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You Filed Your Extension – Now Get Busy With Your Return! May 26, 2012

Posted by mgtaxpro in Tax Issues.
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You may not have been prepared to file your tax return by the April 15th (April 17 for the 2011 tax year) due date. So you wisely filed an extension.

What exactly did filing an extension do for your tax situation? The extension filed with Form 4868 (Application for Automatic Extension of Time to File U.S. Individual Income Tax Return) allows an automatic 6 month extension to file your return if you were not prepared to do so by the due date. This allows you until October 15th to complete and file your return.

Be aware, however, that the extension does not mean you did not have to pay any taxes due! If you knew or estimated that you will owe when your return is completed, that dollar amount should have been mailed or e-filed with your extension. The IRS will assess interest and penalties from the date the payment was due.

Your next step is to start working on your return. It is so easy to breathe a sigh of relief after the extension is filed because you think you have more time. 

  1. Begin gathering any missing documents so that all your tax paperwork is together.  Do not wait until September and determine you are missing a statement from your bank or broker since it may take several weeks before you have those documents in hand.
  2. If your tax situation is more complex and you have had several taxable events (gains or losses) during the year, do not hesitate to seek out a tax professional to handle complicated issues and who should be able to offer tips for tax-savings in the future. The price you pay to have your returned prepared by a professional is easily justified by the tax savings and planning you receive.  Remember, if you itemize, those fees are deductible on your return next year.
  3. If you do owe, you will be assessed penalties and interest from the April 15 due date until the taxes are paid. Minimize that penalty by filing your return as soon as possible.

Your extension has given you time to get your taxes filed correctly. Be proactive – October 15th will be here before you realize!

 

The information contained in this article is for general information purposes only. The information is provided by MG Accounting and Tax Services, LLC. with no representations or warranties of any kind, expressed or implied.  All rights are reserved.

ONE SMALL BUSINESS PUT 30 PEOPLE TO WORK! -SMALL BUSINESS CAN IMPROVE THE ECOMONY- January 12, 2012

Posted by mgtaxpro in Small Business.
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How important is the small business to our economy? Let me tell you about one small business owner who used his own financial means and put many people to work. This one project resulted in an outstanding immediate benefit to others and the local community.

The SBA defines a small business as, “one that is independently owned and operated, is organized for profit, and is not dominant in its field.”1 The eligibility to be a small business depends on the industry, and is “based on the average number of employees for the preceding twelve months or on sales volume averaged over a three-year period.”2   In the 2008 Census count there were approximately 5.9M Employer firms (firms with payrolls.) Comparatively, there were 21.3M non-employer firms in the U.S. These are firms that do not have employees. “Most are self-employed persons operating unincorporated businesses, and may or may not be the owner’s principal source of income.” Because non-employers account for only about 3.4 percent of business receipts, they are not included in most business statistics, for example, most reports from the Economic Census.3

So what if every one of these 21.3 million small businesses in America hired one person? Could the hiring be significant enough to cause an exponential effect in the economies of the communities in which they serve? And could that impact be sufficient to change the present state of the U.S. economy? What would be the impact on the unemployment rate? Spending generated? Eventually, an increase in manufacturing?

The small business I am acquainted with is Buzz Rentals, LLC located in Erie, PA. The owner has several rental properties and recently renovated the first and second floor apartments of one of his buildings to make it more efficient and updated. He gutted the property, installed new electric service boxes, rewired, updated windows, insulated exterior walls and attic, dropped the ceilings and updated lighting with new light fixtures, fire alarms, updated kitchen and baths including cabinets and fixtures, installed new appliances, replaced the carpet throughout, replaced the concrete driveway, removed several trees for safety of the property and tenants, updated supply lines and installed landscaping. How many people did he put to work?

Let’s do the count:

He supervised 4 people that worked under him, plus 4 students he hired afterschool and gave training in minor work. For the ceilings he hired a contractor with 4 people. Electric required an electrician with 3 people working for him. Furnace and water heater upgrade – 2 people. Driveway replacement, the company owner and equipment operators – 4 people. Tree removals – 3 people. Plumber – 2 people. Hauler for waste removal – 2 people. Landscaping – 2 people. All material and supply purchases were from local vendors, including the pizza and lunches he provided to workers. Total count:  30 people received employment because he provided a work opportunity.

