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So far Administrator has created 175 blog entries.

Our Revised 2013 Referral Program

As many of you know, last year was our first year with our retail office. Things went well for the most part and we grew our client base pretty substantially from the days of when were just a “part time” virtual practice. But where did all that growth come from? Most of it was from our network of friends, family and clients graciously referring their colleagues to us.

While we had a pretty decent referral program in the past, this year we’ve decided to up the ante so to speak. This year we’re offering a program where the referrer can earn up to $200 an unlimited number of times. This is open to existing clients, new clients, friends and family of the practice – essentially anyone who respects us enough to send business our way.

So why are we doing this? Well, all of the details are outlined here, but the short answer is to reward those who think highly of us. If you’re willing put your reputation on the line by recommending our services, we’re willing to earn it, in more ways than one! But seriously, we want to give a little something back to those who continue to help us grow and move this practice forward. Besides, who couldn’t use more cash these days? Oh yeah, the Capital One baby…

By Administrator|2013-01-03T16:52:58-06:00January 3, 2013|Categories: General Ramblings|Tags: $200 referral program, IL tax referral program, tax referral program, wilson rogers referral program|Comments Off

Marketing Your Tax or Accounting Business

The main issue that all tax professionals face, is how to grow and promote their practice. In talking with many professionals over the years, their questions always seem to be the same:

How do I build up my clientele?
What is the best way to market my services?
How do I encourage more client referrals?
How much should I charge for services?

Recently, a question was posed in a forum we participate in regarding affordable ways to market a tax and accounting business. With that being said, we figured that we’d offer up our two cents on what we and others have had success with.

The first thing to keep in mind is that tax and accounting services typically have to be marketed in a manner different than consumable goods. We often tell people that if they were unexpectedly dropped off in a foreign country, they probably wouldn’t go to the phone book to look for their doctor, dentist or barber/hairstylist. Why? Because each of these services involves a “relationship component” so to speak. To find these providers, you will more than likely turn to a colleague and ask them for a recommendation or referral. This tends to be the same for a majority of consumers when they are searching for a new tax or accounting professional. With that being said, marketing for tax and accounting services needs to address two areas: relationship management and search optimization.

Relationship Management Unless you are starting from scratch, a good place to begin your marketing efforts is with your existing client base (no matter how large or small). Here are some ideas on how you can leverage your relationship with these individuals and hopefully yield an instant sales force.

Have a referral program. Everyone likes to be able to tell their friends that they have a “guy/girl” who can take care of them. If you do a good job, your clients will be more than willing to tell others about the wonderful service you offer. So make it easy for them. Develop a one page sell sheet, similar to this one, that gives them all of the information they need to refer you properly. Having a written description of who makes an ideal prospect and how your referral system works is a powerful way to get more qualified leads.
Reward those who make referrals. Mother always reminded you to say please and thank you. It’s good advice to follow this mantra when dealing with your referrals. Your reward doesn’t have to be expensive; it can be as simple as a thank you card or a $20 gift card. The key is to acknowledge that you appreciate the trust your referrer placed in you by giving someone their recommendation.
Routinely “touch” your clients and network. Many marketers will tell you that it often takes 7-9 “touches” before a prospective client will engage you for services. It’s also recommended that you communicate with your existing clients this frequently or even more so. Many of the “touches” used in our practice are not sales oriented at all. For instance, we send birthday/holiday cards to our clients and their spouses just to show we value our relationship. Additionally, we use a monthly newsletter to interact with our clients and remind them that we are there to serve them and their friends should the need arise. All in all, you just want to make sure that you are top of mind when someone asks anyone in your network for a tax/accounting service provider.

Search Optimization In this day and age, the web (not the yellow pages) is where people often turn if they don’t have a person who can offer them a recommendation (think a person who just moved to a new town). With that being said, you need to make sure that your marketing is “search optimized” to help drive traffic to a place where they can locate or interact with you. If you think of the web as a barrel where people bob for apples (and you/your competition are the apples) you want to make sure that you have as many apples in play as you can. Listed below are some ways that you can increase your apples so to speak.

