As
an owner and/or manager, you probably spend a lot of time monitoring
business operations and dealing with everyday problems. But a
longer-term approach is also useful. Just as an annual checkup from your
physician helps monitor and manage your personal health, an annual
checkup can do the same for your business.
Here are tips to get started.
1. Insurance coverage.
Instead of automatically writing a check to renew insurance policies
when they come due, sit down with your agent. Review your business
operations, focusing on any changes. Discuss types of risk that could
arise. Ask about new developments in business insurance. Use your
agent's expertise to identify risk areas and suggest suitable coverage.
2. Tax strategy.
Consider adjusting taxable earnings for the year, perhaps by
accelerating expenses or delaying income at year-end. If your business
reports on the cash basis, you could boost 2015 deductions by declaring
and paying bonuses in December rather than in early January. Deferred
invoicing or early purchases can also reduce your 2015 tax bill.
3. Customer survey.
Track customer satisfaction with an online survey. Focus on questions
that reveal how well your company performs in areas such as prompt
service, staff responsiveness, and understanding of customers' problems.
Ask your customers for insight on potential new products or services,
and let them know how much you value their business.
4. Marketing review. Are your current methods and channels working well, or are you simply doing what you've always done?
5. Succession planning.
Do you have a specific plan for each key managerial position, including
yourself? Are you prepared for a short-term absence or a permanent
vacancy? Your plan might point out the necessity of promoting from
within or recruiting externally.
6. Banking relationships.
Meet with your banker. Ask about new products or services that could
help your company. Address service concerns or problems that occurred
during the year. Look for ways to reduce idle cash, boost interest
earned, and improve cash flows.
An annual business checkup can
help you evaluate current performance, better manage and execute future
operations, and provide a plan for keeping your business on track. If
you need assistance, give us a call at 814.288.1544.
Barnes Saly & Company P.C.
Interesting tax tips, articles & information.
Monday, December 28, 2015
Monday, December 21, 2015
Get a head start on your Form 1099 reporting
No matter what type of business you operate, January is busy. You're
trying to get your business off to a good start in the new year, you're
closing the books on last year, and you have to complete payroll and
1099 forms by month-end. Why not make time this month to get a head
start on at least one of those chores?
You can lay the groundwork now for a common information return known as "Form 1099-MISC, Miscellaneous Income." You use Form 1099-MISC to report payments to non-employees. The list of payments includes fees to independent contractors for services, such as consulting, web designing, accounting, and legal. Generally, you don't need to report amounts you pay to corporations, but there are exceptions. For example, you must report payments to all law firms, whether the firm is incorporated or not.
Here's the information you need to start assembling to complete Form 1099-MISC: the name and address of vendors you paid in the course of your business, the taxpayer identification number of each vendor, and verification of corporate status. The best way to collect this information is to use "Form W-9, Request for Taxpayer Identification Number (TIN) and Certification." Send a copy to all vendors and ask them to complete and return the form to you. When you get the form back, keep it with your records. The IRS doesn't need a copy.
In order to save time in the future, establish a policy to request Form W-9 from a new vendor whenever you sign a contract.
Contact our office at 814.288.1544 if you need more information.
You can lay the groundwork now for a common information return known as "Form 1099-MISC, Miscellaneous Income." You use Form 1099-MISC to report payments to non-employees. The list of payments includes fees to independent contractors for services, such as consulting, web designing, accounting, and legal. Generally, you don't need to report amounts you pay to corporations, but there are exceptions. For example, you must report payments to all law firms, whether the firm is incorporated or not.
Here's the information you need to start assembling to complete Form 1099-MISC: the name and address of vendors you paid in the course of your business, the taxpayer identification number of each vendor, and verification of corporate status. The best way to collect this information is to use "Form W-9, Request for Taxpayer Identification Number (TIN) and Certification." Send a copy to all vendors and ask them to complete and return the form to you. When you get the form back, keep it with your records. The IRS doesn't need a copy.
In order to save time in the future, establish a policy to request Form W-9 from a new vendor whenever you sign a contract.
Contact our office at 814.288.1544 if you need more information.
Monday, December 14, 2015
Give a gift that will last a lifetime
Financial gifts can bestow benefits for many years to come.
Here are options to consider.
● Fund an IRA. Give your children or grandchildren an early start on a comfortable retirement. For 2015, you can contribute the lower of $5,500 or the earned income of the child to an IRA.
