ProAdvisor Tips ~~ Preventing Prior Period Changes ~~

A common issue with QuickBooks is how easily users can (intentionally or unintentionally) enter or edit transactions in prior periods. To prevent unauthorized prior-period entries or changes, set up a unique username and password for each user and set each user’s preferences to prohibit him or her from bypassing the closing date. Thereafter, by establishing a password-protected closing date and moving it forward each month as review and adjustments are completed, you can lock down the prior-period data as the year progresses, as shown in the screenshot at the bottom of the previous page. To access the tool, go to the Company menu, Set Closing Date.

Reprinted from the December 2011 Issue of the Journal of Accountancy

What's New In QuickBooks 2012?

Are you still using an older version of QuickBooks?   It may be time for an upgrade!   There are some really cool new feature and improvements to the 2012 version.   Below are a few of the most exciting changes:

NEW! Calendar View
Staying on top of invoices, billing and other important tasks just got easier! The new integrated Calendar feature allows your clients to quickly view invoice and billing dates and other scheduled tasks. Plus, the improved To Do List now captures more relevant information and displays it, making it easier to see and get done.

IMPROVED! Excel Integration Refresh

Save time when exporting QuickBooks to Excel. Your clients can now save their worksheet formatting when they export, then when they refresh the report for a new time period, simply update the saved file and their formats will be automatically applied to each new report2—it’s that easy!

NEW! Contributed Reports

Save time and increase efficiency by leveraging report templates, created by other QuickBooks users. You can also create report templates for your clients to use. Your clients can easily find the reports they need and filter them by industry type, user ratings and report popularity. They can populate the report with their data in one click.

NEW! Document Center

Your clients can improve their organization by attaching and storing contacts, proposals, receipts and other important documents in the QuickBooks Document Center. Simply drag and drop the documents they need, when they need them to their hard drive. Just another way QuickBooks 2012 is helping make tax time a little easier.

IMPROVED! Memorized Transactions

Increase efficiency by reviewing individual transactions (billing, invoices, estimates, etc.) before they are processed, and have the freedom to choose which transaction to process and which to postpone—all with a simple click of the mouse.

NEW! Batched Time Sheets

Increase efficiency by creating time sheets for multiple employees or vendors in one batch. It’s simple, just create the time sheet and select the employees who worked the same hours and click “create.” No additional re-entry needed.

NEW! Lead Center

Track and follow up on important sales leads in the new QuickBooks Lead Center. When your client’s leads become customers, that customer’s contact information can be transferred into the Customer Center with the simple click of the mouse.

ProAdvisor Tips ~~Memorized Transactions~~

Memorize Transactions

For every company, a significant number of transactions recur regularly, and QuickBooks accommodates this by enabling you to memorize recurring transactions. For example, suppose a company makes the same monthly rent payment, bills clients for recurring monthly services or records the same monthly depreciation entries. In these cases, QuickBooks can memorize the transactions and automatically enter them for you at regularly scheduled intervals. This feature can help save time, reduce mistakes and increase accuracy. You also can use this feature to memorize complex journal-entry templates, such as detailed allocations, and enter the actual amounts later. To access the tool, type Ctrl + M.

Memorize Transaction tip. Memorize Transaction will generate electronic payments or paper checks but it does not automatically send or print them. Once a check is created in QuickBooks, you can send or print the check using the File menu’s Send Documents or Print Documents menu options.

The IRS Adds Another Reporting Requirement: Form 1099-K

 

New for 2011, the government has added an information return in an effort to capture more unreported income by businesses.

Form 1099-K, “Merchant Card and Third-Party Network Payments,” is required to be filed by banks and online sellers, also referred to as “Payment Settlement Entities (PSEs).” Merchant cards include, but are not limited to, Visa and MasterCard. Third-party networks include, but are not limited to, PayPal and Google Checkout. The form must be sent to the IRS and payee.

Institutions must report the gross amount of credit and debit card payments received by merchants only if 1) the aggregate amount of transactions exceeds $20,000, and 2) the aggregate number of transactions exceed 200.

Here are some additional details:

• The gross amount without regard to adjustments for credits, cash equivalents, discounts, fees and refunded amounts is reported in Box 1.
• The receipts are broken down and reported on a monthly basis.
• To avoid double counting the income, the payments should not also be included on Form 1099-MISC.
• The following tax forms have been revised to show Form 1099-K payments received: Schedules C, E, F (Form 1040) and Forms 1120, 1120S, 1065. However, for Tax Year 2011 only because of transitional issues, the IRS has changed these forms so that taxpayers are instructed to enter zero on the line for income from “merchant card and third party payments” (Form 1099-K). Instead, the income is to be included on the next line, “gross receipts or sales not entered on the previous line.”