Web page. With more people conducting web searches on the fly while they are out and about, make sure you web page works well with mobile devices such as smart phones and tablets. We’ve found that our site looks fine on a computer, but when it’s on a mobile device there are some issues (yeah, we’re working on it). Like they say, first impressions count and you want to make sure you are putting your best foot forward.
Google/Bing. These two sites offer services that will visibly highlight the location of your office on their page if you take the effort to set it up. Google Places and Bing Local will allow you to create a free listing complete with description, services, hours and a map of where you are located. True, you do need to wait for them to verify that you are the owner of the business (either by mail or phone) but it’s well worth the time to make it easier for prospects and clients to find you.
Blog. This is just another way for people to “stumble” across your existence. Mr. Rogers likes to write so it’s not too hard for him to come up with ideas or content for us to post on our blog. Plus, because the blog is search engine optimized, it often drives traffic to us and our website when people search for key words that are in some of our post. Do a Google search for “2013 tax season delay” and for some reason one of our posts is the first item you will see. Free publicity? We’ll take it any day.
Service provider sites. In addition to Google/Bing, there are some accounting specific sites that will let you set up a profile free of charge. One of our favorites is Teaspiller. There are also sites where you can pay for a listing; our favorite in this category is Bookkeepinghelp. Even if you only get one new client from each site, it’s pretty much 100% profit as you didn’t have to pay for the ad (outside of a little time to set it up) or very little in the case where you did have to pay.
Free media press. If you like to write articles or do interviews, you could get some free web and physical traffic by reaching out to your local media contacts. If you make yourself available as the “local expert” in taxes (particularly during tax season) you might get some news coverage. Media professionals always need someone whom that can turn to when there is a particular tax topic they need a comment or perspective on. Why not make that person yourself or your practice?

While each of the above individually will not send droves of clients to your door, when implemented as a comprehensive strategy, they will yield a constant stream of prospects. We’ve often said to other professionals, we don’t know ONE way to generate a hundred clients, but we do know HUNDREDS of ways to get one client. Hopefully the above has gotten your own marketing juices flowing. Until next time!

By Administrator|2020-09-21T12:30:50-06:00December 30, 2012|Categories: Business Talk|Tags: advertising services for my accounting business, advertising services for my tax business, how to market your accounting business, how to market your accounting firm, how to market your accounting practice|Comments Off

Tax Impact of being 1099 vs. a W2 Employee

So back in this post we reviewed how an employer goes about classifying a worker as either an employee or an independent contractor. However, what if you are on the receiving end of that classification? What is the financial and tax impact of receiving your pay either via W2 or 1099? In this post will follow the exploits of two workers, Suzy Salary and Contractor Chuck. To keep this example simple and straightforward, we’ll assume the following about both Suzy and Chuck:

Work similar jobs (with different companies)
Don’t have any pretax contributions coming out of their checks
Each make $100,000 per year
Are both single without any dependents and take the standard deduction
Didn’t have any Federal income taxes withheld from their checks (i.e. Suzy didn’t have these deducted from her check, but we’ll assume Social Security and Medicare were withheld)
IRS penalties don’t apply
We’ll ignore the whole 2% payroll holiday that has been in effect the past few years

Amount Earned The easiest difference to spot will be in the amount of their checks. Suzy will take home about $93,800 (due to combined 7.65% withholding of Social Security and Medicare) while Chuck will take home the full $100,000. However, it gets interesting when the two actually go to file their tax returns.

Self Employment Taxes The basic concept to remember with this is that when you work for someone, you and they split the Social Security and Medicare taxes equally (i.e. 7.65% for each of you). However, when you are self employed, you have to foot the whole bill or 13.3% up to income of $106,800. True you will see an adjustment on the 1^st page of your tax return (it’s labeled “Deductible part of self-employment tax”), however due to the nature of the calculations, it doesn’t yield you a true 50% benefit.

Bottom Line Tax Impact At the end of it all, Suzy will wind up paying about $18,957 in income taxes and $6,200 in Social Security and Medicare for a total of $25,157. Chuck on the other hand will pay $16,979 in income taxes and $12,283 in self employment for a total of $29,262. Total tax bill difference winds up costing about $4,105.

Why Bother Being 1099? If your employer gives you the option between the two, the W2 option will more than likely put you at ease. You won’t have to worry about setting cash aside for your taxes bills as your boss will simply withhold them. However, the truth of the matter is that most individuals who are “truly” considered contractors actually may pay a lower tax bill due to having expenses associated with earning their income. For example, a cable installer will typically have the cost of keeping up their vehicle, supplies necessary to perform the work as well possible office related expenses. In the end, they can deduct these allowable expenses on their return whereas an employee cannot.

So if faced with a choice of which type of way you would like to be paid, take the time to consult with your tax practitioner as they can advise you on the possible ramifications of your particular situation.

By Administrator|2012-12-24T13:15:58-06:00December 24, 2012|Categories: Tax Talk|Tags: 1099 vs. W2 tax example, bottom line tax difference 1099 vs. w2, employee, Independent Contractor, Payroll Taxes|Comments Off

The Unavoidable 2013 Tax Season Delay

Back in 2010, the IRS was forced to delay when it began processing tax returns due to late passing legislation made by Congress. In a recent letter from Acting Commissioner Steven Miller, who wrote to Representative Sander Levin, who sits on the House Ways and Means Committee, the IRS warned that this could be the case in early 2013. Why? Well, as Congress works on the Fiscal Cliff, there are two other pieces of legislation that must also be voted upon. As noted in Commissioner Miller’s letter, these are:

Whether the parameters of the alternative minimum tax are revised (referred to as “the AMT patch”)
Whether any already expired tax deductions are revived and made effective for 2012 (the “tax extenders”).