● Fund a 529 education account. Contributions to a Section 529 college savings plan grow tax-free and withdrawals are tax-free when used to pay qualified education expenses of the account beneficiary.
● Fund a Coverdell education savings account. You can contribute up to $2,000 annually to a Coverdell. These IRA-like accounts grow tax-free, though the total amount of your gift may be limited, depending on your income.
● Fund a custodial account. Want to encourage an interest in saving and investing? Buy shares in a mutual fund and combine the gift with a book on investing. Your child can watch the investment grow over time and enjoy dividend payouts too. Modest amounts of investment income can be tax-free to children, although the kiddie tax may apply at higher levels.
Call us at 814.288.1544 to review the tax issues related to these financial gifts.
Here are options to consider.
● Fund an IRA. Give your children or grandchildren an early start on a comfortable retirement. For 2015, you can contribute the lower of $5,500 or the earned income of the child to an IRA.
● Fund a 529 education account. Contributions to a Section 529 college savings plan grow tax-free and withdrawals are tax-free when used to pay qualified education expenses of the account beneficiary.
● Fund a Coverdell education savings account. You can contribute up to $2,000 annually to a Coverdell. These IRA-like accounts grow tax-free, though the total amount of your gift may be limited, depending on your income.
● Fund a custodial account. Want to encourage an interest in saving and investing? Buy shares in a mutual fund and combine the gift with a book on investing. Your child can watch the investment grow over time and enjoy dividend payouts too. Modest amounts of investment income can be tax-free to children, although the kiddie tax may apply at higher levels.
Call us at 814.288.1544 to review the tax issues related to these financial gifts.
Friday, December 11, 2015
Do you know who you're giving to?
Many charities use your donations wisely. Unfortunately, others spend
too much of your contribution on fundraising and administrative
expenses. Some even misrepresent themselves and solicit your money for
phony causes. In today's world, investigating a charity before you make a
donation is wise. Here's a checklist of precautions.
● Request written documentation about the charity's mission and how your contribution will be spent. Ask for proof that your donation is tax deductible. If a charity is reluctant to provide information, think twice about making a gift.
● When you receive a phone solicitation, the caller must provide his or her name, the name of the person or entity on whose behalf the call is being made, and a telephone number or address at which that person or entity can be contacted. If a caller refuses to give you this information, hang up. Report the call to local authorities to help protect others.
● Be wary about giving your credit card number over the phone. Instead, consider mailing your contribution once you've verified that the charity is legitimate and that it represents a cause you'd like to support.
● Just because an organization gives you a receipt for your records doesn't mean the organization is tax-exempt or that your contribution is tax-deductible. To find out if an organization is exempt from federal income tax and how much of your contributions to it are tax deductible, visit the IRS website at https://apps.irs.gov/app/eos.
Asking the right questions and obtaining information from and about a charity is the only way you can be sure your contribution will be used to benefit the causes and people you want to support. If we can help you sort the legitimate from the fake, give us a call at 814.288.1544.
● Request written documentation about the charity's mission and how your contribution will be spent. Ask for proof that your donation is tax deductible. If a charity is reluctant to provide information, think twice about making a gift.
● When you receive a phone solicitation, the caller must provide his or her name, the name of the person or entity on whose behalf the call is being made, and a telephone number or address at which that person or entity can be contacted. If a caller refuses to give you this information, hang up. Report the call to local authorities to help protect others.
● Be wary about giving your credit card number over the phone. Instead, consider mailing your contribution once you've verified that the charity is legitimate and that it represents a cause you'd like to support.
● Just because an organization gives you a receipt for your records doesn't mean the organization is tax-exempt or that your contribution is tax-deductible. To find out if an organization is exempt from federal income tax and how much of your contributions to it are tax deductible, visit the IRS website at https://apps.irs.gov/app/eos.
Asking the right questions and obtaining information from and about a charity is the only way you can be sure your contribution will be used to benefit the causes and people you want to support. If we can help you sort the legitimate from the fake, give us a call at 814.288.1544.
Monday, December 7, 2015
Take control of holiday spending
Exchanging gifts, entertaining family and friends, and extending
goodwill to others are the activities that make holidays joyful. But
sometimes the enjoyment is followed by financial headaches. January's
bank statements and credit card bills bring the unhappy realization that
you lost control of your finances.
How can you prevent this financial hangover? Start with a budget. Estimate the cost of what you plan to purchase. Include gifts, holiday decorations, entertaining, and special events. If the total cost is manageable, stick to your budget as you shop.
