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Let us take on the complicated challenges of small business bookkeeping, payroll, and taxes for one fixed fee. Don’t be a small fish in a big pond. (VIDEO)

Using a Payroll Service? Read this..

Many employers outsource their payroll and related tax duties to third-party payers such as payroll service providers (such as Appletree).

 

Reputable third-party payers can help employers streamline their business operations by collecting and timely depositing payroll taxes on the employer’s behalf and filing required payroll tax returns with state and federal authorities.

 

Here are some things you should know:

 

1) Are payroll taxes impounded by your payroll service, meaning are the tax monies pulled from your bank account and put into the payroll service’s bank account until due?

 

2) If you get a letter from the IRS about payroll taxes you believe you paid, you should contact the IRS YOURSELF; since this could indicate a much bigger problem.

 

3) Become familiar with the tax due dates that apply to employers of your size, try to keep track of these dates.

 

The key issue here is that you, the employer, are ultimately responsible for the payments even if the third party agent misappropriates the funds.

 

Are you certain about how your payroll taxes are being handled?

 

If you found this article useful, please do not keep this a secret. Share it with a friend.

 

Copyright 2014 by Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, a PASBA member accountant, located in Londonderry, New Hampshire, with more than twenty- five years experience on Federal and New Hampshire issues affecting small business, and specializes in keeping his clients OnTrack with bookkeeping, tax, and payroll services for a fixed monthly fee. Learn more about Steve’s exclusive SIX Step system developed for small businesses at www.appletreebusiness.com/map.

Is your corporation really a hobby?

Wouldn’t it be great if you could deduct all the expenses for your hobby?

 

Well, unfortunately, you can only deduct losses on a hobby to the extent of your hobby income. But what happens if you decide to create a corporation for your hobby?

 

I have bad news. Operating the hobby activity within a corporation does NOT change the tax result.

 

Recently, a federal appellate court said that the net losses are not deductible. But, what’s even worse is that the owner of the corporation had dividend income based on the costs that the corporation incurred for the activity.

 

Make sure you understand the rules before you decide to deduct the expenses of your hobby.

 

If you found this article useful, please do not keep this a secret. Share it with a friend.

 

Copyright 2014 by Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, a PASBA member accountant, located in Londonderry, New Hampshire, with more than twenty- five years experience on Federal and New Hampshire issues affecting small business, and specializes in keeping his clients OnTrack with bookkeeping, tax, and payroll services for a fixed monthly fee. Learn more about Steve’s exclusive SIX Step system developed for small businesses at www.appletreebusiness.com/map.

Can you get Health Care tax Credits?

Businesses with fewer than 25 employees that pay at least 50% of the health care insurance premiums for their employees may be eligible for a tax credit for as much as 35% of the cost of the premiums. To qualify, the business must employ fewer than 25 full-time people with average wages of less than $50,000. For 2014, the maximum credit increases to 50% of the premiums the company pays, though to qualify for the credit, the insurance must be purchased through SHOP (or a broker authorized to offer SHOP insurance that is in compliance with the Affordable Care act).

 

As a practical matter, we’ve found very few of our clients actually qualify for this, but when we find one client that qualifies, they’ll usually end up with  thousands of dollars in tax credits.

 

If you found this article useful, please do not keep this a secret. Share it with a friend.

 

Copyright 2014 by Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, a PASBA member accountant, located in Londonderry, New Hampshire, with more than twenty- five years experience on Federal and New Hampshire issues affecting small business, and specializes in keeping his clients OnTrack with bookkeeping, tax, and payroll services for a fixed monthly fee. Learn more about Steve’s exclusive SIX Step system developed for small businesses at www.appletreebusiness.com/map.

How Will Health Care Reform Affect Your Business?

The Affordable Care Act (ACA for short) has left businesses and individuals confused about what the health care reform law contains and how it affects them. Even the accountants are confused!

