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A client asked if he could claim his son, Mark, because he was involved in over 50% of Mark’s financial support for 2014. Mark feels like he should not be claimed by his father, because Mark has his own daughter (Ashley) that he supports. Since Mark was attending college and working part time, his father paid for his tuition and provided health insurance, too. Mark’s part time job helped to pay for Ashley’s child support. Mark wants to file his own taxes so he can claim Ashley. Who should claim who? Challenging situations like this are why people need to hire tax professionals.

The Job of a Tax Preparer

As tax professional it is our duty to understand the tens of thousands of tax code, approximately 75,000 pages of it. While Mark’s situation might seem extremely confusing to people who do not work with the tax code for a living, it is not the most confusing situation that exists. It is actually a common and realistic situation.

Specialty Practices are Popular

With the extent of the tax code, it is common for many tax professionals to pick a specialty. Tax codes for real estate, trust and estate funds, small business, corporate tax, and even simple W2 tax returns. At Acceler8, we have tax specialists in all areas so you can trust that your tax return will be prepared to meet all of our unique tax needs.

Simplification Was Complicated

Thirty years ago the federal government thought they would simplify the tax code and remove the need for professional tax preparers, but the code was not made simple enough to do this. Taxes remained complicated and they have continued to follow this trend of complication. Most tax preparers actually saw an increase in business after 1986 because the gray area that confuses the average American. As lawmakers continue to try to satisfy the needs of the various groups that support them, lawmakers are regularly altering the tax code which makes tax prep increasingly challenging. Presidential candidates constantly promise an easier tax code, but the idea never seems to come to fruition.

Protect Your Finances with a Qualified Professional

If you think that you can use a free tax software program to do your own taxes, you could be making a big mistake. Unless you have just a W2 and minimal income, you will probably be fine. However, if you have some itemized deductions, you are much better off hiring a professional tax preparer to do your taxes. Think of it this way, if you have a paper cut, you are not going to see your doctor and pay for an appointment to treat it; but if you have a deep cut that needs stitches, you are not going to stitch up the cut yourself. Qualified professionals receive the qualification because of their expertise, in the medical world and in the world of tax prep.

So Many Complications, So Little Time

Individuals or families with children, second homes or income property, small businesses, extended family members living in their homes, or any complicated circumstances are best serving themselves by hiring tax preparers. Children create deductions, but the deductions change as they grow. Second homes or income property also come with complicated items, too. Small businesses are an entirely different animal when it comes to tax prep and no small business owner (other than tax preparers who are in business for themselves) should do his or her own taxes. When the IRS sees a complicated tax return that is not prepared by a professional, the IRS is good at finding mistakes during audits.

Have any Questions? Contact Us

At Acceler8, we are in business to help people like you with their tax returns and other financial needs. If you have any questions, please contact us through our website or via telephone at (480) 270-8325.

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Low Priced Tax Software

Tax software does offer one benefit over tax professionals: the price. It is significantly cheaper to purchase tax software, since most of them are in the price range between $10 and $100. You might be able to find some tax preparers who charge around $100, but Certified Public Accountants will charge $200 or more.

Speedy Software with Simple Designs

Along with a low price, tax software does have a few other pros. The first is the speed of preparing the return. You might be able to complete your taxes in about an hour. A tax professional might need a few days, simply because of the volume that needs to be completed. The other benefit is simplicity. People who have simple returns can get them completed simply with tax software.

Better Tax Software with Professional Accountants

While all of these benefits make tax software sound like a great option for taxes, there are so many other benefits to hiring a tax accountant. Spending $100 or less on a tax program might sound like a bargain, but that $100 program cannot compete with the expert programs that professional accountants use. Their software can cost $1000 up to $6000. With that higher price, tax accountants are able to assess data entry, line items, and organization to ensure that your forms are properly completed. With better assessment, tax professionals are able to get more money back than inexpensive software will.

Tax Professionals Build Financial Relationships

Tax preparation professionals are able to build relationships with their customers. Our accountants at Acceler8 take time to get to know you and your financial situation. A software program might know your name, address, and social security number, but it does not know you and your special situations. Tax professionals can help you prepare your annual taxes and they can also help with financial situations throughout the year. They can work with exit strategies for businesses, bookkeeping, saving for education, and business coaching, too. No software can complete with a human when it comes to anticipating suggestions, helping with capital gains, and enjoying friendly conversation.

Tax Professionals Working Year-Round for You

The reason you only see tax software advertised on television and online during tax season is that the software is only useful during tax season. A professional accountant is available all year because your finances need attention all year. At Acceler8, our tax professionals truly are available to help you with any financial conversations throughout the calendar year – not just for the first few months of the year.