But what if the cost grows – and grows some more? There's no need to resort to miserly behavior to trim that out-of-control gift list. One option is to draw names of family members and give one nice gift to each person, rather than multiple small gifts to everyone. Elderly relatives might appreciate "gift certificates" that can be redeemed for your help with home or garden chores. Other cost-saving ideas: make or bake gifts instead of buying them; give combined gifts from parents and children instead of individual gifts; agree on a spending limit with close friends.
While you no doubt want to splurge on the kids during this time of year, don't feel you have to give your children every gift they ask for. When they make their list, have them prioritize the things they really want. At the store, take a lesson from your own childhood, when your favorite gifts were simple toys that encouraged you to use your imagination.
Remember, too, the holidays are more than gift-receiving time. Create a family tradition of choosing and wrapping a present for those less fortunate. Encourage your children to make gifts for family and friends. Arrange family outings and fun activities so the holidays become a series of enjoyable events.
An emphasis on holiday experiences in place of shopping extravaganzas will let you enjoy the season more – both this month and next, when the bills come due.
How can you prevent this financial hangover? Start with a budget. Estimate the cost of what you plan to purchase. Include gifts, holiday decorations, entertaining, and special events. If the total cost is manageable, stick to your budget as you shop.
But what if the cost grows – and grows some more? There's no need to resort to miserly behavior to trim that out-of-control gift list. One option is to draw names of family members and give one nice gift to each person, rather than multiple small gifts to everyone. Elderly relatives might appreciate "gift certificates" that can be redeemed for your help with home or garden chores. Other cost-saving ideas: make or bake gifts instead of buying them; give combined gifts from parents and children instead of individual gifts; agree on a spending limit with close friends.
While you no doubt want to splurge on the kids during this time of year, don't feel you have to give your children every gift they ask for. When they make their list, have them prioritize the things they really want. At the store, take a lesson from your own childhood, when your favorite gifts were simple toys that encouraged you to use your imagination.
Remember, too, the holidays are more than gift-receiving time. Create a family tradition of choosing and wrapping a present for those less fortunate. Encourage your children to make gifts for family and friends. Arrange family outings and fun activities so the holidays become a series of enjoyable events.
An emphasis on holiday experiences in place of shopping extravaganzas will let you enjoy the season more – both this month and next, when the bills come due.
Monday, November 30, 2015
Take precautions to avoid gift card fraud
Gift
cards are a convenient way to give your friends and loved ones "just the
right thing" at holiday time. They also give thieves an opportunity to
make off with your money, according to a public service announcement issued by
the Federal Bureau of Investigation.
How
can you protect yourself from gift card scams? Here are pointers.
•
Buy directly from reputable stores. If you're getting a restaurant gift card,
stop by the restaurant in person or visit their web site. That goes for
airlines and big box stores too.
•
Check reviews of sellers of gift cards in online auctions. There's a reason
someone's selling the card at a discounted price – it may be stolen or
counterfeit. Are you willing to take the risk?
•
Examine the card. Before purchasing a gift card, inspect the front and back for
tampering. Some cards have PIN codes that must be exposed before use. Make sure
the PIN is still hidden.
•
Register the card. Some issuers let you register the card at the store's web
site. By registering, you'll be able to check your balance on a regular basis
and identify any misuse.
Monday, November 23, 2015
Need money to pay bills? Raiding your 401(k) is not a good idea
When
you're short of cash, raiding your 401(k) plan may seem like a good idea. Here
are two reasons why it isn't.
Penalties and taxes. If you're
not at least 59½ years old, you'll be hit with a 10% penalty for early
withdrawals except in certain limited cases, and the money you withdraw will be
taxed at your regular tax rate.
Lost opportunity. If your
401(k) earns an annual return of 5% over the next 30 years, an account with a
balance of $50,000 could grow to over $215,000. A withdrawal taken and spent
today will cost you that growth.
Bottom
line: If possible, find other ways to pay your bills, even if that means
contributing less to your 401(k) in the short term. While it's wise to match
funds your company provides, you might consider temporarily reducing
contributions that exceed the matching amount.
What
about loans? A 401(k) loan also has drawbacks. Again, money that's not in your
account won't grow. In addition, if you lose your job, you'll have to repay the
outstanding loan balance or face tax penalties.
If you need assistance with
financial issues, give us a call.
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