Is Embezzlement in your Future?
Posted by Kim Perkins on November 22nd, 2011
Loss Prevention 101
Recently, Green Apple Resources acquired a client who had discovered embezzlement within his company. Embezzlement, unfortunately, is widespread and is very difficult to detect. It is also a crime of opportunity and trust.
After reconciling the books and rectifying a situation which neared financial ruin for the client, Green Apple Resources examined how the crime occurred, and what could the client have done to prevent the theft from happening in the first place.
The best way to prevent embezzlement is to be an honest business owner. Your integrity leads by example to your employees. Second, pay your employees fairly and treat them well. Third, hire the right employee. Start by checking all references. Consider obtaining a fidelity bond on the new hire. If the employee is not bondable, don’t put them in a position of handling your financial matters.
Here are some simple steps to take which may save you from embezzlement:
- Assign designated duties to more than one person. Don’t have one person responsible for making deposits, reconciling bank statements, or controlling the petty cash account.
- Review your bank statements. It’s your money, review the copies of the checks. Is that your signature on each check?
- Establish office routines which act as a safeguard for your money. Make deposits daily, close and balance daily, bill as your services are rendered, have checks printed and attached to invoices. Do not sign a check if the recipient is in question.
- Above all, be an example for your employees. Do not teach your staff that it is okay to use office supplies for personal business.
In the case of our client, a stack of checks from the middle of the pile was taken and used by the girlfriend of an employee. Losses totaled over $5000.00. After reconciling the books and recommending procedures to curtail future thefts, Green Apple Resources left the outcome of the crime up to the client. In this particular case the client refused to prosecute.
If you detect missing documents, delayed bank reports, holes in your accounting records, a disappearance of petty cash funds, huge profits reported but no money in the bank, or other indicators that something isn’t quite right with your books, call Green Apple Resources!
Remember, your success is our business, and…
We want to be… At The Core!
Tax Saving Tips on Domestic Business Trips
Posted by Kim Perkins on October 27th, 2011
If you go on a business trip within the United States you know that you can deduct some of your expenses. The question is how much. First, let’s cover just the transportation expenses. This is the cost of travel to and from your business destination. It includes travel to your departure airport, airfare, baggage fees, tips, cab fare, etc. All costs for travel fit into this category. The bottom line is this: all of your domestic transportation costs are 100% deductible if your primary purpose is business! But beware, if your primary purpose is pleasure, i.e. a vacation, then none of your travel expenses are deductible; after all, you’re going on vacation.
The IRS does not specify how to determine if the primary reason for domestic travel is business, but let’s be logical: you should be able to claim business as your primary purpose whenever business days exceed any personal days. Any expenses incurred over a weekend or a holiday are also deductible if they fall between days designated for business and it is unreasonable or impractical for you to return home.
Once at your business destination, your out-of-pocket expenses are fully deductible with the exception of meals, which are subject to a 50% disallowance rule. Out- of-pocket expenses include lodging, tips, transportation (cabs, buses, car rental), seminar and convention fees.
Be sure that you document and accumulate proof that you did attend to business while on your business trip. This only serves to protect your interests (money) should the IRS question your expenses. Log your meetings in your day planner, collect your CEU’s from your seminars, keep your notes and programs from your convention.
By the way, expenses for personal days while on a business trip are not deductible!
Remember, your success is our business, and…
We want to be… At The Core!
Tax Tips for 2012
Posted by Kim Perkins on October 24th, 2011
Thanks to the extension of the 2001 and 2003 tax cuts, the current federal tax environment remains favorable to the individual and the small business owner. Now is a great time to take advantage of the low tax rates because we can’t predict what the future tax rates will be. Here are two tax planning ideas to consider during the fourth and final fiscal quarter of 2011:
1). Leverage your standard deduction by bunching certain deduction items and claiming them every other year. Claim the standard deduction during the intervening years. Examples of deductible items which can be bunched every other year to lower your federal income taxes include charitable contributions, state income taxes, and personal property taxes.
2). If you expect to be in a lower tax bracket in 2012 it may pay to defer taxable income from this year into the next. How to do that? If you’re a cash basis taxpayer, send out client/customer invoices late in the year. That way, you won’t receive payment until early 2012.
