Category: Accounting Advices

A third (34%) of UK accountants do not trust that outsourcing is done correctly or to a high enough standard, according to latest research from IRIS Software Group (IRIS), the UK’s leading provider of accountancy software and services.

The research reveals many accountants are reluctant to outsource certain elements of their role thanks to out-of-date assumptions. From the beginning of the COVID-19 pandemic, accountants have been their clients’ essential, trusted advisors. Yet with the threat of business survival still at large, accountancy professionals need more support in managing admin-heavy tasks so they can focus on what matters most – helping clients and growing their business.

IRIS’ latest insights paper surveyed 200 senior accountants and their opinions on outsourcing. It found 42% of accountants associate outsourcing with negative connotations, with 68% saying that they haven’t considered outsourcing in the last 6-12 months – despite a rising demand for advisory-led services since the start of the pandemic.

However, the research further revealed that accountants would gladly use the extra time freed up by outsourcing to dedicate more time to work-life balance (45%), complete higher fee-earning work (33%), build client relationships (27%), and one in five (20%) would use it to focus on business advisory.

Matthew Elliott, Managing Director at Clarity Accountants comments on the findings; “Accountancy is very traditional and value has always been found in the tangible reports created and delivered to clients. But now, there is new value to be found in relationships with customers and offering a better service. [By outsourcing] we’re not bogged down in compliance work, so we can focus on cross-selling services and increasing the value we bring to our clients.

Outsourcing gives us the bandwidth and capacity to scale the business. Without it, I don’t think we could have grown to the scale we have.”

Before COVID-19, 24% of accountancy firms surveyed were planning on hiring extra staff to help ease workload. Although no one could have predicted the uncertainty COVID-19 would bring, recruiting full time employees could have been the wrong decision at a time when staying agile was key. It demonstrated how the flexibility of outsourcing wins out over the risk of costly and unreliable recruitment.

Jim Scott, MD for accountancy at IRIS Software says;

“Firms must act smart. They have to be proficient with their time and proactive if they are to stay as the beating heart of British business.”

“Firms must act smart. They have to be proficient with their time and proactive if they are to stay as the beating heart of British business.We need to break the stigma attached to outsourcing. It’s an efficient way for accountancy firms to resolve any talent gaps, extend practice services and reduce costs, all while increasing profits and margins and enabling them to scale at pace. To unlock these benefits, it’s time for accountants to hang up their hang ups around outsourcing.”

The insight guide, Growth and productivity: is outsourcing the answer? can be downloaded here.

The post Growth and productivity: is outsourcing the answer? appeared first on Accounting Insight News.

Small business owners are feeling upbeat about the prospect of trading getting back to normal but are still struggling with their mental health and finding financial support, according to a survey from ACCA UK (the Association of Chartered Certified Accountants) and The Corporate Finance Network (CFN).

All owners reported that business trading is at the level they expected or slightly higher this month, a jump of 11% over last month.

And there was also unanimity from 100% of respondents that their businesses will return to pre- Covid levels of productivity and turnover within two years, with more than half (57%) believing they will achieve that goal within 12 months.

The SME Tracker, which reports what small businesses tell their accountants, reported data from accountants representing 12,135 SME clients and ran until yesterday.

However, despite the optimism, about their own prospects, business owners continued to report on the struggle to find suitable financial backing from traditional outlets now that government-backed loans are winding down.

More than half (57%) said they found it more difficult to obtain even an overdraft and the same percentage struggled to obtain an unsecured business loan. Others also had problems qualifying for a commercial mortgage (43%), which was a 10% increase from last month.

Anecdotally, some members even told the survey that even the most straightforward tasks, including opening bank accounts, have been made more difficult.

This frustration with the real-world practicalities of delivering on the opportunities now re-emerging may have contributed to another worrying set of responses concerning business owners’ wellbeing.

More than one in five (22%) said they were more stressed and anxious and 19% reported that they were either not sleeping, feeling unable to cope or that their mental health had deteriorated.

Glenn Collins, head of policy, technical and strategic engagement at ACCA UK said:

‘Our survey shows business owners are still struggling to secure the right financial support.