So, if one small business owner, still trying to progress in this economy can put that many people to work using his own savings and purchasing supplies and material on time – – Just imagine what would happen if funds were available for loans or grants so that any of the 21.3 million responsible small businesses of this country could do the same! The exponential result would amaze us all.

1,2 SBA.gov, US Small Business Administration, Small Business Size Regulations

3 US Census Bureau, Statistics about Business Size (Including Small Business)

MG Accounting & Tax Services ~ “Imparting knowledge to yield power.”

 

SMALL BUSINESS  CAN IMPROVE THE  ECONOMY written and provided by MG Accounting and Tax Services, LLC for general information purposes only with no representations or warranties of any kind, expressed or implied. All rights are reserved.

Tax Benefits – Five Easy Things You Can Do Now October 12, 2011

Posted by mgtaxpro in Tax Issues.
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There are some who were not prepared to file their tax return April 15 and found it necessary to file an extension. If you were in that group, be sure you have taken the steps to complete your return by the October 15th deadline.

Here are everal easy steps you can take now to help minimize your tax liability when you file your return for 2011.  Yes, believe it or not, tax time will be here again soon.

Do a pre-consult with your tax preparer so that he/she can advise on any special situations you had during the year.  Review any special concerns you discussed while preparing your prior year (2010) return.

To avoid having to pay, perform a brief estimate of your gross wages and Federal/State tax deductions to be sure you have had enough withheld. This practice can also be done at mid-year so that you can make adjustments to your W-4 and/or have extra amounts deducted from each paycheck.

Now is the time to start making those final contributions to your favorite charities. This includes monetary contributions to your church, United Way, Red Cross and etc.  Be sure to get a receipt so that you have adequate proof of your contribution.

In addition, contributions of clothing, household items, and etc. should be documented with a receipt from the donee and list of the items given.

If you determine you may owe, consider making a contribution to your IRA. Contributions can be made to your traditional IRA at any time during the year or by the due date for filing your return for that year, not including extensions. For most people, this means contributions for 2011 must be made by April 15, 2012. Additionally, if you make a contribution between Jan. 1 and April 15, you should designate the year targeted for that contribution. The funds in your IRA are generally not taxed until you receive distributions from that IRA.

Follow these quick tips and enjoy! You’ll be delighted with the tax saving results.

MG Accounting & Tax Services ~ “Imparting knowledge to yield power.”

The information contained in this article is for general information purposes only.  The information is provided by MG Accounting and Tax Services, LLC with no representations, guaranties or warranties of any kind, expressed or implied.  All rights are reserved.

 

 

THE SMALL BUSINESS AND FINANCIAL STATEMENTS August 1, 2011

Posted by mgtaxpro in Accounting Issues.
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It is just as important for the small business to have financial statements as it is for the large corporation.  Despite what some may think, the small business owner must do more than operate day to day but also needs to have an understanding of what is happening in his or her business. That understanding is the key to making the decisions that determine the current and future economic position of the company.

What are financial statements? They are more than the four or five sheets of paper you may receive from your accountant or CPA at the end of the month or quarter.  “A financial statement (or financial report) is a formal record of the financial activities of a business, person, or other entity.”1 The financial statements put everything that happened in a business (all transactions and events) within a stated time into a structured form.

There are four basic financial statements:

  1. Statement of Financial Position: referred to as a balance sheet which reports on a company’s assets, liabilities, and ownership equity at a given point in time.
  2. Statement of Comprehensive Income: referred to as the Profit and Loss statement (or a “P&L”) which reports on a company’s income, expenses, and profits over a period of time. Profit & Loss accounts provide information on the operation of the enterprise. These include sales and the various expenses incurred during each period.
  3. Statement of Changes in Equity: explains the changes of the company’s equity (ownership) throughout the reporting period.
  4. Statement of cash flows: reports on a company’s cash flow activities, the sources of cash, uses of cash and change in cash balance.

