Tuesday, January 10, 2012
Quickbooks can do much more than you think
QuickBooks Can Do Much More Than You Think
No, you'll never max out all of its features, but here are some tips on tools that extend QuickBooks' usefulness – and save you time.
Zero In On Key Report Figures
You've undoubtedly created reports that were so lengthy that you got tired of scrolling up and down to find totals for each individual section. QuickBooks lets you collapse and expand reports to see primary totals only, but this command affects the entire report.
If you want to just collapse a section or two, here's how you do it. As an example, go to Reports | Company & Financial | Balance Sheet Standard. In QuickBooks 2012, you'd click the Excel button (your version may say Export). Indicate that you want to create a new worksheet and click Advanced. This window opens:
Figure 1: The Advanced Excel Options window displays the formatting tools you can carry over from QuickBooks and the features in Excel that you want to be active.
Make sure that )Auto Outline (allows collapsing/expanding) is checked, then click OK and start the export. When your report opens as an Excel spreadsheet, you'll notice that there is a series of vertical lines to the left of your data, and a group of numbers that corresponds to them running above horizontally.
Figure 2: Excel's Auto Outline feature adds tools to the left of your data that let you collapse and expand subsections.
To collapse a section so that only the totals show, click on the minus (-) sign next to the line that should remain (in this example, it's Total Checking/Savings). Do the same for Total Accounts Receivable and Total Other Current Assets. Then scroll down and do the same thing for the other asset subtotals. Here's what you'll see:
Figure 3: As you can see, the minus (-) signs have turned into plus (+) signs, which allows you to expand the rows back to their original states.
Auto Outline is a very useful feature, but there's more than one way to implement it. And its availability and operation can vary in different versions of both Excel and QuickBooks. We can help you master this, as well as other QuickBooks-to-Excel tools.
Hidden Gems
Here are some other less-commonly-used QuickBooks features that you may want to try:
• Getting ready to send an invoice but want to check a related transaction from the same job a few months ago? You could use the Find tool, which is a seriously underused feature that can often answer a question quickly. But that takes a few clicks. Instead, just hit Ctrl + L, and that Customer/Job screen pops open in the Customer Center. Click Ctrl + E from that screen to see the Edit Job dialog box.
• CTRL+Y on transaction screens opens the Transaction Journal, which shows you the behind-the-scenes debits and credits. If the Account column is truncated, click and drag the little diamond symbol to the right.
• QuickBooks offers numerous helpful payroll reports, but it also transfers your data into Excel for more comprehensive views of your employee compensation information over customizable date ranges. Go to Reports | Employees & Payroll | Summarize Payroll Data in Excel and More Payroll Reports in Excel.
Figure 4: Summarize Payroll Data in Excel is actually a series of reports, available by clicking this navigational bar at the bottom of the screen.
• Allowing multiple windows in QuickBooks and tired of clicking the little x repeatedly to start with a clean slate? Click Window | Close All. This drop-down menu also displays the list of open windows; click on one to go there.
• There may be no more frustrating task than reconciling your bank accounts. If you're using online banking, consider doing this more than once monthly. Also, don't let QuickBooks do an automatic adjustment for a considerable discrepancy unless it was a mistake made by a financial institution: Click the Undo Last Reconciliation button and try to find the error. And don't forget about the Leave button. You may do better attacking it later.
• If you occasionally need to enter a transaction for an entity that isn't a customer, vendor or employee, go to Banking | Other Names List. You can add, edit and delete these, as well as converting them to customers, vendors or employees.
There's more than one way to do a lot of things in QuickBooks. We can tell you about more, and evaluate your workflow to see how else we can improve your accounting experience.
Thursday, October 6, 2011
Four Key Points About Bonus Depreciation
Due to the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, business owners may be able to take advantage of renewed "bonus depreciation" deductions this year. In fact, this tax break is bigger than ever. The IRS recently issued new guidelines for bonus depreciation and expanded some provisions in the law.
Background: Previously, you could benefit from 50% bonus depreciation, coordinated with Section 179 deductions and regular depreciation deductions, for qualified new property placed in service before 2011. "Qualified property" includes property with a cost recovery period of 20 years or less, qualified leasehold improvement property, and certain software and water utility property.