‘They are telling us that conventional and traditional sources of business finance, such as banks, are lagging behind and are making it difficult for them to complete even the most basic functions like opening bank accounts and securing an overdraft.

‘We would like to see government working with finance providers to improve access to the right finance options to help to support recovery and we will be engaging with both parties on this matter.’

Kirsty McGregor, founder of the Corporate Finance Network, said:

‘Small business owners can see the opportunity on the horizon and are seeing the early signs that trading can return to normal. However, they are also feeling uncertain about navigating the current financial landscape, which is causing them stress.

‘They are generally optimistic about the future, but they perceive a high degree of risk and uncertainty stands between them and achieving their targets.’

The post Optimism as small businesses start to get back to normal but financial support lagging behind appeared first on Accounting Insight News.

Did you miss our previous article…
https://www.digital-accountants.com/?p=732

By Jim Scott, MD for Accountancy at IRIS Software Group

Accountants have faced a number of challenges since the start of COVID-19. The sudden shift to remote working and changing customer demands meant many had to adopt new ways of working, fast.

Added to this, businesses have needed additional support to prepare for phase two of the evolving Making Tax Digital (MTD) legislative changes and will continue to need expert advice from accountants ahead of the next phases in 2022 and 2023.

As we emerge from the pandemic, accountants will play a critical role in their clients’ economic bounce back. There’s a real opportunity for accountants too – to unlock their practice’s full potential by nurturing their clients’ growth. As with happy clients, business growth soars.

By taking these small steps and creating better efficiencies for clients, accountants can gain the headspace needed to grow their own firms.

Focus on the specifics

Accountants need to be efficient, accurate, compliant, and productive to best help their clients. This requires the right tools – enter cloud technology, this can become an accountant’s most powerful weapon. Not only can it drive efficiencies by reducing technical complexity, increasing agility and supporting flexible working, it can also improve accountants’ ability to rapidly respond to changing customer needs.

For example, a huge task for any practice is recording business purchase orders, invoices and expense receipts. Whether a sole trader or limited company with many employees, submitting and recording receipts is a time-consuming and arduous task. Leading many accountants to fall into the trap of becoming preoccupied with lower value actions.

One extremely effective tool to combat this is record digitalisation, stored in the cloud. This tool can streamline lengthy admin tasks like tracking client receipts, capturing photos and digitally processing receipts, invoices, purchase orders and bank statements. This frees up accountants’ schedules, enabling them to respond to impromptu client requests and deliver value-add services.

It also allows for valuable collaboration with colleagues that can benefit practice operations in the long run. By minimising the occurrence of incomplete records or lost receipts and invoices by ‘snapping’ all records as they arise, standards can remain high and expectations can be met on a continuous basis.

Cloud technology is also hugely beneficial in staying compliant with and managing MTD. Through harnessing a cloud approach, accountants can not only streamline services, but also act smart and respond flexibly to changing requirements as they happen. Freed from time-consuming admin-based tasks, accountants can focus on more value-add services like advisory, which will ultimately help them cross-sell services to existing clients and grow their business.

The key to unlocking potential

Happy clients equal happy business. So, for accountants looking to unlock their full potential, it’s essential they get this right.

Adopting cloud software can play a huge role in empowering accountants to work smarter, not harder. It gives them the headspace they need to meet their goals today and tomorrow and focus on what they love and do best – supporting clients. Only then can they grow with confidence and thrive moving into the next normal.

The post How can accountants unlock their practices’ full potential? appeared first on Accounting Insight News.

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The SEC on Dec. 10 decided that two EY partners and one principal didn’t take the auditor independence rules seriously and doled out a few fines and sanctions. And like many of these auditor independence violations that get firms in hot water with the SEC or the PCAOB, the flagrant rules bending by EY had to do with providing non-audit services to an audit client. In this particular instance, the audit client was Cintas Corp:

This matter involves aiding and abetting and causing violations of the auditor independence rules arising from Ernst & Young LLP (“EY”), a public accounting firm, performing non-audit services for its audit client Cintas Corporation (“Cintas”) on a contingent fee basis.