These and other tax planning maneuvers are often overlooked by the tax preparation software sold to the general public. Green Apple Resources works with the client to review their tax liability. Our goal is to defer the clients tax liability for as long as possible allowing the client to invest that money or pay down debt.
If you have any questions regarding your current tax profile or your past tax profile, please contact us…
So the IRS wants to audit you?
Posted by perkmik64 on September 29th, 2011
Every year the IRS sends out thousands of letters requesting audits of business tax returns. If you should get one, how do you react? Your first reaction may be fear, panic and anxiety. That is understandable, but non-productive. So, move on from there and read the notice of audit once again.
What is it that the letter is requesting? Talk to the person who prepared your return. If in doubt, call up the IRS auditor and ask him/her to speak to your tax preparer. Be sure to sign and date a form allowing your preparer to speak with the IRS. Then get organized. Working with the IRS can be analogous to preparing for a sporting event: you must be ready with a good defense and a great offense.
How do audits occur? Every business return is “scored” by the IRS. At random, the IRS selects a batch of returns and checks the score with an “average return”. If a selected return deviates from the average, the return is flagged for an audit. Bear in mind, being flagged for an audit does not mean that the IRS is out to get you. They want to know by what means did you arrive at certain figures which affect your tax liability.
So, how to handle an audit? The first rule is to reduce your risk of “exposure”. Do not open yourself up to further areas of investigation. If possible, meet your auditor at his office. Bring with you all documents necessary to support your business return: checks, receipts, contracts, credit card statements, etc. Remember, the IRS auditor is looking for under-reported income or over-reported expenses. Answer all questions with honesty, but briefly. Give your auditor copies of your documents but only if they are requested.
Ask for a copy of any document in the IRS file which you do not have. Do not become argumentative, belligerant, or rude.
Remember, there is never a perfect return. Every return is subject to interpretation of the tax codes. Your auditor may be a stickler for expense deductions under $100.00; another auditor may focus on expenses over $1000.00. The “picky auditor” can be frustrating and time consuming. Remember, stay calm.
Please be aware of this: no matter who prepares your return, you, as the business owner, are responsible for the contents therein. Approximately 4% of all business tax returns are audited. Handling an audit relies upon organizational skills and the ability to work with difficult personalities. And it takes time.
Green Apple Resources has represented clients during an audit. We have the skills necessary to deal with auditors. If you are having tax problems please contact us. We will assess your liability and give you a recommendation as to how to proceed.
Remember, your success is our business!
Learn how to use Quickbooks and save money!
Posted by Kim Perkins on September 22nd, 2011
Want to learn how to use Quickbooks or Quickbooks Pro? Using Quickbooks doesn’t have to be a stressful experience; here is some basic information to get you started.
QuickBooks is one of the most trusted and popular accounting software programs. QuickBooks sales account for 78 percent to 94.2 percent of all small business accounting software program sales. These numbers remain true in 2011.
Learning how to use QuickBooks is a valuable skill for both the accountant and the small business owner. Using QuickBooks properly can make routine bookkeeping tasks less time consuming and more accurate. Less time spent on bookkeeping frees up more time to spend on managing your business and increasing your sales. QuickBooks also gives you the tools for getting better and more accurate information for financial reports, management decisions, and tax returns.
It is important that your QuickBooks be set up and installed properly before you begin using it. QuickBooks has an excellent “interview” process for setting up a new company when you first start your software. You should carefully use each of the steps, including choosing a standard chart of accounts. Most skilled bookkeepers will easily use these interview steps. If you are uncomfortable with the set up process, then have a QuickBooks professional help you with the set up of your program.
Now you are ready to learn QuickBooks. It is advisable to start with one section of your bookkeeping, such as writing checks, and learn this function for a week or two and then add other functions, such as invoicing, becoming comfortable with each function before adding another.
