Monday, July 29, 2013

Six Things To Ask Your Tax Preparer

Even though tax season is over, it will return again in future years and the same issues may pop up as in the past. If you do your own taxes, you can ask yourself the same questions when you prepare them to see if any of the ideas apply to you. This article serves as a handy reference of things to have at your fingertips for any tax season.
There are some assumptions being made here which will be stated in this paragraph. The tax rules being assumed here are the Canadian Tax Code, using Ontario as the province levying the taxes. These ideas can be applied to the other provinces of Canada, but always check with the Canada Revenue Agency or applicable tax agency for changes, which occur frequently. These concepts can be applied to other countries, but the same caveat applies. The situation referred to here as a personal income tax situation. For self-employment or any kind of business, some of the rules may be different.
Does my refund depend on the income taxes I have paid throughout the year? The answer is yes. The government will only give you money as a refund if you have paid income taxes during the year, or you paid more than the amount of income taxes you "should pay" according to the tax calculations. The refund is calculated only on your taxable income, and not on other money you receive from the government. Examples of money that would not be taxed are lottery winnings or gifts. Other monies that are not taxed are credits like the GST/HST credit, Ontario Trillium Benefit, or the Child Tax Benefit. What this means is that if you are thinking of claiming a credit, or putting money into an RRSP, you should check the money you earned during the year and see how much taxes you have actually paid. The taxes in question here are only the income taxes - not property taxes, HST or taxes in the form of registrations or fees. How do you know if you are paying income taxes? Your pay stub will show the taxes being deducted. If you have a casual job, a temporary job or self-employment, there may not be any taxes deducted because you are either not expected to make much money, or you are expected to pay all the taxes when you file them at the end of the year. If you haven't paid any income taxes throughout the year, do not expect a refund at tax time.
Can my tax return be changed in a following year? The answer is yes. When would you do this? If you discover a credit that you could have claimed after the fact, but did not claim it, you can file for an adjustment and have the return recalculated at any time. Many people believe that once a tax return is calculated that it is carved in stone. This simply is not true, however it is easier to claim credits in the current year versus going back into previous years. The rules sometimes change if you are going back to previous years versus claiming in the current year because adjustments may affect credits that you received, or because the income used to calculate the credits would be changed. You can also file for an adjustment if you made a mistake, or if you something happened in a later year which affects the tax returns of prior years. An example of this would be a tuition amount from going to school that was not claimed in the year in occurred.
Do I have to file taxes by the April 30th deadline if I am getting a refund? The answer is no in most cases. If you are receiving a refund, you can usually file after the deadline and not have any issues with paying interest or penalties. This is because interest will not be charged when the government owes you money. The ideal thing to do however if you are getting a refund is to file taxes well in advance of the April 30th deadline. You will get the money sooner, not be in long lineups, will not have as many mistakes on your tax return, and will likely receive the money faster because the government is not as busy processing returns. If for some reason you cannot file taxes by April 30th such as being out of town for example - you can file them after April 30th, but you may have to pay interest or penalties if you owe money to the government.
Should I file taxes if I don't owe any money and I am not getting a refund? The answer is generally yes. If you are not paying taxes or getting a refund, filing taxes on time would be advantageous for you if you are receiving credits from the government. Examples of these credits are the GST/HST credit, the Ontario Trillium Benefit, and the Canada Child Tax Benefit. Whenever you receive money from the government, you should keep your records with them up to date and accurate. If you file taxes late, or have issues with your records, credits may get withheld or reduced because if there is a possibility that you may owe the government money, you will have delays receiving the money.
Should I keep track of carry forward amounts? The answer is yes. A carry forward amount is a credit that would allow you to get taxes paid back in a future year. Examples of this are tuition fees or RRSP contribution room. If you go to school in 2010 as an example, and you did not earn much money in 2010, you can carry forward that tuition credit to the following year. You can use the credit in 2011, 2012 or any other year until the credit is used up. The same applies for RRSP contribution room. If you do not contribute to an RRSP in 2010, the room is still available. You can put money in 2011, 2012 or future years until the room is used up. Keep the documents that show what you have left until the room or situation has been used to offset taxes that you would have paid. Bring this information to your tax preparer so they can update whatever tax credit was started in previous years. The good news is that the government keeps track of carry forwards in the Notice of Assessment statement that is given to you after filing your taxes. Therefore, it is not mandatory that you have to keep track of these carry forwards, but it is easier for you if you do.
Is getting a refund a good thing at the end of the tax year? The answer is that it depends. In a given tax year, for whatever money you make, you will pay a given amount of taxes by April 30th. You may pay more taxes during the year and then get some of it back at the end of the year, or pay less in taxes during the year and then have to pay more at the end of the year. Either way, the same amount of money is paid throughout the year, but the timing is different. You can influence the refund by paying taxes earlier, or getting more deductions which will be accounted for later in the year. You can get more deductions using popular methods like RRSP contributions, tuition credits, medical expenses or business expenses. If this option is not available for you, you can ask your employer to take more taxes off each pay cheque, thereby paying taxes in advance. This would generate a refund if you paid more taxes than you should by the end of the tax year. Why would you do this? The majority of people like to get a refund instead of paying taxes at the end of the tax year. Two reasons for this are that saving money is difficult, or if it is difficult to anticipate how much money will be needed to pay the tax bill at the end of the year. If this is your situation, you can essentially get the government to hold money for you until tax time, and then get some of your money back as a refund. If saving money is not an issue, you are better to pay as little tax as possible and pay more at tax time, because you can invest the money during the year.
Taxes are on ongoing exercise, and the more you know what will happen, the better prepared you will be when doing taxes.