AMT Patch Of the two items, this one poses the more significant challenge for the IRS. AMT applies to individual taxpayers with incomes above specific thresholds set by law. For many years, Congress has been “indexing” these amounts for inflation to prevent taxpayers from being subject to AMT. If this is not done, or Congress delays doing it, under current law the thresholds revert to much lower levels for 2012 – $33,750 for individuals and $45,000 for married taxpayers filing jointly. At these levels, approximately 33 million taxpayers would pay AMT for tax year 2012 (with returns filed in the spring of 2013). This is about 28 million more taxpayers who would pay the AMT than if the exemption amounts were increased as in the past.

Tax Extenders At the end of 2011, a number of other tax provisions affecting individuals expired. These include tax deductions for educators’ out-of-pocket classroom expenses, tuition and related fees for higher education, and state and local sales taxes. The challenge for the IRS on these items is whether or not legislation will be passed to extend these provisions again.

So just how delayed could the filing season be? According to Commissioner Miller if the AMT patch is enacted before the end of 2012, there would be minimal delays to opening the 2013 tax filing season for most taxpayers. This is because the IRS has already programmed it’s systems as if the patch will be enacted. However, if the AMT patch is allowed to expire, the magnitude and complexity of the changes necessary to get the system ready could delay the filing season for impacted taxpayers until late March 2013, if not even later. Conversely, processing would only be delayed by about four weeks if Congress decides to revive and extend already expired tax provisions.

What This Means For You

Tell people to spread the word. For some taxpayers, the timing of when they file and receive their refunds is critical to their financial situations. Being informed that there could be delays regarding the above could impact items such as how Christmas spending is arranged for.
Be prepared for the possibility that tax return processing and the issuance of refunds may be delayed this upcoming 2013. While you may be able to file starting in January, the IRS may hold these returns in a queue, which could create a processing backlog. Depending on the size of this queue, returns that are filed in January may not be processed until a few weeks later, if not several.

Start to get your documents ready and file as soon as you have your information. Firstly, you want to get your information in early so that if a queue does manifest, you are on the top of it and not the bottom. Secondly, make your tax preparers life a little easier. While the start of the filing season may move, the April 15^th deadline will be the same as it is enacted by law. With that being said, it will be a stressful time for most preparers and many will be thankful if you “help them help you” so to speak.

Be patient throughout the process. A lot of what may happen is largely out of the control of your preparer, the tax software companies and even the IRS. So while it may be a little frustrating, realize that we will all get through it if we just take the advice of our friends Telepopmusik and just breathe.

01/03/13 Update: So on January 1st 2013 HR 8, the American Taxpayer Relief Act of 2012, was passed by the Senate and the House of Representatives. This bill makes the AMT issue noted above mute as they have permanently patched AMT so it doesn’t have to be done every year. They also passed some of the extenders as well.

Everyone is still awaiting definitive guidance from the IRS, but at this point in looks like filing may open late January or early February.

01/08/13 Update: So the IRS has issued IR-2013-2 and announced today it plans to open the 2013 filing season and begin processing individual income tax returns on Jan. 30.

The IRS will begin accepting tax returns on that date after updating forms and completing programming and testing of its processing systems. This will reflect the bulk of the late tax law changes enacted Jan. 2. The announcement means that the vast majority of tax filers — more than 120 million households — should be able to start filing tax returns starting Jan 30.

The IRS estimates that remaining households will be able to start filing in late February or into March because of the need for more extensive form and processing systems changes.

By Administrator|2020-09-16T12:00:51-06:00December 16, 2012|Categories: Tax Talk|Tags: 2013 tax season delay, AMT, AMT Patch, April 15th, Fiscal Cliff, Sander Levin, Steven Miller, tax season delayed until January 30th|Comments Off

My Offseason Vacation

Funny how time flies. About this time last year we were knee deep in trying to get our new office ready. Now I’m in the process of getting it all cleaned up and back in shape for our second season. But a lot has happened since we shuttered the doors for the summer. With that being said, I thought I should pen a note updating everyone on exactly what I’ve been up to since then.

Kinder Morgan

Well, back in April I landed a temp/contract job with a company called Kinder Morgan. For those unfamiliar with the name, Kinder Morgan is the largest midstream energy company and the third largest energy company (based on combined enterprise value) in North America. If you’ve ever driven down I-55 and seen a facility that looks like this then you’ve more than likely driven by their Argo terminal.

