Have you considered moving your accounting to the cloud?

Despite the hot and sunny Accounting in the cloudsummer in Las Vegas, my forecast for the future of accounting is very cloudy.  “The Cloud” is a broad term encompassing many service models, but as it relates to accounting software, it generally means that the application runs online (usually through a web browser) and the data is stored online.  By using the cloud, a user does not need to install a particular accounting software program on his or her local workstation.

Some of the benefits of using cloud accounting software include:

  1. Accessibility.  Business owners and their CPAs can access accounting data anywhere with the Internet.  Generally, cloud accounting programs work across multiple operating systems and platforms, so it’s not a problem if one employee has a PC and another has a Mac.  Many accounting software vendors have also released mobile apps enabling a business to manage its accounting from a tablet or smartphone.
  2. Centralized Data.  With desktop software, data files are often exchanged and it can be difficult to keep track of the most current data file.  In the cloud, all users access real-time data, leading to a more collaborative relationship between business owners and accountants.
  3. Reduced Costs.  Instead of an up-front software purchase common with desktop products, most cloud accounting software vendors have a free trial period and then charge monthly subscription fees.  Typically, upgrades are automatic and there is no software installation or maintenance.
  4. Time Savings.  Today’s cloud accounting software can import bank feeds and automate the classification of transactions, which changes a bookkeeper’s role from data entry to managing the imported data and reporting.  You may also want to consider other features such as online invoicing, which may be more cost effective and help you to collect your receivables faster than sending paper invoices.

There are some disadvantages of accounting in the cloud, such as the reliance on an Internet connection.  You’ll also want to consider issues related to data ownership and security.

The cloud provides opportunities for improved accounting processes and real-time collaboration with your Las Vegas CPA (through the cloud, we can serve clients anywhere).  If you are considering moving your accounting to the cloud, contact Dustin Wheeler for a free no obligation consultation.

Did you refinance your Las Vegas home? Deduct the points!

With mortgage rates hitting record lows and government programs such as the Home Affordable Refinance Program (HARP) 2.0, many Las Vegas homeowners and real estate investors took advantage of the opportunity to refinance the loans on their properties in 2012.  However, correctly deducting the costs of a refinance may be a complicated matter requiring professional services from a qualified CPA or tax preparer.

At closing, borrowers typically sign a settlement statement (also known as a HUD-1 or closing statement) that gives a detailed list of refinancing costs.  Because settlement statements are usually long and difficult to understand, tax deductible items from these documents are sometimes overlooked.  For personal residences, the tax deductible costs may include points and prorated real estate taxes.  For rental and commercial properties, settlement statements contain many types of loan fees, prorated association dues and utilities expenses that may be deductible.

Generally, points paid for refinancing are amortized and deducted over the life of the new mortgage.  However, if the mortgage is later refinanced or paid off early, the unamortized points may be fully deductible in the year of the payoff or subsequent refinance.  For this reason, it is important to carefully track the unamortized balance of points from year to year so a significant deduction is not missed.

There are several special rules.  For example, a taxpayer that uses part of the refinanced mortgage proceeds to improve his or her main home and meets other requirements may be able to fully deduct the part of the points related to the improvements in the year of refinance.

Be sure to read our disclaimer and consult with your tax advisor regarding deductions for refinancing costs.  For a free no obligation consultation with one of our Las Vegas CPAs, please contact Dustin Wheeler.

CPAs celebrating the October 15 tax deadline with dodgeball

Jody Padar of New Vision CPA Group proclaimed in her article for Accounting Tomorrow that “dodgeball is the new golf” for today’s new-age accounting firms.  Inspired by the CPA Dodgeball event I participated in with Jody during the AICPA Practitioners Symposium and TECH+ Conference in June, the Las Vegas CPA firm of Wallace Neumann & Verville LLP played dodgeball at the Sky Zone indoor trampoline park to celebrate the end of the October 15 extended tax filing deadline for individuals.  While many CPAs at Wallace Neumann & Verville LLP do enjoy golf, the firm has sponsored many non-traditional activities in the past, including paintball, cart racing, zip-lining, the Las Vegas Devil Dash, and the Tough Mudder.

