How Long Should I Keep my Tax Records?
Jun 10, 2014
Many people ask this question and their files are full of tax papers and receipts. You need to make sure the papers are kept long enough in case the IRS sends a tax notice, but do you really need to keep 20 years worth? The IRS recommends different years for different situations.
- A normal tax return with no special circumstances or a refund received – 3 years from the date you filed the return
- A tax return with either a bad debt deduction or a loss reported from worthless securities – 7 years from the date filed
- All employment tax records – 4 years after the tax was due or paid
- All records for property and other assets purchased and are recording depreciation or amortization, you must keep these records until you sell or dispose of the property.
- If you did not report income that you should have reported – 6 years
- Or if you did not have to file a return or filed a fraudulent return – records should be kept indefinitely, but we would hope that you are not filing fraudulent returns!
That seems confusing having to check the tax returns to see if there were special situations that you would need to keep longer than a more recent return. William Vaughan Company uses a general record retention guideline of 7 years for all tax returns and work papers. This seems easier to remember.
The IRS expects the tax payers to be able to prove any of the income or deductions for your returns. The burden of proof information includes documents such as W-2’s, 1099’s, bills, canceled checks, receipts, and credit card statements. Additional evidence is required for auto expenses, travel, entertainment and gifts. Keep in mind that many of the cash register receipts may start to fade over time. It might be helpful to either make a copy of the receipts or prepare an Excel spreadsheet with the date, store, amount, and a description of what was purchased and keep with the receipts.
You can clean out much of your old tax paperwork, but it is always interesting to look back at a 20 year old return and compare it to the current year.
Sandra Stone, Accountant
Categories: Uncategorized
Are you a Strong Dental Practice Leader?
Jun 05, 2014
A leader builds trust by considering the “good of all” when making decisions. Leaders do not abuse their power, but build trust by using it properly. Trust fosters unity, which contributes to openly sharing information and creates a solid team that supports each other. Trust is based on the respect and expectations of a leader who cares and acts with compassion in a most positive way. With trust there is: honesty, integrity, fairness and compassion which produces good relationships.
Essentials to ensure strong leadership:
Lead by example — Pay close attention to the reactions of your staff to what you say or do, how you treat others, and how you react to things. You will notice that you have a great impact on total team performance, for better or worse.
Create and share a vision statement — Having a vision of where you want the practice to be in three to five years will help you get there. Putting it in writing and share it regularly with team members.
Delegate— Letting go is essential! It will free your time for income-producing dentistry and team members will respond positively, as long as you provide the needed training and tools to succeed.
Training — As practice leader, you must make sure that everyone on the team has the skills they need. Use a combination of shadowing to train or cross-train staff members, and role-play with scripts, on and offsite training days, and continuing education courses.
Demand excellence — Ensuring success in the dental economy requires setting your practice apart from others by excelling in all aspects of patient care and customer service.
Communication – As a leader, your team looks to you for advice and guidance. It’s imperative that you communicate with them openly and often. Communication is the key to success.
If you strive to excel at these principles of leadership, you will be on your way to being a great leader. With great leadership comes great rewards….
Categories: Healthcare & Dentistry
Basic Training for Future Management Leaders
Jun 05, 2014
I was talking to client a few days ago concerning a training program for future leaders of the company. The CFO was charged with the responsibility to see that the management trainees were instructed with a basic understanding of the cost systems and the other management reporting systems that this company had developed. Most of the management trainees had some basic accounting background, although, I’m sure none considered themselves cost accountants or, for that matter, management accountants. However, the current management team is fully aware how important it is for a successful manager today to have a grasp of the cost and management reporting that exists in the company.
The CFO and I were thinking through what sources of education there were in the topics of cost accounting and management reporting. Our goal was to find a few precise courses that would assist these trainees in developing the skills necessary to successfully navigate their way through the cost and management reporting systems. As the conversation continued we were able to determine several management level courses at a local college that have some relevancy to what they were attempting to explain to the trainees. However, it quickly became apparent that much of the training would have to be done with experience, since the issues were so specific to the company, that it would be difficult to find a course that was very relevant to their needs.