The company actually has many business segments ranging from pipelines (natural gas/products) to CO₂ and terminals. I was actually stationed at their Argo terminal which is basically a big liquid storage facility for anything and everything fuel related. The business is actually quite interesting and was certainly a departure from my manufacturing and service industry days. Initially I was brought on to help create some routine financial reporting based upon the Hyperion Essbase application. I was told that my time with them could be anywhere from a few months all the way up to a full six when I was scheduled to return to Wilson Rogers in December.

Well, the initial reporting was created within a month of me being there so I wasn’t sure what exactly would be next. However, I did wind up staying almost seven months and assisting with things ranging from budget reporting to a host of other things. But the best part of the gig had to be the people. Not since my days with the PCD team at PepsiCo had I had the opportunity to work with such an “eclectic” bunch. So to Ron, Brion, Steve, Flo, Angela, Asad, Keith, Lukas and Maureen (aka the mother of Mr. Spanky, who makes some mean hummus by the way) – it was a blast working with you all and thanks for the opportunity.

Cycling & Racing Bikes

Well some of you may have heard a little story about me breaking bones back in March. Via a boneheaded move that is not really worth writing about (as it’s not awesome and didn’t happen in a race) I managed to take a spill on my bike and break my wrist. This happened right during the height of tax season and required surgery, a titanium plate and about 8 screws to fix. To say that things were interesting during this time would probably be an understatement.

Well, the short story about my race season is that it was 1) delayed due to healing, 2) had its ups and downs and 3) was only somewhat similar to what I had hoped for. So to make up for that I decided to make it epic in other ways like riding 200+ miles to four states in a single day and taking 3^rd in my age group at the Illinois State Time Trial Championships.

Ben, Nikos, Ryan, Bill, Jared and Coach Randy showing off our hardware

Ms. Rogers Becomes Mrs. Rogers?

If the title has you confused then maybe this story will help straighten it all out. Typically in August, Aaronita and I head up to Michigan to visit my parents for a little relaxation and some bike racing. Well, this year the entire family was in Chicago on the date of this year’s Cherry Roubaix. Why? Because my little sister was getting married! The funny thing about it is that her fiancé Melvin actually had the last name of Rogers. Don’t worry, we already checked and no he’s not some long lost cousin! Guess her lack of name change will at least simplify things for her when it comes to her next tax return huh?

Melvin & Whitney Rogers

The original Mr. & Mrs. Rogers with the kids

All in all it was a good time and we’re happy to have Melvin as part of the family. As you can see from the picture below, Pilar also had a blast. Not only did she get to be the flower girl at her Aunts wedding, she also got to compete in her very first dance off!

Melvin’s brother Romey vs. Pilar in the infamous dance off

Vacations, Hurricanes and Weddings – Oh My!

In early November all eyes were on the east coast as hurricane Sandy threatened to make a mess of just about everything. This was important to our family as my sister-in-law Sonya and her fiancé Jason live in New York. What was even more pressing was that they were supposed to be getting married on November 4^th down in beautiful St. Thomas. Needless to say, they decided to catch an earlier flight so as to not get stranded by the storm. Good thing too as no one wanted to miss views and experiences like these:

Trunk Bay – St. John’s US Virgin Islands

Sonya & Jason on their special day

The St. Thomas trip was a blast and is probably the first “real” vacation that our family has taken in about a year. When you work for your own company, when you don’t work you don’t earn. But with that said, the trip was most certainly one for the memory books and we’re proud to add Jason to the family. Here is a shot of me with all my girls so to speak.

Judy, Aaronita, Pilar and Jared after the wedding

Getting Ready For Next Tax Season

So other than all the exciting stuff mentioned above, I was also busy working on building up the practice. While tax season is only a four month affair, there are always things that need to be done as we strive to grow. First there was the addition of some new sales reps to the firm. I’m pretty excited that they will represent the company well and continue to spread the word of what a wonderful practice we have. In the offseason we also added a monthly newsletter to our advertising arsenal. The response to it has been pretty good thus far, especially when you have a monthly contest where you’re giving away $50 gas cards!

Other things we worked on included some of the following:

Continued servicing of our growing number of bookkeeping clients
Increasing our advertising reach via supporting local church bulletins
Expanding our current client referral program with one we think will generate some real excitement come January (more on this to come in the next few weeks)
Renewing and expanding our partnership with EPS Financial as we strive to continue to offer economical and responsible financial products to those who are “unbanked”

So as you can see, my summer was filled with lots of activities, lots of fun, and lots of work. Now all we have to do is try and gauge how delayed the tax season will be due to the Fiscal Cliff and the IRS scrambling to decide which way to go with updating their system. Who said being in the tax field was boring? Until next time!