Another option would be to set up a mock company with your QuickBooks program, using a name such as My Training Company, and use this to key in your data and practice while you are learning how to use QuickBooks. You can then set up your “real” company file when you are comfortable with QuickBooks
If you already have QuickBooks, then click on the Help button on your toolbar. From the pop up window that appears, you will be able to search through answers to almost every QuickBooks question. Be as specific as you can and you will usually get a very good step-by-step answer from the QuickBooks help section. For example, type in “how do I charge sales tax on an item” and you will be given choices ranging from a general overview of how sales tax is charged in Quickbooks as well as very specific topics involving sales tax.
If you are not able to find your answer with the internal help section, then the help pop up window also has a Live Community tab where you can present your questions and enter forums for discussion, questions, and also resources of FAQs.
If you leave the QuickBooks Help window open, the Help contents will change depending on the accounting transaction you are recording. As you begin using QuickBooks, this feature will suggest learning topics and very specific topics that will guide you in how to use QuickBooks to enter and use your data. It would be useful to leave the help section open the first several times that you use a new feature or function of QuickBooks.
Still can’t get it? There are Certified ProAdvisors who are trained to set up QuickBooks and train novices to the program.
We, at Green Apple Resources are Experts and offer our services to anyone wishing to begin the new fiscal year with QuickBooks.
Contact us!
Employer / Employee Relations
Posted by Kim Perkins on September 9th, 2011
Human Resources is part of accounting!
Do you believe Human Resources not considered part of accounting? Think again!!! Time and again, Green Apple Resources has encountered Sick Time, Paid Time Off, and employee status payouts which affect the bottom line of small businesses.
Question: What do you keep in your Employee Personnel File? The file should begin the date of hire. All job related documents or acknowledgement thereof goes into the file. Your employee handbook, outlining policies and procedures may be too cumbersome for each employee file but a signed and dated form stating that the employee received the handbook is paramount.
Here is a brief list of documents to be found in your
- Job Description and Classification
- Employees Application
- Your Offer of Employment
- IRS Form W-4
- Copy of I-9. (All originals should be kept in one separate file together)
- Signed receipt of Employee Handbook
- Performance Evaluations
- Forms Relating to Employee Benefits
- Next of Kin and Emergency Contacts
- Warnings and discipline notes
- Attendance/Tardiness Records
- Any contract between the Employer and the Employee
- Documents relating to the departure of your Employee
Although it is called a Personnel File, it is also a series of documents designed to protect you, the Employer! Remember, your business files, including Employee Personnel files can be subpoenaed by opposing attorneys at law. Do not put anything into a file that you would not want a jury to see!
Remember, your success is our business, and…
We want to be at the core!
Finding Tax Errors After You Have Filed Your Return?
Posted by Kim Perkins on September 5th, 2011
You can correct it by amending your return.
Here are some facts from the Internal Revenue Service about amending your federal tax return:
- When to amend a return: You should file an amended return if your filing status, your dependents, your total income or your deductions or credits were reported incorrectly.
- When NOT to amend a return: In some cases, you do not need to amend your tax return. The IRS usually corrects math errors or requests missing forms – such as W-2s or schedules – when processing an original return. In these instances, do not amend your return.
- Form to use: Use Form 1040X, Amended U.S. Individual Income Tax Return, to amend a previously filed Form 1040, 1040A or 1040EZ. Make sure you check the box for the year of the return you are amending on the Form 1040X. Amended tax returns cannot be filed electronically. Use a separate form for each year you are amending.
- Other forms or schedules: If the changes involve other schedules or forms, attach them to the Form 1040X.
- Additional refund: If you are filing to claim an additional refund, wait until you have received your original refund before filing Form 1040X. You may cash that check while waiting for any additional refund.
- Additional tax: If you owe additional tax, you should file Form 1040X and pay the tax as soon as possible to limit interest and penalty charges.
When to file: Generally, to claim a refund, you must file Form 1040X within three years from the date you filed your original return or within two years from the date you paid the tax, whichever is later.
To your wealth!
New Features in QuickBooks 2011
Posted by Kim Perkins on August 19th, 2011
For many small businesses, QuickBooks is the hub of important customer, vendor and inventory information. Accessing the right information at the right time can help the business owner make the right decision and respond faster to the queries of the customer.
