Thursday, May 31, 2012

How Long Should I Keep Tax Records?

How long should I keep my tax returns?
One of the questions I am asked most often, both as an accountant and as a tax preparer, is how long should you hold on to records and files, receipts and bills, and the like.
First of all, it is my belief that you should keep the paper copy of your tax returns (Form 1040 or 1040A plus all supporting Schedules and Forms) forever! This provides a permanent record of your financial history. You never know when the information on a prior year's tax return will come in handy for a variety of tax or financial related reasons, or just to satisfy personal curiosity.
The time period for keeping all other records ties in to the fact that the IRS, and the appropriate state tax authorities, has three (3) years from the due date (or filing date if you had any extensions) of a tax return to audit that return (except in the case of tax fraud - then the IRS can go back forever). If you filed your 2002 Form 1040 by the initial April 15, 2003 due date, "Uncle Sam" has until April 17, 2006 to audit it and ask for additional taxes.
I recommend keeping all back-up documentation that supports an item reported or deducted on your tax return for four (4) full years. This includes all applicable bank statements and cancelled checks as well as W-2s, 1099s, 1098s, and appropriate receipts and bills. You can toss all such information for your 2002 tax return in December of 2006.
Hold on to your individual pay stubs for the year until you have received the Form W-2 for that year. Reconcile the year-to-date cumulative totals on the last pay stub for the year to the amounts reported on the W-2. If they match you can throw out all but the last pay stub. Keep the final pay stub for the year, with year-end cumulative numbers, with your tax return documentation for that year.
Certain documentation requires longer holding periods. For investments in stock, bonds and mutual funds you should keep all confirms and other appropriate back-up, such as notices of splits and records of any dividend reinvestments, for as long as you hold the investment plus four (4) additional years. You should keep the confirmation slip or other documentation for the sale or disposition of the investment for four (4) years after the sale or disposition.
Similarly, if you own real estate you should keep all Closing or Settlement Statements for the purchase and refinancing of the property, and documentation of any capital improvements, for as long as you own the property plus four (4) additional years. You should keep the Closing or Settlement Statement or other documentation for the sale or disposition of the property for four (4) years after the sale or disposition.
If you have invested in a limited partnership or "sub-chapter S" corporation, or are a partner in a business organized as a partnership, a "sub-chapter S" corporation or an LLC or LLP, you should keep the annual Form K-1 you receive from the investment or business for as long as you own an interest in the entity plus four (4) additional years, and keep any paperwork related to the sale or disposition of your interest for four (4) years after the sale or disposition.
Receipts and bills for personal expenses that are not related to any items reported or deducted on your tax return can generally be tossed after one year. Throw out all such bills for calendar year 2004 in January of 2006. You may want to keep bills, receipts and cancelled checks for equipment, applicance and the like for at least as long as these items are covered under warranty.

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Friday, May 25, 2012

Small Business Health Care Tax Credit

Small employers who provide health insurance coverage to their employees may qualify for a special tax credit.

Tuesday, May 22, 2012

Changed Your Name After Marriage or Divorce?

Find out what you need to do if you have changed your name due to marriage, divorce or some other reason.

Saturday, May 19, 2012

QuickBooks Training

Once QuickBooks is set-up and working properly, we can train you or your employees to properly operate QuickBooks specifically for your business.
Why choose one-on-one attention instead of taking a class?
  • We come to your location.
  • We focus on the individual issues facing your business.
  • We will be there to answer your specific questions and concerns.
  • No need to spend time on features that don?t impact your business!
Call today to set-up an appointment.
We will come to your location!!

Sunday, May 13, 2012

Why You Need An Accountant

University of Central Oklahoma's Small Business Development Partners Jim Denton and Andy with John Arledge & Associates talk about the importance of a small business having a CPA partner.

Monday, May 7, 2012

Three Things Never to Say to the IRS

Tax Attorney Anthony E. Parent, founder of advises tax payers about potential pitfalls of dealing one-on-one with the IRS.
Interview 3/08, Denver Colorado

Credit card rules will help consumers, but ...

