TIPS | BEST PRACTICES | NEWS

Prepare for 2018 New Year

Oh November, we did it! Let’s rest a minute. Times up! Time to begin again...

Ahhhh...2016 is in the books! The tax return is complete and filed, the year end journal entries are in, and now it’s time to pause and catch our breath right?

WRONG! There is much to be done in November and December in the accounting office as we look toward ending the year and beginning a new year.

Some things to think about in the coming months...

Strategic Plan for 2018 – Budgets for 2018 – are you working on it?

Year end close calendar and schedule of tasks – know who where and when

Plans for a final year inventory if you carry stock at your location – choose a date and staff

W-9 Vendor review and request any missing forms campaign – don't chase them next year, put someone on it now.

Employee address and withholding form campaign – Have employees review their personal informaton each year for changes or updates.

Worksheets updated and ready for 2018.

Prepare new files for 2018 and make plans for filing away prior years.

And so on, and so on...

So while your kicking back and thinking about your Thanksgiving menu, along with those days off around the Holiday, don’t forget to think about the menu at the office so you can be ready to send out the Old, and welcome the New...Here we go!

If you find yourself needing help to organize and accomplish these special tasks that creep into your November and December, give me a call. We can help...

Abacus is #1 in Service and Back Office knowledge.

Take care. Work hard. Make a difference, however small or insignificant it seems; it could be BIG to someone. Right down to the filing or emptying the trash...

Read More

New Location Florida

2nd Location Now open

Abacus Bookkeeping is excited to announce a second location in Sarasota, Florida effective immediately.

Our services will not be interrupted with our current clients as the Louisville office is still fully staffed.

The loyalty our clients have shown has allowed us to expand and give the same service to some new businesses in need of keeping their payroll and taxes up to date.

This bookkeeping and billing services remote office is available for all types of businesses. We treat each business as unique and we work to ensure proper procedures are setup for bookkeeping, payables, invoicing and financial reporting.

We want all our clients to see this as an extension of the same service we have provided over these past years.

Allow us to give a big "Thank you" to all our clients who have made this opportunity possible.

No political deductions

Be as Political as you like, but its not deductible

A Company formed a political action committee (PAC) to be funded by its employees. As incentive the Company matched the contribution to a charity of the Employee's choice in the Employee's Name. The Employee got a thank you note and the Company would get the deduction.

The IRS ruled that deduction is not permissible. The tax code does not allow deduction of contribution to or in connection with political campaigns. Because these charitable contributions match the PAC contributions, they are incentives for Companies to contribute to PACs, making them political.

Bookkeeping tip: Use two general ledger expense accounts on your books for contributions. One for political contributions (non deductible), and one for all others (deductible). This allows your CPA to quickly determine which of your contributions throughout the year are deductible, which saves them time, and you money, on your tax preparation each year.

Information source: AIPB - The General Ledger Vol 33 No. 6

Welcoming New Staff

Abacus Welcomes Stephanie

As we continue to grow and expand our business in Louisville Kentucky and Sarasota Florida we have brought Stephanie on board full time to assist with the processing and daily tasks at Abacus. Stephanie comes from the restaurant industry and will be instrumental in servicing our clients daily needs. Stephanie is working towards her Certification in Bookkeeping and hopes to have passed all the testing and be certified by the end of 2017. It is our motto to always continue learning and growing in our industry. Certification in Bookkeeping and QuickBooks is key to our continued success.

It is because of the relationships we have formed with our clients and the excellent service we provide that makes expanding our staff a possibility.

Please join us in welcoming Stephanie!

Abacus Louisville - making sense out of cents...

Movin' on up!

Louisville Kentucky Debt Tips

Where Did I Put Those Receipts?

With the tax deadline quickly approaching the mad dash to find all those receipts from trips, lunches, and any other expense you might be able to claim as a deduction are no where to be found. Sometimes we think that itemizing every penny throughout the year is maddening. The time spent to retain and organize receipts can be daunting. But it is important in your income tax filing and measuring your Company's performance. You can't figure out where to go, if you don't know where you've been. Keeping good records can tell the story of your past, which helps you strategically plan where your going in the future.

Many folks believe that if they have their credit card statement or bank statement, that is enough, but it is not. If called in for an audit, if a receipt can not be produced, the deduction could be disallowed.

Don't get caught in this trap. Take the time to keep all receipts.

