It’s that time of year where we reflect on how our business did this this past year, and who thrived within your company.  I’m sure your first thought is to give these stand out employee an end of the year bonus.  This is generally done to show appreciation, as well as to motivate them to continue to produce in the year to come.  But something most don’t think of is that these bonuses can and will most likely be taxed.  So let’s take a look at some key points to consider when giving bonuses.

 

  • Be sure to check with your accountant to make sure you can even afford to give these types of bonuses.  And if so, how much can you afford to give.  This is a time of year we want to be giving and generous, but be sure to work closely with your accountant or CPA in this area to be sure you don’t take too much away from all you did to have a successful year.
  • Make sure that you do know that end of year bonuses are subject to the same taxes as your employees regular pay.  Some states might have a circumstance where they will withhold for supplemental payments, which includes payments.   Be sure to check with your state to see if you fall under this withholding rate.  Your accountant should also have this information for you.
  • If you happen to report on a cash basis, then bonus’ issued before the year ends can is deductible within this year.  This counts even if your employee happens to not deposit or cash the check until after new years.  If you happen to report on an accrual basis, bonuses can be authorized this year that will ultimately be paid in the following year, this will allow them to get a tax deduction now.
  • What should you do if you decide before the year ends that certain employees will get a certain bonus, but you haven’t decided which employees get which amount until next year?  Well the IRS informs that it is possible to accrue the total amount of the bonus this year, which then allows you some additional time to give out the bonuses individually after the new year begins.
  • You might want to give you employees the option of deferring their bonuses until a future time even as far out as when they retire, or they can receive them right away.  There are some restrictions that apply to deferring this compensation.  Choosing to defer is usually done so with the thought that taxes will be lower when the compensation is received.  Obviously it is impossible to know if that will happen or not, but deferring can be a good option to add to the finances of your retirement.

 

Whatever you as an employer decide to do with bonuses, just be sure to follow all guidelines as advised to you by your accountant or CPA.  And be sure to tell your employees with some personal touch other than just money how much you appreciate their work this year.

Many have wondered if it is possible to write off their holiday work party.  It is important to remember that there are rules within the IRS in regards to writing off expenses with an entertainment nature.  If they are read incorrectly, it is easy to get in trouble.

While remembering that the IRS is strict in what can be written off and what cannot, let’s take a look at these holiday parties.  Of course they are fun, a great way to bond with co workers, and a time to celebrate the season, but they can also be a great time to rub shoulders with colleagues, and potential clients.  A great opportunity to advertise and market the business is available at many of these parties.

Many feel that entertaining is a no brainer when it comes to claiming it as a business expense. Of course, you’re interacting with clients, and shaking hands with potential business partners so that you can either continue doing, or gaining business.  So because of this, many feel that it is a perfectly acceptable that the drinks, the food, the music, and so on can be deductible.

It’s not quite that simple.  Hosting a party, and inviting clients, and employees just so that they can engage in a social environment and create a stronger bond is not a business expense that will be considered valid.  If this reason is given while being audited, it will not be accepted.

If you are going to have any type of party that you are hoping to write off, you need to have some discussion of business at some point during the event.  The only exception is if you are hosting a party for your employees and their families, with no potential clients.  This is the typical holiday party.  If this is the type of party you are throwing, then it is completely deductible.  As in 100%.  But if the party is including friends as well, the cost to entertain them is not deductible.

It is important that you document everything so that your deduction will be accepted.  State in your invite what the event is all about, and hold on to a copy of the invitation.  If your event is involving clients, then be sure the invite states what type of business is to be done.  Film whatever presentation is being made.  This will go a long way in case of an audit.

No matter what party you are hosting, make sure you have a guest list stored somewhere.  That way you’ll be able to show that it was just employees and family.  Be sure to involve your accountant in all of this. They will know exactly what to do, and what will be deductible and what might not be.

So the answer is, yes, you can write off your holiday parties.  But be sure you do it correctly or you there could be trouble right around the corner.  As long as your accountant is involved, everything will be documented correctly.

The holidays are here!  This is such an exciting time of year to be in.  With the lights, and the snow, the music, and the delicious treats, there is an amazing energy in the air. There are parties to go to, and ugly sweaters to wear, and there are decorations to set up around your house. Of course part of the excitement is the giving and receiving of gifts.  All of these things make this time of year, a favorite season for many.  But it can also be a time of year where people let their spending get way out of hand.  Here are some tips to help everyone avoid overspending this holiday season.  Let’s call this “Jim Carter’s Tips for Staying on Budget During the Holidays”!

 

  1. Set your budget- This is a basic concept, but probably the most important one.  If you don’t start the season some kind of spending limit, it will be very difficult to keep yourself from spending too much.  What usually happens is once you’ve finished shopping for everyone, you’ll still see things that you think they’ll like. This will cause you to spend more than you hoped to.  So before you get out there to buy gifts, figure out who you need to buy for, and how much you’d like to spend on them.

