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Which Benefits Should You Offer Your Employees?

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Hardaway Axume Weir CPAs - Employee Benefits In a recent study, 77% of workers said that the benefits package an employer offers is extremely or very important in their decision to accept or reject a job.*

If benefits are that important to your employees, they are critical to your bottom line. You know that attracting and retaining top-notch employees generally translates into growing and retaining business. That’s why your financial professional is an important ally.

The Right Stuff

Benefits don’t fit neatly into a one-size-fits-all approach. The best benefits package is one that meets the needs of workforce force. Your financial professional can help design the right benefits package to fit your budget.

Bring in a Pro

Use the upcoming open enrollment season to showcase your benefits and their value — and to engage your employees so they make informed decisions. Make it a goal to achieve 100% participation in your 401(k) plan, meaning that all employees make all their benefit elections (keep in mind that waiving coverage is an election).

Keep it Simple

One reason employees may not be participating is that they don’t understand their options. You can remove that roadblock by providing easy-to-understand materials in a variety of ways (such as one-on-one and group meetings, benefit fairs, enrollment kits and intranet and online tools). Your financial professional will be happy to help with your communication strategy.

If your benefits package is changing this year, highlight the differences and be candid with your employees about why changes are being made. Be prepared for questions. And allow plenty of time for your employees to consider their options. (Three weeks is generally thought to be a reasonable length of time.)

Plan a 401(k) Day

Yes, there really is a 401(k) Day. Originally, it was observed the Friday following Labor Day. These days, employers decide when and how to celebrate the popular retirement plan. Since open enrollment period is all about benefits, why not publicize the benefits of your 401(k) retirement plan at the same time.

Whether you need individual or business tax advice, give us a call. We’ve got the answers you’re looking for, so don’t wait. Call us today.

* ebri.org Notes, Vol. 36, No. 11, November 2015

Give us a call at 661-323-1514 today to learn more, or request a free initial consultation online.

Getting Ready for Payroll in QuickBooks Online

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Hardaway Axume Weir CPAs - QuickBooks PayrollTaking on your company’s payroll with QuickBooks Online? Knowing what you’re up against ahead of time will make your setup tasks much easier.

 

Payroll is probably the most complex element of small business accounting. Not only are you directly responsible to your employees, but you also have to make sure you’re handling everything related to benefits and payroll taxes correctly.

Whether you’re switching from a manual system to QuickBooks Online, or you’ve just hired your first employee, you’ll soon discover that the site can make your payroll-related tasks much more organized and accurate – speeding up the process tremendously.

But before you start getting ready for your first payroll run, you have a lot of setup work to be done. Be sure to leave yourself time before those first paychecks are expected.

 

Our Purpose Here

We’ll provide some step-by-step instruction, but initially, we just want you to see what information you’ll need to have available and how QuickBooks Online handles it. This is not meant to be a payroll setup tutorial.

 

Building a Backbone

There’s no particular order set in stone for your payroll preparation tasks, although you will need to provide some background information about your company and its policies before you can start creating employee records.

QuickBooks Online doesn’t walk you through the steps required. It does though display a page with links to all of the data you’ll have to enter. Click the gear icon in the upper right, and then click Payroll Settings. You’ll see this screen:


QuickBooks Online’s Payroll Settings screen displays links to the pages where you’ll manage your setup tasks.

You would have entered information about your Contact Information and Work Locations (under the Business Information heading) when you first signed on to QuickBooks Online. At the same time, you would have been exposed to the Chart of Accounts, which already has accounts designated for payroll. You can see them by clicking Preferences | Accounting, but please do not customize these. If modifications are needed, we’ll do them for you.

 

Payroll Policies

How often will you pay your employees? Go up to the Payroll heading in the upper left and click on Pay Schedules. Click Create and open the drop-down list next to Pay Period to select the frequency desired. Then enter the date for the first payroll you’ll run in QuickBooks Online and the end date for the period that it covers. Click the box below if you want this to be the default setting for all employees. Then click OK to return to the previous page.