The 2010 Tax Relief Act reinstated and improved the bonus depreciation tax break. It authorizes the following:
*100% bonus depreciation deduction for qualified property placed in service from September 9, 2010, through December 31, 2011 (through 2012 for certain other property).
*50% bonus depreciation for qualified property placed in service from January 1, 2012, through December 31, 2012.
The new IRS ruling addresses a number of issues related to 100% bonus depreciation. Here are four key points:
1. Step-down to 50% bonus depreciation: Under one previous law, you could "step down" from 50% bonus depreciation to 30% bonus depreciation if it suited your needs. For instance, postponing depreciation deductions may have been advantageous in your situation. But there is no step-down provision in the 2010 Tax Relief Act. The new ruling allows business owners to step down from 100% to 50% bonus depreciation in 2011.
2. Component depreciation: If you began to manufacture, construct or produce property before September 9, 2010, the components may qualify for 100% bonus depreciation. In other words, you can benefit for faster write-offs for qualified parts of the property. The new ruling explains how to elect the faster deductions for qualified components.
3. Restaurant and retail improvement property: Under prior law, qualified restaurant and retail improvement property was not eligible for 100% bonus depreciation. But the IRS says in the new ruling that these properties may fall within the definition of "qualified leasehold property." Thus, property with a "dual character" may qualify for enhanced deductions.
4. Business vehicles: The "luxury car" rules limit annual deductions for business vehicles. Generally, the first-year depreciation deduction is increased by $8,000 as a result of 100% bonus depreciation. Therefore, business car owners may be able to claim a maximum deduction of $11,060 ($11,160 for a light truck or van) placed in service in 2011. The actual deduction is based on the percentage of business use. However, this effectively slows down the deductions that may be claimed in subsequent years.
The new ruling provides a special "escape hatch" based on a calculation involving 50% bonus depreciation. If this election is made, business owners may claim deductions over the usual cost recovery period for business vehicles.
Final point: The new ruling clarifies the rules relating to 100% bonus depreciation, but this remains a complex area of the law. Taxpayers must follow strict procedures regarding special elections. It is recommended that you obtain professional assistance from your tax advisers.
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TAX ADVICE DISCLAIMER: In accordance with IRS Circular 230, any tax advice included in this communication, including attachments, is not intended or written to be used, and cannot be used by you or any other person or entity, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions, nor may any such advice be used to promote, market or recommend to another party any transaction or matter addressed within this communication. If you would like such advice, please contact us.
Background: Previously, you could benefit from 50% bonus depreciation, coordinated with Section 179 deductions and regular depreciation deductions, for qualified new property placed in service before 2011. "Qualified property" includes property with a cost recovery period of 20 years or less, qualified leasehold improvement property, and certain software and water utility property.
The 2010 Tax Relief Act reinstated and improved the bonus depreciation tax break. It authorizes the following:
*100% bonus depreciation deduction for qualified property placed in service from September 9, 2010, through December 31, 2011 (through 2012 for certain other property).
*50% bonus depreciation for qualified property placed in service from January 1, 2012, through December 31, 2012.
The new IRS ruling addresses a number of issues related to 100% bonus depreciation. Here are four key points:
1. Step-down to 50% bonus depreciation: Under one previous law, you could "step down" from 50% bonus depreciation to 30% bonus depreciation if it suited your needs. For instance, postponing depreciation deductions may have been advantageous in your situation. But there is no step-down provision in the 2010 Tax Relief Act. The new ruling allows business owners to step down from 100% to 50% bonus depreciation in 2011.
2. Component depreciation: If you began to manufacture, construct or produce property before September 9, 2010, the components may qualify for 100% bonus depreciation. In other words, you can benefit for faster write-offs for qualified parts of the property. The new ruling explains how to elect the faster deductions for qualified components.
3. Restaurant and retail improvement property: Under prior law, qualified restaurant and retail improvement property was not eligible for 100% bonus depreciation. But the IRS says in the new ruling that these properties may fall within the definition of "qualified leasehold property." Thus, property with a "dual character" may qualify for enhanced deductions.