EY billed and received payment from Cintas on invoices calculated on a contingent fee basis for tax credit and incentive services (“C&I services”) performed between July 2009 and August 2018. An audit firm is not independent of its audit client if it provides any non-audit services to the audit client for a contingent fee. As a result, EY was not independent of Cintas during that time period, and Cintas filed annual and quarterly reports with the Commission that were not audited or reviewed by an independent public accountant, as required by Section 13(a) of the Exchange Act and Rules 13a-1 and 13a-13 thereunder.

Philip Hurak

During that time period, Philip Hurak, Alan Greenwell, and Adam Bering also blissfully ignored Rule 2-01(c)(5) of Regulation S-X which says “[a]n accountant is not independent if, at any point during the audit and professional engagement period, the accountant provides any service or product to an audit client for a contingent fee … or receives a contingent fee … from an audit client.” The SEC also found out that EY’s policies and procedures also prohibited billing audit clients on a contingent fee basis.

As Cintas’s auditor, EY had to obtain pre-approval from the company’s audit committee in order to provide non-audit tax services to Cintas, according to the SEC administrative order. In obtaining pre-approval from the audit committee to provide those services, EY said it would bill for C&I services on a time and materials basis. The audit committee gave its blessing.

But …

Despite EY’s … representations that EY would perform C&I services for Cintas on a time and materials basis, in fact EY improperly billed Cintas for C&I services based on a percentage of the relevant tax credit or incentive secured. Specifically, from July 2009 through August 2018, EY charged, and Cintas paid, fees of approximately—sometimes exactly—10% of the benefit Cintas received for federal tax credits and 15% of the benefit Cintas received for state and local tax credits resulting from EY’s C&I engagements.

For example, from 2009 through 2018, EY assisted Cintas in obtaining certain federal tax credits related to hiring. Initially, EY billed Cintas for this work annually at exactly 10% of the credits Cintas obtained. In later years, EY billed Cintas for this work on a quarterly basis and reconciled the bills at the end of the year so that EY’s annual fees were approximately 10% of the total credits Cintas obtained for that year. Certain EY bills to Cintas summarized the amount of each credit and then stated the applicable charges. It was clear on the face of the invoices that the charges were 10% of the amount of the tax credits.

During that time period, Greenwell, who was the tax account leader for tax services EY provided to Cintas, including C&I services, failed to investigate red flags indicating that EY was billing Cintas on a contingent fee basis for C&I services, according to the SEC.

For example, in February 2016, Respondent received an email from Cintas indicating that, for 2014 and 2015, EY had billed Cintas estimated amounts for federal tax credit work and that a reconciliation would occur once the precise amount of the federal tax credits was known. The email suggested that the final fee would be contingent on the amount of credit Cintas received for the work, which Respondent failed to investigate.

Similarly, in March 2017, Respondent was copied on several emails regarding an EY invoice to Cintas for certain state tax credits. In the emails, EY managers told Cintas that the final invoice would be calculated and sent to the company once Cintas had secured the expected incentives. This suggested that EY’s fees would depend upon the final amount of the tax credits, and Respondent again failed to investigate.

During the relevant period, Respondent completed audit work papers certifying that EY complied with applicable auditor independence requirements. Respondent also verbally told Cintas’s audit committee that there were no issues that impacted EY’s independence. As described above, EY was not independent of Cintas. Respondent failed to investigate red flags indicating that EY was performing certain C&I services for Cintas on a contingent fee basis, which violated the auditor independence rules.

Hurak, who was an engagement manager for certain C&I services that EY provided to Cintas from April 2013 to August 2018, reviewed and approved certain EY invoices sent to Cintas for C&I services, including those services provided to Cintas on a contingent fee basis.

For example, in November 2016, Respondent approved billing Cintas for obtaining a large federal hiring-related tax credit. The invoice listed both the amount of the credit and the amount of the fee. The amount of the bill was almost exactly 10% of the credit amount that Cintas received. Cintas paid the invoice in January 2017.

Similarly, in September 2017, Respondent emailed Cintas an invoice for C&I services relating to three federal tax credits. The email also summarized the amount of each federal credit and the charges for each credit. Those charges were approximately 10% of the tax benefit Cintas received for each credit. Cintas paid the invoice in October 2017.