For more information, contact the IRS.


Reprinted from Intuit's "From the Experts" article dated 12/7/2011

Happy Holidays to You and Yours!

Retirement Plan Options for Small Business

Employer sponsored retirement plans provide tremendous value to business owners offering a convenient method to save for retirement and are an important part of a comprehensive benefits package to attract quality employees all while providing important tax benefits.   There are several retirement plan options available to suit all businesses from the single-person sole-proprietor or the larger small business owner.   The chart below outlines the key feature of some of the more popular small business plans:

SEP-IRA SIMPLE-IRA Self-Employed 401(k) Eligibility Any self-employed individual or business owner with employees Businesses with 100 or fewer eligible employees who do not currently maintain any other retirement plan Any self-employed individual or business owner with no employees other than a spouse. Key Advantage Easy to set up and maintain Salary reduction plan with less administration Generous contribution limits Funding Responsibility Employer contributions only Funded by employee salary reduction contributions and employer contributions Funded by employee salary reduction contributions and employer contributions Annual Contribution per Participant Up to 25% of compensation. Employee: Up to 100% of compensation, Employer: Either match employee contributions dollar for dollar up to 3% of compensation Or contribute 2% of each eligible employee's compensation Employee: Up to 100% of compensation.Employees age 50 or older can make additional catch-up contributions . Employer: Up to 25% of compensation,       Access to Assets Withdrawals at any time. Withdrawals are subject to current federal income taxes and a possible 10% penalty (if the participant is under age 59½) Withdrawals at any time. If employee is under age 59½, withdrawals generally may be subject to a 25% penalty if taken within the first two years of beginning participation and a possible 10% penalty if taken after that time period. Cannot take withdrawals from plan until a "trigger event" occurs. Vesting of Contributions Immediate Employee and employer contributions vested 100% immediately Employee and employer contributions vested 100% immediately Administrative Responsibilities No employer tax filings No employer tax filings Annual Form 5500 filing

ProAdvisor Tips ~~Best QuickBooks Shortcuts~~

Keyboard shortcuts are those little keystroke combinations that make daily life in front of your computer screen just a bit easier.   Here are some of my favorite QuickBooks shortcuts:

Chart of Account List Display              Ctrl + A
Open the Find Window                       Ctrl + F
History of A/R or A/P Trans                Ctrl + H
Transaction Journal Display                Ctrl + Y 
Delete Line from Detail Area               Ctrl + Del
Insert Line in Detail Area                    Ctrl + Ins
Increase Check Number or Date          + (plus key)
Decrease Check Number or Date         - (minus key) 
Next Field                                         Tab
Previus Field                                     Shift + Tab
Close Active Window                          Esc

Try these shortcuts to reduce your daily keystrokes and make the most of your time.  
Visit again for more ProAdvisor Tips!!

Year-End Payroll Tasks & Deadlines

By Dec. 1, 2011
·        Remind employees that if there has been a change in their filing status due to marriage, divorce or dependents (birth, adoption, child turning 21), they may want to file a new W-4 for 2012.

·        Make sure employee paycheck names/SSNs match their SS cards and W-4 data.

·        An employer may elect to use the Special Accounting Rule; that is, treat taxable noncash fringes used any time in Nov./Dec. 2011 (e.g., personal use of company car) as paid in 2012. 

Before Dec. 31, 2011

·         Paychecks dated 2012 are 2012 wages, even if earned in 2011.

·        Check all SS withheld. If any employee exceeded the 2011 limit of $4,485.60, make an adjustment or refund before making your final tax-year 2011 deposit. Leave enough time to make adjustments and make refunds.

·        Ask your payroll service (if you use one) for a W-2 adjustment run before closing out 2011 to verify and correct:

- relocation expense reimbursements;
- manual or voided paychecks not in your system;
- personal use of company vehicles;
- company-paid educational assistance; and
- other taxable items paid outside of the payroll system.

·       Report on 2011 W-2s pay received in 2011, provided that the employee had access to the wages without substantial limitation or restriction. In other words, even if a paycheck is dated 2012, if the pay is for 2011 and the employee had access to it in 2011, include the amount on the 2011 W-2.

By Jan. 1, 2012

·        Process W-4s submitted for 2012 before the first 2012 wage payment. 

By Jan. 17, 2012

·        Review 2011 paychecks outstanding more than two pay periods so you have time to void and reissue in time for 2011 W-2s.

·        Verify that total taxes withheld and SS-taxable and Medicare-taxable wages reported on 2011 quarterly 941s (or the annual 944) equal the totals of 2011 W-2s to be distributed. 

