“Check with your Accountant”

Can we replace the Accountant with Payroll Software?

Some of the starters are thinking they can get the software to run the payroll and eliminate the need of an Accountant and they can use an accountant to do the tax return at the end. If you are very knowledgeable and experienced, yes it may help.

Most of the online software will cost an average of $60 per month and some of the banks even offer at lower than this rate. But none of the software or the payroll company can give you advice on any of the tax-related questions. If you ask anything to connect with tax, they will be advised you to check with your accountant. If you ask the same questions to your financial advisor or even to the IRS, they will say the same “Check with your Accountant”

What doesn’t mean “Check with your Accountant” and why can’t they answer your questions Because they are not authorized to give you tax advice. In order to give you Advice, that person must have an Authority or certificate from the government. That means those payroll service providers are not qualified, well I can’t answer that question and you should ask them why you can’t give the answers if you have enough experience.

Each business is unique, and the answers can be different for business to business and person to person and that’s why the experienced business owners always use an Accounting firm to do the payroll instead of an online software company. You will need proper guidance not only in the tax return but also needed in the payroll, which only an Accountant can provide

For any business, every penny is controlled, and I strongly agreed to control the expense and the question is which expense can be control and which should not. It depends on the type of business you are doing.

If you are doing a business where your client won’t need to meet you in person, you may not need an outside office until you grow. You may able to hire a virtual office space (which costs around $50 a month) and run from your home. Some of the expense like marketing can’t be eliminated.

Most of the starters pay an average $60 per month for payroll and which will cost at least $720 a year and anywhere from $500 to $1500 to prepare the corporate tax return at the year-end. If they need to make any amendment to the Payroll tax forms, you need to pay again to the payroll software company or hire an accountant to fix the issue.

Our company formed in 2002 and have enough experience in small business payroll and accounting and our fees are fixed and affordable to any small business. Please visit our website for more information on our fee schedule

Our accounting package ( Payroll and Corporate Tax Return) starting at $85 per month for one State and up to 5  Employees and/or contractors and when you complete the full year of payroll service you are eligible to get a Free Corporate Tax Return (Normally charged $250- $750 ) and one Free business consultation (Normally charged $250 - $500). Yes, that is correct $1020 a year can cover all the tax and accounting costs for your small business. For more information please contact us at 630-663-1500

Tax Due date is April 15th and we paid all the tax on the last day and why are we still getting a bill?

So many taxpayers get a letter from internal revenue service this year asking them to pay some additional tax and interest. Most of them never have this situation before and like to know what is underpayment penalty  and how to avoid this for next year

Underpayment penalty

You must pay at least 90% of the tax you owed for the current year or 110 % of the last year tax, what ever is smaller before December 31^st on a timely manner. 

How do I avoid this for next year?

Its very hard to find out what is 90% of current year until we do the tax, but it is very easy to calculate the 110% of last year tax liability.

If you are employed/Salaried person its very easy to adjust the withholding tax by submitting a proper W4 and if you are not sure what is the correct number of exemptions, get your accountant help and if you are expecting any additional income like bonus, Third party sick pay etc. make sure the employer deduct enough tax from the paycheck

We always noticed that most of the third-party sick pay and unemployment benefits are not deducting no tax or very less tax. We would recommend keeping the same or more income tax deduction on these payments to avoid the big tax bill at the end.

If you are self employed person, its little hard to find out what will be your taxable income unless otherwise you use a professional to keep your books. If you are running a small business, I would recommend using our bookkeeping service to maintain your books Update all the time.

Bookkeepers will go thru your business bank statements and prepare the Profit and loss statement, Balance Sheet and Bank reconciliation on a monthly basis and that will help you to make the estimated payment of income tax to the IRS and State

Our Bookkeeping service starting $75 a month depends on how much transactions a month to enter and please call 630-663-1500 X 5 for more information

October 2013 Newsletter

                         How will the Affordable Care Act “Obamacare” Impact you?

The Affordable Care Act contains new health insurance coverage and financial assistance options for individuals and families, it also contains new benefits and responsibilities for employers.  In 2014 most people will have to have health insurance or pay a fee.  The Health Insurance Marketplace found at www.healthcare.gov helps uninsured people find health insurance.  Open enrollment for the Marketplace ends on March 31, 2014 and if you enroll by December 15, 2013, your coverage can begin as soon as January 1, 2014.  When you fill out an application at the Marketplace you will find out what you qualify for including private insurance plans, Medicaid, and the Children's Health Insurance Program (CHIP).