“Throwing dodgeballs at my co-workers was a great way to end tax season,” said Mikael Nilsson, a tax accountant at the firm.

Below are a few pictures from our dodgeball games:

Mike Verville and Jeff Jones sprint to center court to grab a dodgeballBoth teams make a frantic sprint to the center “neutral zone” to grab a ball as one of the games begin.

Eli Tanimoto plays one-on-fourWith his teammates eliminated for the round, Eli Tanimoto valiantly plays one-on-four.

Jeff Jones powers up to throwJeff Jones (left) powers up for a throw as Reed Lamoreaux (right) looks on.

Mikael Nilsson climbs up the side trampoline during dodgeball gameMikael Nilsson climbs the side trampoline wall as Brian Donnelly (left), Mike Verville, Ronnie Withaeger and Michelle Orlina watch for incoming balls.

Want to be faster with QuickBooks? Try these keyboard shortcuts

Take your hands off the mouse and keep them on the keyboard!  If you use the Windows version of QuickBooks, check out this helpful list of keyboard shortcuts on the Sleeter Group blog.  Three of the shortcuts I use most often are:

  1. Tab to go to the next field.  Thanks to this shortcut, I can enter transactions in the register very quickly.  If I make a mistake, Shift+Tab takes me back to the prior field so I can correct it.
  2. Ctrl+D deletes a transaction or list item.  I sometimes use this shortcut when I realize there are duplicate transactions in QuickBooks and one of them needs to be deleted.  However, be careful since the deletion often cannot be reversed.  Also, you usually should never delete a reconciled transaction.
  3. Ctrl+Y opens the transaction journal for the transaction that is being viewed, which may be helpful for an accountant or someone who has taken a few accounting classes.  The transaction journal shows the debits and credits behind a transaction, such as in the screenshot below*.

QuickBooks Transaction Journal

For setup, training, support services for QuickBooks and other accounting software, please contact me or another CPA at Wallace Neumann & Verville in Las Vegas.

*Sample company file data

Related posts:

What is tax deductible in a Las Vegas business trip?

Kelly Phillips Erb, a contributor to the tax section of Forbes magazine and known by many as Taxgirl, visited Las Vegas last week for a big national AICPA conference.  I attended the conference as well and was fortunate to attend Kelly’s excellent presentation about income tax research.

After her trip, Kelly wrote an article about what types of expenses might be deductible on a business trip like her recent excursion to Las Vegas.  Read her article, “What Happens in Vegas: Traveling for Business” for a good explanation of the rules for deducting various types of travel expenses such as airfare, lodging, conference fees, and food.

The IRS has said that travel expenses are part of the overstated deductions that contribute to the tax gap, so they are frequently examined during audits.  If you have questions about what travel expenses you can deduct for business, be sure to contact a professional providing tax services in Las Vegas.

Find out how much tax you pay with a new AICPA calculator

Calculator and CoinsYou might know how much you paid in Federal income tax last year, but what was your total tax burden considering all types of taxes?  A new online calculator from the AICPA can estimate your total tax bill using more than 20 types of taxes, including state and local taxes.  You can access the calculator at totaltaxinsights.org/Calculator.

Although the calculator isn’t intended to be a tax planning tool (if you need tax compliance and planning services, contact me or another CPA in Las Vegas), it can give you a rough idea of how much tax you really pay.  You might be surprised by the result.

For more information about the Total Tax Insights calculator, read this article from the Journal of Accountancy.

5 Frequently Asked Questions about QuickBooks Backups

Imagine that the computer containing your company’s QuickBooks file has suddenly crashed.  If you haven’t been diligent in backing up your data, you’re probably shocked and terrified.  While it’s possible that much of the data from your QuickBooks file can be re-created (unlike your priceless family photos), you’d probably spend several hours doing it.  Be sure to regularly back up your QuickBooks file to avoid this situation.

