Documenting Improvements to Real Property – Don’t get Screwed!

We often work with Companies constructing improvements to Real Property, including Commercial and Residential Real Estate that they own or lease. As we know,  these additions to the real property are essential in determining your investment in, or basis, in the property.  Down the road, when the Company taxpayer goes to sell the property, maintaining accurate records makes the difference between an optimal capital gain or loss calculation, and a less than optimal. We all know about the difference between these two.

Our clients rely on us to document to the California Board of Equalization (BOE), in order to establish the personal income tax adjusted basis of real property sold by them, based on information provided by the taxpayers’ external accountants, who tracked all costs and expenses of construction on the property and maintained bank and other financial records, receipts, and information.

When our clients rely on us to maintain the construction accoutning, the BOE always finds that the information compiled and provided by us, our client’s Accountants, was the most reliable.  The BOE notes that the evidence submitted by the Accountants  reflected amounts for capitalized construction loan interest and capitalized mortgage interest included in the adjusted basis reported by the taxpayers. Those amounts were tracked meticulously on a detailed schedule that reflected the exact amounts of interest that were paid and whether the taxpayers had claimed those mortgage interest payments as current year deductions or had capitalized those amounts. So, we do go the extra mile. We do provide exactly what is needed to support and defend our Client’s interests. So, contact us for your Real Estate Project. We’re Real Estate Experts, and we know exactly what the BOE, the IRS and the FTB is requiring. You’ll be so thankful, and so will we.

Use the Federal and State Tax Code to the Best of Your Advantage

Our business is built entirely on advising Entrepreneurs on profit and growth strategies, using accurate accounting and management reporting; and then we show them tax efficient investment plans and strategies to keep their wealth. In order to do this effectively, we structure our relationship with our Clients to meet regularly for review and updating of their plans and strategies so they fit into the present circumstances and goals. A big part of that is year-end timing and income/spending decisions to minimize the impact of taxes over the lifetime of the business. We can help your business succeed in these critical areas. We focus on achieving these goals for our Customers daily, so that when the time comes, we are ready to deliver results that matter to you. Please review our year-end Tax Guide, then drop me at note or place a call so we can set up a time to discuss your specific situation and requirements. You’ll be happy you did this, and your views about Accountants may change as well.

Peter P Cullen

peterc@coreperformance.net

949 478-4795

2016-year-end-tax-planning

Paying your Taxes has never been this easy!

April 4, 2016 · Posted in Accounting, Business Tips, Tax Planning · Comment 

The IRS offers several payment options for you to consider as the April tax deadline approaches.You can pay online, by phone or from your mobile device. Paying online is easy and secure. Here are a few of the options  available to you:

  1. When you’re e-filing your taxes, you can use the electronic funds withdrawal method. EFW allows you to e-file and pay from your bank account when you are using tax preparation software or a tax professional. Your can schedule your payment any time before your taxes are due.
  2. You can use IRS Direct Pay anytime to pay your taxes directly from your checking or savings accounts at no cost to you. You receive instant confirmation that your payment was submitted, and you can schedule your payment up to 30 days in advance.
  3. Another option is paying your taxes by phone or online through any of the secure debit and credit card processors. Though the IRS does not charge a fee for this service, the card processors do.
  4. There’s also the Electronic Federal Tax Payment System. It’s free, and it takes five to seven business days to enroll before you can make a payment. If you can’t pay in full, you may want to consider requesting a payment agreement. If you owe $50,000 or less in individual income taxes and can pay the full amount within 72 months or less, you can use the online payment agreement tool.
  5. There’s no need to call or write the IRS because you make the request directly from your computer. It’s easy, and your personal information is safe and secure. If you prefer to pay with your mobile device, use IRS2Go, the official mobile app of the IRS. IRS2Go provides easy access to the mobile-friendly payment options Direct Pay for free, and debit or credit card payments through an approved payment processor for a fee. You can download IRS2Go from Google Play, the Apple App Store or Amazon and make your payments when it’s convenient for you.
  6. Visit IRS.gov/Payments for easy and secure ways to pay your taxes. Electronic payment options are quick, easy, secure and much faster than mailing a check or money order. April 1, 2016 

Nominate Your Favorite Businesses for the 2016 Work Local Awards!


Work Local Awards - FBNominate Your Favorite Businesses for the 2016 Work Local Awards!

Core Performance is excited to announce to our friends and business partners the 2016 Work Local Awards, a celebration of the best local employers in the Bay Area.

The Work Local Awards shines the spotlight on the boutiques, cafes, nonprofits, startups, and all the local employers that make our local communities thrive.