 

  The IRS will be administering the tax provisions.  There is a premium tax credit that may help make the cost of purchasing health insurance coverage.  In January of 2014 you must either have health care coverage, have an exemption from coverage, or make a payment when you file your 2014 tax return in 2015. If you do not have health insurance in 2014 you will pay a penalty of $95.00 per adult, $47.50 per child, or 1% of your income (whichever is greater).  

  If you are a business owner, depending on the size of your business will determine if you are eligible for tax credits, health care options, and your responsibilities as a business owner.  If you have less than 25 full-time equivalent employees may be eligible for a Small Business Tax Credit to help cover the cost of providing coverage.

  All information in regards to the Affordable Care Act was found at www.healthcare.gov or www.irs.gov.

November Newsletter: IRS Scam Alert

The IRS is warning people about a phone scam targeting taxpayers, including recent immigrants, throughout the country.  Victims are receiving phone calls saying that they owe money to the IRS and it must be paid immediately via wire transfer or a pre-loaded debit card.  If the victim does not pay, they tell the victim they will be arrested, deported, or will have their business or driver’s license suspended. 

The IRS will not ask for credit card numbers over the phone, or a pre-paid debit card or a wire transfer.  This scam has been happening in every state.  The IRS will first contact people via mail, they will not call and demand payment over the phone.   These scammers use fake names and IRS badge numbers, have the victim recite last four of their Social Security Number, have a spoof IRS toll-free number, send bogus emails, victims also hear background noise to mimic a call site.  If a victim refuses to pay the scammers will also call back pretending to be from the police, or DMV and will have a spoof caller ID to appear valid.

            If you receive one of these calls and you think you owe taxes call the IRS at 800-829-1040.  If you receive one of these calls and you do not think you owe taxes please call 800-366-4484.   You can also contact the Federal Trade Commission at FTC.gov to report this scam.

            Please remember the IRS will not contact via electronic communication, including email and text messages to request personal or financial information.   If you receive this type of communication do not open any attachments, and forward it to phishing@irs.gov.

            All information in regards to this scam was found on the IRS.gov website.

October Newsletter Details: How will the Affordable Care Act impact you?

The Affordable Care Act contains new health insurance coverage and financial assistance options for individuals and families, it also contains new benefits and responsibilities for employers.  In 2014 most people will have to have health insurance or pay a fee.  The Health Insurance Marketplace found at www.healthcare.gov helps uninsured people find health insurance.  Open enrollment for the Marketplace ends on March 31, 2014 and if you enroll by December 15, 2013, your coverage can begin as soon as January 1, 2014.  You will be considered covered if you are insured through an employer, an insurance plan bought on your own, Medicare, Medicaid, CHIP, COBRA, retiree coverage, TRICARE, or VA health coverage.

On the Marketplace website when you complete an application you will find out what you qualify for including private insurance plans, Medicaid, and the Children's Health Insurance Program (CHIP).  The Marketplace will tell you if you qualify for lower costs based on your household size and income.  Plans cover essential health benefits, pre-existing conditions, and preventive care.  If you do not qualify for lower prices you can still buy insurance at the standard price on the Marketplace website.   If you qualify for Medicaid or the Children’s Health Insurance Program (CHIP), the Marketplace will share that information with your state agency, many states are expanding Medicaid to cover more people in 2014.   If you are eligible for insurance through an employer you have the option to switch to a marketplace plan, however you will not qualify for lower costs based on your income unless the job-based insurance is not affordable or does not meet the minimum requirements.

The IRS will be administering the tax provisions.  There is a premium tax credit that may help make the cost of purchasing health insurance coverage.  In January of 2014, you must either have health care coverage, have an exemption from coverage, or make a payment when you file your 2014 tax return in 2015. If you do not have health insurance in 2014 you will pay a penalty of $95.00 per adult, $47.50 per child, or 1% of your income (whichever is greater). This fee is called the Individual Shared responsibility payment and these fees will increase every year, these fees will be due when you make your tax payment.  You may qualify for an exemption from paying the fee, there is a list on the Marketplace website, some of them include: if you were uninsured for less than 3 months of the year, the lowest-priced coverage available to you would cost more than 8% of your household income, you don’t file a tax return because your income is too low and different types of hardships that may have affected your ability to purchase an insurance plan.  You can apply for an exemption on the Marketplace website or when you file your 2014 federal tax return. If you get insurance through the Marketplace you may be able to claim a premium tax credit, which you can have advance payments sent directly to your insurer during 2014 or you can claim them when you file your tax returns.  If you choose payments in advance you will have to reconcile the payments on your 2014 tax return.

