Getting Ready for Year End

YOU MAY BE READY FOR CHRISTMAS TO GET HERE,

BUT IS YOUR BUSINESS READY FOR YEAR END?

Christmas is almost here and most of us are busy thinking about what to get for brother Mike, sister Sue, Aunt Laura, and Uncle Jack. However for business owners, now is the time to be thinking about another uncle; and that uncle is Uncle Sam.  Although most business owners don’t want to think about tax time until next year, there are some things that could be done now to make tax time go a lot smoother.

Here are a few of the steps that should be taken to prepare your business for the end of the year:

• Reconcile bank account – void any outstanding transactions that are older than 1 year
• Review accounts receivable (amounts customers owe you) – write off amounts that you believe to be uncollectible
• Inventory – if possible take a physical inventory
• Send financial information to CPA for tax planning
• Review employee information – make sure you have social security numbers and addresses for all employees
• Review 1099 information –make sure you have social numbers and addresses for all 1099 contractors

The beginning of the year is the best time to make changes in your business. If you are contemplating switching payroll service, CPAs, or accounting software; now is the time to do it. It’s much easier to switch payroll services or change to another accounting software at the first of the year rather than in the middle of the year. There is much more likelihood of errors being made during the transition in the middle of the year. 

Another consideration is whether or not to take a salary. If you are operating as an S Corporation, it is important for the shareholders to take a salary if there is a net profit for the year. Otherwise, you are opening yourself up to a potential audit risk.

Following all of these steps should help you to get your business ready for the year end and for Uncle Sam.  Sorry, you’re on your own with what to get for your brother or sister! 

Stay tuned next month for more tips on getting ready for tax time. Have a Merry Christmas!

What financial records to keep, how long to keep them

This is something I get asked a lot. “How long should I keep tax returns, bank statements…etc?” So I thought I would send this information out again.

I hope you find it useful. You can’t take everything with you, but the following are suggestions about how long you should keep personal finance and investment records on file:

Financial records timeline

Type of record	Length of time to keep – and why
Taxes	Seven years
Returns	The IRS has three years from your filing date to audit your return if it suspects good faith errors. The three-year deadline also applies if you discover a mistake in your return and decide to file an amended return to claim a refund.
Canceled checks/receipts (alimony, charitable contributions, mortgage interest and retirement plan contributions)	The IRS has six years to challenge your return if it thinks you underreported your gross income by 25 percent or more.
Records for tax deductions taken	There is no time limit if you failed to file your return or filed a fraudulent return.
IRA contributions	Permanently If you made a nondeductible contribution to an IRA, keep the records indefinitely to prove that you already paid tax on this money when the time comes to withdraw.
Retirement/savings plan statements	From one year to permanently Keep the quarterly statements from your 401(k) or other plans until you receive the annual summary; if everything matches up, then shred the quarterlies. Keep the annual summaries until you retire or close the account.
Bank records	From one year to permanently Go through your checks each year and keep those related to your taxes, business expenses, home improvements and mortgage payments. Shred those that have no long-term importance.
Brokerage statements	Until you sell the securities You need the purchase/sales slips from your brokerage or mutual fund to prove whether you have capital gains or losses at tax time.
Bills	From one year to permanently Go through your bills once a year. In most cases, when the canceled check from a paid bill has been returned, you can shred the bill. However, bills for big purchases — such as jewelry, rugs, appliances, antiques, cars, collectibles, furniture, computers, etc. — should be kept in an insurance file for proof of their value in the event of loss or damage.
Credit card receipts and statements	From 45 days to seven years Keep your original receipts until you get your monthly statement; shred the receipts if the two match up. Keep the statements for seven years if tax-related expenses are documented.
Paycheck stubs	One year When you receive your annual W-2 form from your employer, make sure the information on your stubs matches. If it does, shred the stubs. If it doesn’t, demand a corrected form, known as a W-2c.
House/condominium records	From six years to permanently Keep all records documenting the purchase price and the cost of all permanent improvements — such as remodeling, additions and installations. Keep records of expenses incurred in selling and buying the property, such as legal fees and your real estate agent’s commission, for six years after you sell your home. Holding on to these records is important because any improvements you make on your house, as well as expenses in selling it, are added to the original purchase price or cost basis. This adds up to a greater profit (also known as capital gains) when you sell your house. Therefore, you lower your capital gains tax.
Source: Marquette National Bank and Catherine Williams, President of Consumer Credit Counseling Services of Greater Chicago

Don’t like QuickBooks new online banking screen?

For those of you that don’t like the new side by side online banking screen, there is good news. You now have a choice.

This side by side look was introduced with QuickBooks 2009 and there was a lot of grumbling going on. I even went so far as to recommend not upgrading to QuickBooks 2009 if you were using online banking ; it was so horrible.

Well, Intuit got the message. With Release 8 of QuickBooks 2009 you can now choose which style you want to use.

By going to Edit > Preferences > Checking > Company Preferences

You can toggle between the two views:

Side by Side Mode (new way)

Register Mode (old way)

So remember the first step if you are using QuickBooks 2009 is to apply your updates. If you are using QuickBooks 2010 you just need to change your preference.

NGAC – QuickBooks

Well this is my first blog so I really don’t know what I’m doing but here goes. This will be a blog centered around QuickBooks software users. You can ask questions regarding QuickBooks, how to use it, problems you may be having with it, or things you don’t particularly like about it. I have the ear of the developers of QuickBooks software and if you have any hints or suggestions, I can pass them on.

I have been working with QuickBooks since it has been around and can probably answer most of your questions. Although I don’t like everything about the product, I do believe it is the best one out there for small businesses.

Please give me your thoughts or let me know if you need help with QuickBooks.