·         Third-parties that distribute sick pay are required to send to you by today each payee’s annual statements of wages paid and taxes withheld for tax year 2011.

1099-MISC Deadline Just Around the Corner!

Yes, that's right, just around the corner!   I know that its not even Thanksgiving and the actual IRS deadline to mail form 1099-MISC to the recipient for the tax year ended 2011 is January 31, 2012.  (The deadline to file Form 1096 to the IRS is February 29, 2012)  Months away, true, but in my experience it is the one deadline that sneaks up and suprises me every year.  There is a lot going on between now and January 31st...reconciling the g/l accounts, tax planning, budgeting and  switching files over.  Of course, there are the holidays, which mean short weeks & office parties...and, of course, the cookies!  Plenty of distraction making it easy to put off thoughts of  1099's until after the first of the year.  But a little preparation will make sure your not scrambling to meet that deadline come January 31st.

• Order your forms now - There is no time like the present!  The beauty of ordering now is that you still have time to order and receive forms directly from the IRS saving yourself the time and cost of buying them from the office supply store.
• Brush up on the rules - Generally, you are required to issue Form 1099 MISC to individuals and partnerships to whom you paid rent or services totalling $600 in the calendar year.   The most common receipients are listed below, but you can find a complete list and dollar limits on the IRS website here.
• Attorney, fees and gross proceeds
• Commissions, nonemployee
• Compensation, nonemployee
• Directors' fees
• Mileage, nonemployee
• Nonemployee compensation
• Rental Expense
• Royalties

• Make sure you have all your W-9's on file - Go though your supplier list and make sure that you have a Form W-9 on file for each vendor. Cross check the company name, address and FID with your accounting records. Mail out W-9's to any new suppliers as soon as possible so you have all the information you need on file.

  Take these steps to begin preparing now and make sure you enjoy those delicious holiday cookies!

How to get the best car leases

To get a good leasing deal, focus on the following three figures:

· Capitalized cost (price). In some cases, the price is adjusted for extras, such as extended service contracts and registration fees.
· Residual value (estimated cost at lease end). Negotiate to minimize the spread, i.e., the difference, between the capitalized cost and the residual value. This difference is the amount of depreciation your company will be financing through the lease.
· Interest factor. If you want to know the true annual percentage rate, ask for the “leasing factor,” then multiply it by 24.
Compare the following among leases:
· Excess mileage charges due when you return the car. The lease specifies the number of miles included and the fee for extra miles.
· Excess-wear charges due when you return the car. In the lease agreement are the standards by which excess wear will be determined (body damage, worn tires, etc.).
· Early termination fees for ending a lease early. The earlier that you end it, the higher the fee.

For more: Visit: www.federalreserve.gov, search “leasing,” click on “FEB: Vehicle Leasing: Quick Consumer Guide.”

-Republished from the AIPB newsletter, "the General Ledger" Volume 7, Issue 43




·

Business Trips that Mix Business & Pleasure

Although the 21st century has provided us with a multitude of lightning fast communication options the “face to face” meeting continues to remain a favored method to conduct business. The internet, cell phones, teleconferencing and the like are certainly important and useful in their own right, they have not replaced the business trip. In addition, many taxpayers are beginning to plan trips that combine elements of both business and pleasure. Business trips, conventions, and continuing education seminars in exotic locations can provide an interesting and enjoyable vacation style opportunity and at the same time generate legitimate deductions. Although the basic rules are relatively simple, there are a few rules that you should keep in mind when planning any business trip.


Business Travel - The Rules
Taxpayers who travel away from their tax home on business are permitted to deduct travel expenses, including fares, meals, lodging, and incidental expenses, if they are not otherwise lavish or extravagant. A business trip is "away from home" if it takes enough time that the taxpayer may be reasonably expected to need sleep or rest. A taxpayer's tax home is his regular or principal place of business, or his regular abode if he has no regular or principal place of business. You are not prohibited from enjoying non-business or personal activities while on a business trip, but the primary reason for the trip must be related to your trade or business.


Foreign Travel
Foreign travel expenses are subject to some limitations that do not apply if the business trip is within the United States. Some of an individual's foreign travel expenses may not be deductible if he or she takes part in substantial non-business activity during the trip. Taxpayers who travel outside the U.S. for longer than one week or spend less than 75 percent of their time on business are subject to allocation rules, which operate to partially disallow their expenses, unless they had no control over the trip arrangements or the vacation portion was not a major consideration of making the trip. The general rule is to allocate expenses, including meals and lodging, between business and non-business on a day-to-day basis. Each day is either entirely for business, or it is considered to be a non-business day. A day counts as entirely for business if the taxpayer's principal activity on such day was the pursuit of a trade or business. In addition, a day is counted as a business day if any of the following factors are present:
¨ The individual was traveling to or from an overseas destination in pursuit of a trade or business.
¨ The individual's presence outside the U.S. on that day was required at a particular place for a specific and bona fide business purpose.
¨ The individual was prevented on that day from engaging in the conduct of his or her principal business activity due to circumstances beyond his control.
¨ The day was a Saturday, Sunday, legal holiday or other reasonably necessary stand-by day, which intervened during the course of the taxpayer's trade or business.