If you are a business owner, depending on the size of your business will determine if you are eligible for tax credits, health care options, and your responsibilities as a business owner.  If you have less than 25 full-time equivalent employees may be eligible for a Small Business Tax Credit to help cover the cost of providing coverage.  If you have less than 50 employees you might be eligible to buy coverage through the Small Business Health Options Program.  If you have 50 or more employees an annual return will need to be completed to state what insurance was offered their employees and they may also be subject to the Employer Shared Responsibility provisions.

All information in regards to the Affordable Care Act was found at www.healthcare.gov or www.irs.gov.

Role of Accountant in your small business

 It is very important for you to understand the role accountants play in the success of today’s small business?

Even with the best tax software, without being an expert on accounting, tax, and finance, you need an accountant. A professional accountant is well trained and should be able to help you save money as well as add value to your starting or existing business.

Our Monthly service Charge starts from $85 and which includes the payroll, quarterly tax returns, annual tax return, and tax consultation. Our payroll service includes direct deposit, online access to the payroll records, paystubs as pdf in the email, E-Payment and E-filing the payroll tax and reports, Payroll Audit, and Insurance Audit. When you use our monthly accounting service, $1020 a year will cover all the accounting, Payroll, and year-end corporate tax returns.


If you are not using our monthly service, you will be charged $250 for each consultation by phone, email or in person and $250 for the annual tax return preparation. Most of the business owners contact their accountant at least 4 times a year and which will cost $1000 plus the annual tax return fee and the payroll software charges


If you have not yet set up your business, find out the role accountants play and endeavor to talk to an accountant before you start. All businesses have to produce annual accounts for the tax preparation Most jurisdictions have a threshold or guidelines, for which kind of business qualifies for audit exemption.   Whatever form (Corp, S Corp, LLC) your business is going to take; business accountants can offer you a range of valuable services.


The accountant can advise you on how to start your business.

· What form your business should take — sole trader, partnership, limited liability partnership or limited company.

· The role accountant play involves assisting with your business plan.

· Assist you with the Legal and tax aspects of registering your new small business

· Professional accountants will provide all the accounting and book-keeping expertise you need including :

· The setting-up of manual or computerized book-keeping systems — sales ledger, purchase ledger, cash book, petty cash book, debtors ledger, creditors ledger, fixed-asset register.

· The preparation of financial statements — profit and loss account, balance sheet, cash flow statement and related notes.

· Tax returns and corporation tax, VAT, PAYE, and National Insurance contributions, and income tax for sole traders and partnerships.

· Tax planning — minimizing your tax bill.

They can give you general financial advice.

· This may include recommendations on the financing of your business through overdrafts, loans, leasing, hire purchase, factoring, venture capital (including business angels) or grants.

· They can be instrumental at advising and introducing you to viable sources of finance and also help with drafting and presenting your business case to them.

The role accountants play towards the success of your small business or personal financial planning can only be compared to a doctor-patient relationship.



If you like to start your monthly accounting service from us please give us a call @ 630-663-1500

Whats new in 2011 tax return

Personal Exemptions

The personal and dependent exemption for tax year 2011 is $3,700, up $50 from 2010.

Standard Deductions

In 2011 the standard deduction for married couples filing a joint return is $11,600, up $200 from 2010 and for singles and married individuals filing separately it's $5,800, up $100. For heads of household the deduction is $8,500, also up $100 from 2010.

The additional standard deduction for blind people and senior citizens is $1,150 for married individuals, up $50, and $1,450 for singles and heads of household, also up $50.

Income Tax Rates

Due to inflation, tax-bracket thresholds will increase for every filing status. For example, the taxable-income threshold separating the 15-percent bracket from the 25-percent bracket is $69,000 for a married couple filing a joint return, up from $68,000 in 2010.

Alternative Minimum Tax (AMT)

AMT exemption amounts for 2011 are slightly higher than those in 2010 at $48,450 for single and head of household fliers, $74,450 for married people filing jointly and for qualifying widows or widowers, and $37,225 for married people filing separately.

