Accounting Articles

Point Pleasant NJ Bookkeeping Service – Provides Best Outsource Bookkeeping and QuickBooks Tips

Outsourcing the bookkeeping and payroll functions of small and medium size businesses is a wise decision from a time and cost perspective. A well trained outside bookkeeping professional should be able to handle all of your business functions. Most bookkeeping services utilize QuickBooks software to provide your document management needs. Please remember if you want to operate the software on your own it is not that easy to understand.  Here are some suggestions for business owners looking for outside bookkeeping help.

QuickBooks does offer a training program you can go through to become certified in their software system. The problem is most business owners do not have the time to devote to go through such a thorough training program. Even if you did have the time for the training, would you have the time to actually do your own bookkeeping? This is why outsourcing to a Point Pleasant, New Jersey bookkeeping service is such a good idea.

Before you purchase the QuickBooks program for your company sit down with several outsource bookkeeping services to help you understand the financial information that can be provided. Also, determine what portion of the work if any you want to keep in house and what portion to outsource. Having a plan in place that helps you avoid non-core activities and focus on the profit centers in your business will ensure continued growth and profits.   

QuickBooks does change from year to year, so you need to make sure that you work with the most up to date system possible when you start. A Professional Point Pleasant New Jersey bookkeeping service will have the most recent QuickBooks software to keep your business organized. The best tip you can follow is to have a qualified outsource bookkeeping service handle your financial information and your business documents through QuickBooks software to ensure you have actionable information about your business at your fingertips.

 The author: Dawn Contardi, owner of Sharp Bookkeeping Service, a Certified QuickBooks ProAdvisor and a member of the American Institute of Professional Bookkeepers with 25 years of experience can be reached at 732-458-3800 or www.sharpbz.com

Vehicle Leasing Can Provide Tax Advantages for NJ Businesses

One of the most frequently asked questions NJ accounting services receive from their clients involves “should a small business lease vehicles or purchase vehicles?” NJ Business owners have the option of either financing/purchasing or leasing their company cars. There are pros and cons to both options. Listed below are some of the advantages and disadvantages for leasing vehicles as compared to buying vehicles to help you determine which strategy is right for your business.

The length of time for leasing a vehicle versus buying it can affect your decision making process.  Vehicle leases are typically at least three years. You will make payments into a car you do not own at the end of the lease. No residual asset value is a concern for some business owners looking for ongoing transportation.

The main advantage to leasing is that you might be able to secure lower payments on the vehicle when you lease it. Leasing is basically an extended rental program where you put money into a vehicle you will never get out of it.  If you want to keep the vehicle for a longer term, you might as well pay for the vehicle so you have some capital for the next one.

Currently low interest rates make payments on the purchase of a new vehicle versus leasing it about the same. Some of the big car company’s like GM and Chrysler have reduced their leasing programs while others are aggressively seeking leases. The calculation used to determine which option makes sense will change if interest rates begin to rise because the payments on a lease will be less than the financing/purchase option. Have your accounting service NJ provide an analysis of the options. An experienced firm will be able to help you compare the advantages between  leasing and financing/purchasing a car for your business.

The author: Dawn Contardi, owner of Sharp Bookkeeping Service, a Certified QuickBooks ProAdvisor and a member of the American Institute of Professional Bookkeepers with 25 years of experience can be reached at 732-458-3800 or www.sharpbz.com

Get Qualified Sales Tax Reporting Advice from a Brick NJ Accounting Service

 

Sales tax reporting is an inevitable part of running almost any business. The problem is that many businesses do not know how to properly record and file sales taxes. If you fail to properly maintain your records you can either end up owing money or paying too much.  To save time, money and avoid government audits consider hiring a Professional Brick NJ Accounting Service to handle both your books and your sales tax reporting. The process is simple, and it could save you a great deal of money.

The first step in finding the right outsource Accounting service to do your books is to look for experienced individuals that are Certified in the easiest and most commonly used program by businesses today, “QuickBooks.” Set up a consultation with several firms to test their knowledge about bookkeeping and accounting in general and sales tax reporting in particular. Verify their credibility, go to their offices, make sure they are experienced, that they have a web site and get references. 

