Wednesday, February 21, 2007

Small Business Bookkeeping and the IRS

Whether you are a sole proprietor or a Limited Liability Company you are required to report all income and pay taxes on that income.

Your saving grace is your bookkeeping. Why you say?

Each of the above is asked to attach a Schedule C to their personal income taxes in order to show profit or loss from operating a business. This form believe it or not can help you become organized in your company records and help make important purchasing decisions.

Tell me, Cathy, how? On the Schedule C you are required to post all of your gross income, which if that is all you had done all year is collect fees and not had one expense or cost of goods sold you would have to pay taxes on all of that.

But here is the saving grace. Business expenses incurred that are deductible lowers the amount of tax due. Thank goodness huh?

For instance we'll take line 8 on the Schedule C which is advertising. Hmmmmm advertising? What all does that cover? What is deductible? Is placing a banner on a friend's website going to reduce my taxes? Well yes a banner is deductible! In addition if you pay someone to design, update, write and host a web site for your business, these costs are also deductible as advertising. Paying someone to proof read an advertisement is also deductible on line 8 therefore decreasing your tax due.

But did you know that postage for shipping out your flyers, post cards, and other advertisements are not added to line 8 advertising but is reported on line 48 other expenses.

Yep there other instances of advertising deductions you may not have thought of. That is why it is so important to maintain your company's books correctly or to have a good bookkeeper keep those transactions straight for you.

During tax season is not a good time to discover that you owe more tax than your business can afford to pay. At the beginning of the year as it is now is the perfect time to set your books up properly or look for that bookkeeper that can offer you assistance in an area that might not be familiar to you and show you the deductions you could be missing in order to lower your taxes.

The IRS will be looking more closely at small businesses than usual as stated here: http://www.contracostatimes.com/mld/cctimes/business/16265628.htm

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posted by The Office Grapevine at 1:09 AM 0 comments  

QuickBooks and Windows Vista

Have you been enjoying the latest and greatest MAC vs. PC commercials? Here's details about QuickBooks and Windows Vista direct from QuickBooks.

Since QuickBooks 2006 and earlier versions were developedand released before the introduction of Windows Vista,these versions may be adversely affected when used ona computer running Windows Vista. This will impact Simple Start, Basic, Pro, Premier, Payroll and Point of Sale, as well as other QuickBooks products and services. We recognize that your QuickBooks software is an important business tool and apologize for any inconvenience this may cause you. If you choose to upgrade to Windows Vista, We recommend that you use QuickBooks 2007 (and Point of Sale v6.0, if applicable). QuickBooks 2007 is the only version of the software built to run on the new Windows Vista operating system

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posted by The Office Grapevine at 1:06 AM 0 comments  

Monday, February 12, 2007

Chutes and Ladders

INSPIRATION FOR TODAY:
"The only limit to our realization of tomorrow will be our doubts of today."
~ Franklin Delano Roosevelt

GOING UP?
Are you successful? Just average? Struggling? Before you respond, consider where your response is coming from. Like everything else, your reaction depends on your perspective.

These judgments are relative to where you are on the ladder. Feelings of success come from comparisons to those who have accomplished less. Likewise, feelings of failure arise from looking at those who have accomplished more. Where you stand right now can affect your perspective even more than where you have been or the steps you are planning yet to take.

Comparing your work to that of others often introduces doubt. The wisdom of Lao-tsu's Tao Te Ching tells us that "whether you go up the ladder or down it, your position is shaky." You might assume that a job promotion would raise one's confidence and sense of worth, but studies have found that "nearly half of recently promoted managers... express uncertainty and doubt about themselves and their new position." (Cassirer and Reskin, 2000)

The trouble is that a promotion places you in a position where you are no longer the best among lesser performers (a big fish in a little pond). Now you feel like a little fish in a big pond, measuring yourself against those who have already arrived. The big fish enjoys more confidence and security, while the little fish frantically fights to maintain against his larger competitors.