The awards are presented by Localwise—the local job community in the Bay Area—in partnership with the Federal Reserve Bank of San Francisco, Kiva Zip, and more. Localwise is a mission-driven organization focused on helping local businesses hire great local people.

Share the love! Nominate your favorite local businesses today.

SUBMIT NOMINATIONS HERE 

 

We’re passionate about Small Businesses with less than 25 Employees !

Understanding the Small Business Health Care Tax Creditisplogo_premreseller

The Affordable Care Act includes the small business health care tax credit, which can benefit small employers who provide health coverage for their employees.

The small business health care tax credit benefits employers who:

  • have fewer than 25 full-time equivalent employees
  • pay an average wage of less than $51,600 a year
  • pay at least half of employee health insurance premiums

Here are some facts that will help you understand this tax credit and how it may affect your small business or tax-exempt organization:

  • Credit percentage is 50 percent of employer-paid premiums; for tax-exempt employers, the percentage is 35 percent.
  • Small employers may claim the credit for only two consecutive taxable years beginning in tax year 2014 and beyond.
  • For 2015, the credit is phased out beginning when average wages equal $25,800 and is fully phased out when average wages exceed $51,600. The average wage phase out is adjusted annually for inflation.
  • Generally, small employers are required to purchase a Qualified Health Plan from a Small Business Health Options Program Marketplace to be eligible to claim the credit.  Transition relief from this requirement is available to certain small employers.

Small employers may still be eligible to claim the tax credit for tax years prior to 2014.   Employers who were eligible to claim this credit for prior years – but did not do so – may consider if they are still eligible to amend prior year returns in order to claim the credit.

Gathering the following information will assist you in completing Form 8941,Credit for Small employer Health Insurance Premiums.

  • SHOP QHP documentation or letter of eligibility from SHOP, unless transition relief applies
  • Numbers of full-time and part-time employees and numbers of hours worked
  • Average annual wages for employees
  • Employer premiums paid per employee, if applicable
  • Relevant K-1s and other pass-through credit information
  • Cost of coverage for each employee
  • Payroll tax liability – for tax-exempt organizations only
  • Pass-through credit info – for K-1s of other small employers

For more information about the Affordable Care Act visit IRS.gov/aca.

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Thank you for subscribing to IRS Tax Tips, an IRS e-mail service. For more information on federal taxes please visit www.coreperformance.net

Does your Accountant focus on your MAGI ( Modified Adjusted Gross Income) ? …. they should

When you meet with Your Accountant, he or she should review with you and Pay close Attention to Your MAGI (Modified Adjusted Gross Income) in order to insure you still Qualify for Tax Breaks. Proper planning with your Accountant now will help avoid getting caught up in an MAGI tax trap.

Take a look at your 2013 tax return after it’s prepared. How close to the edge did you come to losing tax benefits due to tax phase-outs? As you begin your 2014 tax planning, consider the effects of these benefit-limiting provisions, many of which are based on modified adjusted gross income, or MAGI. Knowing how close you are to the “edge” can help you preserve tax breaks for 2014.

A caution: Since the definition of MAGI as applicable to individual phase-outs varies, you might have to choose between conflicting opportunities. For instance, if you have a child in college this semester, the American Opportunity Credit and the Lifetime Learning Credit may be on your mind. Both benefits are education-related, yet the qualifying requirements differ – including the MAGI threshold.
Education benefits. The American Opportunity Credit is a partially refundable, dollar-for-dollar reduction of your tax bill, with a maximum of $2,500 per student. This year the credit starts to shrink when your MAGI reaches $160,000 and you’re married filing jointly ($80,000 when you’re single). It disappears completely when your MAGI is greater than $180,000 for joint returns, and $90,000 when your filing status is single.

For 2014, the Lifetime Learning Credit begins to phase out at $108,000 when you’re married filing a joint return and $54,000 when you’re single. Once your MAGI reaches $128,000 (married) or $64,000 (single), the credit is no longer available.

Other education benefits, such as the above-the-line tuition and fees deduction, also have MAGI limitations. If you qualify, you can claim the maximum annual limit of $4,000 when you’re married filing jointly and your MAGI does not exceed $130,000 ($65,000 if you’re single). The deduction phases out completely when your income reaches $160,000 ($80,000 for singles).

Retirement plans. Phase-outs affect retirement planning too. The deduction for contributions to your traditional IRA is limited when you are eligible to participate in your employer’s plan and your MAGI exceeds $96,000 ($60,000 when you’re single).

