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Accounting woes? Learn the benefits of outsourcing your businesses accounting needs.

4/8/2019

Many businesses today rely on a trusted accounting professional to handle their accounting needs. With the various changes and complexities to accounting it’s no question there is such as demand. For some, they are still hesitant to use outsourcing as a business practice. While risky for some situations, using an outsourced accountant can be very beneficial. Let’s review some key benefits to outsourcing your accounting needs.

Expert advice

One of the biggest benefits of outsourcing is a team or an individual whose main job is accounting. While you may know certain laws, certain write offs, or even certain tax breaks, there is no guarantee you know all there is to know when it comes to accounting. Going with a trusted accountant who eats and breaths accounting practices can increase your confidence in doing it right.

Cost Savings

Imagine saving money by only using a service when you need it- that’s exactly what you get when you outsource. You only need to utilize the service for specific aspects of your business. You save money by only paying for what you need while saving on not having an employee on payroll who only owns part of that role. The amount of time saved in staff time (and your time) will help with the bottom line.

Minimize Risk

Worst word you can hear: Audit. Yikes- it has and will happen to many businesses. One way though to minimize that risk is by hiring a professional who has studied and then studied again the new laws, changes, and options for a multitude of businesses. Outsourcing allows you to hire the best of the best while also increasing the chance you avoid the “A” word.

Staying current

Words like “confused”, “shocked”, “lost” and “why” have been uttered across the internet when polls went out about most people’s understanding of the new tax laws that recently went into place. There are a variety of tax law changes that go into effect each year, and an outsourced accountant is paid to keep track of them all. You do not need to fear the changes when you can rely on a trusted professional who knows them.

Relevant systems

There is something to be said for keeping up with the times. Phone books are near extinct, Blockbuster has one store left, and MySpace was just a distant nightmare. Staying relevant is vital when it comes to modern day comforts and accounting needs for any business. An outsourced professional has the most relevant systems in place to stay ahead of the curve and keep a watchful eye on your businesses needs. While a sticky pad and a well sharpened pencil may help with tax time, a professional may have a few systems in place to better track your numbers.

Increase productivity

Divide and conquer as the saying goes, is all too true in business. By finding people’s strengths and having them execute on them helps increase any businesses productivity. With accounting needs, outsourcing allows you the flexibility to focus on other aspects of the business, and gives the role of accounting to a professional. This decreases wasted time on crunching numbers.

Support

Last, but certainly not least is the amount of support offered by an professional. Not necessarily for emotional support, rather for technical support and guidance as the year unfolds. Business trends change, income and deductions vary, so why not talk them out with someone who knows how to manage it all? It’s wise to get ongoing assistance so you can take on the road ahead.

Whether you are a new business or a well established one, it’s not too late to consider outsourcing your accounting needs. With PKJ Consulting we would be more than happy to help you get started. If you need to ask a question or you are ready to hand over the task to, we are here to help. Simply contact us HERE to get started!

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Top 5 Reasons to Upgrade Your Business to an LLC or S-Corp

3/26/2019

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If you have a small business or are considering the start of a new business idea, there are some considerations that should be explored before you get too far into this tax year. Running a business can be fun and exciting (and hopefully profitable), so understanding what type of business to form is crucial in setting up protections for your new venture. Setting up a business can be done as a sole proprietor, corporation, partnership, and more. There are however some key reasons to consider upgrading your business filing to an LLC or an S-Corporation. In the following post we will identify the top 5 reasons you should consider updating your filings to one of these statuses for your business.

First, we want to identify what exactly is an LLC. An LLC is short for limited liability company. It’s a business structure that provides a business with limited liability (similar to a corporation), however the structure is easier to establish and easier to maintain ongoing. This is good to know as you consider the reasons to file as an LLC.

Reason 5: Provides Protection

When you operate a business as yourself (say you do freelance work), you take on all the liability. A client doesn’t like the work: they can go after you personally. Even if your business is a sole proprietorship or a partnership, you and your business are legally the same “person.” That means the debts taken by the business are also your personal debts. And if your business partner or employee is accused of negligence, your personal assets might be at risk.