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Friday, July 26, 2013

Simplified Home Office Deduction

The IRS's new, simplified option for claiming a home office deduction greatly reduces paperwork and recordkeeping, but some restrictions apply.

Tuesday, July 23, 2013

No Deduction Left Behind: 4 Tips to Win Next Tax Season

April 2014 is far ahead of us, but when it comes to getting strategized for tax season, there's no time like the present. For small businesses, tax season can feel like a dreaded time. There are so many complications involved, and it can be difficult to find good answers.
When you think of taxes in terms of your cash flow, you may feel as if the two don't go together. It's true, these two things can definitely work against one another, but if you know a few little-known strategies for tax season success, you'll find yourself ahead of the curve.
Leave no deduction behind and no strategy unimplemented! Read on for four tips on how to win next tax season!
1. Write Off Obsolete Inventory
Think about what you no longer sell, because the products are damaged or obsolete. It can either be coaching program software, a PDF guide, or even physical goods. This is a good tax write-off to make, because you've taken a loss in your income, and you'll have to pay fewer taxes in April 2014. Work with an accountant to get this filing process done right.
2. Find a Tax Advisor and Talk with Others
As with anything in business, it helps to talk! Think of taxes as something you share in common with just about everyone. Work with a tax advisor to explore strategies and options that soften the blow to your cash flow. And, especially if you're starting out in the entrepreneurial world, talk with other business owners about their experiences. Tax talk isn't always fun, but you'll enjoy common ground with others.
3. Forecast Your Income
It sounds difficult to know how much you're going to make in a year, but think about how much you've grown, and create a conservative estimate for how much you think your business will be worth. (I hope it's A LOT!) Once you've done that, you can develop an effective planning strategy that works best for you.
4. Work the Government's Tax Department
Know when taxes are due, even if you have a tax adviser or accountant. Remember, any financial burdens will be on you, if there is a mistake. It's a bad feeling to watch your profits disappear when taxes are due. Avoid having to make unexpected payments or penalties by working with the Tax branch, being completely forthcoming, and getting proactive.
Business Tip:
Do you work from home? Write off your home office as a deduction!

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Saturday, July 20, 2013

Letting You Know How Outsourcing Bookkeeping Could Boost Your Small Enterprise

Bookkeeping work is difficult, lengthy and sensitive. It entails accurate and constant record-keeping of all financial transactions that take place during business hours. It must also include any other transaction that could occur outside the business premises or during the weekends. Every transaction should be recorded as it appears on the source document. Have you come across the term outsource bookkeeping services yet?
If not, you could be missing a great solution for your small enterprise. Those who outsource bookkeeping services have peace of mind and are happy about their business performance. Outsourcing allows you to delegate difficult tasks to an outsider. This outsider could be a freelancer or a bookkeeping firm. Many people, including me, would advice you to stick to bookkeeping firms. These are duly registered according to USA business laws and have a tangible license to proof their legitimacy.
As you seek to outsource bookkeeping services, remember to scrutinize your business properly. Perhaps there is more work than you think that needs to be done quickly. Besides, you must have some goals that you wish to achieve through a great independent bookkeeper. There must be benefits to outsourcing that you desire to obtain. For instance, farming out excess work could help unlock your time and freedom. Instead of sitting in the office all day supervising a few employees, you could dismiss those whose skills will be rendered redundant by outsourcing. After they are gone, your managerial burden will become more manageable.
Because your time will also be freed, you can attend more business seminars, workshops, conferences and meetings. In other words, you can now focus on the core areas of your small enterprise. To outsource bookkeeping services will also change your normal office overheads. Independent bookkeepers have their offices and they take care of their bills, salaries and other costs. They do not need your office furniture, computers, software, electricity or any other facility. What they will ask for is their service fee. At the end of the month, you will have saved money that is normally consumed by the bookkeeping office.
The money you normally spend because of that office can be used for marketing. If the business is marketed more, then it will receive more customers, more transactions and more money. If your business grows abruptly, because of effective marketing, you can outsource bookkeeping services to third parties. They normally have a big team of professionals. They are experienced with different industries and will be glad to assist you. Like those who outsource bookkeeping services, you need value for your money.
As much as farming out work is thought to reduce your operational costs, it could not go as planned if you are not careful. Some bookkeepers could be too expensive in the long-run even if their prices may seem fair to you. Cheap is always expensive in the end. Instead of choosing to outsource bookkeeping services on the basis of price, consider quality. What is the use of paying little money for a task that would later on be repeated in your office?