Once you realize, however, that it is only your own perspective that is holding you back, you can begin to take action. Again, it must start from the inside out, because you cannot cause change around you until you have effected change within you. Remember that it's not the size of the fish or the pond that matters - it's how much you enjoy being in the water!

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posted by The Office Grapevine at 11:35 AM 0 comments  

Saturday, February 03, 2007

Blown by the Winds

FOR THIS WEEK

INSPIRATION FOR TODAY:
"One ship sails East,
And another West,
By the self-same winds that blow,
Tis the set of the sails
And not the gales,
That tells the way we go."
~ Ella Wheeler Wilcox,
"One Ship Sails East" (1916)

FILL YOUR SAILS!

So... is one of your resolutions for 2007 to build wealth? First you'd better resolve to determine how it can be done. It then follows to map out your plan. As long as you're not counting on luck, an inheritance, or a winning lottery ticket, you can learn a lot from those who have gone before you.

In this country, 99% of all self-made millionaires fall into one of four categories: those who own their own business (74%), those in high executive positions (10%), those with professional degrees (10%), and finally, those with successful sales careers (5%). Which sounds good to you?

In all of these cases, determination, patience, and reinvestment are critical. You can start with a small company and stay with it as it grows, taking advantage of profit sharing, stock options, and promotions. But... you've got to hold on to that money if you expect it to grow.

Professionals make more money because they've already invested untold time and resources into their education, providing a higher level of service to their clients. But again, it takes patience to acquire that degree and a commitment to saving and investing in order to become a millionaire in this category.

Success in sales is a real challenge. These determined millionaires did not start their own businesses, and many did not earn a professional degree. They simply developed their skill to an extreme level, and managed their money with a skill equal to their sales abilities.

The largest percentage of millionaires, those who own their business, is probably the hardest category in which to succeed, but it's where most millionaires make their money. Yet all we hear or read about in the news is all the rich folks who made their money by winning the lottery, becoming an American Idol, or writing a book featured on Oprah's reading list. These get-rich-quick success stories are completely atypical, but they still hold an undeniable allure because they're easy.

Becoming "rich" doesn't necessarily mean becoming a millionaire, because the happiness you derive from a job that you love is priceless. You can choose to dream or you can choose to act, and that choice will determine your level of success in 2007 and beyond.

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posted by The Office Grapevine at 11:47 PM 0 comments  

Ten Alternatives to a Nightcap - GO BEARS!!!

Something fun to think about....

Are you sticking to the plan during the day but blowing your calorie count with a glass (or more) of alcohol each night? If so, try these alternatives to a nightcap from Fit Forever! members:

  1. Go to bed earlier! You'll wake up feeling a lot better than if you'd stayed up drinking.
  2. If you do have a drink, stick to just one. Otherwise, your willpower can take a plunge — and lead to late-night snacking.
  3. Try a cup of hot tea instead. Go for a spicy, soothing variety and really savor it while you sip.
  4. There'll be no calories, but rather cancer-fighting antioxidants!
  5. Drink a full glass of water before each alcoholic drink. You'll drink less alcohol, quench your thirst, and avoid a lot of calories.
  6. Remember how crummy you feel in the morning after a few drinks! Thinking about that can stop you before you start!
  7. Get a "busy hands" project going in the evening. Knit, needlepoint, scrapbook, or sort photographs. Your hands will be too busy to hold a drink!
  8. If you can't resist it, don't keep alcohol in the house!
  9. Brush your teeth after dinner. Mint and alcohol don't go well together!
  10. Try to relax in other ways: Stretch, do a facial at home, take a bubble bath, write in your journal.
  11. Take it one night at a time.

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posted by The Office Grapevine at 11:23 PM 0 comments  

Warning: QuickBooks and Windows Vista not the best of friends

Posted by: "Andrea Kalli" mailto:akalli@comcast.net?Subject=%20Re%3AA%20word%20of%20warning%20about%20Quickbooks%20and%20Vistaandrea_kalli

Tue Jan 23, 2007 6:08 pm (PST)

I thought everyone should know this ...

