newsroom/press-releases/six-tips-avoid-irs-audit.
  • “Visit the IRS Small Business Tax Center for All Your Tax Needs2 | Internal Revenue Service.” 2 | Internal Revenue Service. Accessed January 08, 2018. https://www.irs.gov/newsroom/visit-the-irs-small-business-tax-center-for-all-your-tax-needs2.

 

 

 

5 Tax Planning Strategies for Professional Service Providers | The Balance Sheet Inc

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tax services, tax consultant, tax preparation servicesAs a professional service provider, applying effective tax strategies can help you meet your financial goals. While you may feel too busy with the demands of your practice, it’s crucial that you take the time to plan your tax strategy.

Here are 5 top tax planning strategies that will help you accomplish your business and financial goals this year:

1. Maximize your deductions

If you’re claiming itemized deductions, you may be able to take advantage of the Net Operating Loss Carryover, if available. Keep in mind that the Net Operating Loss Carryover must be clearly shown on prior income tax returns and financial statements. You can claim your Net Operating Loss Carryover within three years of from the year in which the loss was incurred.

2.Leverage your tax credits

Tax credits are for things like energy, offering medical insurance, and more.  To fully leverage your tax credits, you need a knowledgeable tax professional to let you know what credits apply to your business. Feel free to contact us, we’re eager to help.

Corporate income losses from prior years may be used as credits against your income tax due. Losses can either carry back 2 prior years or carry forward for 20 years. Consult with your tax professional on the best strategy for you.

3.Get Charitable

If you’ve made charitable contributions to accredited institutions, you may be able to deduct these fully. However, in order to claim your charitable contributions, you may have to provide a Certificate of Donation. Any time a donation is over $250 a statement is required.

4.Mind your excess income tax payments

If you’ve overpaid your income tax, you may be able to apply that tax credit to the following year or receive a refund. Keep in mind the option to carry over is irrevocable.

5.Track your unappropriated retained earnings

Unappropriated retained earnings refer to the net income that has not been allocated as income to its shareholders or officers. They are usually distributed as dividends and taxable at that time. Timing of distribution can affect your tax bill.

Are you wondering about the best planning tax strategies for professional service providers? Contact us for a free consultation at (561) 842-1304.

Sources:

“Tax planning strategies.” BusinessWorld. Accessed August 26, 2017. http://www.bworldonline.com/content.php?section=Economy&title=tax-planning-strategies&id= 127590.

Hananel, Eric. “Tax Planning Strategies for Individuals in 2017.” Investopedia. January 10, 2017. Accessed August 26, 2017. http://www.investopedia.com/articles/taxes/011017/top-tax-planning-strategies-2017.asp.

PricewaterhouseCoopers. “Personal financial services.” PwC. Accessed August 26, 2017. https://www.pwc.com/us/en/private-company-services/personal-financial-services.html.

 

 

5 Tax Accounting Tips To Prepare Your Business for Success

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Did you just start your own business? Are you wondering what the essentials are to prepare it for success? A large part of ensuring that your business thrives, is making sure that your business funds are properly tracked. This is also known as “tax accounting”, and constitutes the backbone of businesses of any size.

Here are five tax accounting tips to prepare your business:

1.Understand your business entity

As a business owner, you’re liable for a certain amount of tax, depending on your business structure. While you may not have to understand the ins and outs of your particular tax situation, you should have a basic understanding of it.

For instance, you may qualify for substantial tax savings as an S corporation. However, it may be harder to operate than a single member LLC, for example. As an LLC, you may have the option to change the way your business is taxed. Options like being taxed as a regular corporation or an S-corp. Knowing your business entity and the different tax breaks each can provide, has the potential to save you money. Always consult with a tax professional, which leads to our next item.

 2.Consider hiring a professional

 Preparing your business for taxes is a complex task. Consider hiring a professional to help you through this process. The point is not just to get your taxes filed or checking every deduction box.  You want to maximize your tax benefits for your type of business.

A tax professional can help you structure your business for the best tax advantages. He/she can also help you understand the specific IRS requirements for your type of business, so as to better manage your prospective tax liability. While a bookkeeper can help you set up a good record-keeping system, an accountant can handle your year-end tax planning.

3.Get familiar with the various methods of accounting

As a business owner, you must select the accounting method best suited to your type of business. The two methods that are generally used and accepted consist of accrual accounting and cash accounting.

While the accrual method depicts your current, real-time financial situation, the cash method reflects the actual money inflows and outflows occurring in your business. Be mindful of these as you set your business, and consider letting a professional help you determine the best choice.

Cash and accrual are your basic methods of accounting. There are other accounting methods depending on your industry.

 4. Understand what’s deductible in your business

It’s important to understand what is deductible and what is not in your business. This knowledge will help you substantially save on your tax liability.

You can deduct a number of other costs and expenses in your business, including startup costs, education expenses, auto deductions. Equipment, entertainment, travel, and software expenses are also deductible.

5. Track your expenses accurately

Having a complete and accurate record of your expenses is crucial in order to take advantage of any tax deductions. This also means keeping a detailed record of your business transactions, including your mileage log as well as expense receipts. You’ll also need to carefully separate your personal from your business expenses.

It is best to get good bookkeeping software and enlist a professional to set it up for you. That way, using it is user-friendly and built around your needs.

Are you wondering how to apply these bookkeeping tips to your business?

Contact us for a free consultation at (561) 842-1304.

 Sources:

  1. Anon, (2017). [online] Available at: http://www.jelfsmallbusiness.co.uk/media/178275/Tax-Guides-for-Small-Businesses-V04.pdf [Accessed 10 Aug. 2017].
  2. Anon, (2017). [online] Available at: https://www.irs.gov/pub/irs-pdf/p334.pdf [Accessed 10 Aug. 2017].
  3. Staff, I. (2017). Tax Accounting. [online] Investopedia. Available at: http://www.investopedia.com/terms/t/tax-accounting.asp [Accessed 10 Aug. 2017].
  4. co.uk. (2017). Small business tax and accounting guides. [online] Available at: http://www.bytestart.co.uk/section/tax [Accessed 10 Aug. 2017].
  5. Google Books. (2017). K. Lasser’s Small Business Taxes 2017. [online] Available at: https://books.google.com.ph/books?id=o3kxDQAAQBAJ&printsec=frontcover&source=gbs_at b#v=onepage&q&f=false [Accessed 10 Aug. 2017].