4. Business vehicles: The "luxury car" rules limit annual deductions for business vehicles. Generally, the first-year depreciation deduction is increased by $8,000 as a result of 100% bonus depreciation. Therefore, business car owners may be able to claim a maximum deduction of $11,060 ($11,160 for a light truck or van) placed in service in 2011. The actual deduction is based on the percentage of business use. However, this effectively slows down the deductions that may be claimed in subsequent years.
The new ruling provides a special "escape hatch" based on a calculation involving 50% bonus depreciation. If this election is made, business owners may claim deductions over the usual cost recovery period for business vehicles.
Final point: The new ruling clarifies the rules relating to 100% bonus depreciation, but this remains a complex area of the law. Taxpayers must follow strict procedures regarding special elections. It is recommended that you obtain professional assistance from your tax advisers.
[View Article List] [Go Back]
TAX ADVICE DISCLAIMER: In accordance with IRS Circular 230, any tax advice included in this communication, including attachments, is not intended or written to be used, and cannot be used by you or any other person or entity, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions, nor may any such advice be used to promote, market or recommend to another party any transaction or matter addressed within this communication. If you would like such advice, please contact us.
Monday, April 18, 2011
Ann G. Chiang, CPA
Ann G. Chiang, CPA
Thank you for the opportunity to service you. Thank you for following my retirement plan to save you taxes.
Thank you for the opportunity to service you. Thank you for following my retirement plan to save you taxes.
Friday, February 18, 2011
First-Time Homebuyer closing costs-401K withdrawal
First-Time Homebuyer Expenses. The 10-percent additional tax does not apply if the individual uses the IRA distribution for certain expenses of a first-time homebuyer. Only $10,000 during the individual's lifetime may be withdrawn without a penalty for this purpose. Qualified expenses include acquisition costs, settlement charges and closing costs. The principal residence may be for the individual or the individual's spouse, child or grandchild, or an ancestor of the individual or the individual's spouse. In order to be considered a "first-time homebuyer," the person buying the residence (and spouse, if married) must not have had an ownership interest in a principal residence during the two-year period ending on the date that the new home is acquired ( Code Sec. 72(t)(2)(F)). 165
Bill takes a hardship distribution from his 401(k) plan on April 1, 2011. In order to satisfy one of the safe harbor requirements, Bill will not be able to make any elective deferrals or after-tax contributions to the plan until October 1, 2011 (i.e., six-month suspension of contributions).
Bill takes a hardship distribution from his 401(k) plan on April 1, 2011. In order to satisfy one of the safe harbor requirements, Bill will not be able to make any elective deferrals or after-tax contributions to the plan until October 1, 2011 (i.e., six-month suspension of contributions).
Thursday, January 27, 2011
Cutting the "Kiddie Tax" Down to Size
Tax Tips are not a substitute for legal, accounting, tax, investment or other professional advice. Always consult with your trusted accounting advisor before acting upon any Tax Tip.
The "kiddie tax" is a bit of a misnomer. This tax provision may actually apply to children well into their twenties. Nevertheless, with some advance planning, you can minimize or even eliminate the tax damage.
Basic rules: Income is generally taxed at the tax rate of the individual who receives it. For example, if you are in the 35% tax bracket, your top dollars are taxed at the 35% rate. On the other hand, if your child is in the 10% bracket, the child pays tax at a maximum rate of only 10%.
However, a special rule applies to younger children who receive unearned income above an annual threshold. In this case, the excess is taxed at the top tax rate of the child's parents. Thus, instead of being taxed at the 10% rate, your child may be taxed at the 35% rate on the excess.
The annual threshold is adjusted for inflation, but increases have been small or nonexistent. For 2011, the threshold is $1,900, the same as it was in 2010 and 2009.
Another problem: Initially, the kiddie tax only applied to children under age 14, but the limit has been raised several times. Currently, the age limit is 19, or age 24 for a full-time student if the child doesn't have earned income in excess of half of his or her annual support. In other words, if your dependent child is in college, the kiddie tax most likely still applies.