With technology today, there are many ways to retain a receipt. We at Abacus encourage our clients to take a picture of the receipt right at the table after lunch or dinner. When at the gas pump, before you lay it down on the console or in the seat, snap a picture. When checking out of a Hotel, ask them to email you a receipt or text one to your phone. Then simply build a file to keep your receipts on your computer. Email or text them regularly to your bookkeeper. There is nothing worse than your bookkeeper chasing you down for that missing receipt, and it isn't necessary if you find ways to stay organized.

No paper to save, no bulky file cabinet to maintain. Just neat folders on your computer system to hold your receipts for at least 7 years.

Need help getting disciplined in maintaining your receipts? Abacus can help.

Give me a call

Read More

Budgets are a Way to Measure

Budgets are a Way to Measure

People are afraid of budgets. It could be viewed as failure if the numbers you project are not met so many folks don't bother.

Budgeting is critical in business and in your personal life. Its goal setting...You can't tell where your going if you don't know where you've been. A budget helps you take history and define it for the new year. It allows you to set expectations for yourself and your business. It is a motivator at times as you review the results and take steps to meet or exceed your goals.

If you use QuickBooks as your accounting tool, it can help you to get started on your budget. It can take your history and prepare a budget for you. Using QuickBooks and don't know how to make that happen. Give me a call. We can help!

If you want to grow...you just gotta know.

Not in service? No Depreciation. No Tax Credit.

Not in Service? No Depreciation. No Tax Credit.

You bought a company car or a piece of equipment on December 27th 2015? You wrote the check and you see that it cleared your bank on December 31st. The new car or equipment is delivered to your Company on January 4th 2016. Is there depreciation to book in 2015? Is there a tax credit for 2015?

No...The vehicle or equipment must be available for its intended use in the year the depreciation or tax credit is claimed.

Want to be sure you are strategically adding vehicles and/or equipment each year? Start reviewing year end items such as capital purchases at the end of October or beginning of November. Plan your work and work your plan.

Out with 2015 - Are you ready?

Out with 2015 - Are you ready?

Some things to know as we ring in 2016

Social Security wage base unchanged for 2016. It stays at $118,500 and the tax rate will stay at 6.2% for both employees and employers. Also, the 1.45% Medicare tax on all wages and self-employment income remains the same.

Expect most expired tax breaks to be reinstated including bonus depreciation and the higher Section 179 write-off-by December 31 or in January retroactively.

Emphasis on employment tax violations in 2016. The federal government will increase its focus on employment tax violations. Be careful in filing your W-2's and Form 1099 for your contractors for 2015. The federal government believes many employers fail to understand the importance of employment tax requirements. The focus will be on both civil and criminal cases. The quickest way to sink a small business is to not comply with the withholding tax guidelines.

Happy New Year! It's smooth sailing with accurate reporting. Let's Abacus help you with your bookkeeping needs. We make sense out of cents!

Read More

Business Mileage - Are you prepared?

Business Mileage - Are ou Prepared?

That moment when your CPA asks you...do you have your mileage records for 2015? Start planning now for what you need to turn over for 2015 tax preparation.

A log of business mileage must list for each trip the time, place and specific business purpose of the travel. A general description is likely to be rejected. Equally important, a mileage log should be prepared contemporaneously. The more time that passes between a trip and recording it in the log, the less credible it will be.

Best Practice - Record your activity every day. Keep your log readily available in your vehicle.

Portions of this information collected from AIPB - American Institute of Professional Bookkeepers.

AAAAAAAAAAAAAAAAAAA

GLI Ribbon Cutting

December 1, 2015 will forever by Abacus Louisville, LLC day in Louisville, KY. We had a blast as GLI celebrated our new office and we received our Proclamation from the Mayor of Louisville Office. Thanks to all you stopped by to celebrate in our special day. We could never have come this far without our friends and colleagues helping us along the way. Abacus Louisville, LLC on the RISE!

ow Should you Withhold on Employee Bonuses and/or Gifts this Christmas

How Should you Withhold on Employee Bonuses and/or Gifts this Christmas

Are you thinking about giving your employees a bonus this year? Should you give them a cash bonus or a nice juicy ham this year???

Taxable bonuses/gifts:
Gift Certificates. a gift certificate for a turkey is taxable, even though a turkey is not. Cash gifts of any amount are taxable as wages.
Nontaxable Gifts:
Fruit baskets, hams, turkeys, wine, flowers, entertainment tickets, sporting or other event tickets.