 Most Accounting and Bookkeeping services are very capable and do not charge the outrageous prices ($150+/HR) CPA‘s charge for handling your books. You will still get accurate books and sales tax reporting but you don’t have to break your budget to do so. During your consultation ask for a pricing breakdown on outsourcing your bookkeeping, sales tax reporting and payroll. You should be able to outsource several business tasks to one firm.

The bottom line is rather than spending time on a task that you are not very good at, look for the right Accounting and Bookkeeping service to take care of your sales tax reporting and other business needs. A Professional Outsource Accounting, Bookkeeping and Payroll service will make sure that everything is as accurate as it can possibly be.

The author: Dawn Contardi ,owner of Sharp Bookkeeping Service, a Certified QuickBooks ProAdvisor and a member of the American Institute of Professional Bookkeepers with 25 years of experience can be reached at 732-458-3800 or www.sharpbz.com.

Ocean County Bookkeeping Service Provides Most Effective Ways to Cut Overhead

Running a profitable business involves more than just selling products at a higher price than what you pay for them. There are a variety of overhead costs which can be cut by outsourcing when you are trying to improve your profits. Bookkeeping and payroll are two internal business functions that can be outsourced to produce huge cost and productivity efficiencies. Outsourcing non-core activities will permit you to spend more time in the areas of your business that drive higher profits. For a simple effective way to cut your overhead, consider outsourcing your bookkeeping and payroll.

If you have been doing your own bookkeeping, you are probably spending more time on that process than you need to. Doing the books cuts into the time you could be spending on operations and sales improvements. An option for reducing overhead is to outsource the books to a Professional  Ocean County Bookkeeping and Payroll Service. The efficiencies created will  lower costs and free up time to manage and grow your business.

Outsourcing your bookkeeping to a professional will allow you to clearly see where you may be spending more money than you should in your business. The Pareto Principle Theory states that 20% of the money you spend should generate 80% of your profits. If your numbers are not close to that you need to make adjustments. A professional bookkeeper will have the expertise to get your overhead in line with where it needs to be.

If your CPA is handling your books you are probably spending $150+ per hour just for basic bookkeeping. A far more affordable option is to hire an Ocean County Bookkeeping and Payroll Service that is QuickBooks Certified at a fraction of the price. This firm should be able to handle  all of your bookkeeping and provide the information you need to cut costs and improve profits.

The author: Dawn Contardi ,owner of Sharp Bookkeeping Service, a Certified QuickBooks ProAdvisor and a member of the American Institute of Professional Bookkeepers with 25 years of experience can be reached at 732-458-3800 or www.sharpbz.com.

Correcting 941 Reporting or Deposit Errors Without Penalty With The 941-X

 

by Debera J. Salam, Senior Manager, Ernst & Young LLP, Member AIPB Board of Advisors, Author, Mastering Payroll ( AIPB ) and Mastering Payroll II ( AIPB )

941 filing deadlines

A 941-X filed in 2010 is considered filed on April 15, 2011.  Unlike the 941 that provides an automatic 10 day extension when all taxes were paid timely and in full, there are generally no automatic extensions for the 941-X.

              The statute of limitations for filing adjustment on a 941-X (or any X form) is the later of 3 years from that date you filed the correct form or 3 years from the date that the related tax was paid.  Thus, for a 941 filed any time in 2010, the statute of limitations is April 15, 2014-3 years from April 15, 2011.  Key exception: If you are being audited by the IRS or have entered into a voluntary disclosure with the IRS, the IRS may ask you to sign an extension of the statute of limitations.  If you are unsure whether you should sign the extension, consult your employment-tax advisor.

Tax underpayments-interest and penalty free

Report within 3 years of the date the 941 was filed.

              The procedure for the 941-X gives you more time to remit tax underpayments without incurring interest or penalties by following these simple steps:

1.  File the 941-X by the 941 due date for the quarter in which the error was discovered.

2.  Pay the correct amount -the amount on Line 17 of the 941-X-by the due state.

3.  Include on the 941-X the date that you discovered the error.

4.  Give, in detail, the facts needed to show you do not fall under one of the following categories, under which interest and penalties will not automatically be waived:

  • The underreported amounts relate to an issue raised prior to audit.
  • The underreported liability was filed unknowingly.
  • You received a notice and demand for payment after assessment.
  • You received a Notice of Determination of Worker Classification.

Example 1.  You discover that you underpaid tax for a period prior to Jan. 1, 2011.  On June 10, 2011, you discover that you underreported $10,000 of Social Security and Medicare wages on your 2010 4th q. 941.  You must file a 941-X and pay the amount owed by July 31, 2011, because you discovered the error in the 2nd q. of 2011 and the due date for that quarter is July 31, 2011.  If you file a 941-X on or before July 31, pay the amount you owe when you file the 941-X.

              For corrections of underreported or underpaid taxes only, there is not automatic 10-day extension.  The due date depends on when the error was discovered.  If a due date is a Saturday, Sunday or legal holiday, use the next business day.

If you discover the error any day in: File a 941-X on or before…
January, February, March April 30
April, May, June July 31
July, August, September October 31
October, November, December January 31

Under payments can be paid via EFTPS, debit or credit card, check or money order (payable “United States Treasury”).

Tax overpayments

Example 2.  On Jan, 20, 2011, you discover that you over withheld and over reported FICA by $350 on your company’s 2007 4th q. return.  To obtain a refund, you must file a 941-X before that statute of limitations expires-i.e., by April 15, 2011, the deadline under the statute of limitations for using the claim process described later in this article.

              You have two options for an overpayment.  You can obtain a refund or apply the amount as a credit against future deposits.

  • Claim a refund.  To claim a refund of the line 18 amount of FITW or FICA, file a 941-X (not an 843) by its due date and, in Part 1, check the “Claim” box.  Before the IRS sends you a check, it makes sure there are no unpaid taxes, interest or penalties for your EIN.  (Regularly review company IRS account transcripts for unpaid taxes, penalties, interest or other unpaid balances.)  Even if there are none, the IRS may examine your claim delaying it.  the IRS notifies you I the claim has been accepted, denied or is being examined.  If accepted, it sends you the Line 18 amount plus interest.
  • Request an adjustment-i.e., ask for a credit.  the IRS will apply it to your 941 liability for the quarter in which you filed the 941-X.  Include the credit on the 941, Line 11-not the liability section (Line 17 or Schedule B).  When you  reduce your deposit for the current quarter by the credit amount, the higher Line 11 amount will account for the shortage.

 

 

 

 

 

 

Example 3.  One Feb. 10, you see that a prior quarter’s FICA was over reported and overpaid by $150.  On Feb 12, you file a 941-X asking that the $150 be applied to your 1st q. 941 liability.  Although your Feb, 10 deposit obligation of $10,650, you will deposit only $10,500 ($10,650-$150), and on your 1st q. 941 will report on Lines 10 (total taxes after adjustment) and 17 (liabilities) only $10,650.  On line 11, you will report $10,650 ($10,500+$150 credit from the 941-X0, leaving a balance due of zero.

Time limits.  The IRS needs time to post the 941-X amount.  For instance, in Example 3, the IRS needs time to process you $150 credit.  To avoid delay that results in a balance-due notice for a credit request, the IRS encourages you to use the following schedule when requesting that the 941-X credit be applied to your 941:

When claiming an overpayment credit for a 941 deposit made in… File a 941-X by…
January, February, March April 1
April. May, June July 1
July, August, September October 1
October, November, December January 1

 

Important:  If fewer than 90 days remain in the statute of limitations, you are required to request a refund rather than an adjustment.

Example 4. In March 2011, you discover that your company made an overpayment in its 4th q. 2007 941-X, which it filed and paid timely.  The statute of limitations on that filing began Apr. 15, 2008, so it expires Apr. 15, 2011 (3 years later).  Because you discovered the error in March which is less than 90 days before Apr. 15, you must request a refund-you are prohibited from applying a credit to your 2nd q. 2011 return.

Caution on using overpayment credit offset current-period liabilities.  As noted above, when you request a credit or refund, the IRS first checks your EIN for outstanding taxes, penalties or refunds.  Even if there are none, it may decide to examine your request.  In other words, there is a real chance the credit your requested may not be available, or may be only partially available, for current period 941 liabilities.  If this occurs, the IRS will likely treat the difference as an underpayment, possibly subject to interest and penalties.  If the IRS turns out to be wrong, you may spend hours on the phone or filing paperwork to undo the damage, suffering through collection actions and levies on your company’s bank accounts in the interim.

Bottom line: When correcting an overpayment, consider requesting a refund rather than applying the credit to future liabilities.

Form 941-X review

The following examples illustrate how and when to correct federal employment tax overpayments and underpayments.

Example 5. Underpaid tax.  On June 10, 2011, you discover that on your company’s 4th q. 2009 Form 941, you underreported $10,000 of FICA tax.  File a 941-X with the amount owed -$10,000 – any time before Aug. 1, 2011 (the normal due date, July 31, is a Sunday), because you discovered the error in the 2ndq. of 2011, for which the 941-X due date is Aug. 1, 2011.

Example 6. Credit for an overpayment.  your company filed it 4th q. 2007 return and paid the related taxes on time by Jan . 31, 2008.  On Mar. 2, 2011, you discover that your company had, in fact, over reported and overpaid FICA tax for this quarter.  To obtain a credit for this amount:

              1.  File a 941-X promptly, say by Mar. 12, and show the credit claimed on Line 18.  The IRS will       treat the credit as a 1st q. deposit because you discovered the prior overpayment in the 1st q.

              2.  Repeat the amount from the 941-X, Line 18, on your 1st q. 941, Line 11.

Keep in mind the caution on applying overpayments to future 941 liabilities.

 

Example 7. Refunds.  On Mar. 1, 2011, you discover an overpayment error on your company’s 4th q. 2010 Form 941. File a 941-X no later than May 2, 2011 (the due date of the 2011 1st q. Form 941), and request a refund.

*Be a Social Security Expert. Here are answers to questions older employees may ask you about SS benefits.  For those born in 1942, full retirement (FR) age is 65 and 9 months; in 1943, 65 and lii months, gradually increasing to 67 for those born in 1960 and later.

Age Benefits
FR age reached in2011 Earn up to $37,280, then lose $1 in benefits for each additional $3 earned.  From months of FR age on, the is no earning limit.
FR age reached before 2010 Employees born in 1937 or earlier receive full benefits at age 65.  No limit on earning, no reduction in benefits for those at FR age.
FR age reached after 2011 Recipients can earn $14,160 in 2011 before losing $1 in benefits for each $2 earned.
50 Benefits start for disabled surviving spouse
60 Benefits start for nondisabled surviving spouse.
62 Reduce benefits per employee’s, spouse’s or for spouse’s (still alive) earnings.

 

Important: Earning 40 credits makes a person eligible for benefits at a certain age-but not necessarily maximum benefits.  Credits are unrelated to the amount of benefits.

              Social Security benefits are based on average earnings of the best 35 years of work-not just the last 10 years as many think.  An adjustment is made to account for changes in average wages since the year the earnings were received.  SSA then calculates average monthly adjusted earnings over those 35 yrs when the worker earned the most money.

              Employees can request their SS earnings by calling 800-772-1213 (for TTY, 800-325-0778) or by visiting an SSA office, or can review their statement at

www.socialsecurity.gov/mystatement

 

              Withhold Social Security taxes on all wages subject to FICA, regardless of age or benefit status.  See IRS Circular E for details at www.irs.gov/publications/p15/index.html.

Auto deductions for business use of a vehicle must be substantiated

1. the amount of the expense; and

2. the time and place of business use; and

3. the business purpose of the use.

              Two cases illustrate how the requirements work.

Case 1:  B, a Los Angeles, CA music producer , claimed that he regularly drove from his home in Sacramento to work, stayed for one or two days, then drove back to Sacramento.  He said that he paid most expenses in cash and provided a contemporaneous mileage log of dates, destinations, business contracts, and mileage.  He also provided copies of vendors invoices, canceled checks and other supporting evidence to corroborate the business purpose of 37 of the 48 business trips-but the IRS denied his tax deductions for the other 11 trips for lack of documentation.

Held: For the taxpayer. If the taxpayer can establish a consistent, documented pattern of business use for part of a year, it serves as proof of the entire year. [Barajas v. Comm, T.C.]

Case 2: M (see “Home offices” on p. 2) had a job and ran two side businesses from home: real-estate broker and property manager.  He regularly drove around all over the state looking for properties to show clients and showed a calendar listing destinations and mileage.  For example, in January, he traveled from his home (Orange County) to 11 towns and cities, for a claimed total of 5,498 miles.  The IRS denied all of the mileage deductions.

Held: For the IRS.  The taxpayer’s list of destination descriptions were vague and generic: only a city name-no addresses visited, identification of clients or business purpose. [Mahdavi v. Comm. T.C. Op. 2010-178]

Locking in a target-group tax credits.

 C, an owner-operator of nursing homes nationwide, hired several employees.  After C had interviewed the new hires, they signed forms certifying that they met the qualifications for either the work opportunity or welfare-to-work tax credits under IRC 51 and 51A.  C submitted the data to the designated local agency as required, asking for written certification of the employees’ eligibility, but certification was denied to some without explanation.  C neither appealed the denials nor sought explanations.  Initially, C did not claim tax credits for those denied certification, but later filed amended tax returns claiming the tax credits for them and requesting refunds.  The IRS denied the refunds.

Held: For the IRS.  The IRC requires that to claim a credit, the designated agency must certify the employee’s eligibility.  Just filing a request for certification or claiming that an agency was mistaken in not certifying the employee does not support the credit.  An employer who believes an agency improperly denied certification can appeal the decision.

AIPB Tip:  Require that employees from targeted groups receive certification from the designated agency before starting employment [Manor Care Inc. United States, No. 2010-5038, Fed. Cir.]

Major DOL push on wage-hour enforcement.

  ” The U.S. Department of labor is back in the enforcement business,”  according to secretary of Labor Hilda Solis.

The problem: Everyday practices of 70% of employers result in unpaid “work” hours that the employer has no idea are unlawful, but that do, in fact, violate the Fair Labor Standards Act (FLSA).

The focus: Hourly employees and first-level-managers-typically “supervisors,” such as a customer service supervisor, stocking or maintenance supervisor.

The DOL solution: A huge jump in wage-hour audits.  Another 350 investigators are being added-an increase of more than one third-and DOL has proposed $241 million to pay for the expanded enforcement.

Punching in early (or punching out late).  Tony Here are some typical examples:

punches in 15 minutes before starting time.

Problem: If you are audited, you would have to prove that Tony was not working, because DOL assumes that an employee who has punched in is working.

“Downtime.”  Marina’s workday starts at 9, but she has a long drive and must drop off two children in different places, so she ends up getting in a little after 7:30, has breakfast at her desk and reads celebrity magazines.

Problem: If a customer happens to call, or Marina suddenly remembers something she must attend to and pulls a file so she won’t forget, she is working and must be paid for the hour or portion of the hour when the client called and she pulled the file.

Chatting during breaks.  Bill gets in a half hour early to have a cup of coffee while he talks sports with coworkers.

Problem: If, while chatting with coworkers, any business matters happen to creep into Bill’s chats that is paid work time and all of the coworkers involved in the conversation must be paid for that time.  How does DOL know about this? It doesn’t – unless you are audited, at which time DOL staffers will conduct lengthy interviews with hourly workers.

Checking e-mails from home.  Before leaving for work, James, who lives over an hour away, checks his Blackberry (or other device) for business e-mails.

Problem: DOL considers this unpaid work time.

Supervisor’s “pitching in” to help.  Customer Service Supervisor Harley is an exempt employee.  She sometimes puts on the headphones and takes orders for a few hours.  Maintenance Supervisor Charles sometimes ends up cleaning restrooms himself to make sure the work gets done.

Problem:  If your firm is audited, DOL may decide that answering the phone is hourly work and reclassify Harley as a nonexempt employee.  Once it does this, if DOL finds out that she worked more than 40 hours in the workweek-which most supervisors regularly do these days-you will be hit with overtime back pay, penalties and interest, possibly several years’ worth.  The same goes for Maintenance Supervisor Charles who, because he is a “manager” and therefore exempt, should be supervising restroom cleaners rather than doing the work.  the same would apply to a stocking supervisor who sometimes boxes and puts products on the shelves.  Bottom Line: Employees who are exempt because they do managerial work (regardless  of whether their title is “manager” or “supervisor”) should be supervising those who do the work-not doing the work their nonexempt employees do.

Hourly Employees:

  • Require employees to accurately record all work hours and to submit a timesheet or comparable record that they certify as accurate and submit in a timely manner.

 

  • Require managers to review these records promptly to identify any inaccuracies.

 

  • Prohibit employees form while they are on a lunch break.

 

  • Discipline employees for improperly clocking in or out.

 

  • If you pay Jo for working Wednesday from 9-5, but have a series of business emails from her between 7-9 am or 6-8 pm, DOL considers this unpaid work time.

 

  • Require managers to report any and all suspected off-the-clock work so that it is paid-and steps can be taken to prevent off-the-clock work in the future.

 

  • If there is a wage-hour audit, have ready accurate, indisputable records of hours worked.

 

Helpful Hint: An automated time and attendance system is an easy-to-use tool for staying in compliance with wage-hour regulations.  Many such systems are programmed to alert you to potentially costly issues.  Some can prevent early punch-ins of more than a few minutes.

Low -level exempt managers:

  • Make sure that managers rarely do nonexempt work, and then only for a brief time (i.e., not all morning or half of the afternoon).

 

  • Make sure that a nonexempt manager supervises at least two full-time employees, or DOL may conclude that the person is exempt simply to avoid overtime pay.
  • Give exempt managers the discretion to hire and discipline employees-two key functions of this exempt classification.

 

  • Give exempt managers the authority to make decisions that affect the company to a certain level

Company cash-short? Here’s the bill to pay first.

  To deal with its financial problems T Corp decided to pay several creditors, putting off for two quarters paying employment taxes and filling related returns.  T Corp finally paid the taxes and over $30,000 in penalties and interest, then asked for a refund of the penalties, claiming that it had been “teetering on the brink of bankruptcy.”  The case went to court.

Held: For the IRS.  An employer must pay federal employments taxes when it has the cash flow to make the payments.  Spending the money for other purposes is “willful failure” to pay taxes.  If necessary, a tax payer must make an effort to borrow the funds to delay payment of loans or obligations so it can pay the taxes.  Failure to pay employment taxes may be excused when payment would cause “undue hardship,” defined as a substantial financial loss, such as losing business or contracts, or having to sell property at a sacrifice price to pay the taxes by the due date.  But T Corp provided no proof of any hardship (s).

AIPB Tip: As this case demonstrates, you must pay employment taxes before any other bills, even if that means taking out a loan to do it.  Before you delay payment and pay another creditor or vendor first, consult a CPA or qualified tax lawyer to see if your company’s situation needs the “undue hardship” exception.

Federal Rules for Clocking Time Worked

The State of NJ now uses Federal rules for clocking time worked. Thus, you must round to the nearest 5 minutes, nearest tenth of an hour (6 minutes) or quarter (15 minutes) of an hour.  Employers must apply the method chosen to all employees.  [N.J. Adm. Code 12:56 5.8]

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