NEW YORK — Help is on the way for credit cardholders this weekend.
The final stage of consumer protections signed into law earlier this year go into effect Aug. 22. Yet they only curb select practices; other fees and charges still abound.
A look at the new safeguards, and how cardholders can still get burned.
Penalty fees
New protection: Fees for late payments and other transgressions will be capped to the amount of the violation, up to $25. Previously, these fees were often between $35 and $39 regardless of how much was owed. Also, a single violation can no longer result in more than one fee.
Gaps to watch: Technically, there isn't an outright ban on penalty fees higher than $25. Banks that want to impose a higher fee simply need to give regulators justification for doing so. For example, a bank might provide an analysis showing that the costs associated with late payments average out to $30 per violation, said Lauren Bowne, an attorney with Consumers Union in San Francisco.
It's too early to tell whether banks will pursue this route, but the door is open.
Another exception to the $25 cap is if a customer repeats the violation within six months. Then the cap rises to $35.
Also keep in mind that the rule applies specifically to penalty fees. There aren't any caps on other charges. And not surprisingly, many issuers hiked fees for balance transfers, foreign transactions and cash advances in the past year.
Rate hikes
New protection: Banks must review a rate hike every six months to decide whether the increase is still warranted. If the factors that prompted the hike are no longer applicable, the rate must be lowered.
This rule applies to hikes dating back to Jan. 1 of last year, when banks began raising rates in anticipation of the new regulations.
Gaps to watch: Even if a bank finds that a rate should be lowered, the reduction doesn't have to restore the prior interest rate. So even if a rate was increased 10 percent, a review could result in a 1 percent scaleback.
Banks also have some wiggle room in the factors they use to conduct reviews. They can either base a review on the original reason for the rate hike, such as market conditions. Or they can determine whether the rate is in line with their current interest rates for new customers.
That leeway means rate hike reviews likely won't bring consumers too much relief, said Bowne of Consumers Union.
Also note that such reviews are not required for cards with variable rates, which rise and fall with a certain benchmark, such as the prime rate.
Inactivity fees 
New protection:
 These fees will be banned regardless of how they're dressed up. For example, an annual fee that's waived if a customer spends a certain amount is still an inactivity fee.
Gap to watch: There's still a reason to keep a card active, even if by making a small purchase here and there: Banks can still close inactive accounts. That could hurt your credit score depending on how long you've had the account and your broader financial standing.
This happened to many customers during the credit crunch, as card issuers looked to limit their exposure to risk by closing unprofitable accounts.

Friday, May 4, 2012

Why Bookkeeping Services Are Important For Business

Every business such as small, mid and large generates day to day some financial transaction and if you need to keeping all the financial transaction records include purchase, sales, income, and payment by an individual or organization so, bookkeeping is helpful to keeping all the financial transaction records properly for your business.
With the proper bookkeeper service, business proprietors should be worry-free. Accountants and Bookkeepers will manage the tasks involving to financial transactions including recording income and expenditure, drafting bank reconciliation statements, handling invoices, as well as handling payroll.
When you run a small business, also from home or a small rented office space, one of the things you must do is keep perfect bookkeeping records. If your business not generates proper financial records so, you can get some problem in your business. Therefore bookkeeping is significant if you run your core business smoothly. These records aren't presently for the government's tax information - it lets you know how your business is doing financially. In order to keep the most perfect records likely, the common of individuals will use bookkeeping software instead of paper documents. Now a day many other companies prefer bookkeeping software. Bookkeeping software is really useful to manage each and every financial transaction records accurately and without mistakes.
Advanced Bookkeeping Software Such as:
• QuickBooks
• Peachtree
• Quicken
• NetSuite
• LaCerte
• Sage Line 50
• Property Ware
• Rent Manager
Bookkeeping or keeping the books, as it is more generally identified, is the procedure of maintaining advanced as well as perfect business financial records. In other words bookkeeping can also be definite, as a procedure for monitoring the inflow and outflow of economic funds. Appropriate bookkeeping assists a business to handle its cash flow more efficiently. It also assists when preparation of potential developments for a business.

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Tuesday, May 1, 2012

The Importance of Financial Planning

Why is financial planning important? It ensures that you have money available to meet your present needs and put money away for the future. Some people are really good at being organized and planning, so financial planning comes easy to them. The rest of us might struggle with keeping organized and making good financial decisions. We'd rather go out and spend money on what we want right now rather than saving money for the future and avoiding getting into debt.
Financial planning actually makes life a lot easier. There is big payoff in sitting down and creating a budget, setting goals and determining how you will use your finances. It allows you to put money into savings to use in the future or in case of emergency. You can build a large retirement fund that will allow you to really enjoy your life when you are older.
By following a budget and setting goals, you can create plans for saving up for the things that you really want. So instead of buying things on credit and collecting large balances on your credit card, you can put money away each month until you can pay for what you want. This will help you to avoid debt. Debt can be very detrimental and you can become a slave to using money you earn to pay off debts. With financial planning you can avoid the burden of debt and enjoy the comforts of being in debt to no one.
Financial planning will create a secure family situation and a comfortable living situation. When you are putting money into savings you can use the money to invest and earn even more money. You can watch your money grow, enjoy your current life, and look forward to a bright future. Take the time for financial planning and get on the road to success. Save money, stay out of debt, and enjoy the comforts of being financially secure.

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