A cash bonus or gift certificate is subject to Federal Income Tax, Social Security, Medicare, Federal Unemployment Tax, and any applicable State and Local payroll taxes. If a bonus is paid separate for normal wages you can use the supplemental withholding rate of 25%

Holiday bonuses are usually considered discretionary even if employees expects it each year.

When calculating on bonus pay, be sure to understand the difference between discretionary and nondiscretionary bonuses. The way they are treated for tax and OT calculation pay is different.

Note...Portions of this information was obtained from the AIBP "General Ledger" Issues 42 & 43 - Karen Weller, CB

Read More

Use-it-or-lose-it rule on FSAs

Use-It-Or-Lose-It Rule on FSAs

Now is a good time to remind your employees to use it or lose it with their FSA funds.

In 2015, an employee could exclude up to $2,550 of salary contributed to a flexible spending account (FSA) plan. Employees should know that to claim reimbursement of the entire account balance of a traditional FSA, they must have enough qualified medical expenses by December 31, 2015; any leftover money reverts to the employer. However, there are exceptions:

March 15 grace period exception. If the plan has a provision that expenses incurred between January 1 and March 15 of the following year are allowed than you can use previous year FSA monies for these reimbursements.

The $500 annual carryover exeption. Employers also have the option of allowing employees to carry over up to $500 each year of the FSA balance. But accumulating $500 carryovers in multiple years is not allowed.

A plan can include the March 15 grace period OR the $500 carryover, but not both.

*Portions of article taken from AIPB - The General Ledger

Read More

Contractor vs. Employee?

Contractor vs. Employee?

Is the person you are hiring as an IC (Independent Contractor), really considered an Employee? Know the difference...it can cost you BIG if you don't.

IRS abandons traditional independent contractor v. employee test

The IRS has given up its 20-factor test, replacing it with a 3-factor test it has been pushing in court cases. The previous test included the extent to which workers provided their own tools and supplies, provided services only for that firm v. working for others, how and when their work was performed, and other factors.

The IRS fact sheet states that instead of the 20 factors, businesses and other entities should examine the degree of control and independence in three categories:

1. Behavioral: Does the business control or have the right to control what the worker does and how the worker does the job?

2. Financial: Are the business aspects of the worker’s tasks controlled by the business —how the worker is paid, whether expenses are reimbursed, who provides tools and supplies, etc.?

3. Relational: Is there a contract in writing? Is the work performed a key aspect of the business? Are these workers given employee-type benefits—e.g., vacation pay, a pension plan or medical insurance? Will the work relationship continue?

Some tax advisors say the change is little more than a different way of applying the same tests. Others say the three-category test will result in fewer workers being considered ICs. The fact sheet emphasizes that the Voluntary Classification Settlement Program remains available. The program allows taxpayers who have been treating workers as ICs to reclassify them as employees going forward while incurring a low penalty for classifying them as ICs in the past.

Read More

Louisville Kentucky Debt Tips

Where Did I Put Those Receipts?

With the tax deadline quickly approaching the mad dash to find all those receipts from trips, lunches, and any other expense you might be able to claim as a deduction are no where to be found. Sometimes we think that itemizing every penny throughout the year is maddening. The time spent to retain and organize receipts can be daunting. But it is important in your income tax filing and measuring your Company's performance. You can't figure out where to go, if you don't know where you've been. Keeping good records can tell the story of your past, which helps you strategically plan where your going in the future.

Many folks believe that if they have their credit card statement or bank statement, that is enough, but it is not. If called in for an audit, if a receipt can not be produced, the deduction could be disallowed.

Don't get caught in this trap. Take the time to keep all receipts.

With technology today, there are many ways to retain a receipt. We at Abacus encourage our clients to take a picture of the receipt right at the table after lunch or dinner. When at the gas pump, before you lay it down on the console or in the seat, snap a picture. When checking out of a Hotel, ask them to email you a receipt or text one to your phone. Then simply build a file to keep your receipts on your computer. Email or text them regularly to your bookkeeper. There is nothing worse than your bookkeeper chasing you down for that missing receipt, and it isn't necessary if you find ways to stay organized.

No paper to save, no bulky file cabinet to maintain. Just neat folders on your computer system to hold your receipts for at least 7 years.

Need help getting disciplined in maintaining your receipts? Abacus can help.

Give me a call

Read More

Are Electronic Accounting Records Adequate?