By Administrator|2020-09-16T11:23:07-06:00December 8, 2012|Categories: Who's The Boss?|Tags: Jared Rogers, Kinder Morgan, xXx Racing|Comments Off

2% Shareholders, S Corporations and Fringe Benefits

The IRS code section related to fringe benefits allows employers (in most cases) to deduct the cost of fringe benefits, while employees may exclude those amounts from their gross income. Employer paid health insurance costs are an example of such costs. However, while it seems like deducting health insurance premiums for a shareholder/employee of an S corporation should be a simple matter, only the tax law can make something that should be simple, complicated.

The problem goes back many years and arose soon after S corporations became part of tax law. Initially, S-corporations were viewed as similar to partnerships, and there was a prohibition on deducting certain fringe benefits of partners. Thus, a deduction was denied to S corporations for certain fringe benefits, most importantly health insurance, paid on behalf of S corporation shareholders. Well, not all shareholders, only those owning more than a 2% interest.

Approach. Health insurance of a 2% shareholder isn’t deductible by the corporation unless it’s included in the shareholder-employee’s income. Thus, the approach to make it a deductible expense by the corporation is to include the income on the shareholder’s W-2. At this point it’s a wash – the corporation gets a deduction and the shareholder has income (of course, the deduction is “passed through” to the shareholder). In the final step the shareholder deducts the premiums on his Form 1040, making the insurance premiums deductible.

Corporation or shareholder’s plan? What if the plan isn’t exactly 100% paid for by the corporation? The plan providing for coverage is established by the S corporation if:

The S corporation makes the premium payments for the health insurance policy covering the 2% shareholder-employee (and his or her spouse or dependents, if applicable) in the current taxable year, or
The 2% shareholder makes the premium payments and furnishes proof of the payment to the S corporation and the S corporation reimburses the shareholder-employee for the premium payments in the current tax year.

If the accident and health insurance premiums are not paid or reimbursed by the S corporation and included in the 2% shareholder-employee’s gross income, a plan providing medical care coverage for the shareholder is not established by the S corporation and the shareholder is not allowed the deduction.

In order for the shareholder to deduct the amount of the premiums, the S corporation must report the premiums paid or reimbursed as wages on the shareholder-employee’s Form W-2 in that same year. In addition, the shareholder must report the premium payments or reimbursements from the S corporation as gross income on his or her Form 1040.

Examples. It always helps when one has an example to clarify the various scenarios that may be encountered. In the examples below, Goofball Inc. is an S corporation and Jeb and Bobbi Joe are 2% shareholder-employees.

In 2012 Jeb, a shareholder in Goofball Inc., obtains an accident and health insurance policy in his name and makes the premium payments on the policy. Goofball makes no payments or reimbursements with respect to the premiums. In this case a plan providing medical care for Jeb has not been established by the S corporation and Jeb is not entitled to the deduction under Sec. 162(l).
In 2012 Goofball obtains a health insurance plan in the name of Goofball. The plan provides coverage for Jeb, his spouse, and dependents. Goofball makes all the premium payments to the insurance company. Goofball reports the amount of the premiums as wages on Jeb’s Form W-2 for 2012 and Jeb reports that amount as gross income on Form 1040 for 2012. In this case a plan for providing medical care for Jeb has been established by Goofball and Jeb is allowed the deduction under Sec. 162(l).
For 2012, Bobbi Joe obtains a health insurance policy in her name. Goofball makes all the premium payments to the insurance company. Goofball reports the amount of the premiums as wages on Bobbi Joe’s Form W-2 and Bobbi Joe reports that amount as gross income on Form 1040. In this case a plan providing medical care for Bobbi Joe has been established by Goofball and Bobbi Joe is allowed the deduction under Sec. 162(l).
For 2012, Bobbi Joe obtains a health insurance policy in her name. She makes the premium payments to the insurance company and furnishes proof of premium payment to Goofball. Goofball then reimburses Bobbi Joe for the premium payments. Goofball reports the amount of the premiums as wages on Bobbi Joe’s Form W-2 and Bobbi Joe reports that amount as gross income on Form 1040. In this case a plan providing medical care for Bobbi Joe has been established by Goofball and Bobbi Joe is allowed the deduction under Sec. 162(l).

By Administrator|2012-11-25T17:45:12-06:00November 25, 2012|Categories: Tax Talk|Tags: 2% shareholders, fringe benefits, health insurance premiums, s corporations, s corps|Comments Off

Why I Will be A Failure

Someone once asked me if I wanted to be great. My response was no, I wanted to be mediocre. I have no desire to be “great” in life; that takes too much time, effort and energy. I’d rather be a failure routinely and satisfactory on my best days. Matter of fact, when it comes time for me to reflect upon my life and what it has meant, I know I will deem myself a failure. Why? Because of these seven reasons:

I think there is a pre-established role for my life. My psychiatrist told me the reason I had problems with change was because of something called “agency.” Essentially, all of us humans like to believe that there is a reason or purpose for everything. So, we think, what if there’s a reason we are what we are — what if celestial agency has determined it so? Should we be messing with that? I think not. Who am I to recognize that the role of my life has only one true agent – myself?