My challenge in this article is to give you the kindergarten primer, and maybe share one little tidbit you did not know already. So here goes:

1 – Insurance companies have  new requirements. For example, they cannot refuse coverage due to pre-existing conditions, preventive services must be covered with no out-of-pocket costs, young adults can stay on parents’ policies until age 26, and lifetime dollar limits on health benefits are not permitted.

2 – The law mandates health insurance coverage for ALL individuals. If you’re one of the 45 million or so Americans without health insurance, you will need to get coverage for 2014 or pay a penalty of $95 or 1% of your income, whichever is greater. Low-income individuals may qualify for subsidies and/or tax credits to help pay the cost of insurance.

It is my humble opinion that $95 per person is not really enough, at least for 2014, to convince people to buy insurance. So I’m suggesting that if you don’t have insurance now, it could make sense because of SO much confusion in the health care marketplace, to just watch everyone else make fools of themselves.

Tremendous media attention is focused on the health insurance exchanges or “Marketplace” that opened for business on October 1. The media has left many people thinking everyone has to deal with the exchanges. The fact is that if you are covered by Medicare, Medicaid, or an employer-provided plan, you don’t need to do anything.

Many individuals will qualify for federal tax credits which will reduce the premiums they actually pay. Each state’s Marketplace will have a calculator to assist individuals in determining the amount, if any, of their federal tax credit.

3 – For businesses with 50 or more full-time employees, the requirement to provide “affordable, minimum essential coverage” to employees has been delayed for one year and is not required until 2015. Originally, employers had been required to file information returns that reported details about the health insurance they provided, with penalties to apply if the insurance did not meet standards. Companies complained that they needed more time to meet the reporting obligations, and in response the IRS made the reporting requirement optional for 2014. Without the reporting, the IRS could not determine penalties, so the penalties also were postponed for a year.

Bottom line: The IRS is encouraging companies to comply in 2014 even though there are no penalties for failure to do so.

4 – Businesses with fewer than 50 employees are encouraged to provide insurance for their employees, but there are no penalties for failing to do so. A special marketplace will be available for businesses with 50 or fewer employees, allowing them to buy health insurance through the Small Business Health Options Program (SHOP), but the implementation of SHOP has now been delayed a full year, meaning you’ll just need to keep talking with your current insurance broker.

5 – Businesses with fewer than 25 employees that pay at least 50% of the health insurance premiums for their employees may be eligible for a tax credit for as much as 35% of the cost of the premiums. To qualify, the business must employ fewer than 25 full-time people with average wages of less than $50,000. For 2014, the maximum credit increases to 50% of the premiums the company pays, though to qualify for the credit, the insurance must be purchased through SHOP (or a broker authorized to offer SHOP insurance that is in compliance with the Affordable Care act.

6 – Businesses who DO NOT have a group insurance plan set up for their business can no longer use a SECTION 125 employee plan for deducting qualified medical insurance premiums and expenses on a pre-tax bases. This doesn’t affect dental, vision or dependent care expenses allowed in a 125 plan.

Anyway, confusion continues.

 

If you found this article useful, please do not keep this a secret. Share it with a friend.

 

Copyright 2014 by Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, a PASBA member accountant, located in Londonderry, New Hampshire, with more than twenty- five years experience on Federal and New Hampshire issues affecting small business, and specializes in keeping his clients OnTrack with bookkeeping, tax, and payroll services for a fixed monthly fee. Learn more about Steve’s exclusive SIX Step system developed for small businesses at www.appletreebusiness.com/map.

When your tax returns need to tell a story

When I first meet with a prospective client I love to see what ‘story’ the tax returns are trying to tell.

 

Typically, I’ll ask you what you understand your tax return to be, like whether you’re a corporation, a partnership, an LLC, or whatever…

 

I’ll even start asking you some of the hard questions like WHY you are what you are.

 

From here, I need to see the tax returns, all of them, Business and Personal, State and Federal  so I can see if your story plays out.

