Wedding Bells? Marriage and Taxes.
Mar 08, 2016
Getting married in 2016? While you’re talking over your wedding plans, you may want to discuss something else that’s important: your income taxes.
Tax withholding. You will have a choice of whether to have taxes withheld from your pay at the married or higher single rate. You should also take into account your family income and any dependents. The withholding calculator on the IRS website can help you make the decision.
Tax-filing status. Married filing jointly generally provides the greatest benefit to both spouses. However, there may be circumstances when married filing separately is a better option. Ask your tax preparer for help.
Your expectations. Do you want to break even, get a refund, or owe a little at tax time? Talk to your future spouse about a withholding strategy that will work for both of you. Just be sure you have enough tax withheld to avoid a penalty.
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The Value Of A Chart of Accounts
Mar 07, 2016
How important is a chart of accounts? Does it matter what is in your chart of accounts? Does it make you more profitable or better at what you do? I am curious to hear your answers. I would tend to think some business owners would argue a chart of accounts is irrelevant and does not affect the profitability of your business. However, I say, not so fast!
Obviously, having a chart doesn’t necessarily add money to your pockets. However, correctly structuring your chart of accounts can aid in your profitability. Of course, there is more to it than just having the chart of accounts, it must be correctly utilized for optimum outcomes.
Having the essential accounts (i.e. direct costs and overhead accounts) and correctly managing them will provide you with invaluable information. For example, you are able to determine your gross margin and your profitability. With such data, you can make quality business decisions to improve or maintain your level of profitability. Without such accounts and without recording the appropriate information, it is impossible to have a handle on your gross profit.
In addition, utilizing a reasonably accurate chart of accounts can provide information from which to calculate many accounting ratios. These ratios can be used to benchmark your company in comparison with other businesses in the industry. As a result, improvements can be identified to ensure your business is competitive in your market.
Furthermore, an accurate chart of accounts can provide insight to be used for better decision making. Comparing your accounts over periods can help you identify and predict trends and downturns. You can be prepared to take the necessary actions to ensure you maintain or even enhance your profitability during periods of historical growth.
With that being said, I would caution against constantly modifying your chart of accounts. There may be times when you believe there is better information available which could be true. However, if you are regularly altering your accounts then you will lose the ability to analyze comparable data.
Next time you think it’s just a chart of accounts, think again!
Categories: Cost Accounting
Business Continuity Plan. Be Prepared.
Mar 03, 2016
What if disaster strikes your business? An estimated 25% of businesses don’t reopen after a major disaster strikes.* Having a business continuity plan can help improve your odds of recovering.
The basic plan
The strategy behind a business continuity (or disaster recovery) plan is straightforward: Identify the various risks that could disrupt your business, look at how each operation could be affected and identify appropriate recovery actions.
Make sure you have a list of employees ready with phone numbers, e-mail addresses and emergency family contacts for communication purposes. If any of your employees can work from home, include that information in your personnel list. You’ll need a similar list of customers, suppliers and other vendors. Social networking tools may be especially helpful for keeping in touch during and after a disaster.
Risk protection
Having the proper insurance is key to protecting your business — at all times. In addition to property and casualty insurance, most small businesses carry disability, key-person life insurance and business interruption insurance. And make sure your buy-sell agreement is up to date, including the life insurance policies that fund it. Meet with your financial professional for a complete review.
Maintaining operations
If your building has to be evacuated, you’ll need an alternative site. Talk with other business owners in your vicinity about locating and equipping a facility that can be shared in case of an emergency. You may be able to limit physical damage by taking some preemptive steps (e.g., having a generator and a pump on hand).
Protecting data
A disaster could damage or destroy your computer equipment and wipe out your data, so take precautions. Invest in surge protectors and arrange for secure storage by transmitting data to a remote server or backing up daily to storage media that can be kept off site.
Protecting your business
If you think your business is too small to need a plan or that it will take too long to create one, just think about how much you stand to lose by not having one. Meet with your financial professional for a full review.
- www.sba.gov/content/disaster-planning
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Business Decisions: Taking The Necessary Time To Evaluate
Mar 02, 2016
We apologize for our lack of posting. Bill and I have been busy working on an engagement to determine if a given business location should be shut down. As it stands, the location is not profitable. It would be easy to say, if it is not profitable eliminate the location and stop adding to loss. However, it is not quite that simple. I’m sure any business owner can think of a time when you considered scraping an idea, but then it ended up being profitable.
This is not to say if you have a product line, a customer, or even a process which is not producing a profit that you should continue on. Instead, do not be so quick to react regardless of the decision you make. It is imperative to take the appropriate time to perform the necessary analysis to determine if there is a different method or approach to be taken. Sometimes it is not the idea that is poor, it is the execution.
These are not always easy decisions to be made. Any business decision always has impact, whether it be positive or negative. Taking the time to analyze and reflect gives you an opportunity to evaluate various scenarios and determine what is best for your business. I for one think it’s quite exciting to peel back the layers and have all the relevant information in front of you.
You may discover there is a different method to run a location, or way to cut costs, or even increase sales. Without doing a proper analysis, how do you know? Also consider what could be lost if you stop doing what you’re doing. Are there credits you are currently able to receive which may be eliminate? Are there losses to take advantage of that would be lost?
Do not just give up without a comprehensive review and analysis of all possible scenarios.
Categories: Cost Accounting
Tax Tips: Review Your Return Before Filing
Mar 01, 2016
Everyone makes mistakes, but making a mistake on your income-tax return can cost you. It could delay your refund, boost your tax bill, require an amended return or even trigger an audit. Before you submit your return electronically or put it in the mail, double-check to make sure you haven’t made any errors.
Simple slip ups
Many tax-return mistakes are simple ones. Ensure that you’ve entered the correct name, address and Social Security number for every person listed on your return. Another frequent error is to enter the right information on the wrong line. So it pays to go through your return line by line.
Clear up confusion
It’s important that you use the right filing status. If you’re not sure which filing status is right for you, use the interactive tool “What is My Filing Status?” on www.irs.gov. You can also check the IRS website to figure out who you can claim as a dependent. Once you determine who qualifies as your dependent(s), verify that you have checked the appropriate exemption boxes for your personal, spousal and dependency exemptions.
Correctly calculate credits and deductions
If you’re claiming any credits, such as the dependent care credit, you need to follow the instructions carefully. And check that you have completed the necessary forms or schedules. If you’re taking the standard deduction, verify that you are claiming the correct one. You can use the chart in the Form 1040 Instructions or use the interactive tool “How Much is My Standard Deduction?” on www.irs.gov.
Check your math
It’s very easy and common to make simple math errors while preparing your tax return. It’s a good idea to double-check that you’ve added and subtracted all numbers correctly and that you haven’t transposed any numbers. Ensure that you used the right column on the tax table when figuring out your tax.
Final details matter
Don’t be in such a rush to finish your return that you forget a few final, simple steps. If you’re filing a paper return, verify that you (and your spouse if it’s a joint return) have signed and dated the return. Attach Copy B of each Form W-2 that you received from your employers. Attach each Form 1099-R that shows federal tax withholding. And attach all other necessary schedules and forms in sequence number order. Make a copy of the return and all attachments for your own records. Use the correct mailing address from your tax form instructions, and include a check or money order if you owe tax. And, finally, check that you put sufficient postage on your envelope.
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