Flexible Spending Accounts (FSA)

The Affordable Care Act, enacted in March, established a new uniform standard, effective January 1, 2011, that applies to FSAs and health reimbursement arrangements (HRAs).

Under the new standard, the cost of an over-the-counter medicine or drug cannot be reimbursed from the account unless a prescription is obtained. The change does not affect insulin, even if purchased without a prescription, or other health care expenses such as medical devices, eye glasses, contact lenses, co-pays and deductibles.

The new standard applies only to purchases made on or after Jan. 1, 2011, so claims for medicines or drugs purchased without a prescription in 2010 can still be reimbursed in 2011, if allowed by the employer's plan.

A similar rule went into effect on Jan. 1, 2011 for Health Savings Accounts (HSAs), and Archer Medical Savings Accounts (Archer MSAs).

Long Term Capital Gains

In 2011, long-term gains for assets held at least one year are taxed at a flat rate of 15% for taxpayers above the 25% tax bracket. For taxpayers in lower tax brackets, the long-term capital gains rate is 0%.

Individuals - Tax Credits

Child and Dependent Care Credit

If you pay someone to take care of your dependent (defined as being under the age of 13 at the end of the tax year or incapable of self-care) in order to work or look for work, you may qualify for a credit of up to $1,050 or 35 percent of $3,000 of eligible expenses.

For two or more qualifying dependents, you can claim up to 35 percent of $6,000 (or $2,100) of eligible expenses. For higher income earners the credit percentage is reduced, but not below 20 percent, regardless of the amount of adjusted gross income.

Child Tax Credit
The $1,000 child tax credit has been extended through 2012. A portion of the credit may be refundable, which means that you can claim the amount you are owed, even if you have no tax liability for the year. The credit is phased out for those with higher incomes.

Energy Tax Credits for Homeowners

Energy tax credits for homeowners expire at the end of 2011 and are not as generous as in previous years. In addition, a taxpayer who has claimed an amount of $500 in any previous year is not eligible for this tax credit.

Homeowners can claim an Energy Star window tax credit of up to $200 maximum as well as a water heater tax credit, which includes electric, natural gas, propane, or oil, up to a maximum of $300. The same maximum ($300) applies to air conditioners, but insulation, doors, and roof credits are capped at $500. The furnace tax credit (includes natural gas, propane, oil, or hot water) and is capped at $150 maximum and efficiency must be at 95%.

Earned Income Tax Credit (EITC)

The maximum EITC for low and moderate income workers and working families is $5,751, up from $5,666 in 2010. The maximum income limit for the EITC has increased to $49,078, up from $48,362 in 2010. The credit varies by family size, filing status and other factors, with the maximum credit going to joint filers with three or more qualifying children.

Individuals - Education Expenses

Coverdell Education Savings Account

For two more years, you can contribute up to $2,000 a year to Coverdell savings accounts. These accounts can be used to offset the cost of elementary and secondary education, as well as post-secondary education.

American Opportunity Tax Credit (Higher Education)

The expansion of the Hope Scholarship Credit by the American Opportunity Tax Credit has been extended through 2012. For 2011, the maximum Hope Scholarship Credit that can be used to offset certain higher education expenses is $2,500, although it is phased out beginning at $160,000 adjusted gross income for joint filers and $80,000 for other filers.

Lifetime Learning Credit

A credit of up to $2,000 is available for an unlimited number of years for certain costs of post-secondary or graduate courses or courses to acquire or improve your job skills. For 2011, the credit is fully phased out at $122,000 adjusted gross income for joint filers and $61,000 for others.

Student Loan Interest

For 2011 and 2012, the $2,500 maximum student loan interest deduction for interest paid on student loans is not limited to interest paid during the first 60 months of repayment. The deduction begins to phase out for higher-income taxpayers.

Tuition and Related Expenses Deduction

For 2010 and 2011, there is an above-the-line deduction of up to $4,000 for qualified tuition expenses. This means that qualified tuition payments can directly reduce the amount of taxable income, and you don't have to itemize to claim this deduction. However, this option can't be used with other education tax breaks, such as the American Opportunity Tax Credit, and the amount available is phased out for higher-income taxpayers.

Individuals - Retirement

Roth IRA Conversions

There is no longer an income limit for taxpayers who want to convert regular IRAs into Roth IRAs. The difference is that taxpayers who convert to Roth IRAs in tax year 2011 must pay taxes on the conversion income now instead of deferring it in later years as was the case in 2010.