Intuit Sees Sales Rise on Increased Quickbook Subscribers: Company issues sales guidance for current quarter that surpasses Street estimates

Intuit Inc., the maker of TurboTax and QuickBooks, posted a 9.1% increase in revenue for its fiscal first quarter, while issuing guidance for the current period that was more optimistic about sales than Wall Street estimates.

The company said its QuickBooks Online subscribers rose 41% to 1.6 million.

For the current quarter, the company expects revenue in the range of $1.05 billion to $1.07 billion with adjusted earnings between 33 cents and 36 cents a share. Analysts surveyed by Thomson Reuters forecast revenue of $997.8 million and adjusted per-share profit of 34 cents.

Intuit shares, which rose 17.8% over the past 12 months, fell 0.5% to $113.20 in after-hours trading.

The company typically collects the bulk of its earnings during tax season and often posts losses in its off-tax-season quarters.

For the quarter ended Oct. 31, Intuit posted a loss of $30 million, or 12 cents a share, compared with a year-ago loss of $31 million, or 11 cents a share. Earnings excluding items were 6 cents a share down from 9 cents a year ago.

Revenue rose to $778 million from $713 million.

Intuit projected earnings excluding items of 1 cent to 3 cents a share on revenue of $740 million to $760 million for the latest quarter. Analysts polled by Thomson Reuters projected 3 cents and $756.1 million.

Under a plan announced in 2015, Intuit sold marketing and communications software business Demandforce, collaboration platform QuickBase and personal-finance software brand Quicken earlier this year.

Original article can be found here:  http://www.wsj.com

Dual Control: Segregate duties among team members

Inventory is an area of your practice where segregating duties will greatly reduce the risk of theft. 

If the person responsible for ordering inventory also receives the inventory and enters it into your computer system, there's no one to verify whether the amount recorded matches what was ordered.

So if 12 cases are ordered and received but only 10 cases are entered into the inventory system, no one will notice that the other two cases ended up in your inventory person's trunk.

Police: Employee steals pain medication from veterinary hospital

A 45-year-old woman is accused of stealing pain medication while working for a local veterinary hospital, police say.

Jennifer Manning was charged with felony embezzlement on Sept. 22 after police say she stole at least 17 bottles of Tramadol from the Jolly Pond Veterinary Hospital, located at 3800 Longhill Road, James City County Police Department spokeswoman Stephanie Williams wrote in an email.

Manning is accused of stealing the medication while accepting deliveries from Feb. 2, 2015 to Sept. 2 as an employee of the veterinary hospital. Police believe she took one full bottle from some deliveries and only logged the remaining bottles, Williams wrote.

Police believe Manning stole about $385 worth of Tramadol. The Drug Enforcement Administration considers the medication a schedule four drug, meaning it has a low potential for abuse and dependence. Other schedule four drugs include Xanax and Valium.

Tramadol is used as a pain killer for moderate and severe pain, including surgical pain. It can become habit forming if used for a long time, according to the Mayo Clinic.

Manning’s case is scheduled to be heard in Williamsburg-James City County General District Court on Oct. 4.

Source:  http://wydaily.com

A dual control system requires the authorization or approval of two individuals to complete a transaction. 

One individual should not be responsible for an entire financial transaction from beginning to finish. 

The dual control system puts a second set of eyes on transactions, greatly lessening the risk of embezzlement.

Inventory Management:

One person orders.  A different person receives in the order.   All purchase orders should be forwarded/transmitted to bookkeeping.  

The Fraud Triangle

Incentive ... Opportunity ... Rationalize = The Fraud Triangle as a three legged stool  -------> Take away a leg!  Business owners must be proactive in preventing fraud/embezzlement! 

MINIMIZE OPPORTUNITY! Companies should always be looking to minimize the opportunity for fraud and unethical behavior. Kathryn C. Tiffany, LLC of Voorhees, New Jersey can assist with this. Working as a outside certified bookkeeper, Kathryn C. Tiffany, LLC can help companies analyze operations, review internal controls and address any current or future vulnerabilities. It is a worthwhile investment for any organization that wants to remain secure against the hazards of fraud.  Internal controls a must for businesses! 

$19K stolen from Mount Laurel medical office:  

MOUNT LAUREL – Two former employees stole thousands of dollars from a medical office by forging checks, authorities said.

The crimes against the Briggs Road office, which police did not identify, occurred over a period of at least five months starting in March. The owner discovered the thefts last month, police said.

One of the suspects, 29-year-old Andrea D. Lecklikner of Turnersville, was arrested Thursday on charges of theft by deception and conspiracy. Police said she forged checks totaling $4,959 in New Jersey and Pennsylvania.

A second suspect, 29-year-old Brittany Mulholland of Sewell, remains at large, police said Friday. She forged checks totaling $14,412, according to police, who obtained warrants charging her with computer criminal activity, theft by deception and conspiracy.

Original article can be found here:   http://www.courierpostonline.com

UNDERSTANDING THE FRAUD TRIANGLE

The three factors that make up the fraud triangle are:

Pressure. Most individuals require some form of pressure to commit a criminal act. This pressure does not need to necessarily make sense to outside observers, but it does need to be present. Pressures can include money problems, gambling debts, alcohol or drug addiction, overwhelming medical bills. Greed can also become a pressure, but it usually needs to be associated with injustice. “The company has not been paying me what I am really worth,” for instance.