Open the Vacation and Sick Leave Policies window. If you don’t yet have accrual rules for these paid days off, let us help you here. It’s complicated. When you’re done, click the back arrow to return to the Pay Policies window and select Deductions/Contributions. Are you offering benefits like health insurance? You’ll need to have your paperwork and information handy before you start completing this section.


Before you can pay employees, you’ll need to have entered information about the benefits you offer so you can withhold dollars for them.

Click the plus sign (+) in front of Add a New Deduction/Contribution and complete the fields here, then click OK. You’ll assign these deductions to employees on their individual records in QuickBooks Online. If there are any Employee Garnishments needed (like child support), click the down arrow next to Add Garnishment for and select the worker from the list. You’ll provide details for these in the window that opens. This information was most likely provided to you by the agency requesting it. When you’re done, click OK.

 

Taxes and More

If you’re new to payroll and have never dealt with payroll taxes before, you’re going to need our help getting this complicated element set up correctly. Even if you have, we’d recommend that you let us work with you. QuickBooks Online does a good job of providing guidance here, but failure to submit payroll taxes (or pay them incorrectly) can lead to penalties and fines – or worse.

There are other setup tasks you’ll need to complete, like:

  • Connecting your payroll bank account to QuickBooks Online.
  • Creating employee records.
  • Setting payroll production preferences.

Setup is by far the most challenging part of processing payroll in QuickBooks Online. Once that’s done, you’ll just be entering hours and making modifications. Please do connect with us if you’re planning to take this on, and we’ll make sure you get a good start.

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  • Are you using a payroll service or doing payroll manually? Consider letting QuickBooks Online taking over this task.
  • QuickBooks Online contains links to your payroll setup tasks, but it doesn’t walk you through the process. Let us.
  • Hiring your first employee? Talk to us about managing your payroll in QuickBooks Online.
  • Are you offering vacation and sick time leave to your employees for the first time? We can help you set up accrual rules.

Your time is valuable and accounting software is not your specialty. That’s why we provide training, oversight, and ongoing support. Call us at 661-323-1514 and ask for Ken to discuss your specific needs.

Important Facts About the New Laws on Mortgage Interest Tax Deduction

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Hardaway Axume Weir CPAs - Mortgage Interest Tax DeductionIf you are one of the millions of Americans who own your own home, you should be thinking about how President Trump’s latest tax bill helps or dents your finances; particularly when it comes to the ever-popular mortgage interest deductions. This article should put you ahead of the subject.

First off, if you are a homeowner with no intentions of changing anything soon, your mortgage deductions are unaffected (with a couple of exceptions we deal with below).

The new laws apply only to those buying a home after 15th December 2017. If you fall into this category it boils down to understanding 3 key items:

  • There’s a cap of $750,000 (previously $1 million) on your total mortgage value (covering private and secondary homes in aggregate) that qualifies for interest deduction.
  • Discussing interest rate deduction on new home purchase goes hand-in-hand with the cap placed on Property Tax Deduction – now set at $10,000 (previously unlimited).
  • The Standard Deduction has been nearly doubled for all categories of tax filers in 2018 onwards.

Logically, anyone who intends buying in expensive locations or/and locations with property taxes above $10,000 should stop to think about it:

  • High property prices of course generally call for higher mortgage financing, And it often happens that premium locations are also the ones with the highest real estate taxes – a double whammy effect if you will.
  • In situations like this, it seems that the traditional enthusiasm around interest rate deductions may become somewhat jaded. It gives a whole new meaning to the popular realtor’s mantra, “location, location, location!”

The one escape hatch is to simply forget about itemizing interest payment and property tax claims; go to the expanded Standard Deduction now provided. But then again, the apparently increased relief offered by this new provision should be viewed alongside the knowledge that individual personal exemptions have been removed – which brings family size into the equation. If you have a lot of dependents (e.g. children or elderly parents) you may find yourself after all is said and done unchanged – or worse still, going backward.