How can you lessen the impact? Although every situation is different, here are four ideas to consider:
1. Keep your child's unearned income below or near the $1,900 threshold. For instance, you might wait until next year to give your child some income-producing property. This technique works especially well if you do not expect your child to pay the kiddie tax in 2012.
2. Utilize tax-deferred investments that don't produce current income. This may include investments in growth stock and U.S. Savings Bonds. Similarly, if the child buys certificates of deposit (CDs) or Treasuries that will not mature until next year, you can avoid or minimize the kiddie tax for 2011.
3. Allocate a portion of your child's investment portfolio to municipal bonds ("munis") or muni bond funds. Generally, the income received from these investments is completely free from federal income tax, so your child can pocket any amount without kiddie tax worries.
4. Hire your child to work for your company. Because the wages constitute earned income, this will not trigger any kiddie tax complications. As long as the child is paid a reasonable salary for the services performed, your company can deduct the wages. This is a good way to help a child save money for college without adverse tax consequences.
Final advice: Keep one eye on your child's portfolio and the other on the kiddie tax. But take all the relevant factors--not just taxes--into account when you make investment decisions.
The "kiddie tax" is a bit of a misnomer. This tax provision may actually apply to children well into their twenties. Nevertheless, with some advance planning, you can minimize or even eliminate the tax damage.
Basic rules: Income is generally taxed at the tax rate of the individual who receives it. For example, if you are in the 35% tax bracket, your top dollars are taxed at the 35% rate. On the other hand, if your child is in the 10% bracket, the child pays tax at a maximum rate of only 10%.
However, a special rule applies to younger children who receive unearned income above an annual threshold. In this case, the excess is taxed at the top tax rate of the child's parents. Thus, instead of being taxed at the 10% rate, your child may be taxed at the 35% rate on the excess.
The annual threshold is adjusted for inflation, but increases have been small or nonexistent. For 2011, the threshold is $1,900, the same as it was in 2010 and 2009.
Another problem: Initially, the kiddie tax only applied to children under age 14, but the limit has been raised several times. Currently, the age limit is 19, or age 24 for a full-time student if the child doesn't have earned income in excess of half of his or her annual support. In other words, if your dependent child is in college, the kiddie tax most likely still applies.
How can you lessen the impact? Although every situation is different, here are four ideas to consider:
1. Keep your child's unearned income below or near the $1,900 threshold. For instance, you might wait until next year to give your child some income-producing property. This technique works especially well if you do not expect your child to pay the kiddie tax in 2012.
2. Utilize tax-deferred investments that don't produce current income. This may include investments in growth stock and U.S. Savings Bonds. Similarly, if the child buys certificates of deposit (CDs) or Treasuries that will not mature until next year, you can avoid or minimize the kiddie tax for 2011.
3. Allocate a portion of your child's investment portfolio to municipal bonds ("munis") or muni bond funds. Generally, the income received from these investments is completely free from federal income tax, so your child can pocket any amount without kiddie tax worries.
4. Hire your child to work for your company. Because the wages constitute earned income, this will not trigger any kiddie tax complications. As long as the child is paid a reasonable salary for the services performed, your company can deduct the wages. This is a good way to help a child save money for college without adverse tax consequences.
Final advice: Keep one eye on your child's portfolio and the other on the kiddie tax. But take all the relevant factors--not just taxes--into account when you make investment decisions.
Home-office Deductions: Terms of Tax Endearment
Tax Tips are not a substitute for legal, accounting, tax, investment or other professional advice. Always consult with your trusted accounting advisor before acting upon any Tax Tip.
If you operate a business out of your home, you may be able to write off a portion of your everyday living expenses. But tax deductions for home-office expenses are not automatic.
Basic rules: Home-office expenses are deductible on your 2010 tax return if you use part of the home "regularly and exclusively" as either the principal place of your business or a place to meet or deal with patients, clients and customers in the normal course of business. Also, you may deduct expenses attributable to a detached structure--such as a garage or shed--used in connection with your business.
If you are an employee, the home office must be used for the convenience of the employer. Keep your employment contract as proof of the condition.
The basic rules are relatively straightforward, but several key terms require further explanation.