These four statements enable management to have a clear view of what transpired during the period(s).  It provides a picture of money received from sales and other sources, expenses paid or due in the future, the costs of doing business, and ownership equity.  The information can also be shown by comparison (ex. month to month) and can be used to compute the percentage of change from period to period.

When the small business owner has this information in hand and has an understanding of what the “numbers” mean, it becomes an invaluable tool in the company’s success.  In addition to supporting management’s decision making, it provides a financial history that investors can use to assess the viability of the business and financial institutions may use when deciding to grant loans or working capital.

1From Wikipedia, the free encyclopedia

MG Accounting & Tax Services ~ “Imparting knowledge to yield power.”

 

“THE SMALL BUSINESS AND FINANCIAL STATEMENTS” written and provided by MG Accounting and Tax Services, LLC for general information purposes only with no representations or warranties of any kind, expressed or implied. All rights are reserved.

 

NEW SCAM TARGETING CORPORATIONS July 16, 2011

Posted by mgtaxpro in Tax Issues.
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I postponed my planned article for July about the importance of small businesses having financial statements after I received a call from a client inquiring about a form received in the mail. I instructed her to fax the form to me and I would call her back.

At first glance the form looks legitimate. It is entitled, “ANNUAL MINUTES REQUIREMENT STATEMENT DIRECTORS AND SHAREHOLDERS (For Profit Corporations). It has the corporation number, incorporation date and the correct name and address. The form lists the state code number and quotes the requirement for corporation minutes for an incorporated business registered in the state of GA.  And, it asks for $125 payable to COMPLAINCE SERVICES. For all intents and purposes it looks like a form you would receive from the state government and the payment amount is the same as required for original registration in the state.

However, it also states that “This product has not been approved or endorsed by any government agency and not being made by any agency of the government.” And, it states “This is a solicitation for the order of services.” The first question is why would an outside agency be asking to prepare an organization’s minutes? The second question is why is this payable to “Compliance Services” and not payable to the state? And the problem with the form is they deliberately made it appear as an official government document that is due now.  So a business or person could easily regard it as official without reading the smaller print and issue payment.

Form:  (click to see larger)

Minutes requirement

Scam form looks legit

 

I went to the internet to do some research about the company.  I was not surprised to find other postings about the same mailing in other states. There is one really good article from an author on the Yahoo Network that can be found at this link http://www.associatedcontent.com/article/75059/annual_minutes_mail_fraud_scam_strikes.html.  It appears that this scam for services happens every year and in other states as evidenced by other articles from 2011 and prior years.

Some advice when you receive a document requesting payment that you do not recognize:

  1. Make sure the document comes from an official government agency. (And yes, scammers do attempt to copy government letterhead.)
  2. Call the agency directly to verify if it is legitimate and get an understanding of why you were billed. Do not email!
  3. Before you pay any invoice, always ascertain that it is a debt you actually owe.
  4. If it is a debt due to a state government, it will say pay to the order of that state.
  5. Be aware that anyone can get your business information (corporate number, etc.) if they know where to look.

And if you are still not sure, check with your accountant. My client did and it saved her $125.

MG Accounting & Tax Services ~ “Imparting knowledge to yield power.”

“NEW SCAM TARGETING CORPORATIONS” written and provided by MG Accounting and Tax Services, LLC for general information purposes only with no representations or warranties of any kind, expressed or implied.  All rights are reserved.

 

WHAT ACCOUNTING SOFTWARE SHOULD A SMALL BUSINESS USE? June 5, 2011

Posted by mgtaxpro in Accounting Issues.
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Many business owners do not think about record keeping when starting their business.  There is the excitement of renting building or office space, buying equipment and supplies, getting customers, and all the other traditional startup functions. Generally, “keeping the books” is the last thing on their minds. But, ignoring this step can be the difference between success and failure.

In my blog titled, “The Importance of Keeping Good Records” (June 2010,) I discussed how the decision about your bookkeeping and accounting needs should be made while writing your business plan.  That is the time to choose if you will maintain your records yourself, or hire an accounting professional to handle for you. Lack of planning and forecasting in the financial area is one of the major reasons small businesses fail.  A clear picture of the business financial status with cash flow statement, profit and loss, and balance sheet is vital to business success.