And while Roth IRA contributions are not tax-deductible, the amount you can contribute for 2014 begins to phase out when your MAGI reaches $181,000 ($114,000 if you file single).

In addition, the federal “saver’s” credit for making contributions to retirement plans phases out when your 2014 modified adjusted gross income is more than $60,000 and your filing status is married filing jointly ($30,000 for singles).

Other phase-outs. Finally, the exclusion of social security benefits from taxable income also has a phase-out calculated on the amount of your MAGI over the base amount of $32,000 when you’re married and $25,000 when you’re single.

Other phase-outs affecting your 2014 federal tax return reduce personal exemptions, itemized deductions, and the alternative minimum tax exclusion. Contact Peter Cullen at our office for guidance in managing income for maximum tax breaks.

Need an A/R Makeover? A Quick, 5-Item Best Practice Checklist

Technology has allowed businesses to make substantial improvements in their customer invoicing processes.  The good news is that when you implement these technologies, you will almost always get paid much faster.

If it’s been a few years since the last time you’ve changed your accounts receivable processes, it’s time for a new look.  Here are five tips you can use to rate your own invoicing process, step by step.

1.     Invoice Creation

The best way to create all of your invoices is by the push of a button from one of about five types of systems that already have all of your data:

  •  Time and billing, if you bill hourly
  • Estimating and project management, if you use proposals
  • Customer relations management (CRM) systems that have invoicing as a feature
  • Point of sales systems that track open accounts
  • Accounting system that includes an A/R component

There are a couple of key best-practice concepts to follow at this step:

  • Eliminate any duplicate data entry you can.  You should only have to enter your invoicing data in one place, and it should flow to every other system that needs it.
  • Automate as much of the process as possible.  Never start in Word or Excel, because this always means duplicate data entry somewhere.
  • Have an easy approval process so someone else can do the data entry if needed.
  • Keep your invoice data real-time so you can benefit from the next step, which is….

2.     Invoice Delivery

How you create your invoice will vary by the type of business you have, but the main thing to make sure of is that the invoice is approved quickly and sent out to the client as soon as the work has been done.

The only way to do this is electronically.  If you’re still printing, stuffing, stamping, and mailing you invoices, you’re losing anywhere from two days to nearly a week before your customer even sees the bill.  Change that by using email or delivering the invoice electronically.

3.     Invoice Terms

When do you want to get paid?  Most people feel it’s realistic to aim for 30 days.  But if you set your payment terms to Net 30, you’re more likely to get paid in 45 days, not 30, according to recent research by Xero, where over 12 million small business invoices were reviewed.

Set your terms to 13 days or less, Xero suggests, because most small business debtors pay two weeks late.  Here is the infographic in case you want to check it out:  http://www.xero.com/guides/invoicing/

4.     Payment Method

How does your business rate when it comes to payment options?  If all you take is checks, you can add another week’s delay to your payment.  Instead, we recommend creating lots of choices for customers, such as taking:

  •  Credit and debit cards through MasterCard, Visa, American Express, and Discover
    • You can set up links online (best) or receive a fax or scanned form where you can enter the card into your back office.
  • PayPal
  • ACH for recurring payments that the client agrees to draft from their bank account
  • Checks

Your industry may even have more options.  For example, in accounting, Intuit has their Intuit Payment Network (IPN) where small businesses can receive money electronically and send and receive requests for money.  IPN is far cheaper than PayPal fees, too.

5.     Receipt

When you get paid electronically, it’s in your bank (or your merchant account) within minutes.  If you bank online, you can see things immediately now (it’s really amazing!).  When you receive a check, you have the overhead of preparing the deposit and making the trip to the bank.  If you have hundreds of paper checks, you also have additional bank fees incurred from processing the checks.

If your accounting system interfaces with your bank, then you save a lot of time and money not having to post those transactions.

Invoice-Free Zone

Why not get out of the invoicing business altogether by offering a pay-in-advance option?  Your Accounts Receivable balance goes to nothing, to name one of many benefits.  Not every industry can adopt this practice, but if you think creatively, you might find some ways you can implement this in your business.

How did your A/R process rate on the 5-point checklist?  Got some ideas for improvement?  As always, please reach out if you have A/R questions or if we can help you implement your best practice invoicing system.

Is Hosted QuickBooks Right for You?

If you are currently using the popular QuickBooks desktop software, you now have a fairly new option available to you:  hosted QuickBooks.  In this article, we’ll talk about what it is, what type of businesses it’s right for, and how to get started if you decide it’s for you.