Here’s another curveball that throws the cat amongst the pigeons: irrespective of when you bought or intend to buy your home/ homes (i.e. before or after the December 2017 law, it’s all the same) interest on second mortgages and on mortgages attached to unrented vacation residences is no longer deductible. Period. Given this, and all the other considerations are drawn into the conversation (as outlined above), it is impossible to provide a quick “catch-all” solution on interest rate deductibility. We can say this, however:

  • It is likely there’ll be a homebuyer movement away from expensive property purchases for the foreseeable future, resulting in a growing tendency to relocate to tax-friendlier regions.
  • The upper-middle class homebuyers will need to analyze these new tax provisions with a fine toothcomb, and even consider renting out vacation homes for part of the year to bring interest rate deduction back into the equation.
  • Those buying at home prices under the $750,000 cap limit with under-$10,000 property tax limits should have a far easier passage.

Conclusion: It’s at times like this that astute tax advice paves the way forward and dispels doubt. As you can see there are numerous considerations, especially for larger families and those fortunate enough to own more than one home. Also, those on the cusp of relocating should be looking at all the variables as well as state taxes before making the move. Our team is geared to answer your questions on every aspect of real estate related deductions. Contacting us sooner than later may be the wisest decision you can make this year.

Whether your business focuses on property management, development, investing, or if you’re a real estate broker or agent, Hardaway Axume Weir CPAs, LLP is ready to support all your tax and accounting needs. Call us at 661-323-1514 today for more information or request a free consultation online now.

What To Do When You Get an Audit Notification

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upset individualYou’ve opened the mail and your heart sinks. Your business just received an audit notification from the IRS. Click through to learn how to keep your cool and prepare for what happens next.

You may be surprised to learn that not every audit notification you receive will be legitimate. So, first, make sure you received an official audit notification. The Internal Revenue Service (IRS) will notify you either by letter or by a phone call followed by a letter. The IRS does not notify taxpayers about audits through email, so if you do get an email saying you’ve been selected for an audit, it’s probably fraudulent. If you’ve determined that you’re definitely getting audited, your next step is to learn what’s involved.

What Exactly Is an Audit?

According to the IRS, an audit is “a review/examination of an organization’s or individual’s accounts and financial information to ensure information is being reported correctly, according to the tax laws, to verify the amount of tax reported is substantially correct.”

That’s it. It’s an audit — not an arrest and not a trial — so don’t panic. Contrary to popular belief, an audit doesn’t automatically mean you made a mistake. Yes, an inconsistency can trigger an audit if there’s a discrepancy between what’s on a tax form and what you actually reported. But the IRS may choose to audit a taxpayer based on random selection or a statistical formula. Also, an audit may be less intrusive than you feared. For example, it may be entirely through the mail, although in some cases, it may be at an office or the taxpayer’s home or place of business. And not all audits result in your owing money. In fact, your audit may lead to no changes at all.

Both businesses and individuals may be audited (even sole proprietorships), and there may be some differences in how they are handled. One thing that virtually all audits have in common, however, is access to records. The IRS is going to want to check some of your records, and maybe a lot of them. Did you deduct business expenses? Make some substantial charitable contributions? You’ll need to show the IRS some receipts. The good news is that in many cases the IRS accepts electronic records.

What Happens Next?

There is no typical length of time for an IRS audit, but if you have your records handy and cooperate fully and quickly, you increase your chances that it will be as brief and painless as possible. Ultimately, the IRS may determine that you owe more money. At this point, you can pay it or you can appeal. The audit doesn’t have to be the end of the road. There is a substantial appeal process and a long and expensive court trial may not even be necessary.

The important thing to remember is that you don’t have to go it alone! Your accountant can work with you throughout the audit process, including any appeals. The key factor is to call us as soon as you receive the notification about your audit. We’re ready to work through the details and help you gather any records you may need.