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Wednesday, July 17, 2013

Why Is It Important For You to Prioritize Tax Preparation?

As a business owner, there are a lot of things that would bug you when establishing a company. This would entail a lot of hard work and can be a very tiring endeavor. However, there is a need for you to prioritize such kinds of dealings in order for you to achieve success in whatever business you plan on having. Here are some of the reasons why it would be beneficial for your business to take tax preparation services seriously.
Tax preparation can increase your profit and lessen your financial issues.
When you put this task first by deciding to hire expert professionals to handle your financial documentation and reporting needs, you will be have a better view of your business. With the assessments and evaluations made by these accountants, you can formulate new business strategies to fill for what you have lacked in dealing with your business recently.
Aside from that, these proficient workers provide service like no other. They will be able to generate deductibles from what seems to be an impossible finance listing. They can also make miracles in filing lesser returns. Who knows? You might even get cash reimbursements if you're accounting firm does an awesome job.
Tax preparation services can give you advice and recommend suggestions that can boost your business.
To attain full blast increase in your earnings, you need people who will guide you and work with you along the way. These business associates and accountants can definitely provide you with the best recommendations to push you ahead of your competitors. Their insights are very helpful and should not be neglected as they are sure to work in your favor.
Prioritizing tax preparation can give you a vision of what your business will be in the future.
It is very important for you to target goals in order to guarantee milestones for your business. You will surely be able to put your plans into fruition if you have tax preparer that will do their best to give you accurate analysis of your financial standing. Your business in the future relies on what you have been doing from the start. And so, you will be able to clear things so your business will be in a safe place to stand through the test of time.
These are just some of the reasons. Just be careful in selecting an accounting firm to carry out your tax preparation needs and you're good to go.

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Sunday, July 14, 2013

The Major Advantages of Using Professional Tax Preparation Services

There is a major emphasis on convenience in our fast moving society. It seems that the less work we have to do because of automation, the more content we seem to be. Due to the busy lives of many individuals that stretch their time between family, work and social activities time-saving strategies are becoming more valued. That is the main reason that convenience has become a valued luxury. Many people are willing to try almost anything to cut down on time spent doing unbearable tasks or chores. This is where doing your own taxes can be a pain in the butt.
We all accept that fact that we are required by law to do our taxes and unless you want to go to prison there is no way to avoid it. Due to the inevitability of doing taxes you might as well automate the process and save yourself the time and effort. The way to make your life as easy as possible is to use the professional services of a tax preparer. This is something that many individuals have been utilizing for a long time. It is hard to ignore that, while we are in love with the internet age, old fashioned tax preparation services are still tremendously useful.
It is not difficult to find a local service that can help you with your tax preparation. It probably be easier than you think to find a tax preparer around tax season. You will have no choice but to see their offers for services all over the newspapers, radio and tv. Advertising for tax preparation services are necessary because most people want to avoid taxes as long as possible. Therefore it is very important that we are constantly reminded that tax time has arrived. If you ever are running behind in doing your taxes a tax preparation service can really save you some frustration and anxiety.
However, before you drop off a shoebox full of receipts and W2's you need to remember that you need to carefully prepare before you consult with a tax preparation service. However, don't get stressed out about getting ready for the tax plunge, because you won't have to do too much work. Just make sure that you have all of your tax and financial documentation for the previous year and receipts if you plan on utilizing the valuable deductions. They are necessary you want the tax preparer to prepare your taxes correctly.