With an LLC, it’s the LLC that is responsible for debts and obligations. Yes, you can lose the money you have invested in the company, however personal assets (such as a home) can’t be used to collect on business debts. In addition, your personal assets are protected should a business partner engage in some not so “above board” activity or there are any claims of business negligence.

Reason 4: Filing Return Benefits

Some tax fillings require an insane amount of extra business filings, tax forms, and separate taxes and fees to be paid. The IRS classifies an LLC as either a sole proprietorship or a partnership (depending on number of owners). That allows you to take advantage of “pass through” taxation, essentially meaning the LLC does not pay any LLC taxes or corporate taxes. In this case, the LLC income and expenses pass through to the owner(s) personal return and the owner(s) pays personal income taxes on the profits in that tax year.

Reason 3: Reduced Paperwork

Who doesn’t love paperwork? Ok, that was a trick question. Nobody loves taking on more paperwork than is absolutely mandatory. Some businesses who file as a C-Corp for example often have more paperwork than that of an LLC or S-Corp. For Corporations, they often have to have annual shareholder meetings, pay annual fees (which take forms to complete and submit), and intense record keeping requirements. The more requirements takes more paperwork which involves more time driven away from productive use of that time.

On the other hand, an LLC does not have these requirements. In some states, annual filings are not even required. Less filing leads to less wasted time when trying to operate a lean business.

Reason 2: Tax Advantages

Tax time is somewhat of a stressful time for many businesses. Paying taxes is even more stressful as it dips into the bottom line and creates less profit to grow the business. With a filing status such as a Traditional C Corp, these entities are taxed twice on distributions to shareholders. Yikes. That’s more to taxes than to business growth.

On the other hand, LLC’s and S Corps get the best benefits when it comes to taxation. An LLC doesn’t have their own federal tax classification, but can adopt the tax status of sole proprietorships, partnerships, S Corp or C Corp. In addition, an S Corp avoids double taxation and receive pass-through tax treatment. Much better.

Reason 1: Flexible Profit Distribution

Our number one reason to consider filing as an LLC or S-Corp comes down to profits and how those can be distributed. Businesses exist for many reasons, and profits are one key reason.

An LLC has greater flexibility in the way they distribute profits to their owners, and they aren’t required to distribute them equally or according to ownership percentages. The flexibility in identifying the profits based on agreements between partners is huge when it comes to return in investments into the business. An LLC can for instance distribute more to a member who investment more into the startup costs, and then distribute the portion of profit based on the amounts designated early on.

Starting or running a business has some amazing benefits and perks. Creating a structure to safeguard, provide flexibility, and create an equal share of revenue distribution is key to ongoing success. There are several reasons to strongly consider upgrading to or filing as an LLC or S-Corp today.

Need help setting up your LLC or S-Corp? Visit our simple setup page here to learn how we can help get you running in no time.

Click here for Business License Setup!

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Small Business Conversations: Tax Tips with Sam Storr

2/13/2019

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Don’t have time to take a listen...here’s a quick summary of my latest episode of Small Business Conversations with PKJ, where we help those who have a strong passion, understand and gain the knowledge needed to help them through their entrepreneurial journey. With tax season upon us, it's a time that people either embrace or dread where people are scrambling to gather the receipts, locate past filings, looking for additional kids to claim, find a tax person and just get it over with. On one hand there are those that immediately contact PKJ Consulting on January second, ready to file their taxes and get that refund. On the other, I have those that contact us the day that taxes are due to help them file an extension. It's interesting that we all know we have to file taxes every single year, but no one truly understand how the process works.

