6 Reason Why Small Businesses Should Keep Good Records

Everyone in business must keep records.   Record keeping is not solely about fulfilling regulations or legal requirements.  Record keeping is also about understanding your business, to monitor the progress of your business, now and in the future.   In addition, good records can increase the likelihood of the success your small business.

Here are 6 Reason Why Small Businesses Should Keep Good Records:

Detail Tracking of Business Income Expenses.  As a business owner, you will receive income such as money or property from many sources and business expenses which can range from advertising to utilities and everything in between.  It will require you to track a significant amount of information and documentation, to properly identify your customers, sales, inventory and deductible expenses.  By keeping track of all business expenses, you can take the largest tax deduction you are entitled to.  Without a proper record keeping system, tracking important details of your business may be impossible.

Keep your books up to date.  Small business owners need to know where their company stands daily, weekly, monthly, quarterly and annually.  Without this knowledge you have no control over your business.  Keeping your books up to date and accurate is the best remedy for your business’ financial health.  A bookkeeper can help manage your business and keep your finances on track.

Prepare Financial Statements.   Small businesses need good records to prepare accurate financial statements.  These include income (profit and loss) statement and balance sheets.  These statements can help you in dealing with your bank or creditors and help you manage your business. Financial Statements also can convince lenders, crowdfunders, or investors to fund your small business.

Growth.    Small businesses often operate with plans to eventually grow.  Start by committing time to outlining a  business plan for your business to grow and update your plan on a regular basis to address any changes.  A business plan is a road map and can help you find more growth opportunities and avoid common mistakes.

Legal Compliance.  Numerous federal laws require employers to create and retain various forms of employment records and in some instances, to make filing with governmental agencies.  The more employees a company has, the more record-keeping laws it will be obligated under.  The business owner is responsible for meeting your monthly, quarterly and annual federal, state, and city tax obligations. Your small business must file timely monthly, quarterly and annual tax returns.

Tax Preparation.   You need goods records to prepare your tax returns.  These records must support the income, expenses, and credits you report.  Generally, these are the same records you use to monitor your business and prepare your financial statements.  If the IRS examines any of your tax return, you may be asked to explain the items reported.  A complete set of records will speed up the examination.

8 Steps On Starting Your Small Business

You have finally decided to go on your own.  Congratulations!  Now what is your plan?   Do you have an accounting system in place?  How are you organized for tax purposes?  Do you have an updated business plan?

Here are 8 Steps on starting up your small business:

 Create a Plan and Write It Down: A plan can help you move forward, make decisions, and make your business successful. You might develop a fairly simple business plan at first as you first open your small business than elaborate as you prepare to approach bankers and investors.

Decide on a Business: When deciding on a business name research availability for that name then choose a business structure. Your small business can be a sole proprietorship, a partnership, a limited liability company (LLC) or a corporation. Depending on the complexity of your business, it may be worth investing in a consultation from an attorney or an accountant to ensure you are making the right structure choice and help to iron out all the details. This is not an area you want to get wrong.

Register your small business: This is the first step toward making it real. Get a Employer Identification Number (EIN) to identify your business. You will also need to get the proper business licenses and permits. There may be city, county, or state regulations as well.

Plan Your Finances – Starting a small business doesn’t require a lot of money, but it will involve some initial working capital to cover ongoing expenses before you are turning a profit. There are a number of ways you can fund your small business: family and friends, small business loans, angel investors and crowdfunding.

Choose Your Accounting System: One of the most important systems for a small business is an accounting system. Your accounting system is necessary in order to create and manage your budget, track your expenses and profits, conduct business with others and file your taxes. You can set up your account system yourself, or hire an accountant to take away some of the guesswork.

Set Up A Bank Account: One of the easiest ways to screw up your business accounting and tax reporting to the IRS is to commingle personal and business funds. Using a business account for all business transactions will eliminate that possibility.

Set Up Your Business Location: Whether you will have a home office, private office space or retail location, setting up a place of business is important. Make sure your business location works for the type of business you will be doing.

Promote Your Small Business: You will want to start with creating a marketing plan and explore many marketing ideas as possible so you can decide how to promote your business.

It’s a terrifying experience if you don’t have the support you need, hire an accountant to be your trusted advisor.

Save Time With Our Virtual Tax Prep

This year, don’t sit in a tax office for hours.  Instead, schedule a virtual appointment with a licensed and experienced tax professional at           T. Williams & Associates.
We can prepare your taxes over the phone when you upload your tax documents via your cell, fax or through our secure and encrypted client portal. Use our virtual tax prep services link to learn more.
Virtual Tax Prep
We understand that getting organized can be daunting. Email us at admin@twa-accountingservice.com for a complimentary Tax Checklist. It’s an easy way to make sure you have all the necessary documents and figures before you get started. When you’re ready, you can schedule an in-person or virtual appointment.
By the way, we love referrals. Everyone benefits! For each client you refer to us that files their taxes by April 18th, you get $25.
Don’t wait until it’s too late and start preparing your taxes now. T. Williams & Associates has worked with individuals, small businesses, home health care providers and State and Federal entities for over 17 years. Let us take care of your taxes and bookkeeping so you can focus on your 2018 goals.
We look forward to working with you.