A Host of Opportunities

Hosted QuickBooks changes the location of your QuickBooks company file from your local computer to one of the dozen authorized QuickBooks hosting companies.  You then access your QuickBooks file through a secure Internet connection.  The good news is you continue using the exact same QuickBooks software, screens, forms, and reports that you are comfortably familiar with, so the additional learning curve is extremely low.   The two biggest differences are:

  • You access your QuickBooks differently; instead of accessing your local software, you will access the same version of QuickBooks software via the cloud on a secure server provided by a hosting vendor.  You will most likely access your QuickBooks by clicking on a desktop icon or accessing a screen and entering your login information.
  • The pricing is different.  Instead of paying a large software fee at the beginning and then optionally paying for annual upgrades, you pay monthly, like a lease.

There are a few other very minor differences, such as how you back up your file, how you print checks, invoices, and other forms, and how you interface with other software such as Microsoft Outlook® or Word®.  At most, the learning curve for each of these minor changes is five minutes top for any user.

Who Benefits

You will benefit from hosted QuickBooks if any of the following are true:

  • You, your team, your bookkeeper, or your CPA needs to be able to access your QuickBooks files from multiple locations.
  • You are spending at least one hour per month restoring the file from one location to another.
  • You have experienced errors in the past from backing up and restoring the company file or the Accountant’s Copy because of passing it back and forth among people who need to update it or to get information from it.
  • You prefer to save the time it takes installing QuickBooks and applying the upgrades to QuickBooks software.  With hosted QuickBooks, the hosting vendor takes care of all of that.
  • You do not have a recent backup of QuickBooks and forget to take backups on a regular basis.  With hosted QuickBooks, backups are a routine part of the process.
  • You’re great at working on the core items of your business, but want to reduce time spent on IT-related tasks.
  • You dislike or feel inadequate when it comes to technology, and you agree it makes sense to outsource as much as possible.

Any Concerns

Hosted QuickBooks is great, but it’s not right for everyone.  If you feel “safer” with no one having access to your QuickBooks, then hosting it may not be right for you.  Although the data centers are far more secure than the PCs in most people’s homes and offices because they have to undergo a rigorous security audit to become a hosting vendor, some people are simply uncomfortable passing their financial data to others.  If you want to consider hosted QuickBooks and wonder about security, we’ll be happy to have a conversation with you about that.

Hosted QuickBooks is also not right for people that are using very old software versions because you may be forced to upgrade to a newer version.

Hosted QuickBooks is also not right for people who have much more free time than budget.  Although hosted QuickBooks is not particularly expensive, there is a cost outlay that will buy you time savings.  If the free time you gain (that you can apply to completing more important priorities in your business) is not valuable to you, then hosted QuickBooks may not be right for you.

Getting Started

Before moving to a hosted QuickBooks solution, your accounting professional will want to ask you questions about how you are using QuickBooks, if they aren’t already familiar with your requirements.  Selecting the right hosting solution means evaluating:

  • What version and line of QuickBooks you are currently using because this has to be exactly matched with the hosting vendor.
  • What other applications access QuickBooks, such as online banking and payroll.
  • What add-ons you are using with QuickBooks, if any.
  • What printers, Microsoft software, email software, and other peripheral needs you have when using QuickBooks.

Once those answers are gathered, your accounting professional can provide you with some hosting solutions, costs, and implementation plans.  Most accounting professionals partner with one or more hosting companies so that you can get a seamless one-stop shop experience.  You may also be able to benefit from volume or package pricing through your accounting professional.

If you are thinking that hosted QuickBooks might be right for your business, please email us or give us a call so we can talk more about it.

 

Mobile Marvel

May 23, 2013 · Posted in Accounting, Business Tips, Cloud Accounting, Xero · Comment 

It’s common now to get alerts from your bank on your smartphone.  It’s even fairly easy to find a good app where you can take credit card payments from your cell.  But how about the rest of your mobile accounting needs?  Finally, the whole enchilada is here with Xero Touch for the Android, iPhone, and iPad.

Once you have your Xero accounting system in place, you can perform most of the major daily accounting functions from your smartphone.  Xero Touch allows you to enter a four-digit pin so that the login process is easier.  From there you can do the following:

At-a-Glance Balance Summary

You can check your real bank account, PayPal, and credit card balances.  While banks allow you to see your bank balance, this balance does not take into consideration uncleared checks, so the balance can be misleading.  Balances in Xero should be more accurate as long as you are caught up with your accounting.