If you decide to do your own accounting there are two products I recommend:  QuickBooks and Peachtree accounting software. QuickBooks is a great accounting software product for the non-accountant. It provides simplified entry and instructions to aid in input of transactions for receiving cash from customers, payments to vendors and will produce financial statements at the end of each monthly period.  Peachtree is great for the user that has a basic understanding of debits and credits and some general accounting knowledge. It will perform the same functions as QuickBooks but at what I consider a more advanced level of accounting. Peachtree offers the ability to close your books each period, where for QuickBooks this is a behind the scene automatic function. For both products it is important that the original setup is done correctly.  It is vital that capital (ownership) accounts are setup correctly and very challenging to go back to fix accounts after transactions have been entered and posted.

MG Accounting and Tax Services, LLC specializes in small business structure and accounting. We are certified in QuickBooks and have Peachtree expertise.  We provide setup and training services for both QuickBooks and Peachtree. Visit the “Shopping” page of our website http://www.mgaccountingandtaxes.com/Shopping-Cart—-Find-It-Here.html for quick access to purchasing QuickBooks and Peachtree products.

MG Accounting & Tax Services ~ “Imparting knowledge to yield power.”

“WHAT ACCOUNTING SOFTWARE SHOULD THE SMALL BUSINESS USE?” written and provided by MG Accounting and Tax Services, LLC for general information purposes only with no representations or warranties of any kind, expressed or implied.  All rights are reserved.

You Filed Your Extension – Now What? May 3, 2011

Posted by mgtaxpro in Tax Issues.
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You may not have been prepared to file your tax return by the April 15th (April 18 for the 2010 tax year) due date.  So you wisely filed an extension.

What exactly did filing an extension do for your tax situation?  The extension filed with Form 4868 (Application for Automatic Extension of Time to File U.S. Individual Income Tax Return) allows an automatic 6 month extension to file your return if you were not prepared to do so by the due date.  This allows you until October 15th to complete and file your return.

Be aware, however, that the extension does not mean you did not have to pay any taxes due!  If you knew or estimated that you will owe when your return is completed, that dollar amount should have been mailed or e-filed with your extension.  The IRS will assess interest and penalties from the date the payment was due.

Your next step is to start working on your return.  It is so easy to breathe a sigh of relief because you think you have more time.

  1. Begin gathering any missing documents so that all your tax paperwork is together.  Do not wait until September and determine you are missing a statement from your bank or broker since it may take several weeks before you have those documents in hand.
  2. If your tax situation is more complex, do not hesitate to seek out a tax professional to handle complicated issues and who should be able to offer tips for tax-savings in the future. The price you pay to have your returned prepared by a professional is easily justified by the tax savings and planning you receive.  Remember, if you itemize, those fees are deductible on your return next year.
  3. If you do owe, you will be assessed penalties and interest from the April 15 due date until the taxes are paid. Minimize that penalty by filing your return as soon as possible.

Your extension has given you time to get your taxes filed correctly. Be proactive – October 15th will be here before you realize!

The information contained in this article is for general information purposes only. The information is provided by MG Accounting and Tax Services, LLC. with no representations or warranties of any kind, expressed or implied.  All rights are reserved.

A TAX REFUND MAY BE WAITING FOR YOU! April 1, 2011

Posted by mgtaxpro in Tax Issues.
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If you have not yet filed your 2007 tax return, there may be a refund waiting for you.  However, in order to claim that refund, you must file a 2007 return by April 18, 2011. You have three years from the date a tax return was due to claim a refund for that tax year. The tax due date for federal returns is extended this year due to the Emancipation Holiday observed by the District of Columbia.

The IRS announced in an article March 3, 2011:

“Refunds totaling more than $1.1 billion may be waiting for nearly 1.1 million people who did not file a federal income tax return for 2007. However, to collect the money, a properly addressed, mailed and postmarked return for 2007 must be filed with the IRS no later than Monday, April 18, 2011.”

The IRS estimates that half of these potential 2007 refunds are $640 or more from taxes withheld or estimated payments made during 2007. In addition, many low and moderate income workers may not have claimed the Earned Income Tax Credit (EITC).