Hiring a Tax Professional Saves Money and Time

If you do decide to file your taxes with an inexpensive tax software and something goes wrong, you will need to see a tax professional to straighten out the problem. The time it takes to work through challenging tax issues makes it worth every penny to hire a high quality accountant who knows the regulations and system. Instead of spending numerous hours working on repairing mistakes that an inexpensive software program made, you could be focusing on your own livelihood and making more money.

The professionals at Acceler8 can answer any questions you have about hiring a tax accountant versus using tax software during this important time of the year. Contact us at (480) 270-8325.

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Tax law is constantly changing and our professionals know the changes and how they affect your returns. Here are several reasons why it is important to hire a tax professional, like the ones at Acceler8:

• The hassle moves to someone else. When you do your own taxes, you need to read about all of the deductions and line items. By hiring a tax professional, you can trust that she will know all about the latest laws about deductions and credits. Your tax professional is trained to read and understand the laws so you do not have to learn about them yourself.
• Let someone else learn about the tax laws. Laws are complicated and if you do not have training in understanding the laws related to taxation, you could make serious mistakes. The trained professionals at Acceler8 spend significant time studying and learning the tax laws, so you can trust their knowledge.
• Avoid costly mistakes. If you make mistakes doing your own taxes, you are on your own. When you work with a tax professional, you do not have to worry about mistakes. On the chance occasion that a mistake might be made by a tax professional, you have that person and their team of experts to help you avoid more mistakes. Those do-it-yourself tax prep programs cannot help you if mistakes are made, but a real person can; this security is one of the most popular reasons why people hire tax professionals.
• Learn the value your own time. When you do your own taxes, you are taking your own time that you could be using for something else. When a tax professional prepares your taxes, you can use your own time for the things you enjoy doing. If you are concerned about the value of hiring a tax professional, all you need to do is to calculate the monetary value of your time. You will quickly see that your time is worth much more than it costs to hire an Acceler8 tax professional to prepare your taxes.
• Get the answers to your questions. Your tax professional can answer all of your tax preparation questions all year long. This way, you can be better prepared when tax time rolls around each year. You can ask questions about receipts, deductions, and other useful money-saving tools.
• Start planning for next year and beyond. Once your tax professional sees the status of your finances, he can then help you get ready for the following tax year. Tax professionals are skilled in helping their clients maximize their money so you can save on taxes and have more money in your pocket at the end of the year. If you do not work with a tax professional, you cannot benefit from their education and experience.
• Relax and enjoy your peace of mind. Tax professionals know their craft and this allows their clients to relax during tax time. Why not enjoy the closing days of winter and the opening days of spring instead of stressing out over getting your taxes done on your own? Acceler8 tax professionals provide the tax help you need, so you can relax and enjoy life.
• Save money. The small price that you pay for tax preparation is practically priceless. In many instances, tax professionals are able to find extra deductions and credits that save clients more than it costs to hire a professional. This reason alone should be enough for you to rely on a tax professional from Acceler8.

Contact Acceler8 at (480) 270-8325 or complete the contact form and let Acceler8 help you with your tax and accounting needs.

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The best strategy is to meet with your tax advisor during the mid-year off-season and look over your financial statements to estimate your potential tax liabilities. By doing this in the middle of the year, it can save you from any unexpected tax consequences when your return is due. No one wants to get caught owing the IRS more money than anticipated.

When you schedule that all-important meeting with your tax professional, consider bringing up these helpful tips so that you can work together to keep more money in your business, rather than in Uncle Sam’s pocket.

Understand the legal structure of your business.

The legal structure of your business can significantly impact your tax situation. Most small businesses start out as a sole proprietorship, but if your business has grown or is now netting $100,000 or more annually, you should consider incorporating.

Incorporation provides a number of tax benefits. One is the ability to deduct medical insurance premiums that you pay on behalf of the company.You can also deduct business losses from your income tax if the business isn’t doing well. However, incorporation isn’t without its drawbacks. There is obviously more paperwork and record keeping, and taking money from the business must be done through payroll instead of simple draws.

Be sure to discuss your company’s legal structure with your tax professional and attorney. It could end up saving you money in the long run while providing you peace of mind.

Provide yourself the benefit of a retirement plan.

Many entrepreneurs and small business owners put everything into their businesses and end up neglecting themselves. That may be necessary during the start-up phase of your business, but somewhere down the line it is important to think of your future personal needs. If your business is finally in the black, take out some money and put it towards your retirement fund. The best part is it is tax deductible.