 

  1. You don’t always have to buy gifts- The typical thing that we do is we buy our friends and family something from their favorite store, or something made by their favorite brand.  But sometimes we might be in a year where we have to tighten our belt a little.  This is a year where maybe you can give more nontraditional gifts.  If you have a particular creative skill, you can hand make gifts for your friends and family.  Maybe you don’t consider yourself to be the most artistic, or creative person alive.  Well, this is a time where you can develop a skill, and give a gift that your loved ones might not expect.  Remember, it’s a season for giving, not spending hundreds of dollars over budget.  If those you are getting gifts for understand the work that went into a gift like this, it will be more meaningful than anything you could have purchased.

 

  1. Avoid Using Credit Cards- During this time of year, credit card usage goes through the roof!  Don’t let that be you.  Use cash as much as possible.  You have your budget set, so you know how much you can spend.  Don’t become persuaded by the thought that you can buy so much more with your credit cards.  Once the lights and tinsel comes down, and all the candy canes have been consumed, you’ll have a huge credit card bill that you will regret having.  Stick to the budget, and stick to using cash.
  2. Be honest about what your budget is– Again, the first instinct we have is about how we’re going to get everybody a great gift.  You’ll anticipate hours at malls and outlets getting everyone just what they want.  But along with step one, make sure your budget is set, talk to your accountant if you need to, so that you know just how much you have to spend this year, and then be honest with yourself and even others when it comes to gift giving.  If you are a college student, and you don’t work during the school year, you just won’t have the money to spend on gifts that you may wish you had.  And there is no shame in stating that.  Even if you’re working full time and your budget is tight this year, being honest about your budget will send the message that gifts might not be as elaborate.  But usually people are generally pleasantly surprised at what your gift ends up being.

 

This time of year, it is easy to get caught up in buying gifts.  And it is so easy to go way over budget.  It is important to remind yourself after this season is over, life does continue, and that credit card bill will be waiting for you in the new year.  Keep from starting the new year off in debt.  Set a budget this holiday season, and you’ll be happy you did.

With the Thanksgiving holiday right around the corner, we often reflect in our personal lives about what we are thankful for.  It might be our family and friends, or our homes and our jobs, but it is common to think this way during this holiday season.  Since we are taking the time to think of all that we are thankful for in our personal lives, we might as well stop for a moment and think about what we should be thankful for in our business lives.  Be grateful that you are employed, and be even grateful if you work somewhere that you enjoy, and get along great with the people.  It is especially important to be thankful if you are a business owner.  If you do own your own business, here are some things you should be thankful for.

 

  • Be Thankful for your employees- As an owner of a company, you know more than anyone else just how important your staff is.  Your employees beyond anything else will determine how successful your business will be.  Don’t internalize this gratitude.  Make sure they know just how much you appreciate their hard work.  Taking the time to tell your employees of your gratitude will go a long way, especially if you are an owner of a small, or startup business.  Because chances are your employees are going above and beyond the call of duty to see your business thrive.

 

  • Be Thankful for your Contractors- Month after month, you have contractors who are keeping your business running properly.  If your company has a legal team on retainer, be sure to let them know you’re thankful.  Consider your accountant during this time of year.  Think about all they do to keep the finances of your company in order.  Think about how much money they have saved.  Let them know that what they have done to ensure everything financial is taken care of, and keeping the business in a good place.  If you have a hired payroll company, be sure to thank them as well.

 

  • Be Thankful For Your Customers- And most importantly, thank your customers.  After all, they are the ones keeping your business a success.  If your company has sales people, be sure they take time to offer their thanks to the clients they visit.  Be sure you as the owner, thank as many customers as you come in contact with.  Again, this will go a long way to let your customers know that they are important to you, and you don’t take them for granted.  Make sure you are genuine in your thanks.  Customers can tell if you are just being nice to get more business from them.

 

You may not see customers everyday as a business owner, and you may not cross paths with all of your employees every week, but people like to feel valued.  Make sure you as a business owner show gratitude to everyone involved with your business.  It is the time of year to give thanks, and without these hard working individuals, and happy customers, you wouldn’t have the business you do.  If we have left anyone out, be sure to acknowledge them as well.

Medical professionals treat patients and help heal those who are ailing.  They don’t generally focus on the finances of their practice.  But just like any other business, management of accounting and financial issues is an important part of a practice’s success.  Maybe your practice isn’t large enough to have full time financial administration.  But finding assistance with your finances is still important to keep your practice thriving and growing.  Here are some options to look at when considering accounting help.

Most medical offices will hire a private management accountant to handle their finances.  Private accountants deal with several clients, and many of them will specialize in accounting for medical services.  Find an accountant that has the knowledge and experience in this field along with knowledge of cost accounting.  Being accurate with cost accounting makes sure that patients are charged appropriately, and that the costs associated with the use of medical equipment is included in the patient billing.

There are many accounting firms that offer accounting services to medical practices.  Usually these will be medium sized firms.  Such a firm will basically act as your accounting department.   If you have a staff that can take care of some of the financial basics and bookkeeping, the firm can handle the bigger things such as cash flow statements, financial reports, end of year closing of the books and tax planning.