In todays workplace with all things going paperless, it is important to remember that a good paperless filing system is critical to retain support documentation for your entries on the books.

TIP - JEs alone neither document a transaction nor the parties' intent. The IRS and the Tax Court take a similar stance. In one case, relying on electronic entries without retaining the source records was negligent. When electronic records were the only proof offered of certain transactions, the IRS has at least on one occasion pushed for a fraud penalty.

Key Problem: Anyone can create or alter transactions on accounting software long after the fact.

You are allowed to record transactions on your accounting software and use reports from it to prepare tax returns, but to prove or support the transactions, you need source documents. If you use electronic documentation such as images, keep them as long as you would paper records and be prepared to satisfy the IRS that such records are contemporaneous with the transactions and have not been altered since.

HOW CAN WE HELP - If setting out to become a paperless environment you must first outline the structure of this environment to insure it is set up in such a way that will take you through many years of filing documents in this manner. We help many companies every day with their back office needs. This is just another area where our expertise can help get you situated in to many years of keeping your back up in a paperless environment.

Making sense out of cents..... Karen Weller, CB

Read More

Louisville Kentucky Debt Tips

Thinking of Starting a New Business? What's Deductible, What's Not?

The case: C and his wife lived in a home on a large parcel of land that he began plans to develop and subdivide. Over about 5 years, he prepared a business plan, hired land-use professionals, paid fees and submitted plans to the town planning board for approval as a subdivision. Work included mapping and surveying the land, designing the subdivision and testing soil. The plans were revised several times in response to directions from the planning board.

After 5 years of preparation the economy hit a downturn, so C delayed his plans. He deducted on Sched C all the professional, legal, vehicle, meals and entertainment, and other expenses related to his development plans.

The IRS denied all the deductions, claiming that C was not engaged in a trade or business and that the expenses were capital costs, not deductible expenses.

Held: For the IRS. The activities that the taxpayer had engaged in, although substantial, were related to planning and exploring the future development and sale of the property. The taxpayer never actually did any marketing or even had product available, so he was not yet engaged in a trade or business, making the expenditures nondeductible—unless he completely abandoned the project in the year that he wanted to make the deduction. (Note that there are special rules for deducting expenses for a business related to property.) [Chen v. Commissioner, T.C. Summ. Op. 2014-6]

AIPB tip: To write off expenses related to exploring a business opportunity, you must show that any intention to pursue the business has been completely abandoned or that the business idea is no longer useful. Otherwise, the expenses related to planning must be capitalized either as business preparation or as organizational costs.

Source:  American Institue of Professional Bookkeepers, Volume 10: Issue 29

Read More

Vehicle Fleet Bookkeeping Louisville Kentucky

"Business Use"? Prove It…

He owned a carpet cleaning business which he reported on a Schedule C. He owned 9 vehicles, including 4 vans. He admitted to using 4 vehicles for a combination of business and personal purposes. He did not keep mileage logs to document business use of any of the vehicles.

He deducted the vehicle expenses based on a handwritten summary he had given his accountant that showed business use and expenses, but he included no receipts.

He claimed 75% business use for each of the 4 vehicles. The IRS denied all of the expenses for the 4 vehicles but allowed the deductions for the other vehicles.

Held: For the IRS. A contemporaneous log of business use and expenses for a vehicle is not required if there is other evidence created at or near the time of the expenses. But all the taxpayer offered was his testimony and time of the expense to support the taxpayer’s reconstruction of recollections about business use.

Although the court believed that he had, in fact, made some business use of the vehicles, because he did not have evidence to support the portion of business use, the court agreed with the IRS that all business use deductions should be denied. [Daniels v. Comon, T.C. Summ. Op. 2014–16]

Source: The General Ledger – The Complete Newsletter for Professional Bookkeepers

Read More

State TAx Payment Bookkeeping Louisville Kentucky

To Which State Should You Pay SUI?

If the employee lives in one state, works entirely in another, submit quarterly wage 
reports and contributions to the worked-in state.

If the employee is temporarily transferred from one state to another, continue to submit wage reports and contributions to the state where the employee worked regularly.

If the employee is permanently transferred from one state to another and relocation occurs prior to the beginning of a calendar year, transfer to the new state no more than the original state's SUI limit based on the original state's SUI wage ceiling.

From AIPB Advisory Board member, Lorelei M. Krucki, CPP, Department of Corporate Training, St. Petersburg College, St. Petersburg, Florida