This Small Business Conversations with PKJ features Sam Storr, who specializes in tax preparation. Sam Storr, born and raised in Detroit, Michigan holds a bachelor's degree from Eastern Michigan University in accounting and is also a member of Phi Beta Sigma Fraternity. He's the owner and tax accountant at Advocate Tax Services, a tax preparation and small business consulting firm in Michigan. He also has over five years as a tax professional with experience in audit, bookkeeping, quickbooks, fixed asset management and depreciation and internal gap and property tax. In addition, he's also a podcaster at the Ice Podcast, the podcast network where he is the co-host of the Iron Sharpens Iron podcasts.

Don’t Expect Your Tax Preparer to Bend the Rules

Sam advises, “I lost a couple of clients because I'm too much by the book. So yeah, they didn't want to work with me. They didn't want me to do their taxes for them because I'm not just going to give you what you want. I'm going to tell you what's correct. So what a lot of people don't realize is, you can't get ahead just by lying. I'm very by the book. It's a reason I have the record that I have. I've never been audited since I've been in business. So I want to keep that streak alive. And in case you do get audited, I got proof. So I'm not going to just do what you're telling me. I'm gonna do what's right.”

As a tax expert myself, I couldn’t agree more with Sam’s viewpoint. My mom worked for the IRS for 30 years...so I kind of know the ins and outs about how the IRS. works. There are people who want you to bend the rules a little bit and who want to alter something on their tax return. But a lot of times those tax people who do that- and I have a lot of clients have this happen- they go to someone who's willing to bend the rules and nine times out of ten they get that letter from the IRS that says, “We need more information to verify this,” and then they reach out to that person that they found on the street corner or who's handing out flyers or knew somebody who knew somebody and that person is nowhere to be found to help them fix it because they aren't an official tax person.

Be Honest with Your Tax Preparer

“Be open and honest with whoever's preparing your taxes. I always tell people, ‘If the tax preparer is not asking you questions, then it’s a problem. If you're not asking your taxpayer questions, that's also a problem.’ You need to know what you're signing because you're signing a legal document. You should want to know what's on it. So, no secrets.”

Have All Your Documents Ready

Having all of your information ready to go to when you meet up with a tax person helps it get done quickly and efficiently. Sam adds, “Make sure anything that you purchased has a receipt for it. Make sure that your mileage is logged. Make sure you have receipts for all the gas that you have spent. That's very important because I've noticed that they're really cracking down on that.We need documentation. The more you got the better. No guesswork.”

I’m asked all the time about keeping receipts when using a credit card vs. cash. I asked Sam his take on it and here was Sam’s opinion, “I always tell clients anything that you use with a business, please swipe your credit card because then I can just take your banks statements and just analyze that and download it to excel it, spit it back out and I can get a detailed account of what you spent. So that's the easiest. That's the best thing I can tell anybody. Use credit cards as long as you're making enough revenue to cover that. That's the easiest paper trail you can have. A lot of people are cash based. When you’re cash based you must keep receipts. When you use a card you can get away with not having a receipt, but when you’re using cash, you have got to have the receipt and mark it down.”

Listen to the full podcast to hear more about Sam’s entrepreneurial journey and if you’d like to connect with Sam, you can do so by contacting him directly via email at advocatetechservices@gmail.com or catch him on Facebook @advocastetaxservices.

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How Outsourcing Can Lead To Your Companies Success

2/5/2019

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Outsourcing is great way to offload tasks that either you don’t have time to do or that you absolutely hate doing. Either way, your time can be freed up instantly by bringing on a team to help. Some people look at outsourcing as EXPENSIVE, but ultimately, it is an INVESTMENT. It’s an investment that can be the bridge between your business growing $25K or losing $25K. Only you can make that decision. We want to share 3 ways outsourcing can lead to your companies success.

Reduced overhead costs

Small Business Owners are often looking for ways to save money but still run their business at the same time. Outsourcing will allow you to still run your business while being economical as well. When you outsource, you don’t have to worry about benefits, insurances, or anything that a W2 employee would include. They are considered a 1099 contractor and there are no other costs associated with them besides you paying them for their work. With a W2 employee, you have to train them, buy supplies, and most times, they are only there collecting a check.