We invite you to request a consultation online now or call us at 661-323-1514 to learn more about how we can help you save money on your taxes.

Business Auto Deductions: Two Ways to Calculate

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tax deductionsDo you drive your car for business purposes? The costs of operating and maintaining your vehicle are potentially deductible. Here are some guidelines.

Two Methods

The IRS provides two basic methods for computing deductions for the business use of an automobile.

Actual expense method. With the actual expense method, you deduct the actual costs of operation, including licenses, registration fees, garage rent, repairs, gas, oil, tolls, and insurance. Additionally, you may claim depreciation deductions (and/or elect expensing under Section 179). If the car is leased, you deduct your lease payments rather than depreciation. (Certain limits apply.)

Standard mileage rate. Alternatively, you may choose to use an IRS-provided standard mileage rate. With this method, you multiply the number of business miles you drive during the year by the applicable rate (58¢ per mile for 2019). When you use the standard mileage rate, you don’t separately deduct expenses such as gasoline, oil, insurance, repairs and maintenance, depreciation, or lease payments. However, business-related parking fees and tolls are separately deductible.

Which Should You Use?

Generally, you will want to use the method that produces the largest deduction. If your vehicle is costly to own and operate, the actual expense method may be more advantageous. Conversely, if your vehicle is fuel efficient and/or inexpensive, the simpler standard mileage rate method may be a better choice.

With either method, the IRS requires that you keep records that substantiate your business use of the car: the date, place, business purpose, and number of miles you travel. When you use the actual expense method, you’ll also need records substantiating the amount and date of car-related expenditures. You can avoid having to retain receipts by using the standard mileage rate.

If you decide to use the standard mileage rate for a car you own, you may switch to the actual expense method in a later year. However, you won’t be able to claim accelerated depreciation deductions for the car. With a leased car, you have less flexibility. If you choose the standard mileage rate the first year, you must use it for the entire lease period.

Personal and Business Use

If you use your car for both personal and business purposes, you must keep track of your mileage for each purpose. To figure the percentage of qualified business use, you divide the business mileage by the total mileage driven. Then multiply that percentage by your total expenses.

We invite you to request a consultation online now or call us at 661-323-1514 to learn more about how we can help you save money on your taxes.

Smart Pricing Strategies

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dollar signIt’s a given that businesses need to be profitable to survive. A key element in making a profit is pricing. Here are some suggestions that can help you get your pricing right.

Identify Your Costs

If you don’t know what your product’s or service’s total costs are, you can’t price them accurately. What makes up total cost? The components may include:

  • Cost of materials or merchandise
  • Labor costs, including salaries plus benefits
  • Overhead costs, such as taxes, rent, insurance, marketing, utilities, and transportation

Determining how much you need to charge just to cover your costs is an essential first step in setting prices. Be sure to reevaluate your costs regularly. If you are experiencing difficulty moving certain products at an acceptable profit, your costs could be too high.

Know Your Customers

Customers generally fall into distinct categories. Some are very price sensitive. Others focus less on price and more on convenience. The implied status or exclusivity of certain goods and services is very important to certain other customers. Once you identify the type of customer you are targeting, it becomes easier to set your prices accordingly.

Know Your Competitors

Knowing what your competitors charge for similar products or services helps you position your business in the marketplace. For example, if you determine your competitors focus on low prices, you can decide if you want to differentiate your business by focusing on superior service.

Leveraging service as a value proposition may justify charging higher prices than your competition. Or there may be other differentiators that allow you to charge higher prices, such as exclusive merchandise or highly knowledgeable employees.

Experiment and Monitor

Look for ways you can sell options, service contracts, and add-ons to a primary product or service, perhaps by offering several “packages” at different prices. Or consider applying discounts based on the quantity ordered.

Continuously monitor your prices and your profitability. Knowing which products or services are making you money allows you to make data-driven decisions about inventory and pricing.

We offer a FREE initial consultation to discuss our management consulting services. Call us today at 661-323-1514 and ask for Ken.