Someone told me what I would be. I was told when I was younger that I would never amount to nothin’ in life. I mean, someone convinced me that I was what I was and I’d better just live with it because, well, that’s what I’ll always be. Too bad I never thought – really? Says who? Show me the chapter on predetermined stations in the cosmic rule book, please.

I don’t believe. I remember in the movie Star Wars the following conversation:

“Luke: I can’t believe it.

Yoda: That is why you fail.”

And this is a large reason why I fail – I don’t believe I can be great so why even try? I mean, we all know that positive things happen when we 1) believe, 2) act, 3) obtain positive/negative confirmation, 4) adjust and 5) repeat until success. I’ll just stop this equation at step one if I may.

I’m established in my career and that’s okay right? At this stage in my life things are good. But is established what I really want out of life? I mean, if “established” means I can’t reach beyond certain imposed parameters to achieve anything else that I truly want, then maybe it isn’t so useful after all. But since this is a personal choice, I’m going to say that I like the idea of “establishing” myself out of greater achievements.

I’m afraid of losing what I’ve built. True, I know that I can lose everything I’ve built through no fault of my own. Heck, there were people who lost everything they “built” via the financial meltdown of 2008 or Super Storm Sandy though no action of their own. However, I want to let the fear of losing everything stop me from reaching out for what I really want in life.

I don’t want to be a disrupter. The notion of disrupting anything – or being the water that breaks the rock – is scary to me. Disruption means that consistency, stability and certainty might get jettisoned for a time, and that puts my hard-wired internal defense system on high alert. Sometimes, though, you have to override the alarms and move ahead anyway. If you never do, you’ll never know what could happen. Unfortunately, I am okay with not knowing.

I have no idea where to go next. Even if I do want successes in life, I have no idea where to start. I mean, I’m too hardwired in my life to let things kind of just “flow” and figure themselves out. Maybe this has to do with my desire to deal with what is certain or known and dealing with “faith” is just a little too much for me. Never mind the fact that most of what is thrown at me in life is out of my control. I’ll just attempt to stay safe in my little cocoon rather than venture into the unknown with just a rough plan and a lot of “conviction.”

So, for the reasons above I am doomed to be a failure in life. However, don’t cry any tears for me as this is perfectly fine. I never really wanted to be a success – I’m personally more afraid of what my life would be like if I succeeded versus if I just fail like I am supposed to!

Sincerely,

The Failure

Author’s Note: The above is written in jest as the author (and it is presumed you the reader) would never intentionally strive to be a failure in life. However, if you prefer to not seek success in your life, you may print the above letter out and replace your name at the bottom. That way you can give/send it to anyone who asks why you don’t want to be great in life!

By Administrator|2012-11-19T13:27:58-06:00November 19, 2012|Categories: General Ramblings|Tags: failure, reasons we fail, success|Comments Off

Just what exactly is the Fiscal Cliff?

Lately there has been a lot of talk about the impending Fiscal Cliff and its potential to derail the current fragile US economy. However, there hasn’t been a lot of talk explaining exactly what it is or how it even came to be. In this post we’ll take a deeper look at the situation to determine if things are really all “doom and gloom” or if things are just being blown out of proportion.

The Fiscal Cliff Explained

In short, the “Fiscal Cliff” is a term used to describe the conundrum that the U.S. government will face at the end of 2012, when the terms of the Budget Control Act of 2011 are scheduled to go into effect. The following provisions of current law are what have brought us to this point:

Expiration of the Bush tax cuts extended by President Obama in the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010;
Across-the-board spending cuts (“sequestration”) to most discretionary programs as directed by the Budget Control Act of 2011;
Reversion of the Alternative Minimum Tax thresholds to their 2000 tax year levels;
Expiration of measures delaying the Medicare Sustainable Growth Rate from going into effect (the “doc fix”), most recently extended by the Middle Class Tax Relief and Job Creation Act of 2012 (MCTRJCA);
Expiration of the 2% Social Security payroll tax cut, most recently extended by MCTRJCA;
Expiration of federal unemployment benefits, most recently extended by MCTRJCA and
New taxes imposed by the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010.

Possible Effects of the Fiscal Cliff

The major concern behind all the “doom and gloom” talk is that if the current laws slated for 2013 go into effect, the impact on the economy could be dramatic. While the combination of higher taxes and spending cuts would reduce the deficit by an estimated $487 billion, the Congressional Budget Office (CBO) estimates that gross domestic product (GDP) would be cut by four percentage points in 2013, sending the economy into a recession (i.e., negative growth). At the same time, it predicts unemployment would rise by almost a full percentage point, with a loss of about two million jobs. The nice little info graphic below illustrates all the components in play and what happens if lawmakers let all the policies go into effect (left side) vs. if some type of tax and spending concessions are made (right side).