Bering, who was the engagement partner for C&I services that EY provided to Cintas from July 2009 through June 2018, failed to perform a reasonable inquiry in response to information that EY staff under his supervision were billing Cintas for C&I services on a contingent fee basis, according to the SEC.

By at least 2016, Respondent became aware of information that EY staff under his supervision were billing Cintas for C&I services on a contingent fee basis. In March 2016, in response to questions he raised to EY staff about Cintas invoices, an EY manager emailed Respondent that “[h]istorically [Cintas] has agreed to pay us fees that reflect the amount of benefit we bring.” In that same email, the EY manager included a chart showing Cintas’s tax credits and EY’s corresponding fees, which were a percentage of the tax credits. Respondent failed to investigate the information in the email suggesting that a contingent fee arrangement existed between EY and Cintas.

In January 2017, Respondent did not respond to an email from an EY manager specifically raising concerns that EY had been invoicing Cintas on a contingent fee basis for C&I services. When the manager followed up during a phone call, Respondent directed the manager to discuss the issue with the person responsible for invoicing Cintas and otherwise failed to perform a reasonable inquiry as to the manager’s concerns.

Alan Greenwell

Hurak, an attorney licensed in the state of Ohio who became an EY principal on July 1, 2018 before resigning from the firm in February 2019, agreed to pay a $20,000 fine and to cease and desist from future violations of auditor independence rules. He is also suspended from appearing or practicing before the SEC as an attorney for two years. He is currently a shareholder with accounting and advisory firm Clark Schaefer Hackett, according to his LinkedIn profile.

Greenwell, a partner throughout the relevant time period who left the firm involuntarily in March 2019, agreed to pay a $15,000 fine and to cease and desist from future violations. In addition, he is barred from appearing or practicing before the SEC as an accountant for two years. Greenwell currently is a shareholder and Cincinnati markets leader at tax and accounting firm Brixey & Meyer, according to his LinkedIn profile.

Adam Bering

Bering, an attorney licensed in the state of Ohio and current principal at EY, agreed to pay a $10,000 fine and to cease and desist from future violations. He also is suspended from appearing or practicing before the SEC as an attorney for one year.

In addition, Scott Clark, an accountant and former vice president of corporate taxation for Cintas, had his wrist slapped by the SEC for negotiating and approving payment of EY’s contingent fee invoices on Cintas’s behalf. He was fined $30,000 and agreed to cease and desist from future violations. Clark was also suspended from appearing or practicing before the SEC as an accountant for one year.

Related article:

EY Learns the Hard Way Not to Screw Around with the SEC’s Auditor Independence Rules

The post A Few EY Partners Didn’t Get the Auditor Independence Rules Right appeared first on Going Concern.

Did you miss our previous article…
https://www.digital-accountants.com/?p=648

Irrespective of your feelings on the matter, crypto could very well prove that it is here to stay.

There’s little doubt that cryptocurrency represents one wave of the future. Bitcoin and Blockchain have changed the way we see traditional paper-based money and metallic coinage. Savvy investors are getting in “on the bottom floor,” as the saying goes. Virtual currencies don’t need to feel like a gamble or a fade. Irrespective of your feelings on the matter, crypto could very well prove that it is here to stay. All kinds of cash – even the offline ones – go through cycles of boom and bust. Inflation can change everything, and so can fluctuating tax codes. What is the IRS looking for, and how can you avoid running afoul of their regulatory agents? 

Closer Look at Cryptocurrency Itself 

According to federal tax rules, cryptocurrency is classified as property and not a financial asset. By the IRS’ reckoning, it is a capital asset as well. So the gains and revenue you generate from selling or trading capital assets are indeed taxable. Other types of capital gains are stocks, bonds, houses, and widgets. Recent investment innovations such as Dogecoin and Bitcoin also fall under this category. So if your income is higher than your baseline, you receive a capital gain. Conversely, if you end up losing money, that is clearly a capital loss. 