Some medical offices prefer to hire a part-time accountant.  This way, they’ll work on site and be knowledgeable of all that goes on at the practice, including financial challenges.  If you only have a couple of days of accounting work per week, hiring a part-time accountant might be the best solution for your practice. The drawback of engaging a part-time accountant comes into play if things pick up, and your part-time accountant is busy with other clients. They might not have time or capacity for you and your office on a full-time basis.  Then you may have to hire another accountant, and taking the time to train a new accountant is never fun.

Using a Tax Consultant may be of great benefit to your medical office when doing taxes.  The consultant can help maximize deductible expenses, minimize tax liabilities, and help you effectively manage your income tax reporting obligations.  An experienced tax consultant can be of great benefit before year-end and when tax season comes around.  Most of your tax planning should take place before year-end when you still have the flexibility to structure your taxes.  It is much more difficult and available options for tax planning are limited after the year end.

One final way you can do accounting work for your medical office is to buy software that has been designed just for medical office use.  However, having accounting software does not make you an accountant any more that having a word processing software makes you a great writer.  Help from a professional accountant is essential to help medical professionals manage the financial and accounting issues so they can concentrate on their profession and be successful.

No matter which route you decide to go down when choosing accounting assistance for your medical office, the key is to make sure the accounting professionals you hire have the experience and knowledge in medical services accounting.

There are different types of personal financial statements.  However, you should consider using at least the following two financial statements:  1.) a statement of your personal cash flow and; 2.) a personal balance sheet or Statement of Financial Condition.

The statement of cash flow will measure the cash coming in and going out, so that you can, within a range of dates, determine where your personal funds are coming from and where they are going.  This also is the basis for creating a budget.  Usually this statement will track the cash inflows and outflows over the period of a calendar year.

The Statement of Financial Condition lists your assets and liabilities at current market values and discloses your Net Worth as of a specific date, usually at the calendar year-end.  Your Net Worth is determined by subtracting the total of your liabilities from the total of your assets.  Your assets will include bank account balances (checking and savings), investment account balances, cash values of life insurance policies, retirement account balances, real estate, personal property, etc.  All assets are shown at current market values as of the date of the financial statement.  Liabilities will include current unpaid utilities, taxes, and other monthly bills.  Liabilities will also include the current balance of loans and mortgages payable, and an accrued liability for estimated income taxes payable on the difference between estimated current values of assets and the estimated current amounts of liabilities and their tax bases.

There are a couple of reasons why people use personal finance statements.  One, they enjoy tracking their expenses and income in order to manage their financial health.  Or, perhaps they have met with investors or a lending institution who will want to take a look at their financial statements.  Whatever the reason, you may want to meet with an accountant to help you prepare these financial statements.  With the help of a professional accountant or CPA, you will be able to properly present your financial condition and cash flows in a manner that will make them accurate and comparable from year to year.  This will assist you in reaching the objectives that you have set.

Going through this process with an accountant will benefit you in multiple ways.  You’ll have a greater understanding of your personal financial strengths and weaknesses.  You will be better able to manage the creation and preservation of wealth, or growth strategies.  Having a clear personal financial statement will put you in a position to have financing terms that you would prefer.  Working with an accountant on this, you will feel safe that all of your money has been accounted for accurately.

If you have any questions about putting together your own personal financial statements, consult an accountant.  Better yet, give CPA James E. Carter a call.  Not only is he an experienced accountant, he enjoys helping individuals and small businesses with their financial goals.  He can help you see what your finances really mean and you can help you create a better game plan for your future.  It’s best to seek out the expertise of a professional, than take any chances on going it alone.

Accounting within your HOA can be different than the usual type of budgeting in people’s personal life. Usually an HOA committee will determine the budget for the HOA by estimating the expenses, and then they will determine the source of revenue. A large amount of that revenue come from the HOA fees paid by the residents. It can cause some serious problems if the HOA wants to determine the HOA fees first, because then the board will want to keep these fees lower than they should be, and then when the budget is made, it might be hard to stick with. There is nothing worse than when an HOA is given a budget too low for what it needs to do. Then you might be tempted to dip into your reserve funds, and from there you’re playing catch up. Let’s take a look at some basic ways you can avoid having these types of problems with your HOA budget. Continue reading

If you have just graduated in accounting, there is a good chance you’re going to be looking all over for the typical types of accounting jobs that you’ve always assumed you’d end up getting. But there are accounting jobs out there that you may have never thought of. These jobs might even pay more than the more traditional jobs, so for that alone they are worth looking into. These jobs might be more interesting and allow you to use your financial expertise in other areas you may be interested in. Here are some various accounting jobs that you may not have considered. Continue reading

There is a widely known statistic that states that only a third of family owned businesses make it through the transition to the second generation. The main reason this success rate is so low is attributed to lack of planning. Dealing with relationships in the family, as well as from a moral perspective make it difficult to plan for succession. When you are handing your business over to the next generation, it’s important to have a plan. Here are some tips for a successful succession.
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