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Thursday, July 11, 2013

In-House Bookkeeping Vs Outsourced Bookkeeping Services

Most businesses rely on an in-house bookkeeper to handle their bookkeeping needs. Usually, this in-house bookkeeper is an office assistant who handles bookkeeping in addition to various other tasks. Having bookkeeping handled by non-specialists is error-prone and expensive especially when you can outsource bookkeeping at a fraction of the cost while dramatically improving its quality. How is that possible, you may ask?
Until recently, outsourced bookkeeping was only feasible for the largest businesses. The advent of the Internet and access to a global pool of virtual resources has made outsourcing feasible for even small businesses. Anyone anywhere with access to a computer and Internet can provide bookkeeping services.
Outsourcing enables specialization and quality improvement not just with bookkeeping but throughout the business. The quality of bookkeeping benefits from access to a rich pool of virtual bookkeepers. Quality of other processes in the business improve due to more time that is now available. As a result, outsourcing enables the business to focus on what it does best and allows the service provider to deliver what they do best. So, outsourcing improves quality by enabling specialization throughout the business.
Outsourcing offers significant cost savings. By having access to a rich pool of talented virtual bookkeepers across the globe which includes low cost countries like India, the business can cut costs from lower hourly rates and from lesser number of hours it takes the bookkeeper complete tasks.
Outsourced bookkeeping also reduces overhead. With an in-house assistant, you usually have to provide an office desk with computer and pay the assistant whether or not there is actual work. Such pay includes salary, vacation time, sick time, social security, medicare and healthcare. With an outsourced bookkeeper, you only pay for hours you use and there is no additional overhead.
Outsourcing reduces business liability in two ways. First, by letting a third party handle the books, any errors do not result in criminal prosecution as the business can easily point their fingers at the virtual bookkeeper. Second, having a specialist handle the bookkeeping drastically reduces the number of errors and associated liabilities.
The cost savings from outsourcing bookkeeping, can be used to lower end prices for customers and/or improve profit margin. This cost advantage enables the business to compete better.
As you can see, outsourcing bookkeeping offers some significant benefits. The biggest challenges are around security and quality. This is where picking a bookkeeping services provider with an extensive positive track record as opposed to getting someone off the street may help.

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Monday, July 8, 2013

Lien Withdrawal

Set up a direct deposit installment agreement for a quicker lien notice withdrawal.

Friday, July 5, 2013

Why Hire a Professional Tax Preparer for Filing Tax Returns

This article looks at the reasons why small and even bigger businesses must hire professional CPAs instead of using tax return software for filing returns. Many ordinary businessmen do not know the pitfalls that await them once they use software for filing the returns. Business owners and all other people responsible for filing business taxes must read this article to know the difference between the two ways of filing tax return.
Why to get assistance from a certified public accountant for filing tax returns?
Whether your business is located in Virginia or any other state of the US, you must ensure that its tax returns are filed year end. There are many advantages of hiring a professional CPA for tax preparation. Let us discuss these advantages.
Ever-changing tax law
Every year all the tax laws revise. It is very difficult for the software vendors to immediately incorporate all the changes in their software. However, certified public accountants can easily comply with the new additions. One reason why many small business owners do not try to file tax returns for themselves is change in tax laws. Therefore, the biggest advantage of getting your returns prepared by CPAs is accommodating of all new changes.
Double-checking for mistakes
Tax preparation is an error prone process. There are many different types of calculations involved and software can also commit mistakes. However, CPAs usually calculate tax by software but also check it manually for double verification. This further decreases the chances of errors in filing tax returns.
Tax refunds
Usually it is very difficult for the software to tell you whether you have any tax refunds to claim or not. But certified public accountants tell you rightaway if there are any tax refunds that you can claim on your tax.
Handling complexity
The tax returns can get very complicated at times. Ordinary business owners are not able to handle all the different adjustments that need to be made in filing a complete return. CPA professionals can handle even complicated tax matters without getting lost into the complexities.
Subjective judgement
Tax return software can only make calculations. It cannot give any opinion to the business owner or management about what to do. On the other hand, professional CPAs can help businesses minimize tax liabilities and given them practical advice beneficial for many future years.
Depend on qualified CPAs only
Small and medium sized business owners often tend to rely on just accountants. They do not look into the fact that their accountants are certified or not. There are many advantages of working with a qualified certified public accountant. An uncertified accountant will not be able to handle complex accounting matters. He will also fail to fully understand the various tax laws that need compliance during tax preparation.

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