Consult with your financial advisor for the best retirement plan option. Self-employed business owners are no longer limited to just a SEP IRA. There are other options available, not only for you, but for your workers as well. If you decide to offer a retirement plan for employees, you may be able to provide raises for them without paying additional employer-paid payroll taxes. Check IRS Publication 560 for more information. Also be sure to discuss this with your tax professional as well.

Purchase capital assets, namely furniture and equipment.

Is your business in need of a few big-ticket items? Perhaps you need office furniture, new computers or some specialized equipment. Don’t frown upon these capital outlays. The IRS allows deductions for these capital assets under the Section 179 Deduction. This is a special deduction that allows you to depreciate the entire cost of these items in one year, rather than to depreciate them over their lifetime. Unfortunately, in 2014 Congress reduced the threshold amount to $25,000, but there is a possibility that lawmakers will raise that ceiling.

Provide benefits for your employees.

In addition to capital items, employees are considered a business asset as well. As a small business owner, it is important to provide benefits to your workers. Although wages are crucial, you shouldn’t neglect fringe benefits. There are many fringe benefits available that are non-taxable for both employer and employee. They are detailed in IRS Publication 15-B. By consulting this publication, you may uncover some benefits that boost your employees’ morale while saving you valuable tax dollars.

Make some good financial projections.

Finally, help your tax professional help you by making some financial projections. Dig out those financial statements and run a profit and loss comparison. Compare this year’s business to last year’s. Are there any major changes? Perhaps a product took off, and you made more money this year compared to last. This situation will definitely impact your tax liability. Play with the numbers and try to estimate what the bottom line will be for the current year. Bring your projections to your tax advisor to see if any adjustments to your estimated tax payments are needed.

Taking advantage of these tax-planning tips ahead of time can save you money that can be put to better business use.

If you own a small business and could use some help with tax planning, contact Acceler8. We are your small business advisors. We offer tax, accounting, and business advice, so get in touch with Acceler8 to learn more today.

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A good business plan is an invaluable tool. Not only does it help get your business funded and off the ground, it also creates a strategy for growth and success. You should look at your business plan as a living document that grows and changes along with you and your business. Updating your business plan on a regular basis provides benefits to your business and creates value. Here is what an updated business plan does for you.

It provides updated financial data.

Financial analysis should be ongoing in any business, but aside from those monthly balance sheets, take a look at your business plan.

Keeping your business plan current helps you update milestones, working capital, forecasts and assumptions, which helps you stay on track and plan ahead financially.

However, there is an even greater reason for keeping this document current — funding. At some point, every small business needs more money. An outdated document will hardly convince any lender or investor to finance your business. It spells lack of credibility. It makes you look unprepared and informed about your business, as well as current market trends, financial projections and how you fare against the competition. Keeping up to date with your plan makes you a lower overall financial risk for lenders — and helps you avoid risky financial behavior.

It’s an opportunity for review.

Updating your business plan also provides you with a valuable review of your business. It is an opportunity to see how far you have come and where you want your business to go.

When reviewing your document you may notice that your customer base or target market has changed. Perhaps the anticipated growth in one segment of your business was way off. It’s also possible that recent industry trends have impacted certain products or services. Whatever the case may be, updating your business plan forces you to reevaluate these items.

It allows for strategic planning.

Aside from reviewing the previous period or year, an updated business plan allows for future strategic planning. Businesses are more dynamic than ever, especially small businesses. They are constantly evolving. Products and services change, customers change, market fluctuations occur, and technology advances. All of these factors impact today’s business owner.

An updated business plan can help define a company’s broad, long-term visions and objectives. It provides both the big picture and the road map, making it much easier to navigate the direction of your business.

When should you update?

So, when should you update your business plan? Well, if you ask Tim Berry, the author of The Plan-As-You-Go Business Plan, he will tell you “always.” He certainly does have a point. It is important to constantly think about your business plan and be aware of how everyday changes can (and do) impact this living document.

Realistically, though, a thorough annual update can provide excellent value to both you and your business.

A success story.

The value of updating your business plan may sound great on paper, but what about people in the real world of business? Here is one success story.

Sean Hackney, the founder and co-owner of Roaring Lion Energy Drink originally started out in the year 2000 with a brief scripted plan that landed him help to get his business going. Since then he has updated his business plan multiple times, growing his business from an initial $62,000 investment into a multi-million dollar company within a few years.

Regardless of where you are in your business, the value of updating your business plan cannot be underestimated.

If you own a small business and could use some help updating your business plan, contact Acceler8. We are your small business advisors. We offer tax, accounting, and business advice, so get in touch with Acceler8 to learn more today.