Staying Over
Due to airline pricing policies, it is sometimes economical for a business traveler to stay over Saturday night although business concluded on Friday. The additional lodging expense may be more than offset by the lower airfare as a result of the Friday and/or Saturday night stay-over. In such situations, the additional meals and lodging expenses for the Friday/Saturday mini-vacation may be written off entirely as part of the deductible as ordinary and necessary expenses of the trip.
If, on a business trip during the week, a certain day is devoted primarily to pleasure, that day's expenses are not deductible. Although this may be a nondeductible expense that the business traveler is willing to pay, take care not to devote over half of the time you spend away from home on pleasure. In such a case, none of the transportation expenses involved in getting to and from the location are deductible. On the other hand, if more than half of the trip is devoted to business, all of the transportation expenses may be written off as a business expense.

On Not Becoming a Statistic...

A Forbes article published this week offers some stark statistics for the Small Business Owner. According to data provided by the Bureau of Labor Statistics, only 44% of small businesses will survive into their 4th year. Depending on what kind of gambler you are, those less than 50/50 odds can be a pretty harsh possibility for a venture you've poured your hard work, dreams and money into - betting it would be a winner. But rather than be discouraged, you can pose the question, "What can I do to make sure my business is part of that 44% who are thriving?"

The list to consider is as long as the many hats that your wearing...

• Business Planning
• Sales & Marketing
• Finance & Accounting
• Product, Inventory Management
• Labor Management
• and everything else

The key is knowing when and where things are going right and when and where things are going wrong. A few questions to consider:

• Who is buying?
• How quickly they are paying?
• What's your spending?
• What are you spending on?
• How much money you have tied up in inventory?
• What's your gross margin? Return on Sales?

Maintaining accurate and up to date financial records, and understanding what they are telling you, is key to building a strong, healthy business. The Income Statement, Balance Sheet and Statement of Cash Flow are the tools that will provide you with the answers you need to make informed decisions about your company.

Arm yourself with the right tools and you will put the odds of success in your favor!

How long do I have to keep this stuff? Record Retention Rules

You've finally finished switching your files over. The file cabinets are happy to no longer be overstuffed with an entire year and your happy to have room to move around in them while 2007 is still young. 2006 is packed away in boxes, probably sitting on the floor of your office where they will stay for the next few months because you know you'll be referring back to them a million times. And after that its off to the storage room, closet, warehouse, where ever you can find the room to store them. This is when the question always comes up, "How long do I have to keep this stuff anyway?"

Here is a list of some of the more common items cluttering up your office and how long to hang onto them:

~ 3 years - Most general correspondence, employment applications, petty cash vouchers

~ 7 years - A/P and A/R ledgers & schedules, invoices (from vendors and to customers) Purchase Orders, Sales Records, Payroll Records, Bank Statements.

~ Indefinity - Accountants audit reports, financial statements, general ledger, contracts still in force, deeds, mortgages & bills of sale, tax returns, minute books.

For a complete list of record retention rules click here and download our newsletter from the Helpful Tools & Tips section.

Know Where You Stand With Key Business Ratios

One look at these formulas and you may feel like your back in high school algebra class! Well, your teachers said you’d use this stuff in real life, now you have the best reason of all -to gain a clearer understanding of your business.

There are dozens of ratios that accountants use to analyzing the financial health of your company in the areas of liquidity, efficiency, profitability and solvency. Here we will look at some of the most common ratios from each category.
********************************************************

Current Ratio = Current Assets/ Current Liabilities

Used to measures your companies liquidity, or ability to quickly generate cash. This ratio is one of the most commonly calculated and is important because it helps you to assess the business’ ability to meet short-term debt obligations. Lenders also commonly look at this ratio.

********************************************************
Days Sales Outstanding = # Days / (Sales/Accounts Receivable)

Also known as “DSO” or “Average Collection Period”, this is one of several key ratios used to measure your company’s efficiency. The Days Sales Outstanding calculates the average days it takes to collect payment on your accounts receivable. This is a great way to keep an eye on collections efforts, the key to cash flow.

