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 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
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 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
Kathryn C. Tiffany, LLC is a certified bookkeeping and QuickBooks firm. We identify opportunities, provide solutions and deliver exceptional personal service to small and midsize businesses as well as individuals. Our services include bookkeeping and QuickBooks accounting for individuals and businesses.
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.
Payroll -- Payroll can be yet another time-consuming task for a business owner -- and one in which outsourcing can also make a great deal of sense. Doing so can be beneficial from a time and a cost perspective. This is because there is no need to maintain your own payroll system, or even a specialized individual to handle this task. In addition, because payroll laws are always changing, remaining in compliance can often become a challenge when businesses maintain this role on their own.
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.
For more information on how Kathryn C. Tiffany LLC can work with your business, contact us.
Let's Talk About Simplifying Your Bookkeeping
CALL NOW for a free initial consultation--at your office and convenience--to discuss your needs and how we can best serve you.
Kathryn C. Tiffany, LLC Bookkeeping Services
Certified QuickBooks ProAdvisor
Bonded and Insured
Telephone: (856) 803-4651
Email:Kathryn@TiffanyAccounting.com
Web: http://www.TiffanyAccounting.com
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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.
The business of growing your small business.
Whether you are a start-up business, a growing business or a mature
corporation, Kathryn C. Tiffany, LLC has the expertise to help you.
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we can tackle them for you. You name it. . .we can do it!
We can provide you with:
Monthly/quarterly processing of financial information
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Bookkeeping assistance/training and overload services
Start-up assistance and accounting systems development
Business plan development
Monthly/quarterly tasks and reports
Reconcile bank account(s)
Generate Income Statement
Generate Balance Sheet
Generate Statement of Cash Flow
Maintain General Ledger
Why hire staff? Let Kathryn C. Tiffany, LLC do your monthly bookkeeping at a fraction of the cost of a full-time employee.
Our talented team is experienced with all the major accounting software
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planning, improved internal controls, and other areas that will make
your business more profitable.
CALL NOW for a free initial consultation--at your office and convenience--to discuss your needs and how we can best serve you.
Kathryn C. Tiffany, LLC
Licensed, Insured & Bonded
Voorhees, New Jersey
Email: Kathryn@TiffanyAccounting.com
Phone: 856-803-4651
Intuit QuickBooks Profile: http://proadvisor.intuit.com/quickbooks-help/kathryn-tiffany
Web: http://www.TiffanyAccounting.com
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