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Save time by hiring a trained professional to handle your bookkeeping.

What’s the Difference?

Many small business owners don’t know the difference between a CPA and accountant, so we’ll clarify that for you.  An accountant is a broad term that is used to describe a financial professional who complies with a standard set of accounting principles.  CPAs are accountants, too, but they have also passed a state licensing examination.  Basically, a CPA is an account who has additional credentials.  There are lots of small businesses that use accountants, and many of them are quite competent.  However, in certain situations, it may be beneficial to take advantage of the services of a CPA.

Licensing

A CPA has been licensed by the state through a rigorous examination process.  An accountant has not.  As part of their licensing, CPAs are required to stay current with the tax code.  There are continuing education requirements that must be met in order to maintain licensure.  These requirements do not apply to accountants.  This means that you can trust that a CPA is up to date on financial regulations and tax codes, but you have no guarantee that an accountant has received any continuing education.

Taxes

Not every CPA specializes in small business taxes.  However, generally speaking, CPAs are more well-versed in tax laws than accountants.  Much of the licensing exam and yearly continuing education courses taken by CPAs is devoted to the tax code, so they are quite familiar with the current rules.  In addition, an accountant is considered an unenrolled tax preparer by the IRS.  This means that the accountant can prepare and sign your tax returns, but cannot represent you before the IRS.

Financial Analysis

There are several types of professionals who can handle your daily financial duties.  A bookkeeper can take care of recording business income and expenses.  An accountant reviews this information and prepares financial reports, like balance sheets and profit and loss statements.  CPAs provide a more comprehensive financial analysis and offer advice on financial and tax matters.

Audit Support

As was previously mentioned, a CPA can represent your business before the IRS, while an accountant cannot.  This alone is an important reason to use a CPA rather than an accountant.  An accountant, as an unenrolled tax preparer, is only permitted by the IRS to represent clients in a very limited manner.  If your business were to be audited, you need to be able to rely on your tax preparer to represent you before the IRS.  When you choose a CPA, that person has full authority to represent you to the IRS.

Many small business owners are reluctant to hire a CPA because it costs more than a bookkeeper or an accountant.  You don’t have to choose between them; you can do both.  Use a bookkeeper to handle the day to day financial duties, like inputting income and expenses.  Use an accountant to prepare regular financial reports.  Use a CPA to prepare your yearly taxes.  Many firms offer all three of these services so that you can get the help that you need on the most cost-effective basis.

If you own a small business and need the support of a financial professional, contact Acceler8.  We are your small business advisors, and we can provide the tax and financial support that you need.

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Failing to Track Receivables

No matter how great your business idea is, it will not be successful if you aren’t making sure that you are getting paid. This means that the drudgery of tracking receivables is essential for your success.  Every time you send out an invoice, you record a receivable.  This simply indicates that a customer owes you money.  You can then check your listings of receivables to see whether customers owe you money. When you receive a payment from a customer, you should mark the invoice as having been paid.  Seems simple enough, right?  Well, the practice often gets neglected because small business owners are so busy taking care of so many other things.  Those checks get left in a pile on the desk, and the receivables aren’t always marked down in a timely manner.

As a result, you end up with a bunch of money deposited in your account, and you don’t know where it came from. This can be a real nightmare at tax time. Staying on top of your receivables as you receive payments will make things a lot easier in the long run.

Failing to Keep Records of Expenses

Keeping receipts for all business-related expense purchases is extremely important. You may have a credit card statement for your business expenses, but how will you remember what each charge is for? Try keeping an envelope in your car or bag where you can stash receipts, and make a standing appointment once a week to scan those receipts and store them in the cloud. You can even use a mobile app to scan and store digital copies of those receipts as you go.

Failing to Track Cash Expenses

It’s easiest to track your business expenses by using a credit card or debit card, but sometimes you have to pay for things in cash. If you don’t keep track of those cash expenses, you can miss out on the opportunity to deduct them on your tax return. You might also overstate your cash expenses because you don’t have a record to verify them. Be sure to get receipts from vendors when you pay in cash, and consider logging cash expenses into cloud accounting software immediately if possible.

Failing to Hire a Professional Tax Preparer

Many small business owners think that doing their taxes themselves is an easy way to save some money. However, that often is far from the truth. A professional tax preparer has the expertise to get you all of the available deductions and make sure that no errors are made, which can have a significant impact on your total tax liability in the end. Go ahead and spend a little more up front to hire a professional to handle your taxes. It will make your life simpler and net you a bigger refund.

