finance, tax, Quickbooks, account FAQs for Peoria & Morton, IL

How can I save on my tax preparation fees?

One key word: Organization. We mail our clients tax organizers in January. This is a helpful tool in letting you know what you had last year so you can see if you have the same information this year. The organizer asks questions to see if you have any different deductions for the current year. If you don’t have an organizer, assemble your information in groups. For example, all W-2’s and 1099’s are grouped together, as well as bank interest statements, charitable contributions, etc. Opening and sorting mail takes time, so you can save some preparation time if we don’t have to do that.

I’ve heard that the home office deduction is an IRS red flag. Is this true?

No, it’s not a red flag. As a matter of fact, the IRS is issuing information on how to identify and correctly report home office deductions. The IRS understands that there is a growing amount of home based businesses, and they may qualify for this deduction.

I use my auto for business extensively. What do I need for documentation at tax time?

This is an area the IRS is examining closely. You must record the date, beginning and ending mileage, and purpose of the trip to be deductible. You’ll also want to identify personal mileage driven during the year. One suggestion: Purchase a travel book at your office store and put it in your car. They only cost about $2 and can potentially save you thousands of dollars!

What information do I need to deduct entertainment expenses?

First, keep all receipts. It’s not enough to have the charge card statement, you must have receipts also. Note who was in attendance and the purpose of the meeting, as well as the date.

Why don’t we support other bookkeeping software other than QuickBooks?

QuickBooks has over 84% of the small business market and is growing. We believe their software has tremendous value for most businesses. Having said that, QuickBooks doesn’t fit all situations. For those times, we are happy to help our clients find the right software.

Am I required to electronically file my personal income tax return?

Yes, effective in 2011, anyone who prepares over 10 tax returns must electronically file federal returns. Remember that there are several advantages to this. First, you receive confirmation that the IRS has received and accepted your return. There’s no more running to the post office to mail your return before the April 15 deadline. If you elect to have direct deposit of your refund you typically will receive it within 10 days. Paper checks can take up to 12 weeks to receive.

Do you recommend upgrading to the current version of Quickbooks?

Yes, I do, especially if you have version 2008 or earlier. Intuit has added several good features that help business owners run their business. If you run QuickBooks payroll, your employees can access a website to get their paystubs and W-2 information without having you print it out. Several reports have been enhanced also. This is one upgrade that’s worth the money.

Why do I need monthly financial statements for my business? Isn’t the tax return enough?

Can you name one successful business that doesn’t have accurate, up to date financials, and reviews them on a regular basis? Try to think of the financials as a report card-it’s one way to gauge the health of the company. Analyzing financial statements isn’t intuitive. We help you “breathe life” into your statements. They should be a tool for success. We tell you what the statements are indicating and how to improve results. Tax returns are typically based on a different set of rules-tax law vs. financial accounting. Also, the tax return is done only once a year-if there are problems it takes longer to find out and correct the issues.

What is the difference between tax planning and tax preparation?

Too often Income Tax Planning comes after Income Tax Preparation. This is a big mistake. Tax planning occurs during the year, not after the fact. Many people think tax planning is only for the “rich”, not them. In reality, tax planning is effective with major purchases or sales, or with major life events such as college, weddings, retirement, etc. Laws are constantly changing-just give us a call to discuss your situation.

Personal Finance Planning is only for people with a net worth of over $500,000

Absolutely wrong! Personal Finance Planning and Income Tax Planning go hand in hand. Neither happens in just one year, they are both a process lasting many years. Because we are familiar with your personal income taxes, we can help chart a course for upcoming life events. We do not sell financial services, so we are completely objective in our advice.