Dealing with the Cliff

Generally speaking, U.S. lawmakers have three choices to deal with the Fiscal Cliff, each of which brings about a different outcome as it pertains to economic growth and budget deficits:

They can let the current policy scheduled for the beginning of 2013 – which features a number of tax increases and spending cuts that are expected to weigh heavily on growth and possibly drive the economy back into a recession – go into effect. The plus side: the deficit, as a percentage of GDP, would be cut in half.
They can cancel some or all of the scheduled tax increases and spending cuts, which would add to the deficit and increase the odds that the United States could face a crisis similar to that which is occurring in Europe. The flip side of this, of course, is that the United States’ debt will continue to grow.
They could take a middle course, opting for an approach that would address the budget issues to a limited extent, but that would have a more modest impact on growth.

Anticipated Outcome?

Given how late Congress acted in 2011 regarding the debt ceiling (i.e. item number two under “The Fiscal Cliff Explained” above), the cost of indecision is likely to have an effect on the economy before 2013 even begins. The CBO anticipates that a lack of resolution will cause households and businesses to begin changing their spending in anticipation of the changes, possible reducing GDP before 2012 is even over.

Having said this, it’s important to keep in mind that while the term “cliff” indicates an immediate disaster, the impact of the changes will be gradual at first. What’s more, Congress can act to change laws retroactively after the deadline. As a result, the fiscal cliff won’t necessarily be an impediment to growth even if Congress doesn’t address the issue until after 2013 has already begun.

However, one thing to note is that the US debt picture is not in a good place currently. Pictured below are some nice graphs on projected budget deficits and historic US federal debt levels to help put things in perspective. We can only hope that our politicians and lawmakers will sit down NOW and make those difficult decisions to help right a situation that could potentially get much worse in the years to come.

Budget deficits, projected through 2022. The “CBO Baseline” shows the effects of the fiscal cliff under current law. The “Alternative Scenario” represents what would happen if Congress extends the Bush tax cuts and repeals the Budget Control Act-mandated spending reductions beyond the end of 2012.

US federal debt from 1940 to 2022. The right side of the diagram projects what would happen to the debt if Congress (a) allows current laws to take effect and reduce the deficit (the baseline) or (b) extends the current policies, such as keeping tax cuts in place (the alternative).

By Administrator|2012-11-15T12:52:41-06:00November 15, 2012|Categories: Accounting Talk|Tags: budget deficit, CBO, debt, Fiscal Cliff, Sequestration|Comments Off

Dealing With Identity Theft

Occasionally bad things happen to good people. Despite all of our efforts to secure that data which is so precious to us, sometimes it winds up in the wrong people’s hands. Where do you begin when you think that you may be susceptible to, or worse the victim of, identity fraud? Read on to find out some of the critical first steps that one should take.

Notify credit bureaus and establish fraud alerts. If you have credit cards, the first stop is to report the situation to the fraud department of the three credit reporting companies – Experian, Equifax, and TransUnion. When you notify one bureau that you are at risk of being a victim of identity theft, it will notify the other two for you. Placing the fraud alert on your file means that it will be flagged and that creditors are required to call you before extending credit. The initial alert is valid for only 90 days, however you can request that it be extended to 7 years. You must have evidence of attempts to open fraudulent accounts and an identity theft report (police report) to establish the seven-year alert. You may cancel the fraud alerts at any time.

Contact banking institutions. If your ATM or debit card has been stolen or compromised, report it immediately. ATM and debit card transactions are subject to the Electronic Fund Transfer Act (15 USC §1693). Even if you are a victim of identity theft, your liability for charges can increase the longer the crime goes unreported. For more on EFTA and your liability for fraudulent use of your ATM/Debit Cards, see the following FTC guide. If you have had checks stolen or bank accounts set up fraudulently, ask your bank to report it to ChexSystems, a consumer reporting agency that compiles reports on checking accounts. Also, place a security alert on your file

Dealing with brokerage accounts. You do not have the same protections against loss with brokerage accounts as you do with credit and debit card or bank accounts. The Securities Investor Protection Corporation restores customer funds only when a brokerage firm fails. If an identity thief or other fraudster targets your brokerage account, refer to your account agreement for information on what to do. Immediately report the incident to the brokerage company and notify the Securities and Exchange Commission. Also notify the Financial Industry Regulatory Association. To protect against fraud, put a password on each of your investment accounts.