Invoice Functions

You can create, approve, and send invoices.  One way this feature can be utilized is to have your bookkeeper enter the invoices as drafts in Xero.  Once they are entered, you can review and approve them via your smartphone.  You can also email them directly from your smart phone.

Expense Features

Let’s say that you just used your credit card to make a purchase.  You can take a picture of the receipt and enter it right in Xero Touch so you’ll be up-to-date and paperless.

Reconciling Transactions

What Xero calls reconciling is quite different than what you might be used to.  Much of Xero’s functionality is based around bringing banking data into the system and then either matching it with bills and invoices already entered or coding it to the proper income statement account.  The smartphone app allows you to do matching, coding (which they call creating), transferring between accounts, or adding comments.   These are the same four functions you have available online, and we’ll go into these in more detail in next month’s article.

Contacts

Are you visiting a client and need to make a note?  You can do so right on your cell phone in Xero Touch.

Jazzed About Mobile Accounting?

We know, it might be a bit of a stretch to have the words “jazzed” and “accounting” in the same sentence, but we’re jazzed about Xero Touch and the future of mobile accounting.

It will only get better from here, so be the first to join us for the ride.  Give us a call so we can see if Xero is right for your business.

Have You Been Hacked? How to Minimize Your Risk

Just about every day, we read in the news that another company has been hacked.  You might have already been directly affected by the password thefts at LinkedIn last year or Evernote this year.  Or you might have had your own social media account, email, website, network, or computer hacked.  Worse, many of you have been hacked but don’t even know it.

So how can you minimize the damage and risk of hackers?  Here are several tips, some familiar, some not so familiar.  As you go through the list, check off the ones you’re already doing and make a list of new ideas to implement to protect your business and personal assets.

Signing Your Life Away

Your signature might look great in a graphic in your email signature line, your website, or your newsletter, but it’s a huge risk.  You’re giving away your handwriting, and forgers can easily replicate, master your handwriting, and impersonate you.  To reduce identity theft, don’t publish your real signature anywhere.

Money, Honey

Implement strong passwords on all of your financial accounts:  banks, credit unions, PayPal, credit cards, and your accounting system.  We know it’s painful, but do not use the same password for your financial accounts anywhere else, especially social media!  If possible, use a different password for each account to reduce risk further.

What’s Your Password?

Here are some quick password tips:

  • Do not use your name, your pet’s names or your kid’s names in your passwords.  There’s just too much information available publicly to do that safely anymore.
  • Mix up letters, numbers, capital letters, and special characters, if they are allowed.
  • The longer, the more secure; most apps require at least 8 digits.
  • Change passwords quarterly to be on the safe side.

Password Storage

Most apps that help you save time with passwords are NOT safe!  Here’s what we do and don’t recommend:

DO:

  • Password-protect your computer, even though you don’t have to.
  • Keep a separate file of your passwords on your computer, but DO password-protect that file and make sure it is not shared with anyone on a network.  Also name the file something totally unrelated like bio, letter, or goulash recipe; do not name it “passwords.doc!”
  • You can also keep a record of your passwords offline, but be sure to lock it up in a safe.
  • When you make file and disk backups, be sure those are locked up and password-protected too.  They will no longer have your PC password to protect them.

DON’T

  • Don’t give in to your browser or any website when it asks to remember your user ID and password, especially for your financial accounts or client information.  All of the major browsers have been hacked – Internet Explorer, Chrome, Firefox, and even Safari.

If you use password management applications, proceed with caution.  Be sure you have properly vetted their security claims.  Most of these are simply form fillers that are not safe.

Vulnerable Applications

Avoid leaving vulnerable PC ports open and unattended, including chat, messaging, FTP (file transfer protocol), Skype, webinars, Google hangouts, video sharing, and the like. It’s like having all the doors and windows unlocked in your house; an intruder has a lot of choices for easy entry.  When you are on these more vulnerable connections, shut the others down, and close the applications you don’t need.  Then logoff when you are done.

A Plug for Software

As soon as a hacker has found a new exploit, the software companies will learn about it and make an update available within days.  The hacker community is tight;  other hackers will look for software that is not updated and exploit the hack.  Avoid the copycat hackers by staying on top of your software updates, not just your anti-virus, but also your Microsoft and other software updates.  Doing this will eliminate a great deal of the risk out there.

New Users

If multiple team members need to access your software, consider setting up additional users rather than having one account.  If one person gets hacked, the others will likely still have access and can react quicker to the intrusion.

Stay Safe Out There

How many of these are you already doing?  Give yourself a reward, and then get busy implementing the rest so you can stay safe.

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