Released September 2010, QuickBooks 2011 has many new features which allows the user to access information in billing, collections and customer activity. Below is list of new features found in QuickBooks 2011:
1. E-mail from Webmail Accounts: No longer do you have to open a web browser, log into an account and attach a file. QuickBooks does it all for you with the self-directed clicks. Please be sure that your e-mail recipient recognizes your address; otherwise, your mail may be labeled as spam.
2. QuickBooks Search: This operates in the same manner as Google search. The search feature will find recurring words or figures.
3. Customer/Vendor History: Customer/Vendor contact and transaction history is quickly available when editing or creating new transactions. This allows you to work more efficiently.
4. Customer Snapshot: This allows you to view a consolidated history of your customers purchases, average days to pay, and outstanding balances. You can also prioritize your top customers.
5. Collections Center: Use this feature to minimize time spent identifying customers overdue on their payments. This is a very important feature!!
6. Batch Invoicing: When charges to a customer are repetitive, this feature allows you to create a batch of invoices save them and edit them at a later date if services and pricing change.
7. Paid Stamp with Date Bar: Bill paid, received and entered, your invoice will now appear with a Paid Stamp and the date the bill was paid.
This is only a brief summary of new features found in QuickBooks 2011. For more information please contact us.
To your wealth!
Kim
IRS Tax Limitations are up to Interpretation
Posted by Kim Perkins on July 26th, 2011
The IRS is quite specific in terms of how long records must be kept. IRS Publication states, “You must keep your records as long as they may be needed for the administration of any provision of the Internal Revenue Code.” Your records are your responsibility. Loss or disposal of your records may be detrimental to your position should the IRS enact an audit or a judgement against you.
However, there is a time limit which favors both the IRS and the taxpayer: the Period of Limitations.
If You:
1) Owe no additional tax and (2), (3), and (4) below do not apply to you the limit is three years.
2) Do not report income that you should and the income is more than 25% of your gross reported income shown on your return the limit is six years.
3) File a fraudulent return there is no limit.
4) Do not file a return, there is no limit.
5) File a claim for a refund or a credit after you have filed a return the limit is either 2 years from when you paid the tax or three years from when you filed the return, whichever is greater.
6) File a claim for a loss from worthless securities, the limit is seven years.
The Period of Limitations is subject to filing dates and interpretations of the Internal Revenue Code.
Need help with culling out old paperwork, give us a call.
Record Management 101
Posted by Kim Perkins on July 20th, 2011
Paperwork, files, receipts, contracts, correspondence- without a proper records management strategy business owners are likely to find themselves losing the battle against documentation. One of the most important tasks that Small Business Owners face, is how to manage the records of their business.
Not everyone shares a passion for financial organization. We might recycle important letters, forget to back up computers or hold on to our tax documents in a bin labeled ‘in case of audit’. To run a successful business, however, records management is a matter to be taken seriously. If you can’t do it, or you don’t want to do it, hire someone who is able and willing to do the task.
Why does a business need to keep records? Well, according to the IRS: “If you are carrying on a business or engaged in a commercial activity you are required to keep adequate records. Such records must provide enough details to determine your tax obligations and entitlements.” In many cases original documentation must be maintained to support your records.
If the thought of making the IRS unhappy isn’t enough to motivate you to start a records management system, perhaps a better reason is business continuity. Business continuity means that your business is able to continue operating without stopping. You do not benefit when your business comes to a stop. Without proper records a business would have a hard time reaching its customers, suppliers, employees or backers. And a business can be interrupted in many ways – natural disaster, illness/death, fire – the list is endless. But these risks can be mitigated through good records management.
Here is a list of simple steps you can take to develop a records management system that works for your business:
Learn which documents hold long-term value to your company. Pricing contracts, certifications, licenses, etc.
Learn how long certain records must be held.
If you can’t organize it – Get someone who can!!!
Back it up. Back up systems are low-priced and current technology allows for “cloud computing”.
Keep the paper only when it is necessary. Purchase a scanner and e-file your records. Banks, as a general rule, keep your records on e-file and accessible for 7 years.
It can be argued that your business, what you do best, is only a strong as its financial framework. Invest your time in creating a financial foundation which will sustain your business, increase your efficiency and reduce your anxiety.
Call me if you have questions.