This entire process reminded me of a conversation I had a few months ago with a senior manager, in the same company, who had gone through a refresher course in management training. This course was designed to give more seasoned management leaders the opportunity to improve their skills. In this case, the trainees were given relatively short periods of instruction, usually four hours or less on a given technical topic. Then they were given two days of operating experience to implement what they had studied which was then followed by another four hour session where they were debriefed on what they had discovered. The debriefing was often times the most educational, as they discussed what they had learned trying to implement what they wanted, and what they had to do to modify their behavior to be successful. This senior member of management thought that process of formal, hands-on training, followed by a debriefing was the most effective training he had ever received. In fact he thought that that training process could be implemented in a wide variety of cases with very good success.
As the CFO and I considered many options through the conversations we had about this new training program needed, we decided to pursue this kind of hands-on training for the management team. We would have the trainees receive formal training, perhaps in a structured course, then when they got back to their office, they would be given more hands-on experience. They would receive reports and other actual results of operations related to what they had just learned about. They would attempt to sort through the information they received to try to come up with a recommended course of action. Those courses of action would then be implemented, the results reported, and the entire process would be reviewed. In order to provide the highest level of success, the subject ranges would be narrow so that we could focus on one very specific technical issue at a time, and the overall timeframe within which they have to complete the entire process would be very short.
Categories: Cost Accounting
Trusts — Filling a Role in Your Financial Plan
Jun 04, 2014
Would a trust help you accomplish some of your financial and estate planning objectives? Trusts can be used to address a variety of concerns, including protecting and distributing your assets, managing taxes, and achieving your charitable goals. The assets in a trust are managed according to your wishes by the trustee you choose.
Not Just for the Wealthy
Trusts are very flexible arrangements and offer many different planning options that can be tailored to fit your situation. Here are some ways a trust can be used for your benefit or for the benefit of others.
You can establish a trust to:
• Manage the distribution of assets to beneficiaries based on criteria you establish
• Manage assets and provide recordkeeping for financially inexperienced beneficiaries
• Provide for management of your financial affairs if you become ill or incapacitated
• Protect financial interests of your children from a previous marriage
• Secure funds to provide for special needs dependents, including disabled children, elderly parents, or other relatives
• Minimize exposure to estate taxes and/or probate costs
• Benefit a charity while still providing for loved ones
• Keep the affairs of a business private and help to preserve it for family members
A Helping Hand
If you do decide to establish a trust, make sure you have confidence in a potential trustee’s ability to properly manage your affairs before you make a selection. You might want to consider naming an institution such as ours as trustee or co-trustee to obtain the benefits of professional management services and an unbiased perspective.
Categories: Uncategorized
Variable Interest Entity Updates
May 27, 2014
Do you have consolidated financial statements due to a variable interest entity (VIE)? If so, there is a possibility you no longer have to consolidate the VIE into your financial statements. The FASB has issued Accounting Standards Update (ASU) No. 2014-07, Applying Variable Interest Entities Guidance to Common Control Leasing Arrangements. This guidance addresses the consolidation of lessors in certain common control leasing arrangements. ASU No. 2014-07 allows a private company to elect not to apply the variable interest entity guidance to a lessor under common control if certain conditions are met.
These conditions include the following:
- The private company lessee and the lessor are under common control;
- The private company lessee has a leasing arrangement with the lessor;
- Substantially all of the activity between the private company lessee and the lessor is related to the leasing activities (including supporting leasing activities) between those two companies; and
- If the private company lessee explicitly guarantees or provides collateral for any obligation of the lessor related to the asset leased by the private company, then the principal amount of the obligation at inception does not exceed the value of the asset leased by the private company from the lessor.
If these four criterion are met, and the private company elects not to apply the variable interest entity guidance, certain disclosures about the lessor and the leasing arrangement are required. For further details, contact your William Vaughan Company representative.
By: Ryan Leininger, CPA
Categories: Uncategorized