 

For instance, if you tell me that you’re an employee of your corporation, I’m going to ask questions when your corporate tax return shows zero compensation to the owner and your balance sheet says that you owe your corporation $500,000!

 

Or, I see , in addition to your corporation tax return, that you also have your own business  on your personal return, and you’re taking deductions there.

 

Or, you’re complaining about all the taxes that you pay for your S Corporation restaurant, and I see all the profit that you have, and it’s because your tax return very clearly says that you have $1,000,000 as CASH in your bank account, and you tell me that there can’t be any more than $10,000 in your bank account!

 

The ‘story’ has to play. Maybe that’s where my strength is, since I’m going to look at the big picture. Are we telling the State of New Hampshire (or neighboring states) a story consistent with what we’re telling the IRS, taking a reasonable compensation at the same time. In the end , it’s all got to be consistent.

 

When I’m sitting across from the auditor, I need to be able to tell them this ‘story’, so it’s important that whatever the ‘story’ is, it needs to be credible. For instance, if your tax return says that you owe your company $200,000, you’ve got a loan document to support this. If I walk in the door, and you’re the owner, and introduce me to the ‘president’, well that president better be an employee, and not a ‘sub-contractor’…

 

Do you know your story? Do you understand your tax returns well enough to know whether they tell the same story? Is your story credible?

 

If you want to learn more about this, check out Appletree Business Services’ Business Financial Confidence Map.

 

If you found this article useful, please do not keep this a secret. Share it with a friend.

 

Copyright 2014 by Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, a PASBA member accountant, located in Londonderry, New Hampshire, with more than twenty- five years experience on Federal and New Hampshire issues affecting small business, and specializes in keeping his clients OnTrack with bookkeeping, tax, and payroll services for a fixed monthly fee. Learn more about Steve’s exclusive SIX Step system developed for small businesses at www.appletreebusiness.com/map.

No barbequeing with accountant

“I don’t want to barbeque with my accountant”“

 

The other day I picked up a new new tax client. He’s an insurance agent with plenty of accountants that he already knew.

 

He barely knew me, but I had one big advantage that none of the other people he knew had…He didn’t know me!

 

He wants an accountant that can talk to him totally objectively, and not have to worry about not being invited to next week’s barbeque!

 

I was happy to oblige!!

 

If you want to connect with us at Appletree Business Services, take a look at our Business Financial Confidence Map.

 

If you found this article useful, please do not keep this a secret. Share it with a friend.

 

Copyright 2014 by Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, a PASBA member accountant, located in Londonderry, New Hampshire, with more than twenty- five years experience on Federal and New Hampshire issues affecting small business, and specializes in keeping his clients OnTrack with bookkeeping, tax, and payroll services for a fixed monthly fee. Learn more about Steve’s exclusive SIX Step system developed for small businesses at www.appletreebusiness.com/map.

What? New Hampshire has business taxes?

Most small businesses are required to file the New Hampshire Business Profits tax and Business Enterprise tax. Are you confident you know what these taxes are and how much you should plan to owe on them as a small business owner?

 

NEW HAMPSHIRE BUSINESS PROFITS TAX

 

If your business has gross receipts over $50,000, then you are required to file a Business Profits Tax Return, a tax of 8.5% of the ‘net income’ apportioned to New Hampshire. . From this , you can then take a deduction for reasonable compensation for personal services. A typical small business owner who’s typically doing the work in his small business will have no problem often justifying that 100% of his or her Schedule C income is reasonable compensation. But there are all sorts of traps here, so be certain you’re doing this right, particularly once we introduce the BET tax!

 

NEW HAMPSHIRE BUSINESS ENTERPRISE TAX

 

This is a tax of .75% on your Enterprise Tax base of all wages (including Reasonable Compensation above), interest (including any Mortgage interest from a Home Office), and any dividends paid. This tax will also reduce dollar for dollar any Business Profits Tax you would owe. So, essentially the Business Enterprise Tax is a minimum tax to make sure that all small business owners pay something, particularly since so many avoid the clutches of the Business Profits Tax.