Gains Help Diminish the Associated Taxes

Taxes are a certainty in life. However, taxes have been collected throughout human history via various foodstuff resources such as wheat and rice. Reducing your tax bill takes some careful planning and plenty of patience. Keep your short-term gains until they convert into long-term gains instead. This process should take about a year, so you will be richly rewarded if you can resist the urge to sell. 

Wager Gains and Losses Against Each Other 

Investments come with some inherent risks. They might not work out the way you wanted. Even so, be bold enough to pit prospective gains against potential losses. Subtract your crypto losses from the gains you made—additionally, factor value appreciation into your calculations. Please be advised that you’ll inevitably run into strict limits if you play it this way.  

Capitalize on The Seller’s Market

Low-income years are perfectly normal. Despite the loss of revenue, your small business (or S-Corporation as well) can still stay afloat. Selling at the right time decreases the amount of taxes you have to pay. This scenario benefits you the most after you’ve retired because you won’t be bumped into a higher tax bracket. 

Trust the Professionals at the Harding Group

Unlike other accounting firms, The Harding Group, located in Annapolis, MD, will never charge you for consultations and strive for open communication with our clients. 

Are you interested in business advising, tax preparation, bookkeeping and accounting, payroll services, training + support for QuickBooks, or retirement planning?  We have the necessary expertise and years of proven results to help. 

We gladly serve clients in Annapolis, Anne Arundel County, Baltimore, Severna Park, and Columbia. If you are ready to take the stress out of tax time, contact us online or give us a call at (410) 573-9991 for a free consultation. For more tax tips, follow us on FacebookTwitterYouTube, and LinkedIn

The post Your Guide to Decoding Complex Cryptocurrency and Crypto Tax Concerns appeared first on The Harding Group.

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Is accounting an obsolete major? That’s the question posed by John “Jack” Castonguay, PhD, CPA, in the August/September 2021 CPA Journal. He writes:

Accounting — at least as an independent field of study — is becoming obsolete in today’s technology- and analytics-focused world. Its value lies in its interdisciplinary applicability and position as a foundational business curriculum. In recognition of that reality — and to maintain a pipeline of candidates open to CPA licensure, increase the number of engaged accounting students, and keep the profession relevant to the next generation — this author believes that colleges and universities should eliminate the accounting department as a stand-alone department and reorganize accounting under finance and information systems departments.

It’s long been established — and we here at Going Concern have nearly 13 years of evidence littered throughout our archives to prove it — that the accounting profession has a recruitment problem. A decade ago, the profession’s efforts were honed in on increasing diversity, but nowadays it’s about getting people in the door.

The most recent AICPA Trends report [PDF] — published in 2019 — tells us that accounting enrollments are down overall, though it does look like there’s some positive movement on the diversity side:

Total projected accounting enrollments are down 4% from the highs of 2016, but are still among the highest on record. Master’s enrollments are down 6% from 2016. Racial/ethnic diversity has increased in the 2017-18 academic year. Universities have reported increases in Hispanic or Latino enrollees of 3 and 8 percentage points at the bachelor’s and master’s levels, respectively. Seventy-two percent of bachelor’s of accounting programs and 65% of master’s of accounting programs expect to have the same or higher enrollment in 2019.

We are anxiously awaiting the newest AICPA Trends report, which is published every two years and therefore should show up anyday now. Until then, we can only guess on what the next batch of numbers will look like and hand-wring over the data we do have.

The Bureau of Labor Statistics forecast employment of accountants and auditors to grow 13.1% from 2012 to 2022; current BLS data projects 7% growth for this segment from 2020 to 2030, about as fast as the average for all occupations.

About 135,000 openings for accountants and auditors are projected each year, on average, over the decade. Many of those openings are expected to result from the need to replace workers who transfer to different occupations or exit the labor force, such as to retire.

Let’s talk about retirements while we’re on the topic. A few years back, the AICPA estimated that a whopping 75% of its members (read: CPAs) would be eligible for retirement in 2020. When you combine this figure with waning interest in accounting as a major, more and more accounting graduates foregoing the CPA exam, an accounting professor shortage, and the pressures of a traditionally reactionary profession to take proactive steps to adapt to new technology, well, it doesn’t look pretty.