Questions I am often asked about backing up QuickBooks files include:

Q. How do I make a backup of my QuickBooks file?

A. On the File menu, select Create Backup.  If you want to save the backup file locally or on a removable storage drive, select Local Backup.  If this is the first time you’re creating a backup, click on the Next button and select a file location for saving backups.  Otherwise, click the Finish button.

Q. What is the difference between a backup copy and a portable company file?

A. Portable company files are smaller than backup files, but they contain all of the financial information.  In fact, we prefer that our clients send us portable company files because they are faster to upload and take up less space on our portal.  However, they do not include letters, logos, images, templates, or transaction log files (according to this Intuit support article).  We recommend you create backup files for internal purposes.

Q. How often should I create a backup copy of my QuickBooks file?

A. The answer to this question depends on your comfort level for losing data.  If you lose your QuickBooks file, how much data do you want to re-enter?  Though some companies back up monthly or weekly, the thought of spending many hours re-entering data causes some business owners to back up daily or every time a QuickBooks file is closed.

Q. Where should I save my QuickBooks backup files?

A.  You could save them on your computer’s hard drive, but if you experience a hard drive failure or theft, you’ve lost your QuickBooks company file AND backup files.  A better answer is to save them to a removable storage device, such as a CD, USB flash drive, or external hard drive.  However, if you experience a fire or other natural disaster, you could lose both your QuickBooks company file and backup files if they are both located on premise.

Another option you may want to consider is a secure and encrypted online backup service.  Many online backup services will back up your QuickBooks data easily and automatically.  Some business owners’ backup strategies include a combination of off-site removable storage and online methods.

Q. I forgot where I saved my QuickBooks backup file.  How can I find it?

A. QuickBooks for Windows backup files have a .QBB file extension.  QuickBooks for Mac uses various different file extensions depending on the version.  To find your QuickBooks backup file, search your computer for files with the appropriate file extension.

Get your tax return prepared by a CPA in Las Vegas

Due to the current economic conditions and the unique business industries that operate here, Las Vegas residents face many tax and accounting challenges.  Certain financial events, such as starting a new business, often cause people in Las Vegas to seek out the help of a CPA to prepare their tax returns.  Here are a few frequently asked questions:

How do I report a short sale or foreclosure on my tax return?

Las Vegas has one of the highest rates for foreclosures and short sales in the country.  Did you recently experience a foreclosure or short sale and are worried about the tax consequences?  Did you receive a Form 1099-A or 1099-C and aren’t sure what to do with it?  Depending on the facts and circumstances of your foreclosure or short sale, the cancellation of debt may or may not be taxable.  Accounting for real estate transactions is complicated, so you’ll want to make sure you use a Las Vegas CPA that specializes in real estate. We also offer our experience as CPAs to help new real estate investors in Las Vegas to accurately report deductions for investment and rental properties.

How do I correctly report tips?

Las Vegas is frequently called “the entertainment capital of the world.”  With many high-end restaurants, hotels, and performances, tipping is a frequent occurrence in Las Vegas.  Whether you own and operate a restaurant or entertainment business or are an employee in one, you’ll want to make sure your tip reporting is compliant.  At Wallace Neumann & Verville, LLP, we have several CPAs with experience in the Las Vegas entertainment industry.  We also have a former Las Vegas IRS Revenue Agent who worked closely with the tip compliance team at the IRS.

I’m starting a new business.  How should I set it up to reduce taxes and make sure the accounting is done correctly?

At Wallace Neumann & Verville, LLP, we have helped several entrepreneurs get their businesses up and running.  Our CPAs serve many startups and small businesses in Las Vegas with issues such as entity selection, accounting software implementation, and tax return preparation.  My post with five new business accounting tips may also be helpful for you.

I don’t live in Las Vegas.  Can you still help me?

Wallace Neumann & Verville, LLP serves several clients that do not live in Las Vegas.  Our CPAs use the latest technology to serve clients remotely, such as computer screen-sharing sessions, videoconferencing, and secure file exchange with our client portal.