*********************************************************

Gross Profit Margin = Gross Profit /Net Sales

Gross profit margin is one of the most universally recognized ratios used in business. Reported as a percentage, this profitability ratio measures the % of sales dollars remaining after deducting the cost of goods sold. A negative trend in the margin signals that inventory and/or cost & pricing matters require review.

*********************************************************

Debt Ratio = Total Liabilities / Total Assets

The solvency ratio is used to measure the company’s ability to satisfy long-term debt when it becomes due. The Debt Ratio measures the percentage of business assets financed with debt. It is generally believed that a healthy Debt Ratio should be no more than 50%. A higher ratio may indicate overuse of debt and may result in difficulty meeting debt obligations.

Tick, Tick, Tick...Those 1099's are Due by the End of the Month!

Yes, its time for one of year-ends most annoying tasks.... generating 1099's. They are due to the recipient by January 31st, but Uncle Sam give you until February to get his copy, along with the 1096, out to him.

There are an alphabet soup of various 1099 forms covering everything from the 1099A ( acquisition of abandoned property) to the 1099S (proceeds from real estate transactions.) But the most common 1099 a small business runs into is the 1099MISC. This is the form used to report to the IRS expenses paid throughout the year to independent contractors, service providers, attorneys, and other non-employee compensation.

The typical rule of thumb is that you must issue a 1099MISC to any service provider who is not incorporated, and to whom you've paid more than $600 in the last calendar year. Except for attorneys, who you must issue a 1099 to regardless of how much you spent. Click here for a link to the IRS informational guide for more details.

A couple of tips to make 1099 processing a little easier:

1. During the year, as you use independent contractors-- that's your IT guy, your cleaning company, and the woman who developed your marketing campaign,--make it a habit to have them complete a W-9 Request for Taxpayer ID and Certification and keep it on file. This will insure you have full name, address and TIN# come 1099 time.


2. Better yet, take that info from the W-9 and put it right into your accounting software. Most programs have a section in the vendor set-up screen asking if they are eligible for a 1099 and requesting their taxpayer id number.


3. Taking this one step further, if you go into the options of your accounting software (in QuickBooks you want to go into Edit, then Preferences, and select 1099) you can select the accounts and threshold which are eligible. Now you can easily generate 1099 reporting directly from your software!

Happy Filing!!

Debits & Credits

$$ The tax accountant just finished reading the tale of Cinderella to his daughter. The little girl loved the story and asked, "Daddy, when the pumpkin becomes a golden coach, would that be income or a capital gain?

$$ A businessman on his deathbed called his friend and said, "Bill, I want you to promise me that when I die you will have my remains cremated." "And what," his friend asked, "do you want me to do with your ashes?" The businessman said, "Just put them in an envelope and mail them to the Internal Revenue Service and write on the envelope, "Now you have everything."

$$ Q. Where do homeless accountants live?
A. In a Tax Shelter.

$$ Two neighbors greeted each other over the fence, “How is your daughter doing in accounting class?” inquired one, ”Great” is the response, “Now instead of asking us for her allowance. She bills us for it!”

Colonial Business Solutions goes back to School!

I'm excited to announce my upcoming involvement with the Assabet After Dark program in Marlboro, where I will be teaching "Introduction to Computerized Accounting with QuickBooks 2006." beginning March 7, 2007.

For years Assabet has been the premier provider of adult education opportunities in the greater MetroWest area, offering a wonderful selection of continuing education courses. From classes that make your home a yummier place like the "Italian Cookie Workshop" to classes designed to improve everyday life such as "How to Pay for College without Sacrificing your Retirement" , and of course *my favorite* classes that help you succeed in business, "Introduction to Accounting with QuickBooks 2006", Assabet really does have something for everyone!

I encourage any small business owner who currently uses QuickBooks and wants a better understanding of its capabilities, as well as anyone considering implementing QuickBooks to take this course. It is designed to provide a strong, broad based understanding of this powerful accounting program.

Classes fill up fast! So call Assabet today at 1-800-537-6663 ext. 429 or sign up on the web at www.assabetafterdark.com.

I look forward to seeing you!

Happy New Year!

Colonial Business Solutions is pleased to welcome you to our new blog dedicated to addressing accounting related questions and concerns commonly faced by today’s business owners. Our mission is to provide you with timely news, sensible tips & advice and valuable information intended to help your accounting department and your business run more smoothly and efficiently.

We are constantly looking for new ways to assist our clients and welcome your input and feedback. Please feel free to drop us a line if there is a specific question you have or a topic you would like to see covered.

We hope that you enjoy and benefit from theses postings and we look forward to seeing you again next soon.