 

What I just presented is a simplified explanation of these taxes. Quarterly estimates are required to be made as well.

 

Do you know if  your small business is affected by the New Hampshire Business taxes? Because we have no income tax IN New Hampshire, many small business owners  often don’t file these tax returns, until several years later when the state comes knocking, and they will.

 

Also, planning can be extremely difficult with these two taxes, particularly where certain techniques often used in other states will backfire in New Hampshire, partly because New Hampshire does not recognize flow through entities such as S Corporations.

 

We run into clients all the time that haven’t prepared these taxes or simply prepared them incorrectly, often we end up saving them a substantial amount in overpaid taxes once they come to us. This is what Business Financial Confidence is all about. Let our accountants help you get that confidence with our Business Financial Confidence Map.

A KPI? What’s that?

Everybody’s got ‘books’, but how is your business performing?

 

I don’t care what the size is. Every small business owner needs to have a measurement tool and be consistently measured against that tool.

 

 

And that is where Key Performance Indicators or KPI’s come into play.

 

It’s one thing to know what your sales are. That’s the easiest measure, but don’t you want to at least go one step up from your competition? How about knowing what your gross profit margin is ( Take your sales minus your direct costs of doing sales and that gives you gross profit. Gross Profit divided by Sales is your gross profit margin)

 

Every business owner, at a minimum, should know their gross profit margin. Without knowing this, how can you predict, with certainty, how much money you could make if your sales increased by X dollars?

 

Now let’s get a little more complicated…Do you know what your breakeven sales are? That’s great if you can figure that out for today, but what was it last year at this time? Do you know that?  Great, your breakeven sales went down from last year. Why did that happen? What’s changed in your business? Is this something we can capitalize on going on forward.

 

If you’re a service business, how many employees do you have? Do you know what your average sales are per employee. or perhaps per  foreman.

 

Can you see where I’m going with this? Everyone else is  just talking about keeping track of your dollars, not about being able to manipulate those dollars so that a small business owner can be that much more confident about where they are today, and have the certainty about where their business is going tomorrow.

 

Start measuring your performance today! Do you know what a KPI is for your business? I’d love the opportunity to talk with you further about helping you figure out your own business financial confidence. If you want to learn more, look at Appletree Business Services’ Business Financial Confidence Map.

The value of an accountant to your New Hampshire small business

What is the value of a small business owner having a relationship with an accountant?

 

As business owners, we often build our own mental barriers to change, until something changes…

 

When I first met this one client, every time we talked, he would bring up his desire to offer health insurance to his employees. I would ask him about talking to his insurance agent, and he would present me the options that were presented by the agent. He had  ‘trust’ in his agent, and was somehow looking for me to resolve ‘the problem’.

 

I would suggest talking to another insurance agent, but would get resistance. After about 6 months of this, I finally told the client that EVERY time we had talked , this subject had come up, and it was time to put or shut up. I told him that if his insurance agent was so good, then we wouldn’t be having this conversation every single month, that at least, it was worth talking to another agent.

 

He met with a different insurance agent, and a whole different solution was presented with my client now offering health insurance to all his employees with a minimal match by him as the employer.

 

My point is that, to my client, that problem that could have festered for a lot longer. But it was because he had a ‘relationship’ with an accountant or business adviser, he was able to get out of his mental box and move on.

 

As a business owner, don’t settle for just looking for a bookkeeper or an accountant. Look for a someone that you feel comfortable with, someone that’s approachable. Look for someone that you feel comfortable opening up to.

 

If you can’t open up, then your advisory can’t help you get out of your box and help you achieve your long term objectives. With that all said, you also have to give the relationship time, and not expect results within days of starting this relationship.

 

What are you waiting for? Check out our Business Financial Confidence Map for a head start.