Opportunity. An opportunity to commit the act must be present. In the case of fraud, usually a temporary situation arises where there is a chance to commit the act without a high chance of being caught. Companies that are not actively working to prevent fraud can present repeated opportunities to individuals who meet all three criteria of the fraud triangle.

Rationalization. The mindset of a person about to commit an unethical act is one of rationalization. The individual manages to justify what he or she is about to do. Some may think they are just going to borrow the stolen goods, or that they need the money more than the “big” company they are stealing from.

POLICE BLOTTER:

THEFT/ARREST: In August 2016 the owner of a medical office on Briggs Road reported that two former employees had been stealing money from the business over a period of time. 

The investigation revealed that between March 2016 and August 2016 employee Andrea D. Lecklikner, age 29, of Turnersville, NJ cashed forged checks at various locations in New Jersey and Pennsylvania totaling $4,959.00.

A warrant for her arrest was obtained charging her with theft by deception and conspiracy to commit theft by deception. 

On September 22nd she turned herself into police.

She was released pending a court hearing after posting 10% of $25,000.00 bail.

The investigation also revealed that a second employee, Brittany Mulholland, age 29, of Sewell, NJ cashed forged checks at various locations in New Jersey and Pennsylvania totaling $14,412.00. 

Mulholland also accessed the computerized payment system of the business and stole an additional $8,985.27. 

Warrants were obtained charging Mulholland with computer criminal activity, theft by deception, and conspiracy to commit theft by deception.

Mulholland remains at large.

- Mount Laurel Police Department

Reminder: October 15th Tax Deadline Remains During Appropriations Lapse

Everyone is eligible for an automatic tax deadline extension and the first thing you should do if you missed the tax filing deadline is file for an extension with the IRS. 

This gives you until October 15th to file your taxes. 

However, you should also know that if you owe the IRS money, it is due on April 15th. So even if you file for a tax deadline extension, you need to send in an estimate of the taxes you owe. 

Failure to do so can result in fines or penalties.

There are no penalties or fees for not filing for an extension if you don’t owe the IRS any money.

We take care of your financials so you can get back to the job of running your business and generating profits

We put hours back in your day and, most importantly, we provide insight. 

We review your Profit & Loss and Balance Sheet statements to make sure they show the true condition of your business. 

What parts of your business are driving revenue? 

Which ones cost you money? 

Cash management generally is not a problem in and of itself; it is a symptom of other problems. 

With small businesses cash management is crucial. 

It is a common misconception that a business owner "loses control" of their finances if they outsource bookkeeping. 

With us, that couldn't be further from the truth.

Kathryn C. Tiffany, LLC
Voorhees, NJ
(856) 803-4651

Enter barter with transaction history in QuickBooks

Exchanging goods or services on a non-cash basis with a customer that is also a vendor is commonly referred to as bartering. A common scenario is that your customer also sells you goods or services, and you are going to “swap” and not pay each other for the items purchased from each other.

To track the exchange of goods or services, follow the steps mentioned below:

1. From the menu bar, select Lists, Chart of Accounts

2. From the Account drop-down list at the bottom left, select New to create a new bank account and type the name Bartering

Note: This bank account will always have a net zero balance if the transactions are recorded properly.

3. Click Save & Close.

4. From the menu bar, select Vendor, Enter Bills to record your vendor bill as if you were going to make the purchase from the vendor.

5. From the menu bar, select Vendor, Pay Bills. The Pay Bills dialog box opens. Select the bill for the vendor you will barter with.

6. In the Pay Bills dialog box, select the Bartering Account as the payment account

7. On the Home page, click the Customers button to open the Customers Center

8. From the customers list select the customer or job you will be bartering with

9. From the Customers Center, in the New Transactions drop-down list, select Invoices. Prepare the invoice to the new customer (also your vendor) using the same items on the invoice as if you were selling them to a customer. Click Save & Close.

10. From the Customers Center, in the New Transactions drop-down list, select Receive Payments. Record the fictitious payment from the customer (your vendor). Click Save & Close.

11. Depending on how your preferences are set up for customer payments, deposit the fictitious customer payment into the same Bartering bank account created earlier.

Note:- QuickBooks will not allow the same name to reside on multiple lists. To get around this limitation, when creating the customer name for your vendor, create the same name in customers list and add letter C with a dash(for example if the vendor name is John add it in customers as John-C)

New Jersey Sales Tax as it applies to the Temporary Staffing Industry

Why you need to read this article!

Many staffing firms and their clients in New Jersey believe that temporary staffing services are not subject to New Jersey’s Sales Taxes. In the vast majority of situations served by the temporary staffing industry this is true. But not all!

This Legal Resource document has been written specifically with the purpose of pointing out to staffing firms and their clients that New Jersey does apply sales tax liability to the provision of temporary staffing services that fall under certain specific service categories.

Since there is a “cost” to not collecting and remitting sales taxes when required, the document also has a section on who is liable for sales tax payments, the associated record keeping requirements and a brief description of the interest and penalties imposed by the State of New Jersey for failure to report and/or pay sales taxes in a timely and accurate manner.

NOTE especially the section detailing how sales tax liability is not only a firm obligation but also can be a personal liability for owners and managers of the firm as well.

This document has been provided to inform the staffing industry of its sales tax requirements and also to be shared with the client as a resource defending the staffing firm’s position that sales tax applies. References have been provided for the reader to research this subject further.

This document however is designed to be general and informational. Therefore each situation will be case-specific and needs to be evaluated by the firm’s professional advisor to determine the direct sales tax application to the firm and its client.