The CPA Evolution project aims to address that last issue, and the AICPA and NASBA recently released a revised CPA Evolution Model Curriculum upon which university accounting programs can build their curricula but are by no means required to. I’m hearing grumblings from deep within the bowels of academia that some professors are less than thrilled about this project, but no one is willing to go on record, so if you’re an accounting professor with an opinion on CPA Evolution good or bad and willing to put your name on it, please do reach out.

The problem with this approach, writes Castonguay, is that the new curriculum fails to address the “jack-of-all-trades” problem; early-career accountants in particular are expected to know a little bit about a lot of stuff, essentially.

Even though the CPA Evolution Project is aligning the credential with practice, it is also underscoring that the value in the license lays not within the accounting curriculum that has existed for decades; the new value is the technology, the analytics, the systems, and the tax research. But I believe the curriculum realignment anticipated by the CPA Evolution Project will only lead to an even faster decline in enrollments if accounting remains siloed as a stand-alone major.

As the profession gets more specialized, the accounting curriculum is expanding to include more information, more courses, more skills, and more tracks—but students are less skilled at each one. It’s a cycle that can’t be fixed by repackaging existing courses. It can only be fixed by eliminating the accounting major and unlocking accounting’s interdisciplinary value and specialization within finance, information systems, or other departments.

In order to better recruit future accountants (or should we start calling them accounting analysts?), Castonguay suggests a total rehaul of accounting education, rolling existing accounting curriculum into other departments. This, he says, is preferable to trying to cram technology content into existing accounting programs instead, which seems to be the current plan.

[T]he accounting department itself should be eliminated and reorganized predominately under finance and information systems departments. In the author’s opinion, this approach will unlock the value in the fast-evolving accounting roles that accounting firms and future employers seek from graduating students.

So what do we think? Is accounting a dead major? Is the solution to the profession’s pipeline problem as easy as parasitically latching onto other business majors hoping to snag a couple future CPAs with the captivating glitter of accounting fundamentals?

I’ll say this: the next few years are going to be very, very interesting.

Photo by Ana Arantes from Pexels

The post Is Accounting an Obsolete Major? appeared first on Going Concern.

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Relatives and children can both count as tax dependents.

Relatives and children both count as tax dependents. They matter so much because they qualify you for certain breaks you couldn’t access otherwise. Such breaks are bigger than you might believe, which of course, means filing the paperwork correctly becomes an even more attractive incentive. We’ll show you how to identify and declare your dependents on your returns to make them as valid and legitimate as possible! 

Let’s Define the Term 

Kids and relations must possess certain attributes to fit this description. When they do count, you can take advantage of valuable deductions and credits that will help you save some money. The Head of Household filing status is a big deal, and it carries an immense amount of responsibility. That said, this distinction allows you to tap into the Child Tax Credit, the Earned Income Tax Credit, or the Child and Dependent Care Credit. Whichever one applies best will depend on your circumstances

How Your Children Can Be Named as Tax Dependents

First of all, the child or children you claim must belong to your family unit. Sons, daughters, stepchildren, foster children, and siblings all fall into this category. Any children of such family members likewise qualify. However, the kids need to meet age restrictions. For instance, they must be 18 or 23 or younger; the second caveat comes from the “student” designation as long as they have been in school for five months of the calendar year. That’s the minimum threshold, at least. Even if your children exceed these age limits, you can still claim them if a doctor has diagnosed them with a permanent or total disability. 

The So-Called Residency Test

The child in question must also live in your home with you. Some exceptions are accepted, such as moving away to college or spending time in the hospital. Cases of divorce or separation can complicate matters. In general, though, the custodial parent may claim their children as their tax dependents. 

The Income Stream Test

When your children have a steady income, the lines blur even more. They cannot be named dependents if they claim more than 50% of their own financial support. Likewise, they are not allowed to file a joint return with someone other than you. The loophole has to do with possible spouses, though. That means the child and their spouse are permitted to claim tax refunds or estimated taxes paid. Finally, they must pass the citizen/resident test. What is that? We will have to explain next time!   

Trust the Professionals at the Harding Group

Unlike other accounting firms, The Harding Group, located in Annapolis, MD, will never charge you for consultations and strive for open communication with our clients. 