Increased efficiency and productivity

What business owner doesn’t want to be efficient and doesn’t want to be productive. Most strive to do this but struggle either because they are wearing 50 hats and don’t have a team to help or because they can’t afford to bring on a employee to help. But there’s HOPE! Contracting tasks out will not only help you take care of those small administrative tasks that take up too much of your time, in return they will help you become more productive and efficient. Believe it or not, when you bring on a team member, it makes you focus on processes and systems even more than before because you have to train this new contractor you just hired. That contractor will need access to certain systems and will need to know the processes to do their job. Betcha never thought about it that way huh?

Focus on company vision/goals

As a business owner, you should be focusing on being the face of your business, collaborating, networking with future partners, envisioning the plan for the future and what steps are needed to get there. This is called The Creative Space. If you are engulfed in client work, how can you focus on these things? YOU CAN’T! Or You won’t have time, it happens often. As a leader in your business, you are guiding and leading the pack which means it’s in your best interest not to be bogged down with paperwork all day. Outsourcing can help eliminate all of that. Be the true business owner you were meant to be and don’t try to do it all yourself!

“If you want to go fast, go alone. If you want to go far, build a team”!

Are you ready to learn more about HOW to become successful in order to succeed and grow you business, Click Here to Register for LevelUp: How Outsourcing Will Lead to Your Companies Success which will be hosted by PKJ Consulting & Jasmine & Co on two dates - Febuary 21st and Feb 23d at 12:00pm PST ( 3pm EST).

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How the 2018 Tax Reform Affects You

1/22/2019

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With the tax season upon us, many are wondering about how all the new Tax Reforms will affect them. Here is your quick guide to the most important changes

2018 Tax Brackets

Standard Deduction and Personal Exemption

The standard deduction has basically doubled for all filers, but the personal exemption has been eliminated. The marriage penalty is also gone.

Child Tax Credit

In 2018, the Child Tax Credit (CTC) doubles in value from $1,000 to $2,000. Additionally, $1,400 of the credit is now refundable. That means after your tax liability is paid, you will receive any remaining refundable portion of the credit in a tax refund. But like most tax credits, the amount available is subject to phase-outs beginning with an adjusted gross income (AGI) of $200,000 for single taxpayers and an AGI of $400,000 for those filing a joint return.

Education tax benefits

The new tax reforms still allow taxpayers with student loans to claim a deduction of up to $2,500 for the interest paid on those loans each year. One key change for this deduction for those who qualify is that it can be claimed without itemizing deductions.
College 529 savings plans - Up to $10,000 in those accounts can now be used to cover the cost of K-12 education annually. That includes some expenses related to homeschooling. Previously those funds could only pay for college tuition and fees.

Retirement Plans

Laws enacted in 2017 and 2018 make it easier to access retirement funds needed to recover from federally declared disaster areas in 2016, 2017 & 2018. Some of these provisions include eliminating the 10% early withdrawal penalty, include a qualified hurricane distribution in income over a 3 year period, repay distributions to the plan, and have expanded loan availability and an extended loan repayment period.

Itemized Deductions

Because of the effect of changes to the standard deduction and limitations on itemized deductions, the use of itemized deductions will likely be reduced for most taxpayers. The income based limit on overall itemized deductions has been eliminated. The following is a summary of changes to itemized deductions:

Foreign property taxes will not be eligible for deduction;
State & local income tax, property tax and personal property tax are limited to $10,000 for married couples filing jointly, and $5,000 for married couples filing separately and single taxpayers. (Property taxes associated with carrying on a trade or business (such as a rental property) are fully deductible;
No deduction is available for interest on home equity loans;
Interest on acquisition debt for a home mortgage is limited to the interest on the first $750,000 of debt ($375,000 for married couples filing separately). Again, any interest paid in connection with a trade or business or rental property are fully deductible. If the loan was originated before December 15, 2017,the former limits of $1 Million and $500,000 of total loan will apply;
Medical expenses must exceed 7.5% of Adjusted Gross Income to be considered for deduction; (This will be increased to 10% of AGI for 2019)
Charitable donations made to public charities may be deducted up to 60% of AGI. Deduction for college athletic seating rights is eliminated;
Casualty and theft loss deductions will only be permitted for federally declared disasters;
Deductions for gambling losses and other expenses related to gambling are limited to gambling winnings;
No miscellaneous itemized deductions will be permitted;
The overall limitation on itemized deductions will be suspended for 2018 through 2025.