Social Security number (SSN) misuse. The Social Security Administration (SSA) does not in most cases provide assistance to identity theft victims. But be sure to contact the SSA Inspector General to report Social Security benefit fraud, employment fraud, or welfare fraud.

Social Security Administration online complaint form: www.socialsecurity.gov/oig
SSA fraud hotline: (800) 269-0271
By mail: SSA Fraud Hotline, P.O. Box 17768, Baltimore, MD 21235

SSN misuse and tax returns. If you are a victim of tax-related identity theft (or a potential victim because someone has wrongfully obtained your Social Security number), you must file Form 14039, Identity Theft Affidavit, with the IRS. Once the form is filed and your identity verified, then the IRS will send you IRS Letter 4869CS, which will provide you with a six-digit identity protection personal identification number (IP PIN) and instructions for its use. For electronic returns, the software will indicate where to insert the IP PIN. For paper returns, enter the IP PIN in the six boxes to the right of the spouse’s occupation in the signature section.

Unlike your SSN, the ID PIN is not a permanent identification number. Rather, it is like the security code found on the back of most credit cards. The ID PIN you receive in one year will be valid only for returns filed for that tax year. For more information on what to do with tax identity theft, please refer to this one page guide.

Keep good records and monitor your credit files. In dealing with the authorities and financial companies, keep a log of all conversations, including dates, names, and phone numbers. Note the time you spent and any expenses incurred in case you are able to seek restitution at a later date. You may be able to obtain tax deductions for theft-related expenses (consult your accountant). Make sure you confirm all conversations in writing and send correspondence using certified mail with return receipt requested. Keep copies of all letters and documents and actively monitor your credit files going forward. If you need times on organizing your case check out these helpful sites:

FTC’s guide Take Charge

Identity Theft Resource Center

By Administrator|2022-04-20T17:51:26-06:00November 7, 2012|Categories: Accounting Talk|Tags: credit card fraud, identity theft, SSN fraud, tax fraud|Comments Off

Hiring Your First Employee & Payroll Taxes

So, in this post we discussed the trials and tribulations of finding the perfect employee for your company. Now we’ll take a look at the tax implications so you keep yourself out of hot water with the regulators, or said another way, what ever employer should know BEFORE they hire their first employee.

Eligibility to Work in the United States. Every employer must verify that each new employee is legally eligible to work in the United States. You don’t want to run into problems later so have the employees you hire fill out Form I-9, Employment Eligibility Verification. You can also get their SSN at this stage.

Employee vs. Independent contractor. While you may want to classify a person as independent contractor to avoid the hassle of dealing with payroll taxes, make sure the classification is proper. Generally speaking, an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done. Not sure what your new hire will be? Check out this site for a little assistance.

Independent Contractors Agreement. If you do determine that the person who’ll work for you does qualify to be classified as an independent contractor, it’s a good idea to draft an agreement. This document should outline the duties they will/won’t perform, how they are compensated and the responsibilities with reporting their earnings to the IRS. This way you are protected in case the employee disagrees that they were an independent contractor or worse files a Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding.

Fill out Form W4. To know how much income tax to withhold from an employees’ wages, you should have them complete Form W-4, Employee’s Withholding Allowance Certificate. Ask all new employees to give you a signed Form W-4 when they start work. Make the form effective with the first wage payment. If the employee claims exemption from income tax withholding, they must indicate this on their W-4. The amount of income tax withholding must be based on filing status and withholding allowances as indicated on the form. If a new employee does not give you a completed Form W-4, the IRS recommends that you withhold tax as if he or she is single, with no withholding allowances.

Withholding & Matching Taxes. So as an employer you will act as a collector and depositor of taxes. You should withhold the proper amount of federal income tax based on the employees Form W4. Additionally, you are required to withhold social security and Medicare taxes from your employees’ wages and pay the employer’s share of these taxes. Generally speaking the employee AND employer tax rate for social security is 6.2% on wages while the tax rate for Medicare is 1.45% each for the employee and employer (2.9% total). All of the above is deposited via a system called EFTPS by the employer.

Reporting. In addition to withholding and depositing payroll taxes, employers must periodically report these amounts to the government. These are done via Form 940, 941 or 944. You may be asking yourself “What is the difference between Federal 940, 941 and 944 taxes?” 941 tax filings are submitted each quarter. 944 tax is the same as the 941, but is filed and paid on an annual basis. The IRS makes the determination on which tax form you will file and how often you need to deposit your tax withholdings depending on the size of your payroll. 940 tax is Federal Unemployment. Unless you are exempt, you are required to report/pay this tax on an annual basis in addition to your 941 or 944 taxes.

By Administrator|2020-09-16T11:19:36-06:00October 29, 2012|Categories: Tax Talk|Tags: Form 940, Form 941, Form I-9, Form W4, Independent Contractor, Payroll Taxes|Comments Off

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