Are you interested in business advising, tax preparation, bookkeeping and accounting, payroll services, training + support for QuickBooks, or retirement planning?  We have the necessary expertise and years of proven results to help. 

We gladly serve clients in Annapolis, Anne Arundel County, Baltimore, Severna Park, and Columbia. If you are ready to take the stress out of tax time, contact us online or give us a call at (410) 573-9991 for a free consultation. For more tax tips, follow us on FacebookTwitterYouTube, and LinkedIn

 

The post How to Properly Claim Tax Dependents on Your Paperwork appeared first on The Harding Group.

How can CPAs make a difference?

It’s a universally acknowledged fact that money makes the world go around. That’s just how it is. No matter how you feel about this principle of modern society, you need plenty of money to keep your business running. For all of the income you generate, you must also realize that the Internal Revenue Service requires you to pay your share of taxes. That’s when you should ask a certified public accountant to supervise your financial affairs. How can CPAs make a difference? 

CPAs and the IRS 

The IRS is always watching. Despite the volumes of submissions they have to comb through when they detect errors, you and your business could be in for a world of trouble. Even if you make a small mistake or you aren’t aware of recent changes to applicable tax laws, the IRS will not be lenient about it. Hire a CPA to take care of the tax return process for you. 

Your In-House “Tax People” Aren’t Overextended 

While you may have employees on your payroll that handle your taxes, they probably also have other duties. When you hire a tax professional (or even a team of experienced CPAs), you’ll be saving your regular team members a great deal of stress. 

Time is Money, and Accountants Handle the Math 

Inflow, outflow, income, expenses, what do these terms all mean? They are all accounting-based concepts that you probably only have a fleeting grasp of. Skilled accountants can handle all of the tricky calculations and deductibles that may be in play. Plus, they’ll tell you how to categorize each item in your accounting software. If you don’t have any software, your CPA can manage everything for you throughout the year and not just when the tax day deadline is approaching!  

They’ll Discover Unexpected Tax Rebates 

Tax rebates are always helpful. These incentives are offered as ways to encourage businesses to pursue sustainable growth. What do we mean, exactly? In other words, the government wants you to be friendlier to the environment. Your CPA can inform you about the potential rebates that you’re eligible to receive and how to take advantage of them on your return paperwork. 

trust the professionals at the Harding group

Unlike other accounting firms, The Harding Group, located in Annapolis, MD, will never charge you for consultations and strive for open communication with our clients. 

Are you interested in business advising, tax preparation, bookkeeping and accounting, payroll services, training + support for QuickBooks, or retirement planning?  We have the necessary expertise and years of proven results to help. 

We gladly serve clients in Annapolis, Anne Arundel County, Baltimore, Severna Park, and Columbia. If you are ready to take the stress out of tax time, contact us online or give us a call at (410) 573-9991 for a free consultation. For more tax tips, follow us on FacebookTwitterYouTube, and LinkedIn

 

The post Here Are Some of the Ways CPAs Can Save You Some Cash appeared first on The Harding Group.

Don’t run the risk of being punished with harsh penalties from the IRS!

Tax Day 2022 returns its original April 15th deadline. While that seems like it’s ages away, it’s a good idea to stay on top of your finances. Falling behind on tax payments (or even worse – outright dodging the taxes you are supposed to pay) can land you in some serious hot water. The Internal Revenue Service frowns on any misconduct of all descriptions. Don’t run the risk of being punished with harsh penalties. They’ll hamstring your attempts to generate business and harm your reputation with clients and customers alike!

Late Filings and Overdue Payments

The two most frequent violations of IRS regulations are late filings and overdue payments. The punishments are different depending on the entity at fault. If you’re running a sole proprietorship or in charge of a C Corporation, the late fee seems relatively small. It’s only 5% of the total taxes owed for each month that you are in arrears. But the penalty will keep growing until it maxes out at 25%.