The IRS reminds taxpayers that a 2007 refund will be held if they have not filed for 2008 and 2009 or applied to any amounts owed to the IRS, or used to offset unpaid child support or past due federal debts.

See the article at:  http://www.irs.gov/newsroom/article/0,,id=236811,00.html?portlet=6

Back tax issues can be resolved. Call MG Accounting & Tax Services, LLC today at (770) 265-6792. We offer a free 30 minute consultation. Don’t miss this opportunity for a refund you may not have expected!

 

MG Accounting & Tax Services ~ “Imparting knowledge to yield power.”

“A Tax Refund May Be Waiting For You!” written and provided by MG Accounting and Tax Services, LLC with no representations, guaranties or warranties of any kind, expressed or implied.  All rights are reserved.

“FOLLOW THE MONEY” March 11, 2011

Posted by mgtaxpro in Tax Issues.
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To be successful in any type of business, you must learn how to “Follow the Money.” The small business owner and those self-employed are challenged to keep up with what is happening in their business.  From their point of view, the most important thing is making money every month to pay the bills and hopefully have enough remaining to pay themselves.

Because they are so focused on making money, they don’t always watch the expenses.  You may have good monthly and annual revenues, but are surprised at year end when net profit is low or none existent. So the question is always, “What happened to all the money I made?

Having a system in place that “follows the money” or records the money coming in and tracks expenses as they are paid out will put you steps ahead on the road to success.  This tracking can be accomplished by having consistent procedures for every transaction and a bookkeeping (accounting) system in place to record those events.

If you have few transactions each month, Microsoft Excel spreadsheets may be sufficient to track income and expenses. If monthly transactions exceed twenty-five or more for income and expenses combined, I recommend utilizing supporting software such as QuickBooks or Peachtree. With the right software and using automatic bank account downloads, tracking income and expenses can be made easy.

MG Accounting & Tax Services, LLC can help you with your bookkeeping and accounting setup, training, or provide monthly services at a reasonable fee.  Let us help you put smart business practices in place to “follow the money.”

MG Accounting & Tax Services ~ “Imparting knowledge to yield power.”

“Follow The Money” written and provided by MG Accounting and Tax Services, LLC with no representations, guaranties or warranties of any kind, expressed or implied.  All rights are reserved.

“STAY CURRENT WITH YOUR TAXES” February 5, 2011

Posted by mgtaxpro in Tax Issues.
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Taxes are a subject many of us avoid until absolutely necessary. But it is important to stay current in your tax situation, because the alternatives result in worry and even financial hardship.

If you have a good Tax Preparer they can steer you in a direction that avoids the worry and tax anxiety. Their job is to prepare your return in accordance with IRS regulations but also to have sufficient knowledge to help you make correct decisions regarding your financial situation.

Not only should they be cognizant of the tax implications for a refund but also the effect current actions have on your future. For example, if an individual tax payer decides they are going to claim three exemptions on their W-4 when they actually only have two, the consequences may be zero refund or they may owe. Or, the new business owner needs to understand the tax pros and cons of setting their company up as a corporation versus a limited liability corporation.

Once you allow your taxes to get behind, it is just more difficult and expensive to catch-up. If there are special circumstances, you may need the experience of a tax professional who knows how to handle that portion of the tax law. Once the IRS calculates that you owe, the penalties begin and continue until you can prove otherwise.  That is beginning of the calls and letters to the IRS to resolve the difference.

The solution is to file all returns – individual or business – when they are due. If you cannot complete your return by the due date, file an extension in a timely manner. Stay aware of the extended due date by marking your MS Office or phone calendar and setting up reminders. Recognize when the tax problem is beyond your control and get the professional help you need.  The extra you may spend can save you additional penalties and worry in the long run. Try a fresh approach to your tax situation. Call MG Accounting & Tax Services at (770) 265-6792 today!

MG Accounting & Tax Services – “Imparting knowledge to yield power.”

“Stay Current With Your Taxes” written and provided by MG Accounting and Tax Services, LLC with no representations, guaranties or warranties of any kind, expressed or implied.  All rights are reserved.