Today, I received notification from the QuickBooks people that if you upgrade your operating system to Windows Vista, you'll need to upgrade to QuickBooks 2007.

Per their email:

"Since QuickBooks 2006 and earlier versions were developedand released before the introduction of Windows Vista,these versions may be adversely affected when used ona computer running Windows Vista. This will impact Simple Start, Basic, Pro, Premier, Payroll and Point of Sale, as well as other QuickBooks products and services. We recognize that your QuickBooks software is an important business tool and apologize for any inconvenience this may cause you. If you choose to upgrade to Windows Vista, We recommend that you use QuickBooks 2007 (and Point of Sale v6.0, if applicable). QuickBooks 2007 is the only version of the software built to run on the new Windows Vista operating system."

Andrea Kalli
Andrea Kalli Virtual Trainer and Assistant, LLC
www.virtualassist.net

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posted by The Office Grapevine at 11:18 PM 0 comments  

Tax Info for 2007

Donating stuff?: If you wouldn't wear it, don't expect a deduction

Chicago Sun-Times, Dec 18, 2006 by Susan Tompor

Here's a tax tip for the industrious among us who are determined to de-clutter the house and make room for guests this holiday season:

Do not expect to clean up on your 2006 federal income tax return by taking a huge deduction after you donate all that junk. The tax rules have changed.

Tighter rules for contributions of clothing and household items took effect this summer, as part of the Pension Protection Act of 2006. (See below)

So if you've given away anything after Aug. 17, you cannot take a deduction for a charitable contribution of clothing or household goods, unless the items are viewed as being in "good used condition or better."

Clunky wording, yes. But these are tax rules. What does "good used condition or better" mean?

"They don't define what that means," said Herbert Hoffman, tax director for BDO Seidman in Troy, Mich. Not yet anyway. The Internal Revenue Service is expected to give more guidelines later, as we get closer to tax season.

In general, though, we can take an educated guess here, and say that you do not have a legitimate tax deduction if you're donating bags of old pants, ratty sweaters and stinky shoes. If it's junk that you'd never wear -- and junk that no one else would wear, either -- do not expect to cut your tax bill by donating it to a charity.

"Don't unload your garbage, and take a charitable deduction," Hoffman said.

It could get a little tricky figuring out what qualifies.

"I don't think anyone would want to go out and try to get an appraisal for this stuff," joked Mark Luscombe, analyst for tax publisher CCH in north suburban Riverwoods.

He does advise taxpayers to keep even more pristine records of these donations, and take pictures of clothing or household items before donating them to document how good something looks.

Typically, you can deduct the fair market value at the time you gave the item. Or Hoffman suggests basing the deduction on what the item might sell for at a secondhand store.

If you bought a $50 shirt, he said, you couldn't take a $50 deduction once you wear that shirt and then donate it.

A man's shirt might have a value of $2.50 to $12, according to the Salvation Army Valuation Guide at www.satruck.com.

If you plan to donate old underwear or old socks and take a deduction, think twice. The IRS might deny a deduction for any item that has minimum monetary value, such as socks or underwear.

There are some exceptions on the good used or better rule.

If a single item is valued at more than $500, a deduction might be allowed for that item even if it's not in good used condition or better. But the taxpayer must include a qualified appraisal with the tax return. You'd also need to file Form 8283.

The rules changed because the federal government saw signs of abuse, as taxpayers rewarded themselves with fat deductions for used items. Taxpayers deducted about $9 billion for charitable donations of clothing and household goods on their 2003 returns.

CASH CRACKDOWN:

Cash donations -- even small ones -- to religious organizations and other charities such as the Salvation Army kettles -- also will become more difficult to claim as a deduction beginning in 2007.

The IRS is going to require a receipt for cash contributions next year and afterward, if you want to deduct those donations on your federal tax returns.