There is a core difference between how New Jersey treats the sale of tangible personal property and the sale of services for sales tax purposes. New Jersey Statute, N.J.S.A 54:32B-3(a) provides that all retail sales of tangible personal property are subject to sales tax unless specifically exempt and sales of services are exempt unless specifically enumerated as taxable. N.J.S.A 54:32B-3(b) lists the services that are subject to sales tax. 

Temporary services are not listed as taxable and therefore appear not to be subject to New Jersey sales tax.

However, the November/December 1990 New Jersey State Tax News specifically addresses “Temporary Service Contractors”. It differentiates between employment agencies that merely refer people and collect a fee and a temporary staffing agency that employs temporary staff and provides them to clients for a fee. Referring people for a fee is exempt from New Jersey sales tax while temporary staffing services could be subject to New Jersey sales tax. 

The 1990 notice states: “when an individual is required to perform taxable services, the service contractor is required to collect sales tax on the fee charged to the client.” For example, both a temporary staffing agency and a security firm are required to collect New Jersey sales tax on their fee for supplying a security guard to their respective client since security services are a taxable service in New Jersey.

The following is a list of services subject to New Jersey sales tax. Therefore, a temporary staffing agency that provides temporary staff that performs any of these services is required to collect and remit New Jersey sales tax on the fees associated with such services. This list is general (specific details of requirements need to be researched), subject to change, and is not necessarily all-inclusive.

Taxable Services in New Jersey:

Animal grooming
Answering services
Car washing
Carpet cleaning
Cleaning services (janitorial)
Floor covering installation
Garbage removal (non-contractual)
Information Technology (see below)
Installing personal property
Investigation and Detective services
Landscaping
Lawn mowing
Massage
Pest control treatment
Photographer’s services
Producing personal property
Repairs of personal and real property
Scanning
Security Guard and Patrol services
Snow removal
Window washing

Note that “Installing personal property” and “Repairs of personal and real property” includes the supply of craft labor (mechanics, welders, painters, electricians, plumbers, technicians, and similar job titles) for purposes of installing or repairing production machinery, equipment and/or buildings for clients, irrespective of whether or not the temporary staff is managed by the client.

Information Technology-Related Staffing Services

The following section evaluates the various types of IT related staffing services that are subject to sales tax.

A temporary staffing agency that provides temporary staff to a client is required to collect and remit New Jersey sales tax if the temporary staff performs one of the following services:

Software installation

Hardware repair and maintenance

Software maintenance contracts that include delivery of taxable software via tangible storage media

Software maintenance contracts that include delivery of taxable software electronically unless used directly and exclusively in conduct of purchaser’s business.

A temporary staffing agency that provides temporary staff to a client is NOT required to collect and remit New Jersey sales tax if the temporary staff performs one of the following services:

Computer consulting

Training

Data processing

Creation or modification of software

Software maintenance contracts (training, consultation, customer support only, no software provided)

Sales for Resale or Other Exemptions

Sellers may discharge their liability for collecting the sales tax due from their customers by taking a sale-for-resale certificate (NJ Form ST-3) or other exemption certificate. An exemption is allowed for services purchased with the intention to resell them in the form purchased or as a component of other services. The tax does not apply at the time of the purchase for resale, but does apply at the time the services are resold at retail. The Seller who accepts the certificate must maintain a record that associates the sale for resale with the exemption certificate on file.

For example, if a temporary staffing agency provides a temporary security guard to a security firm (that provides security services to corporations), the security firm is permitted to provide the temporary staffing agency with a sale for resale exemption certificate thereby relieving the temporary staffing agency from collecting and remitting sales tax on the taxable services of the security temporary staff. The security firm is required to collect and remit sales tax on its taxable security services that it provides to its corporate customer. On the other hand if a temporary staffing agency assigned an individual as a security guard to a client (i.e. a manufacturing plant), then the temporary staffing agency is required to collect and remit New Jersey sales tax on such services.

Liability for Sales Tax Payments and Penalties and Interest

Obligation of the Seller (Temporary Staffing Agency)

New Jersey sales tax is imposed on purchasers of goods and services (hereafter “customers”) but collected by Sellers who have “nexus” in the State. Nexus is defined as the minimum level1 of business activity that allows a state to impose taxes on such business activity or require the entity to collect and remit sales/use tax. All New Jersey Sellers (i.e., both New Jersey based and out-of-state Sellers) that meet the nexus threshold are required to file a Certificate of Registration with the New Jersey Division of Revenue and obtain a Certificate of Authority which empowers the Seller to collect and remit sales tax in New Jersey. A Seller’s failure to obtain a Certificate of Authority does not relieve the Seller of the obligation to collect and remit the tax.

Obligation of the Customer (Client)

N.J. Rev. Stat.  §54:32B-12(a) provides that Sellers are to collect New Jersey sales tax from the customer when collecting the sales price to which the tax applies. Customers that fail to pay the Seller the applicable New Jersey sales tax are required to pay the tax directly to the State. N.J. Rev. Stat.  §54:32B-14(b). New Jersey can legally recover the sales tax due from either the Seller or the customer. A contract between the Seller and the customer, delegating the sales tax liability to one party, does not preclude the State from legally seeking such liability from either party. 

Sellers have the same legal rights to collect New Jersey sales tax from their customers as if the tax is a part of the purchase price of the service. The State must be joined as a party in any action or proceeding brought by a Seller to collect the tax due from the customer. N.J. Rev. Stat.  §54:32B-14(a).