Whether you live in Las Vegas or elsewhere and are seeking a CPA, please do not hesitate to contact me or another professional from Wallace Neumann & Verville, LLP.

Disclaimer

IRS launches IRS2Go 2.0 smartphone app

Last year, I wrote about the debut of IRS2Go, the first smartphone app from the IRS.  Yesterday, the IRS announced the release of version 2.0 of the app.  The new version includes tools to watch IRS YouTube videos, order tax return transcripts, and get the latest news from the IRS.

If you have a portable device with either the Apple or Android platforms, the IRS app may be the easiest and most convenient way to check the status of your refund.  If you want to maximize your tax refund and take advantage of every deduction that is legally allowed, please contact a Las Vegas CPA from Wallace Neumann & Verville, LLP.

New 1099 questions on business tax returns

After the IRS finalized its tax forms for the year 2011, we became aware of two new questions on business tax returns (including Forms 1120, 1120S, 1065, and 1040 Schedule C):

  1. Did you make any payments in 2011 that would require you to file Form(s) 1099?
  2. If “Yes,” did you or will you file all required Forms 1099?

Background – what is Form 1099?

Generally, a business issues Form 1099 and its series of forms to report certain payments to the IRS and inform recipients of the amounts reported.  For example, Form 1099-INT reports interest income and Form 1099-DIV reports dividend income.  The most common type of 1099 filed by small businesses is Form 1099-MISC, which reports amounts such as rents and nonemployee compensation.

The rules and thresholds for issuing 1099s vary, but for both rents and nonemployee compensation, a business must issue Form 1099-MISC to report $600 or more paid during the tax year to an individual or partnership for services.  Reportable payments for services include professional fees paid to an attorney or an accountant.  Other examples are payments to independent contractors for janitorial services, information technology consulting, web design and plumbing repairs (just to name a few).  Rent paid to a landlord is another reportable payment that is sometimes overlooked.

Implications of the new questions on business tax returns

Tax returns are signed under penalties of perjury, so it is important to accurately answer the two new questions regarding the filing of 1099s.  We expect nearly all of our business clients to meet the requirement for issuing 1099s and answer “yes” to the first question since they have paid us accounting fees (as a partnership, Wallace Neumann & Verville is eligible for a 1099).  We do not know the consequences of answering “yes” to the first question and “no” to the second question, but one possible outcome is an IRS correspondence audit.  For this reason, we urge all of our clients to timely file all required Forms 1099.

Penalties for filing late and failing to file

The IRS recently increased penalties for failure to file information returns, failure to furnish correct payee statements, and for intentional disregard of the law.  For the year 2011, the penalties for failure to file information returns such as 1099s are as follows:

  • $30 per information return if you correctly file within 30 days (by March 30 if the due date is February 28).
  • $60 per information return if you correctly file more than 30 days after the due date but by August 1.
  • $100 per information return if you file after August 1 or you do not file required information returns.
  • If any failure to file a correct information return is due to intentional disregard of the filing or correct information requirements, the penalty is at least $250 per information return.

In addition, the penalty for failure to furnish correct payee statements increased to $100 per return.  The penalty is reduced to $30 per return for failures corrected within 30 days after the due date and reduced to $60 per return for failures corrected on or before August 1.

See section O of the Form 1099 general instructions for more detailed information regarding these penalties.

Filing your 1099s

We are happy to prepare Form(s) 1099 for our clients when requested to do so. Typically, clients provide us with either an electronic copy of their accounting data or the amounts required to be reported on Forms 1099, as well as the name, address, and tax identification number for each recipient.

If you decide to prepare your own 1099s, you can buy blank forms at most office supply stores.  If you use QuickBooks, we can walk you through the steps for printing 1099s directly from the software.  Another option is to use an Approved IRS e-file for Business Provider.

The laws for issuing Form 1099 are complex, so please consult with your tax advisor.

See Also

Disclaimer

2011 General Instructions for Forms 1097, 1099, 1098, 3921, 3922, 5498 and W-2G

2011 Instructions for Form 1099-MISC, Miscellaneous Income