Are there Tax Breaks for Military Families?

There are some special tax breaks for members of the military and their families. If you’re in this group, here are some tips:

 Moving expenses. Service members who are on active duty and move because of a permanent change of station can deduct the reasonable unreimbursed expenses of moving.

 Combat pay. Enlisted persons and warrant officers who serve in a combat zone for any part of a month can exclude all military pay for that month from their income. Officers also can exclude a limited amount of pay.

 Joint returns. Spouses who are not available to sign a joint income-tax return due to military duty may use a power of attorney or IRS Form 2848 to file the return.

During the transition to civilian life, you may be able to deduct certain job search and/or moving expenses. You should also remember to meet with your financial professional to make sure you have adequate insurance coverage.

For more help with individual or business taxes, connect with us today. Our team can help you with all your tax issues, large and small.

Be Sure to Take Advantage of Deductions for the Self Employed

Tax breaks can be a boon to the self-employed. If you own your own business — or are thinking about it — here are some tax deductions you may be eligible to claim.

Self-employment (SE) tax. When you’re self-employed, you have to pay SE taxes on your earnings instead of the Social Security and Medicare taxes that employees and employers pay. You’ll be able to deduct a portion of your SE taxes.

Health insurance. If you’re not eligible for coverage under a plan offered by your spouse’s employer, you can deduct the costs of health, dental, and long-term care insurance premiums paid for yourself, your spouse, and your dependent children. (Requirements apply.)

Office at home. You can deduct a percentage (usually based on square footage) of your mortgage or rent, utilities, property taxes, homeowners insurance, and home maintenance costs. Alternatively, you may use the “safe harbor” method, which allows a deduction of $5 per square foot (up to 300 square feet). But be careful — you must use the space regularly and exclusively for business to claim the deduction.

Thinking about retirement. Deductions for contributions to a tax-deferred retirement plan, such as a SEP-IRA, SIMPLE IRA, Keogh plan, or solo 401(k) plan, will reduce your current tax bill.

Talk and surf. You can deduct phone, fax, and Internet expenses directly related to your business.

Vehicle use. The cost of driving a car for business is deductible. You can use either the IRS standard mileage rate or your actual expenses to compute your deduction.

Interest. Interest on business loans and business purchases charged to a credit card is deductible.

Food, fun, and travel. You can generally deduct 50% of the cost of business meals and entertainment if you meet certain tax law requirements. Other business travel expenses, such as lodging, are 100% deductible.

Make sure you keep good records, and give us a call today if you have any questions.

Tax Time: Plan Ahead for 2018 to Avoid Refund Delays

Take steps now to ensure smooth processing of your 2017 tax return and avoid a delay in getting your refund next year.

Gather Documents
Making sure you have all your documents before your file your return, including your 2016 tax return. This includes Forms W-2 from employers, Forms 1099 from banks and other payers, and Forms 1095-A from the Marketplace for those claiming the Premium Tax Credit. Doing so will help avoid refund delays and the need to file an amended return later. Confirm that each employer, bank or other payer has a current mailing address.

Typically, these forms start arriving by mail in January. Check them over carefully, and if any of the information shown is inaccurate, contact the payer right away for a correction.
Taxpayers should keep a copy of their 2016 tax return and all supporting documents for a minimum of three years. Doing so will make it easier to fill out a 2017 return next year. In addition, taxpayers using a software product for the first time may need the Adjusted Gross Income (AGI) amount from their 2016 return to properly e-file their 2017 return.

Renew Expiring ITINs
Some people with an Individual Taxpayer Identification Number (ITIN) may need to renew it before the end of the year. Doing so promptly will avoid a refund delay and possible loss of key tax benefits.

Any ITIN not used on a tax return in the past three years will expire on Dec. 31, 2017. Similarly, any ITIN with middle digits 70, 71, 72 or 80 will also expire at the end of the year. Anyone with an expiring ITIN who plans to file a return in 2018 will need to renew it using Form W-7.

Taxpayers who fail to renew an ITIN before filing a tax return next year could face a delayed refund and may be ineligible for certain tax credits. For more information, visit the ITIN information page on IRS.gov.

Expect Some Refunds to Be Held
As always, the IRS cautions taxpayers not to rely on getting a refund by a certain date, especially when making major purchases or paying bills. Though the IRS issues more than nine out of 10 refunds in less than 21 days, some returns require further review.

For a Faster Refund, Choose e-file
Electronically filing a tax return is the most accurate way to prepare and file. Errors delay refunds and the easiest way to avoid them is to e-file. Nearly 90 percent of all returns are electronically filed. There are several e-file options:
• IRS Free File,
• Volunteer Income Tax Assistance and Tax Counseling for the Elderly programs,
• Commercial tax preparation software, or
• Tax professional.

Use Direct Deposit.
Combining direct deposit with electronic filing is the fastest way for a taxpayer to get their refund. With direct deposit, a refund goes directly into a taxpayer’s bank account. There’s no reason to worry about a lost, stolen or undeliverable refund check. Direct deposit saves taxpayer dollars.