Regular and exclusive use: To meet this requirement, you must use a specific area of your home only for business reasons. The specific area can be a room or even an identifiable space within a room. It does not have to be permanently enclosed, but doing so strengthens your tax position.
If you use the office portion of the home occasionally or sporadically for personal reasons, the personal use "taints" the home office. Thus, no deductions are allowed.
Note that certain exceptions apply for day care centers and facilities for the aged or disabled. Furthermore, if a home is a principal place of business and a specific area is used for inventory or product storage, the area qualifies for depreciation deductions if it is used regularly for business.
Principal place of business: If you are self-employed and work exclusively from home, it is obvious that your home office is your principal place of business. But this determination is not always so clear cut. For instance, you might perform some business functions at home, but spend most of your time visiting clients, customers or patients at other locations.
The law in this area seesawed back and forth for years, but you can currently qualify for home-office deductions if you perform administrative and management functions at home and you have no other fixed business location for these functions. Administrative and managerial activities may include
*billing and invoicing
*keeping books and records
*ordering supplies
*setting up appointments
*researching and writing reports
However, you are not disqualified if you arrange to have administrative or managerial duties performed at other locations. For example, you might outsource payroll duties or handle customer inquiries on your laptop in hotels or airports. Similarly, you will not be penalized if you spend more time on the road than at home.
Convenience of employer: An employee is entitled to deduct home-office expenses only if he or she is specifically required by the employer to maintain a home office. Thus, a dedicated worker who brings work home nights and weekends usually does not qualify. It does not matter if the work at home results in a benefit to the employer--it must be an absolute condition of employment. In addition, keeping a home office must be justified by the nature of the job.
Contact a professional tax adviser for the application of these tax rules to your personal situation.
If you operate a business out of your home, you may be able to write off a portion of your everyday living expenses. But tax deductions for home-office expenses are not automatic.
Basic rules: Home-office expenses are deductible on your 2010 tax return if you use part of the home "regularly and exclusively" as either the principal place of your business or a place to meet or deal with patients, clients and customers in the normal course of business. Also, you may deduct expenses attributable to a detached structure--such as a garage or shed--used in connection with your business.
If you are an employee, the home office must be used for the convenience of the employer. Keep your employment contract as proof of the condition.
The basic rules are relatively straightforward, but several key terms require further explanation.
Regular and exclusive use: To meet this requirement, you must use a specific area of your home only for business reasons. The specific area can be a room or even an identifiable space within a room. It does not have to be permanently enclosed, but doing so strengthens your tax position.
If you use the office portion of the home occasionally or sporadically for personal reasons, the personal use "taints" the home office. Thus, no deductions are allowed.
Note that certain exceptions apply for day care centers and facilities for the aged or disabled. Furthermore, if a home is a principal place of business and a specific area is used for inventory or product storage, the area qualifies for depreciation deductions if it is used regularly for business.
Principal place of business: If you are self-employed and work exclusively from home, it is obvious that your home office is your principal place of business. But this determination is not always so clear cut. For instance, you might perform some business functions at home, but spend most of your time visiting clients, customers or patients at other locations.
The law in this area seesawed back and forth for years, but you can currently qualify for home-office deductions if you perform administrative and management functions at home and you have no other fixed business location for these functions. Administrative and managerial activities may include
*billing and invoicing
*keeping books and records
*ordering supplies
*setting up appointments
*researching and writing reports
However, you are not disqualified if you arrange to have administrative or managerial duties performed at other locations. For example, you might outsource payroll duties or handle customer inquiries on your laptop in hotels or airports. Similarly, you will not be penalized if you spend more time on the road than at home.
Convenience of employer: An employee is entitled to deduct home-office expenses only if he or she is specifically required by the employer to maintain a home office. Thus, a dedicated worker who brings work home nights and weekends usually does not qualify. It does not matter if the work at home results in a benefit to the employer--it must be an absolute condition of employment. In addition, keeping a home office must be justified by the nature of the job.
Contact a professional tax adviser for the application of these tax rules to your personal situation.
2011 Common Benefits of a Business
Tax Tips are not a substitute for legal, accounting, tax, investment or other professional advice. