Don't be late filing or making your Federal Payments. Here are the most common filing and payment due dates for March 2010
Making Work Credit Pay = Tax Savings Up to $800!
Two special tax credits offer taxpayers an opportunity to lower their tax bill or increase their refunds this filing season. Both credits are claimed on new Schedule M, Making Work Pay and Government Retiree Credits.
The making work pay credit helps millions of workers and self-employed individuals, while the government retiree credit especially targets former government workers who aren’t receiving Social Security benefits. Income limits apply to the making work pay credit but not to the government retiree credit. Both credits are refundable — meaning that those eligible can get them even if they owe no tax. Here are further details on each of these credits.
Making Work Pay Credit
Most eligible taxpayers qualify for the maximum making work pay credit of $800 for a married couple filing a joint return or $400 for other taxpayers. The credit equals 6.2 percent of earned income up to the maximum amount. Thus, any eligible couple whose earned income is $12,903 or more qualifies for the $800 maximum credit. Other taxpayers qualify for the $400 maximum if their earned income is $6,451 or more.
For most workers, the credit is based on the taxable wages reported to them on Forms W-2. Self-employed individuals figure the credit using the net profit or loss they receive from a business or farm. Additional calculations are necessary for some taxpayers, including those who have net business losses, wages from work performed while a prison inmate or foreign earned income. More information, including a worksheet, can be found in the instructions for Schedule M.
Some taxpayers are not eligible for the making work pay credit, including:
Joint filers whose modified adjusted gross income (MAGI) is $190,000 or more.
Other taxpayers whose MAGI is $95,000 or more.
Anyone who can be claimed as a dependent on someone else’s return.
A taxpayer who doesn’t have a valid social security number.
Joint filers, if neither spouse has a valid Social Security number.
Nonresident aliens.
Other taxpayers qualify for the credit but must reduce the amount of the credit they claim, including:
Joint filers whose MAGI is more than $150,000 but less than $190,000.
Other taxpayers whose MAGI is more than $75,000 but less than $95,000.
Taxpayers who received an economic recovery payment. This special $250 payment was made during 2009 to recipients of Social Security benefits, supplemental security income (SSI), railroad retirement benefits or veterans disability compensation or pension benefits.
Taxpayers who claim the government retiree credit.
See Schedule M and its instructions for details.
Though all eligible taxpayers must file Schedule M to claim the making work pay credit, most workers got the benefit of this credit through larger paychecks, reflecting reduced federal income tax withholding during 2009.
Government Retiree Credit
This credit is designed to provide a benefit equivalent to the economic recovery payment to those government retirees who did not qualify for these payments. Retired federal, state or local government employees who receive pensions in 2009, based on work not covered by Social Security, are eligible to claim this credit. The credit is $250. For joint filers the credit is $500 if both spouses are retired government employees who receive pensions based on work not covered by Social Security. The credit cannot be claimed by an individual if he or she received an economic recovery payment during 2009. See Schedule M and its instructions for details.
For more information consult your tax preparer or go to IRS.gov
Planning For Action
©D. L. MacMillan, QuickBooks Training. Web Learning
You are likely familiar with the term business plan, but just what is a business plan and how do you put one together? It is not as complicated as you might think. And if you prepare one segment at a time, than it won’t be an overwhelming task.
A business plan includes the following topics:
A basic business concept
A description of your product or service
What advantages your product or service brings to the market
The competition
A marketing plan
Your business background and experience within the field
Partners and/or key employees and what they can add to company
Financial budgets, forecasts and funding needs
The basic business concept is a clear description of your proposed company. For example if I were to open an art gallery I might phase my business concept as follows:
I propose to provide an art gallery in which local artists will rent wall space. I will provide sales staff, opening nights with refreshments and a unique, well lit environment to showcase their artwork. The artists will be responsible for providing a mailing list, invitations and mailing costs, opening night advertisements and carrying insurance on their artwork. All work must be original, owned and copyrighted by the artist and framed. All art and framing must be approved before hung. I will collect a 50% commission on each sale.
The description of your product or service is a specific description of the products you will carry or the services you will provide. Going on with the art gallery business I might say that “The gallery will be showcasing the original art of local artists and offering a unique selection of subjects”.
The answer to what advantages your product or services brings to the market will depend upon the competition within your market area. It may include statements such as “There are no other galleries in this area that offer original art” or perhaps “By showcasing art from local artists only, our customers will feel pride in supporting their local culture”. Or perhaps your easy to reach location, or the uniqueness of your building brings value to your product or service.
Just who is your competition? Look around; visit their places of business if at all possible. Ask those who might use their services or visit their store why they like doing business with them and what they might like to see improved. And don’t stop with the businesses in your immediate area; expand beyond to locate your competition. In this day of Internet access, it would also be smart to do a search for competing businesses. In this segment of your business plan, list your main competitors and describe how your product or service will stand out from the crowd.
Your marketing plan should consist of a clear description of how you plan to get customers to your door. Will you place ads in the newspaper, on the radio or television or do direct marketing? Consider signage, logo design, web site development, mailing lists, business cards and brochures. Will you join organizations that might lead you to contacts? Do you have previous contacts that are willing to sing your praises? Will you have a grand opening? What ever methods you choose to use this is the place in your business plan to put it all in writing. It is not only what you will do, but when and in what order you will do it, and what you expect to reap from your efforts.
What do you bring to the table in this venture? Have you many years of experience in this field? Have you studied and worked in this area of business before? It’s time to toot your horn. Describe everything that makes you unique to succeed. Sell yourself!!!!
If you have a partner or key employees joining you in this business, then describe what they can add to the overall success of your business. List their relevant experience, education and knowledge.
And now the financial part. All of your forecast reports should be broken down by month. The first part is a sales forecast for at least three years. How do you know what you may sell over the next three years? Well you don’t, you do a best guess estimate. Don’t be pie in the sky, but also don’t be too conservative. Your estimate should show gradual increases over time and may adjust upward or downward if your business is seasonal. And remember, this is a good faith estimate and is expected to need adjustment as time goes by.
Next set up a spreadsheet listing all the expenses you might incur over the first, second and third year. This will include the cost of the product being produced, any tools or equipment you might need, labor and related tax, insurance expenses and all other expenses you will incur to bring your product to a ready to sell state. Your Cost of Goods Sold should coincide with the estimated number of units listed in your sales forecast. Also include general expenses such as rent, utilities, business insurance, advertising and marketing costs, loan interest, vehicle expenses, taxes and any other expense you might occur. And don’t forget to include paying yourself in this budget.
During your first year of business you will most likely be operating with a negative cash flow. Most businesses do not show a profit until after year three and some not until their fifth year in business. This will be apparent when you put your forecast profit and loss statement together. A Profit and Loss Statement is a document that lists income less expenses for a specific period of time. The net result is either your Profit (income exceeds expenses) or Loss (expenses exceed income). You need to come up with a plan to cover the time periods when there is not enough cash coming in to cover your expenses. This plan might include using your personal savings, borrowing from family members or friends, taking in partners, selling off personal assets, working a second job, or maybe scaling back a bit. Making this plan will involve taking a close look at all your available ways to raise money for your start-up. It also may involve borrowing money from a bank. Try to refrain from mortgaging your home if at all possible. You don’t want to be in the position of losing your business dream and the roof over your head at the same time. Look into SBA loans, local business loans and grants. SCORE, a division of the SBA (Small Business Association) can be a great deal of help not only in finding financing but in all other areas of starting up your business including preparing your business plan. SCORE consists of volunteer business people who offer free business help.
All in all, your business plan provides a written document to guide you through your start-up and will keep you focused on your goals. Also if you are looking for funding, a well thought out business plan will show you are serious about the success of your business.
Copyright ©D. L. MacMillan All Rights Reserved
February 2010 Tax Calendar
Don't be late filing or making your Federal Payments. Here are the most common filing and payment due dates for February 2010
Year End Tasks
©D. L. MacMillan, QuickBooks Training. Web Learning
The holidays are over and we have had a few days to ease back into our regular business schedules. But with the new year comes a long list of tasks that need to be attended to in order that your filing requirements are met and your books are ready for your tax preparer.
The first tasks are definitely tied into a deadline and they are preparing your W2’s and 1099’s. The copies sent out to employees and subcontractors need to post marked no later than January 31st. You have a small reprieve this year however as the 31st lands on a Sunday moving the deadline to February 1st. The filing deadline of these forms to the various government agencies (federal, state, local, etc) is March1st, 2010 (usually February 28th however again this day falls on a Sunday this year).
Before distributing either of these forms be sure to make sure the names and addresses are correct. And the employee’s Social Security number or the subcontractor’s FID number matches the name on the form. This is more likely to become an issue with subcontractors, as they may have filled out their W-9 with a dba name (doing business as) but using their Social Security number as their identifying number. A Social Security number should be matched to the individual’s personal name and only FID’s used for a company name.
Verify that the information shown on the forms is correct. Do the wages reported and the taxes withheld agree with your payroll records? Have you included any taxable benefits are listed in the correct boxes? If you have any questions regarding these amounts please consult either your payroll provider or your accountant.
Now that these forms are done and mailed, lets discuss what should be done about making sure your books are ready for tax preparation.
There are certain key accounts that should be reconciled and analyzed. These include all bank, credit card, inventory and payroll accounts.
Reconcile your bank and credit card accounts to the year end statements.
If you are tracking inventory take a physical inventory count as close to the 1st of the year as possible. And compare this to your booked inventory. If there are discrepancies either in count or value than make sure your count is correct and if you find it is adjust your booked inventory as necessary.
Verify that your payroll liability accounts are in sync with what your payroll records are
reporting.
Review your accounts receivable and accounts payable agings. Are there invoices that should be written off?
Review your Balance Sheet and Income Statement looking for any numbers that may not look right. Perhaps you have an unusual high amount posted to office supplies for example (or any other account). Was the cost of a computer purchase incorrectly posted to this account instead of a fixed asset account? Verify that the entries posted in these accounts are correct. The goal is to take a “does this make sense” review of these statements.
Wait until your January bank and credit card statement have been received and any transactions dated in the previous year are posted before you present your records to your tax preparer.
By taking these steps you will save time and money in the preparation of your taxes.
January 2010 Tax Calendar
Don't be late filing or making your Federal Payments. Here are the most common filing and payment due dates for January 2010
Using Classes In QuickBooks
Would you like to know how much profit is made by a particular department or location within your company? The use of classes will allow you to do just that providing you with reports showing the income earned and the expenses incurred for each segment of your business you wish to break out. For example, if your company is a retail store with more than one store it would be helpful to know just how profitable each store is. Or perhaps you are an electrician and would like to know whether you make more of a profit on commercial jobs versus residential work.
Setting up classes is very easy. First under the Edit pull down menu, choose Preferences. In the new window in the left hand column click on Accounting and then the Company Preferences tab. Check the box titled Use Class Tracking and the Prompt to assign classes box. To set up your classes, access the List Menu and choose the Class List option. On the bottom of the window that opens up click on the Class pull down menu and choose New. Name your class and click okay.
You will see a class field on all forms and should you save an entry without filling in the class you will be prompted to add a class. However, you will have the choice to either use a class designation or not to use one.
You may run a Profit and Loss Report by class by clicking on the Report menu, choosing the Company & Financial section and selecting Profit and Loss By Class. Other reports may be modified to show data by class should you wish. For example if you would like to see all open customer invoices by class, then bring up the Customer Open Invoice Report and click on the Modify Report button at the top of the window. In the Filter tab you may choose to filter by class and then you can either choose to filter by all classes or choose to filter on multiple classes. If you choose to filter on multiple classes an additional window will open and let you choose the classes you wish to see in your report.
As always QuickBooks gives business owners many ways to see and analyze their financial information in order that they might use this information in their quests for profits and success.
Copyright ©D. L. MacMillan All Rights Reserved
QuickBooks 2010 Is Here!
©D. L. MacMillan, QuickBooks Training . Web Learning
You can now customize your company snapshot. And for those who did not upgrade to 2009 yet the Company Snapshot Page is a great way to keep daily tabs on all of your business activity. Graphically displayed reports at your fingertips, updated in real time allowing you to view all the important key data you need to keep on top of your business.
Document Management saves you time, money and file space. Attach and store documents to your QuickBooks database. A scanned or electronic document can be attached to any vendor, customer, employee, account or transaction allowing you to refer back to the document easily without digging through piles of paperwork or file folders. And no more lugging all that paperwork off to your tax preparer because it’s all there in QuickBooks! Easily shared with even those who do not have QuickBooks because they are all safely online. Don’t worry about lost or damaged documents again.
A new re-designed report center allowing you to preview reports to add in your search and you can even tag your favorite reports for future quick access.
Tired of plain old invoices? QuickBooks 2010 gives you an easy way to distinguish your company from the crowd. Free professional designs are included that are available for all invoices, statements and other forms.
This is a real time saver. Whenever you need to enter multiple customers, vendors, or items you have the option to use an easy to use spreadsheet form. When you are finished all the individual records are filled in and ready to use.
New way of handling customer checks! Stop running to the bank and just scan your client’s checks into QuickBooks, the funds are deposited and the accounting is done. This requires a separate subscription and a separately purchased check scanner.
Easy Installation with Improved Installation Manager. Reduces steps for upgraders by copying existing configuration.
Improved Clean up Company Data Wizard to condense older transactions into summary roll-forward numbers.
Favorites Menu create shortcuts directly to specific functions and personalize favorites for each users. Favorites menu can be accessed from any where in Quickbooks.
Improved On-line Banking – choose from either the register view or re-designed Online Banking Center.
Purchase your update today and start enjoying all these new features!
©D. L. MacMillan, QuickBooks Training . Web Learning Dissemination of this article in its entirety is allowed under this copyright. Extractions of any content are not permitted for any purpose and the article must be disseminated in its present form without modification or change of authorship, whether in whole or in part. This dissemination allowance applies to this specific article only and does not transfer to other publications copyright protected or developed by Donna L. MacMillan, D.L. MacMillan and Associates, Bookkeeping R Us or CFOMAC.
Feel free to share the link for this article to as many people as you like.
Common Payroll Terms
©D. L. MacMillan, QuickBooks Training. Web Learning
Are you confused by all the acronyms used for payroll? Here a few of the most common and what they stand for.
-
EIN- Employer Identification Number which is issued by the IRS upon request. This should be issued for every company, but is mandatory for any company with employees.
-
SSN- Employee’s Social Security Number which is issued to any employee who is legally eligible to work in the United States.
-
W4- The form filled out by a new employee showing the employee’s name, address, social security number and the marital status of the employee as well as the number of dependents he/she wishes to have their FIT based on. This form is kept on file by the company.
-
W2- The form an employer issues to every employee at the end of each calendar year or if the employee leaves during the current year at the end of their employment. This form shows the company’s name, address and EIN number as well as the employee’s name, address and SSN. It also lists the wages earned that are subject to FIT, FICA and state withholding and the amounts withheld. This form may also include such items as deferred deductions such as employee contributions to pension or retirement plans and employee health benefits withholdings as well as other withholding or income items that affect the employee’s taxable wages. This form consists of several copies, one for the Social Security Administration, one for your state, employee copies for Federal, state and if appropriate local government filings and copies to be kept by the issuing company and the employee.
-
FIT– Federal Income Tax. This refers to the Federal Income Tax withheld from an employee’s paycheck. This tax is based on rates set by the IRS and is affected by an employee’s marital status and number of dependents.
-
FICA– Federal Insurance Contributions Act which includes Social Security and Medicare tax withholdings from an employee’s paycheck. The Social Security portion is applied to 100% of an employee’s wages, however the Medicare portion is applied only to the amount of wages set and changed yearly by the IRS. The employer is required to match the total amount of FICA taxes withheld from each employee.
-
SIT– State Income Tax which refers to your state income tax withholding from an employee’s paycheck. These withholdings are based on rates set by each individual state. Some states do not have income taxes for individuals.
-
SUTA- State Unemployment Tax Act. This is a tax that the employer pays and is based on your state’s rate per a stated amount of wages per employee.
-
FUTA- Federal Unemployment Tax Act. This is an employer paid tax that is based on a stated wage per employee and the rate may be adjusted based on the amount contributed to your state fund.
-
941- A Federal form filed quarterly to report wages paid, FIT and FICA wages withheld as well as the employer’s contributions to FICA, and the dollar amount of deposits made and the dates these deposits were made.
-
940- A Federal form filed yearly to report wages paid, amount and date of state SUTA contributions made and any FUTA deposits made during the calendar year.
Please refer to the IRS and your state’s web sites or publications for Federal, state and local rules and regulations to determine the current rates in effect, when and how to make your deposits and what reports are required and their due dates.
©D. L. MacMillan, QuickBooks Training. Web Learning Dissemination of this article in its entirety is allowed under this copyright. Extractions of any content are not permitted for any purpose and the article must be disseminated in its present form without modification or change of authorship, whether in whole or in part. This dissemination allowance applies to this specific article only and does not transfer to other publications copyright protected or developed by Donna L. MacMillan, D.L. MacMillan and Associates, Bookkeeping R Us or CFOMAC.
Feel free to share the link for this article to as many people as you like.
Going Into The Fourth Quarter
©D. L. MacMillan, QuickBooks Training . Web Learning
The fourth quarter for most businesses starts on October 1st. If you have not started to get ready for the year end, now is the time to start.
If you have been struggling to keep a manual set of books and your plan is to bring your tax payer a cardboard box or multiple plastic bags of receipts in January, there is a better plan and now is the time to put it into action.
Intuit offers several bookkeeping system options that range from the very simple to those that meet the needs of mid-market companies with sophisticated recording and reporting needs. And the cost of these programs start at FREE! Yes I did say free.
If you are a small company without inventory tracking needs and have limited customers and vendors than you can most likely use the free Simple Start Editions. Need more customers and vendors than Simple Start is also available in a very low cost edition.
For those of you that require inventory tracking there is the QuickBooks Pro edition.
You can start at the lowest level that works for you now and easily move up to a more robust version in the future. And without having to relearn a brand new program as each level is based on the preceding level.
With a good set of books you will have peace of mind, knowledge of your business and your tax preparer will be thrilled when you walk through the door without a pile of receipts for him/her to wade through. And who knows you might even save some money because better organized books allows your tax preparer to take more time actually advising you and finding tax savings instead of trying to organized a whole year’s worth of work at once.
See the full range of QuickBooks products at www.cfomac.com. Click on the QuickBooks & Other Links page from the top menu.
©D. L. MacMillan, QuickBooks Training . Web Learning Dissemination of this article in its entirety is allowed under this copyright. Extractions of any content are not permitted for any purpose and the article must be disseminated in its present form without modification or change of authorship, whether in whole or in part. This dissemination allowance applies to this specific article only and does not transfer to other publications copyright protected or developed by Donna L. MacMillan, D.L. MacMillan and Associates, Bookkeeping R Us or CFOMAC.
Feel free to share the link for this article to as many people as you like.
Do You Have What It Takes To Be An Entrepreneur?
©D. L. MacMillan, QuickBooks Training . Web Learning
You have a great idea for a product or service that you know will make you the next multi-millionaire. Your family and friends either think you are brilliant or crazy. Perhaps you are not happy with your current employer or career and desire more control of your work and career. After all if you are like me, there is no better boss to work for than yourself. So how can you fail? Wrong question! The question you should be asking is how can I succeed?
It takes not only a great innovative idea, but a passion for success and an attitude to do whatever it takes to reach your goals. And planning, planning, planning.
You will wear many hats as the owner of your own business – innovator, inventor, marketer, sales, executive, financier, purchase agent, production manager, bookkeeper, office administrator, advertising manager, and the list goes on. Even if you are out-sourcing some of these functions you need to know if the people you hire are providing you with the information and services needed. This doesn’t mean you need to be an expert in all the areas needed for a successful business, just that you understand the basics of each. The more knowledge you accumulate, the more successful you will be. The president of a large corporation surrounds himself with a highly trusted group of advisors. But it is the president that hand picks these people based on the knowledge and experience he has accumulated within each area. You need to assume the same responsibilities for your business.
And if you think you will have more free time, well think again. There is no room for a 9-5 mentality in the start-up and growth of a new business. Long hours, working on weekends, holidays and nights are more the norm. And while you might not be servicing customers during these hours, you will certainly want to be taking care of all the non-direct tasks. And this is where the planning, planning, planning comes in. Plans to finance your business. Plans to market your business. Plans to grow your business. And following the planning are the tasks of putting the plans into action.
Almost every waking moment of your life should be filled with thoughts of how to move to the next stage of success. Conversations at breakfast or over the dinner table will center on the business. You never know when a breakthrough will arise and you need to take advantage of those thoughts when they pop up or you will forget and never get back to them. Carry a tape recorder or notebook around with you at all times. I keep one by my bedside as I sometimes wake in the middle of the night with a wonderful idea and I know from past experience if I don’t write it down then and there it won’t be around in the morning. If I am watching television a program or advertisement might inspire me to action so again a notebook is right there on my coffee table.
This all consuming attention to your new business doesn’t mean you don’t enjoy your personal life however. Do take what I call mini vacations. Times during the day to regroup, rest, spend time with your family. Take a walk, do a short stint of exercise, read a book for pleasure, play with your kids, plan a meal where no business is discussed, go for a drive, call up a friend. These activities will clear your mind and rest your body and you will return to your business tasks refreshed anew and you will be reminded that living a full life is not just about how much money you make, but also how you treat those you love and enjoy the pleasures we are meant to experience.
Starting a new business is hard and time-consuming work, but it also fun, exciting and fulfilling. If you have what it takes and are willing to put in the time and work, then welcome to the world of Entrepreneurship!
©D. L. MacMillan, QuickBooks Training . Web Learning Dissemination of this article in its entirety is allowed under this copyright. Extractions of any content are not permitted for any purpose and the article must be disseminated in its present form without modification or change of authorship, whether in whole or in part. This dissemination allowance applies to this specific article only and does not transfer to other publications copyright protected or developed by Donna L. MacMillan, D.L. MacMillan and Associates, Bookkeeping R Us or CFOMAC.
Feel free to share the link for this article to as many people as you like.