For S-Corporations or partnerships, the fine is much stiffer. How many partners or shareholders are involved? You can expect to pay $200 depending on the size of your corporation. The new fine is $210 as of the tax year for 2020. While it doesn’t seem like that large of an increase, it’s still something you won’t want to pay! Late payment penalties, on the other hand, are not as severe. The IRS will hit you with a .5% penalty of the amount you owe for every month you are behind on paying. The maximum limit is 25%, which can still hurt your bottom line

Request the First-Time Abatement 

One solution is to request first-time abatement relief. This option is the most basic way to seek mercy from the IRS. If you don’t have this document on your dossier with them, they will forgive the penalty. Even so, this will only work once. The government does not like repeat offenders.   

Provide Reasonable Cause for Tax Issues 

Suppose that you’ve already used your first-time abatement. What then? Another solution is to furnish the IRS with a good reason why you have tax issues in the first place. Rely on these specific keywords in your documentation to convey the circumstances: death or serious injury; Fire, Casualty, or Natural Disaster; Missing Records.  

Trust the Professionals at the Harding Group

Unlike other accounting firms, The Harding Group, located in Annapolis, MD, will never charge you for consultations and strive for open communication with our clients. 

Are you interested in business advising, tax preparation, bookkeeping and accounting, payroll services, training + support for QuickBooks, or retirement planning?  We have the necessary expertise and years of proven results to help. 

We gladly serve clients in Annapolis, Anne Arundel County, Baltimore, Severna Park, and Columbia. If you are ready to take the stress out of tax time, contact us online or give us a call at (410) 573-9991 for a free consultation. For more tax tips, follow us on FacebookTwitterYouTube, and LinkedIn

The post 2 Ways You Can Avoid Penalties from the IRS appeared first on The Harding Group.

It’s possible to balance your budget.

It’s possible to balance your budget. Although this prospect gets even harder when you run a business, you can do it without fear of breaking the bank. With a solid financial foundation in place, you can ensure that your startup or sole proprietorship survives. Being an entrepreneur is exceedingly difficult, but if you have a head for numbers, it’ll be somehow easier, at least in this respect. 

ssemble Your Income Streams 

The first thing you’ll want to do is gather all of your revenue sources. How much do you make every month, and how do you earn your income? The Profit and Loss budget report helps you evaluate the fiscal health of your business. It all comes down to the business model you’ve chosen – and that differs depending on the industry your company operates in. For example, writing, editing, and consulting services all intertwine. 

Figure Out Your Fixed Costs

You’re also on the hook for the fixed costs that recur every month. That’s why it is important to figure out what they are and how you can pay them off. In simple budgetary terms, the “fixed costs” are what you pay for every month and don’t fluctuate from one billing cycle to the next. Rent, Internet, website hosting, and outsourced payroll services all fall under this category. Once you’ve determined what each cost is, add them up. The sum will be what you owe every month.  

Factor In the Variable Costs 

However, plans change. As such, it’s always a good idea to prepare for variable costs. Unfortunately, it can be hard to predict these costs and how much you’ll have to pay to cover them. Usage utilities (gas, electric, and water) are some of the most common. More complicated ones are shipping costs, sales commissions, and travel costs. High profits spur your business’s growth, but failing to meet your minimum thresholds will set you back instead.  

Forecast Your Incidental Spending 

One-time or incidental expenses are inevitable. The upside is that, at least in theory, you won’t have to worry about them again once you’ve addressed them. A business course (maybe in pursuit of your MBA) and assets like a new computer or smartphone both count. Unexpected costs can torpedo your business, so do your best to prevent them from happening! 

Trust the Professionals at the Harding Group

Unlike other accounting firms, The Harding Group, located in Annapolis, MD, will never charge you for consultations and strive for open communication with our clients. 

Are you interested in business advising, tax preparation, bookkeeping and accounting, payroll services, training + support for QuickBooks, or retirement planning?  We have the necessary expertise and years of proven results to help. 

We gladly serve clients in Annapolis, Anne Arundel County, Baltimore, Severna Park, and Columbia. If you are ready to take the stress out of tax time, contact us online or give us a call at (410) 573-9991 for a free consultation. For more tax tips, follow us on FacebookTwitterYouTube, and LinkedIn

 

The post Here’s How You Can Budget Your Small Business! appeared first on The Harding Group.