Lost Deductions

Moving expenses
Unreimbursed employee expenses
Employer-subsidized parking and transportation reimbursement
Casualty and theft losses (except those attributable to a federally declared disaster)
Tax preparation expenses
Other miscellaneous deductions previously subject to the 2 percent AGI cap

Mortgage Interest

The deduction can only be taken on mortgage debt of up to $750,000.

Medical Expenses

The threshold for medical expenses has been reduced from 10% of adjusted gross income (AGI) to 7.5% of AGI.

BUSINESS TAX CHANGES!

Passthrough Deduction for Qualified Business Income

Eligible taxpayers may be entitled to a deduction of up to 20 percent of qualified business income (QBI) from a domestic business operated as a sole proprietorship or through a partnership, S corporation, trust or estate. For taxpayers with taxable income that exceeds $315,000 for a married couple filing a joint return, or $157,500 for all other taxpayers, the deduction is subject to limitations such as the type of trade or business, the taxpayer’s taxable income, the amount of W-2 wages paid by the qualified trade or business and the unadjusted basis immediately after acquisition (UBIA) of qualified property held by the trade or business. Income earned through a C corporation or by providing services as an employee is not eligible for the deduction.
Eligible taxpayers may also be entitled to a deduction of up to 20 percent of their combined qualified real estate investment trust (REIT) dividends and qualified publicly traded partnership (PTP) income. This component of the section 199A deduction is not limited by W-2 wages or the UBIA of qualified property. The sum of these two amounts is referred to as the combined qualified business income amount. Generally, this deduction is the lesser of the combined qualified business income amount and an amount equal to 20 percent of the taxable income minus the taxpayer’s net capital gain.. The deduction is available, regardless of whether an individual itemizes their deductions on Schedule A or takes the standard deduction.

Meals & Entertainment Business Expense Deductions

The 2017 TCJA eliminated the deduction for any expenses related to activities generally considered entertainment, amusement or recreation.
Taxpayers may continue to deduct 50 percent of the cost of business meals if the taxpayer (or an employee of the taxpayer) is present and the food or beverages are not considered lavish or extravagant. The meals may be provided to a current or potential business customer, client, consultant or similar business contact.
Food and beverages that are provided during entertainment events will not be considered entertainment if purchased separately from the event.

With so many changes, make sure you have a tax professional prepare or review your tax filing before submitting for your tax return this year!

Want to book a consultation - click here!

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Accounting woes? Learn the benefits of outsourcing your businesses accounting needs.

Top 5 Reasons to Upgrade Your Business to an LLC or S-Corp

Small Business Conversations: Tax Tips with Sam Storr

How Outsourcing Can Lead To Your Companies Success

How the 2018 Tax Reform Affects You

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Categories

ADDRESS: LAS VEGAS/HENDERSON/SUMMERLIN

​Accounting woes? Learn the benefits of outsourcing your businesses accounting needs.

Top 5 Reasons to Upgrade Your Business to an LLC or S-Corp

Small Business Conversations: Tax Tips with Sam Storr

How Outsourcing Can Lead To Your Companies Success

How the 2018 Tax Reform Affects You

Archives

Categories

ADDRESS: ​LAS VEGAS/HENDERSON/SUMMERLIN

Accounting woes? Learn the benefits of outsourcing your businesses accounting needs.

ADDRESS: LAS VEGAS/HENDERSON/SUMMERLIN