If you run a small business, you can count on Acceler8 for bookkeeping advice. We are your small business advisors. We can help you with everything from taxes to accounting, so give us a call today.

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1. Home Office Deduction: Many people are reluctant to take a home office deduction because they fear that it increases the possibility of being audited. However, that isn’t necessarily the case. You just need to be careful that you define your home office according to the terms of the IRS. Your home office must be devoted solely to your business and not used for any other purpose. For example, a guest bedroom with a computer in the corner is not a home office. However, a home office doesn’t have to be an entire room; it can be a portion of a room. The key is to only claim your work area as a home office, so measure out your work space and divide it by the total square footage of your home.
2. Office Supplies: You can deduct the cost of your office supplies even if you don’t claim a home office deduction. Save your receipts.
3. Office Furniture: There are two ways that you can deduct office furniture. First, you can deduct the entire cost of the furniture in the year that it was purchased. This deduction will be applied in Section 179. The limit for tax year 2014 is $25,000. The second option is to deduct a portion of the cost of the office furniture over a period of seven years. If you do it this way, you must use the IRS chart to calculate the amount of the deduction each year.
4. Office Equipment: Office equipment means things like computers, printers, and fax machines. Office equipment can be deducted 100% in one year or depreciated over a period of five years.
5. Software: Computer software that has been purchased off-the-shelf can be deducted over a period of three years.
6. Business Publications: Business related magazine subscriptions can be deducted 100% in the year that they were purchased.
7. Mileage: It is important that you keep track of all business-related miles that you drive so that you can deduct them. Keep a log of date, mileage, purpose of the trip, tolls, and parking fees. There are two ways that you can deduct mileage. The first option is to calculate the mileage by multiplying the number of miles by the 2014 rate, which is 56 cents per mile. Then add your tolls and parking fees to determine your deduction. The other option is to measure business use of the vehicle versus personal use. Then you can deduct that portion of your auto expenses, including fuel, repairs, and insurance. Include lease payments. If you have a loan for the purchase of the vehicle, you can deduct interest and depreciation.
8. Travel: Much of your business travel is deductible. You can deduct the entire cost of transportation and hotel stay, even things like tips for the housekeeper. While you are traveling, your meals are deductible at a rate of 50%.

These are some of the most common tax deductions that are available to small businesses. If you own a small business and could use some help figuring out your taxes, contact Acceler8. We are your small business advisors. We offer tax, accounting, and business advice, so get in touch with Acceler8 to learn more today.

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1. Choose the best accounting system for your business. There are two main options – cashed based accounting or accrual based accounting. In a cash based accounting method, you count your income when you get it and count your expenses when you pay them. With the accrual based accounting method, you count these things when they happen instead of when they are paid. So what’s the difference? Well, there will be a difference for your business if you keep an inventory or make transactions on credit. If this is true for your business, the accrual method may be a better choice for you. In fact, the IRS may require a business to use the accrual accounting method if they keep an inventory or have more than $5 million in sales. If you don’t keep inventory or deal with credit transactions, a simple cash based accounting system should work just fine for you.
2. Keep daily records. This is simple, but extremely important. Make an accurate daily record so that you are aware of the financial situation of your business. It doesn’t matter what system you use; just choose one and stick with it. Once your system is in place, it will only take a few minutes to keep up with it each day.
3. Treat checks with as much care as cash. You probably write a lot of checks, and you get envelopes full of canceled checks back from the bank. It’s easy to fall into a routine and pay little attention when writing checks, but take a moment and slow down. Review all of your checks carefully. If you make a mistake, it is your mistake, not the bank’s mistake. You will have to deal with the fallout. Review cancelled checks personally; this way, you will be aware of any unauthorized checks before anyone else gets the chance to remove them.
4. Request a bank statement that cuts off at the end of the month. This is useful because it syncs your bank statement with your other monthly records, so you are comparing matching time frames. It’ll be a lot easier to balance your statements and track expenses this way.
5. Leave a trail. You should be able to retrace your company’s financial activities easily. Keep business and personal accounts separate. Keep your checks and invoices in order, and don’t skip numbers. If you need to go back and check something later, it will be much easier this way.
6. Use software. Even for a very small business, using a bookkeeping software program will make your record keeping much simpler and more organized. Let’s face it – the time of the old ledger and pen system has come and gone. You can do everything you need to do, and even back up all of your important records, if you do it on your computer.

These basic bookkeeping tips for small business owners are a great starting place for entrepreneurs. If you could use a little small business advice, contact Acceler8. We are your tax, bookkeeping, and small business advisors. Call Acceler8 to learn more today.

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