So consider writing checks instead of putting $10 or $20 in cash in the collection plate at church.
Some religious organizations offer a way to have donations automatically deducted from your checking account. That would also provide records for the IRS.

Source: Gannett News Service

WHAT'S IT WORTH?

The Salvation Army's online Valuation Guide can give you a good indication at www.satruck.com

Copyright CHICAGO SUN-TIMES 2006Provided by ProQuest Information and Learning Company. All rights Reserved.


Stricter Rules on Charitable Donations: http://taxes.about.com/b/a/257331.htm

The Pension Protection Act toughens the tax laws for charitable donations. Under the new law, taxpayers must keep records of all cash donations. Individuals must show a receipt from the charity, a canceled check, or credit card statement to prove their donation. No tax deduction will be allowed if the taxpayer cannot provide any supporting documentation. Taxpayers will not need to mail in the receipts with their tax return. Instead, taxpayers will need to keep receipts and other documentation with their copy of the return in the event of an IRS audit.

The new law also toughens the rules for non-cash donations. Donated items, such as cars, clothing, and household goods, must be in good condition. "The new law does not define 'good condition,'" according to CCH. No tax deduction is allowed for items in less than good condition. Kay Bell provides this word of warning, "Perhaps the IRS will, at least for a while in this new requirement's initial stages, start pulling more returns that list donated property and asking filers to confirm the worth of their gifts."

Rules for Claiming the Charitable Donation Deduction:
http://taxes.about.com/od/2005taxes/qt/charitabledonat.htm

Your gift of cash or property must meet certain criteria in order to be tax-deductible.
You must actually donate cash or property. A pledge or promise to donate is not deductible until you actually pay.

You must donate to a qualified 501(c)(3) tax-exempt organization. Charities will let you know if they have received their 501(c)(3) tax-exempt status.

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Some organizations are not required to obtain 501(c)(3) status from the IRS. These include churches and other religious organizations.

You must be able to itemize. Giving to charity is a great tax planning strategy, but it only works for people who are eligible to itemize their deductions.

You must meet recordkeeping requirements. This includes saving canceled checks, acknowledgement letters from the charity, and appraisals for donated property.

Non-Cash Donations of Property

Donations of property (other than cash) are subject to strict recordkeeping and substantiation rules. You must be able to substantiate the fair market value of the goods or property you donated, plus keep any written acknowledgements you receive from the charity.

Fair Market Value of Donated PropertyYou must make an assessment of the fair market value of the property you donate.

Non-Cash Donations Totalling More Than $500You must attach IRS Form 8283 if your total non-cash donations exceeds $500.

Car Donations: Must Have Written AcknowledgementIf you donate a car, truck, boat, airplane, or other vehicle, and the vehicle is worth more than $500, you must received a written acknowledgement from the non-profit before you can claim a tax deduction.

Non-Cash Donations over $5,000: Must Have Written AppraisalIf you donate property worth more than $5,000, you must obtain a written appraisal of the property's fair market value.

Limits on the Charitable Donation Deduction

Your charitable donation tax deduction may be limited. There are limits specific to charitable donations, and there are general limits on itemized deductions.

50%, 30%, and 20% Limits on Charitable Donations

Generally, you can deduct cash donations in full up to 50% of your adjusted gross income.

Generally, you can deduct property donations in full up to 30% of your adjusted gross income.

Generally, you can deduct donations of appreciated capital gains assets in full up to 20% of your adjusted gross income.

Charitable donations in excess of these limits can be carried over to the following tax year. The excess donations can be carried over for a maximum of five years.

100% Limit for Charitable Donations

Only for 2005, you can deduct charitable donations in full up to 100% of your adjusted gross income. To qualify for the 100% limitation, you must donate cash between August 28, 2005, and December 31, 2005. These special cash donations are reported on Schedule A, Line 15b.

posted by The Office Grapevine at 11:11 PM 0 comments