Personal Liability

N.J. Stat. § 54:32B-14(a) states that “every person required to collect any tax imposed by this act shall be personally liable for the tax imposed, collected or required to be collected under this act”. In other words, New Jersey holds “persons required to collect the tax” (at a Seller) personally liable for any uncollected sales tax due from customers on taxable products and services. N.J. Rev. Stat. § 54:32B-2(W) states that “persons required to collect tax” includes any officer or employee of a corporation or of a dissolved corporation who as such officer or employee is under a duty to act for such corporation in complying with any requirement of this act and any member of a partnership. With respect to Limited Liability Companies, all members of such entity (regardless of their involvement in the business) are deemed to be a person required to collect tax, and therefore personally liable for unpaid sales tax. 

In Hapag-Lloyd A.G. v. Director, 7 NJ Tax 108 (1984) and Theryoung v. Director, Dkt. No. 02-19-0409-89ST, 1-6-93 (Not Approved for Publication) an officer of a corporation with limited participation in the affairs of the corporation was held to be a responsible officer for purposes of personal liability imposed on persons required to collect taxes. New Jersey Courts have adopted the position that does not permit an abdication of the responsibility for the collection of sales tax and other trust fund taxes. The officer and his wife were owners of 80% of the corporate stock of a company engaged in the construction and set-up of advertising displays. The officer never visited the location of the business during most of the period that the sales tax deficiencies occurred, an arrangement agreed on with the two other shareholders when they purchased the business. The officer was aware of the poor financial condition of the company as a result of off-site meetings held with the other officers. He also had the authority to hire and fire employees and signed the New Jersey CBT-100 as president of the corporation.

Returns and Payments

All Sellers are required to file quarterly sales tax returns and remit the tax due on a quarterly basis. Sellers whose monthly sales tax liability exceeds $500 in the first or second month of any quarterly filing period are required to file a monthly sales tax report and remit the tax due for that month. Quarterly returns and payments are due on or before the 20th day of the month following the close of the quarter. Monthly returns and payments are due on or before the 20th day of the following month.

Record Keeping Requirements

Sellers required to be registered in New Jersey must keep accurate books and records including a true copy of all sales slips, invoices, receipts, statements, etc. issued to customers for a period of 4 years (i.e., statute of limitations). If a Seller’s records are determined to be incorrect or insufficient, any sales tax returns filed on the basis of such records can also be deemed to be incorrect or insufficient. In such case, the State may determine the Seller’s tax liability based on any reasonable methodology or information available.

Interest and Penalties

Sellers that fail to timely remit sales tax collected are subject to interest at the rate of 3% above the prime rate, per month or fraction of a month during which the deficiency remains, from the original tax payment due date until the actual date of payment. Interest is compounded annually. In addition, any amount of New Jersey sales tax that remains unpaid after the due date is considered an underpayment and subjects the Seller to a penalty of 5% of the underpayment.

Sellers that fail to timely file a required sales /use tax return with the State are liable for a late filing penalty of 5% of the tax due per month or fraction of a month during which the sales tax return remains late, but is capped at 25% of the tax due. An additional penalty of $100 per month or fraction of a month during which the return remains delinquent may be imposed. This penalty is imposed on the first day following the original return due date and on the same calendar day of each succeeding month thereafter.

For example, assume an out-of-state Seller began providing taxable services to a New Jersey based customer in October 2009. The prime rate was 5% throughout the entire applicable time period. The Seller should have collected $1,000 in New Jersey sales tax for the customer. The Seller then files and pays the outstanding liability on May 15, 2010. The Seller would now potentially owe New Jersey the following:

$1,000 in tax,

$500 for late filing of a return (sales tax return was due January 20, 2010…..penalty is $100 per month or fraction of a month …..Jan, Feb, March, April, May),

$250 penalty for late filing (5% per month for 5 months),

$50 penalty for late payment of taxes due (5%),

And approximately $35 in interest (balance due x 8% per annum x 5 months)

Total New Jersey sales tax liability is $1,835 including penalties and interest.

Please contact your tax professional for assistance in assessing your specific situation.

Links:

New Jersey Statute, N.J.S.A 54:32B-3 (http://law.onecle.com/new-jersey/54-taxation/32b-3.html)

New Jersey Sales Tax Guide

(http://www.state.nj.us/treasury/taxation/pdf/pubs/sales/su4.pdf)

NJ Technical Bulletin-Taxability of Software

(http://www.state.nj.us/treasury/taxation/pdf/pubs/tb/tb51.pdf)

1 The United States Supreme Court (hereafter, the “Court”) ruled in Quill Corporation v. North Dakota, 504 US 298 (1992), that an entity must have “substantial nexus” with a state before such state can impose a tax on the entity. The Court defined “substantial nexus” in terms of a seller’s physical presence, holding that a state may not require a seller to collect tax from its residents if the seller’s only contact with customers in the state was via U.S. mail or common carrier. In other words, The Court concluded, a company needs to have a physical presence in a state before such state can require the company to collect and remit sales tax. The Court went further and stated that the entity’s in-state physical presence must be more than the “slightest presence”. The Court did not create a bright line test to determine when an entity’s in-state activities exceed the slightest presence test but left it to the states to interpret The Court’s decision. There is divergent authority on whether the Court’s ruling in Quill, which requires a physical presence, applies to non-sales taxes (i.e., income/franchise taxes)

Monday, May 31st

We're closed on Memorial Day to honor those who served.

Conducting Internal Investigations

It seems that employees love to complain about anything, and it seems impossible to investigate everything. When employees feel, however, that you are not taking their complaints seriously enough or that you are ignoring them, they will find external sources for their complaints. These external sources range anywhere from the EEOC, the NLRB, Wage and Hour, private attorneys, and juries!! And juries love to punish you when they feel that you ignored an employee's legitimate complaint.

But what are legitimate complaints?
We all know that an employer has a legal responsibility to investigate some complaints but not others. Can you make the distinction?

How you handle internal complaints can make all the difference of whether an employee goes externally with their complaints. It can make all the difference in whether the government or jury will find that you took immediate action and took prompt remedial action for legitimate complaints.

Record Retention: Read This Before Tossing Old Tax Records

Now that your taxes have been completed for 2015, you are probably wondering what old records can be discarded. If you are like most taxpayers, you have records from years ago that you are afraid to throw away. It would be helpful to understand why the records must be kept in the first place. 

Generally, we keep tax records for two basic reasons: (1) in case the IRS or a state agency decides to question the information reported on our tax returns, and (2) to keep track of the tax basis of our capital assets so that the tax liability can be minimized when we dispose of them. 

With certain exceptions, the statute for assessing additional taxes is three years from the return due date or the date the return was filed, whichever is later. However, the statute of limitations for many states is one year longer than the federal law. In addition to lengthened state statutes clouding the recordkeeping issue, the federal three-year assessment period is extended to six years if a taxpayer omits from gross income an amount that is more than 25 percent of the income reported on a tax return. And, of course, the statutes don’t begin running until a return has been filed. There is no limit where a taxpayer files a false or fraudulent return to evade taxes. 

If an exception does not apply to you, for federal purposes, most of your tax records that are more than three years old can probably be discarded; add a year or so to that if you live in a state with a longer statute. 

Examples - Sue filed her 2011 tax return before the due date of April 15, 2012. She will be able to dispose of most of the 2011 records safely after April 15, 2015. On the other hand, Don files his 2011 return on June 2, 2012. He needs to keep his records at least until June 2, 2015. In both cases, the taxpayers may opt to keep their records a year or two longer if their states have a statute of limitations longer than three years. Note: If a due date falls on a Saturday, Sunday or holiday, the due date becomes the next business day.

The big problem! The problem with the carte blanche discarding of records for a particular year because the statute of limitations has expired is that many taxpayers combine their normal tax records and the records needed to substantiate the basis of capital assets. These need to be separated and the basis records should not be discarded before the statute expires for the year in which the asset is disposed. Thus, it makes more sense to keep those records separated by asset. The following are examples of records that fall into that category: 

Stock acquisition data - If you own stock in a corporation, keep the purchase records for at least four years after the year the stock is sold. This data will be needed to prove the amount of profit (or loss) you had on the sale. 

Stock and mutual fund statements (If you reinvest dividends) - Many taxpayers use the dividends they receive from stocks or mutual funds to buy more shares of the same stock or fund. The reinvested amounts add to the basis in the property and reduce gain when it is finally sold. Keep statements at least four years after the final sale. 

Tangible property purchase and improvement records - Keep records of home, investment, rental property, or business property acquisitions AND related capital improvements for at least four years after the underlying property is sold. 

For example, when the large $250,000 and $500,000 home exclusion was passed into law several years back, homeowners became lax in maintaining home improvement records, thinking the large exclusions would cover any potential appreciation in the home’s value. Now that exclusion may not always be enough to cover sale gains, particularly in markets where property values have steadily risen, so records of home improvements are vital. Records can be important, so please use caution when discarding them. 

What about the tax returns themselves? While disposing of the back-up documents used to prepare the returns can usually be done after the statutory period has expired, you may want to consider keeping a copy of your tax returns (the 1040 and attached schedules/statements plus your state return) indefinitely. If you just don’t have room to keep a copy of the paper returns, digitizing them is an option. 

If you have questions about whether or not to retain certain records, give Kathryn a call first; it is better to make sure, before discarding something that might be needed down the road.

QuickBooks: Expand Functionality with Custom Fields

QuickBooks’ structure is universal enough to appeal to millions of small businesses. But not all small businesses are alike. Custom fields help you shape it to meet your company’s unique needs.

If you’re using QuickBooks, you probably know that you’re complying with the rules of double-entry accounting. The software is designed such that you can be compliant with these requirements without even being aware of it. You’re dealing with invoices, purchase orders, bank account reconciliation, bill-paying, and payroll; not debits and credits and journal entries. QuickBooks does the double-entry part for you in the background.

While every business that uses QuickBooks is following those same double-entry accounting rules, each has its own unique structure and its own need to modify some elements of the program to do certain tasks, for example:

• Store more specific information about customers, vendors, and employees in their records, 
• Differentiate between variations of similar inventory items, and,
• Create more targeted reports.

This is where custom fields come in.

Cash vs. Accrual Accounting Methods

Under IRS definition, an accounting method is a set of rules used to determine when and how income and expenses are reported.

Normally for IRS purposes, the accounting method; cash vs accrual is chosen before you file the first business income tax return. It must then be used on a consistent basis for the life of the business, unless changes in the business occur that statutorily necessitate a change in the accounting method. If you wish to change methods for particular reasons of your own, you must get written permission from the IRS.

When you bill the client, when you actually receive the money and bank it, and when the job and its guarantees reach completion can each define when you have to report the income.

Normally, you calculate your income and expenses by using three major methods: 1) Cash Method; 2) Accrual Method; or 3) Hybrid Method in which select elements of cash and accrual are combined.

Bookkeepers in High Demand!

West Berlin: An in-between place with plenty of its own to offer

One in a continuing series spotlighting real estate markets in the region's communities.

There's more than just one Berlin at the end of Haddonfield-Berlin Road in Camden County.

Today's destination is Berlin Township, also known as West Berlin, which refers to the unincorporated community where most residents live.

As confusing as it all is - especially when you toss in Berlin Borough, which was created from the township by referendum in 1927 - convenience is the word Realtor Val Nunnenkamp applies to this community of 5,362.

"Convenient location," Nunnenkamp says.

"It is between the borough and Voorhees," says Nunnenkamp, an agent with Berkshire Hathaway HomeServices Fox & Roach Realtors in Marlton, and "that means shopping and other amenities those two communities offer are convenient" - though the township has plenty to offer, as well.

"Most people don't realize you pay 8 percent to 12 percent less for houses in the township than you do in the borough, and 12 percent to 17 percent less than for homes in Voorhees," he says.

There is little home construction in Berlin Township, he says, except for the "very popular" over-55 community Montebello, being developed by J.S. Hovnanian & Sons, with homes starting at $299,000.

"I've sold 12 homes there," Nunnenkamp says. "With prices averaging $340,000 to $540,000, it is by far the most expensive neighborhood in Berlin Township."

Otherwise, there is not much land available for building, he notes - though that wasn't always the case.

The first major development built in Berlin Township was Berlin Estates, off Harker Avenue, which was opened in 1956.

"The houses were designed as entry-level homes for veterans, and were 870 square feet, with three bedrooms and one bath - five rooms being the standard model," Nunnenkamp says.

The houses were built on slabs, so there were no basements. The price: $10,000.

"Roses were grown on the property where the houses were built, so the builder called the entrance 'Rose Lane,' " Nunnenkamp says.

In the intervening 60 years, homeowners have added on, often an extra 500 or 600 square feet, and the average sale price is now $149,900 "if beautiful," he says.

That's an average of $1.30 a square foot, Nunnenkamp says, adding that "if you still own an original little 'box,' it is $1.15 to $1.20 a foot."

Pinecrest, off Franklin Avenue, came along next, in 1962, he says.

"These bi-levels, split-levels, ranchers, and two-story homes sold for $12,000 to $20,000 originally," Nunnenkamp says.

Homes in Pinecrest also have been updated and expanded - they did have basements - and now sell for $160,000 to $230,000, he says.

Centaurion Woods - bi-levels, ranchers and two-story homes - behind the Berlin Township Police Department building was built in 1973 with homes that originally sold for $48,000 to $65,000.

"It isn't as popular as some other locations," Nunnenkamp says, probably because of its closeness to busy Route 73 and the fact that the development was built among older bungalows.

Two active listings in Centaurion Woods are priced at $145,000 and $157,000, Trend Multiple Listing Service data show.

Other than at Montebello, prices typically fall into the $150,000 to $250,000 range, meaning that Berlin Township is a perfect address for the first-time buyer, Nunnenkamp says - "a nice little starter home for the money in a nice little town."

In the last six months, there were 49 sales here. Currently, 19 sales are pending, and there are 42 active listings. The average property tax bill in the township is $6,074, up 2.6 percent from 2014.

"Berlin has a little downtown along Haddonfield Road, Route 561, three ballparks and a playground, lots of stores and places to eat," Nunnenkamp says.

Most popular are Sundaes ice cream shop on Route 73 and Sprinklz on Haddon Avenue, which draw customers from 30 miles away, he says.

"Los Amigos and Oceanos Family Restaurant have been there for 40 years," he says. And then there's Jersey Joe's Hoagies and Deli on Haddon Avenue - before or after the homemade sea salt caramel water ice at Sprinklz.

Read more at http://www.philly.com

The Truth About Tax Records: An Index Card Can Make or Break You: Put your records in order now to cope with a potential IRS challenge

The Wall Street Journal
By Laura Saunders
March 5, 2016 1:00 a.m. ET


Working on your tax return? Put your records in order now to cope with a challenge from the Internal Revenue Service down the road.

To see the difference proper proof makes, consider the results of two Tax Court cases released in December. In the first one, the judge ruled that a business consultant owed more than $23,000 in taxes and penalties for 2010 and 2011 because he didn’t have convincing records of write-offs for wages, travel, meals and entertainment.

The same week, another judge ruled that a couple who owned a small business could deduct nearly $7,000 in mileage expenses for business travel in 2010—even though their records were handwritten on index cards, and some were missing.

“The better your records, the less agita you’ll have with the IRS,” says Ed Mendlowitz, a CPA with accounting firm WithumSmith+Brown who is based in New Brunswick, N.J.

The tax rules on record-keeping have a surprising history. In the 1920s, the entertainer George M. Cohan—who wrote the songs “(I’m a) Yankee Doodle Dandy” and “Give My Regards to Broadway”—deducted more than $50,000 for travel and entertainment related to his profession, including “entertaining” drama critics. Mr. Cohan didn’t have receipts for many of the expenses, so the IRS denied them.

In 1930, however, the celebrated jurist Learned Hand ruled that Mr. Cohan’s lack of records didn’t bar him from taking deductions, as long as they had a basis in fact and could reasonably be estimated. His pro-taxpayer decision became known as the Cohan Rule.

Congress has since whittled away Mr. Cohan’s tax legacy by enacting stiff standards for some deductions, especially ones subject to abuse. As for the IRS, its gold standard for write-offs without receipts, such as miles driven in one’s own car for business, is “contemporaneous records.” That means notes made when the expense was incurred, such as a log recording miles driven.

But IRS agents and judges also can accept good-faith estimates and other forms of proof for write-offs. Because the couple in the December case kept timely records on index cards, the judge allowed their testimony regarding some missing cards.

As you make your way to this year’s April deadline, here is record-keeping advice from experts.

Avoid charitable-donation pitfalls. Current law is both clear and rigid: taxpayers who make cash contributions need proper proof of the donation in hand before filing their returns in order to get a deduction. If the taxpayer gets the proof only after filing, the IRS could disallow it.

Proper proof of a cash donation typically consists of a letter from the charity giving its amount, date and the value of anything (such as a tote bag or dinner) received in return. That value must be subtracted from the deduction.

The rules for other types of donations, such as property, are also persnickety about proof. In a famous 2012 case, a California couple lost an $18.5 million deduction for property donated to charity because they didn’t have the correct records. The judge acknowledged that the decision was harsh, but said the law left him no choice. For more on substantiating charitable deductions, see IRS Publication 526.

Take care with T&E. Large deductions for travel, meals, and entertainment are often an audit magnet, so treat them carefully. Taxpayers are supposed to keep records showing who, what, when, where, and why; experts say the one people most frequently forget is the “business purpose” of the activity. Suggestion: when setting up a meeting that will include deductible expenses, record the business purpose at the same time.

For details on travel, meals and entertainment deductions, see IRS Publication 463.

Update records for your home. Did you add a room to your home this year, install new windows, or add a deck? Such investments can increase your “cost basis” in the home, which could lower the tax bill when it is sold.

For example, say a couple bought a home for $100,000 years ago in a high-growth area such as Seattle. If they sell it for $700,000, the law allows them to avoid tax on $500,000 of their $600,000 profit—so they would owe tax on $100,000. If, however, they invested $75,000 in improvements over the years, their cost basis rises by that amount and they would owe tax only on $25,000 of profit.

For more about what qualifies as an investment in a home, see IRS Publication 523.

Know when to toss. How long do you have to keep tax records? The law has various statutes of limitations, but Mr. Mendlowitz offers a rule of thumb: Keep tax returns (plus substantiation) for seven years. And for assets held outside tax-favored retirement plans, keep records of their cost until seven years after the asset is sold. That, of course, can be a very long time. 

Source:  http://www.wsj.com

Marcus Lemonis, host of CNBC's 'The Profit," shares his best advice—and biggest mistake.

Marcus Lemonis of The Profit says that the best piece of financial advice he gives everyone is to invest in yourself. Pay attention to what you need and what you don’t need. Identify when something is what you want and whether or not it will actually bring anything to your quality of life. And with the money that you save, invest in an idea you have or an idea your kid has. You don’t need to go very far to find something to invest in.

Lemonis admits that his biggest financial mistake was celebrating his early successes. He spent a lot of money on things that he didn’t really need, like expensive cars, expensive clothes and real estate. When the financial recession hit in 2008 and 2009, he realized just how much money he had spent on things he didn’t need when he had to fire people in order to stay afloat. This mistake showed him that he needed to be a better leader and that he needed to think about the people he employed, not just himself.

Read more here: http://time.com

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Unlike other bookkeeping/accounting firms, we go beyond these traditional services and provide our clients with many other business services. Our clients have the advantage of having a trusted certified bookkeeper who knows their overall financial condition.

If you believe that an bookkeeping firm should do more than just QuickBooks, then you've come to the right place. At Kathryn C. Tiffany LLC, we offer a variety of services for businesses so that they can operate much more efficiently, as well as cost effectively.

Our bookkeeping, and accounting services include the following:

Accounting -- Regardless of whether you need monthly or annual accounting support, we will work with you in order to ensure that your needs are being met. At Kathryn C. Tiffany LLC, we provide accurate and timely financial reporting and advice for you and your business, as well as accounting software (QuickBooks) training and support services. We will even provide you with ways to customize QuickBooks software in order to fit the specific needs of your company.

Bookkeeping -- While bookkeeping can be critical, it is also a time consuming task -- and one for which most business owners just simply don't have the time to devote. Our bookkeeping services include financial statement preparation, reconciliation, and more. Outsourcing your business's bookkeeping can make good financial sense, as it can reduce your overhead expenses, as well as the demands on your own personal time.

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Partnering with a firm that can provide you with a variety of reliable services can help your company and allow you to concentrate on running and growing your business. 

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How to Prorate

Apartments and Homes for Rent

In order to calculate the prorated ______ amount you must take the total _____ due, divide it by the number of days in the month to determine a daily ______ amount. You then multiply the daily rent amount by the number of days the ______ will be __________ to generate the prorated amount for the partial month

Four things every small business owner should know about taxes

Blood pressures are rising at many small businesses now that tax season is underway.

Although many owners hire accountants and attorneys to complete their income tax returns, taxes are a hassle. In a survey released last year by the advocacy group National Small Business Association, nearly 60 percent of the owners surveyed said the administrative burdens were the biggest problems posed by federal taxes. And 85 percent of the more than 675 owners said they relied on a professional to prepare their returns.

Owners can make the process easier by being organized and watching out for tax pitfalls, accountants say. Here are four tax issues small business owners should be thinking about now and year-round:

RECORD-KEEPING MATTERS

Haphazard or incomplete records are one of the biggest problems accountants see at small businesses. Rather than using accounting software year-round, owners stuff receipts and bank statements into file folders and then have to sort them as the tax deadline approaches.

Using accounting software to organize records will ease the process and help guard against costly errors, says Scott Berger, an accountant with the firm Kaufman Rossin in Boca Raton, Florida. He noted that checking accounts can be linked to the software, cutting down on data entry. Financial records can also be linked with tax preparation software, shortening the time it takes to compile a return. It may be too late to get your records into an accounting program for 2015, but owners should get started for 2016 before more time passes, Berger says.

Another reason for keeping good records: Owners need to provide financial numbers for potential lenders or investors.

"It's in their best interest if they want to take their business to the next level," Berger says.

TAX TIME, A TEACHABLE MOMENT

Many owners don't bother to ask for a copy of their tax returns, says Emilio Escandon, an accountant with Morrison, Brown, Argiz & Farra in New York. That's a bad idea — a tax return is like a report card, providing a snapshot of how a business is doing, he says.

"You should go through that report card and see where you can improve," Escandon says.

Reviewing the return and discussing it with an accountant can also help an owner plan for the future. For example, if a business suffers a loss, it may not be a one-year event; the loss can also be carried forward, Escandon says.

"You should always have a forward-looking approach," he says. Owners should also know that their prior-year returns can be amended to take advantage of a loss.

EMPLOYEES AND FREELANCERS

Small businesses that hire freelancers need to be sure these workers are truly independent and shouldn't be classified as employees. Many companies use freelancers because they don't want obligations like Social Security and Medicare taxes or providing health insurance. But under the law, freelancers can't be treated like employees in terms of what they do and how much control a boss has over them. The IRS and state tax officials are paying closer attention to how workers are classified, looking to catch businesses violating the law, says Michael Greenwald, an accountant with Friedman LLP in New York.

Companies must give W-2 forms to employees and 1099s to freelancers detailing their 2015 compensation by Feb. 1. Freelancers, many of whom are small business owners themselves, should be sure they get 1099s from everyone they worked for the previous year. The IRS will match the 1099 copies it gets against the income you've reported, and if you failed to include any income, you'll hear from the agency.

YOUR HOME OFFICE AND CAR

The deduction for using part of your home as an office has long been a point of contention between owners and the IRS. If an owner uses half the family room to run the business, the government won't allow a home office deduction. A home office must be a separate space used solely for business purposes.

"You could theoretically go to the extent of putting up a partition to wall it off," Greenwald says.

But the reality is the IRS won't know whether you have a separate office unless your return is audited and an IRS agent visits your home.

On the other hand, the government recognizes that owners use cars for personal and business use. But owners must keep a diary of how many miles they drive for business each day, and calculate their deduction based on that amount. Many owners as they juggle work and family probably don't keep those records, Berger says. The answer, as in keeping a company's books, may lie in technology; there are smartphone apps like TripLog to help owners track business mileage.

1099-MISC Reporting Requirements: Avoid Penalties

In 2011, the IRS enacted a new type of 1099 reporting form called a 1099-K for certain types of electronic payments.  The 1099-K is issued by third party payment processing companies such as credit/debit card processors, PayPal, etc. for payments to vendors and contractors. 

What does this mean to companies issuing 1099’s?

1099-MISC forms issued should include only payments made by cash, check, wire transfer, electronic check, ACH, online bill pay (bank to bank only), or direct deposit.  If your company made any payments to vendors using credit cards, debit cards, gift cards, or any other third-party payment network (such as PayPal) – those payments should NOT be included on 1099-MISC forms because the processing  companies are responsible for reporting those payments.   

What does this mean to companies issuing 1099-MISC?

Companies issuing 1099-MISC forms should confirm that only those payments made with the payment types mentioned above are reported on their 1099-MISC to the vendors.  For example, if the company paid a 1099 vendor $1,000 in 2015 and $400 of that was paid by credit card, then only $600 is reported on their 1099-MISC.  The additional $400 paid with the credit card is reported to the vendor on the 1099-K by the credit card processing company. 

Why should the payee care?

This reporting is mandated by the IRS and there are penalties to the Payor company for failure to report and incorrect reporting.  In the example above, the vendor’s 1099-MISC would be incorrect if the payor reported the entire $1,000 because the credit card company will be issuing a 1099-K for the portion it paid the vendor. 

How does QuickBooks help with reporting the correct 1099 information?

QuickBooks 2012 to 2016 automatically excludes from Form 1099-MISC any bill payments made using the credit card payment methods.  In addition, QuickBooks also recognizes and excludes from  the 1099-MISC any check payment containing one of the following notations in the check number field (limited to 8 characters):  Debit, Debitcar, DBT, DBT card, DCard, Visa, Masterc, MC, MCard, Chase, Discover, Diners, PayPal.  QuickBooks 2012 to 2016 also has a built in 1099 Wizard.

If you have QuickBooks 2009, 2010, or 2011, you have three options:

If you only have a few vendors that you paid with debit, credit or third party payers, you can manually search for and exclude the non-reportable payments.
If you have a lot of 1099 vendors you can purchase the downloadable QuickBooks 1099 Assistant App for $.99 to help you exclude the payments.  Or…
Upgrade your QuickBooks and take advantage of the updated 1099 Wizard. 

Where can I learn more?

Visit www.irs.gov and search for Treasury Decision 9496, 1099 for 2015.

You can also search within the Help of QuickBooks programs for Form 1099-MISC.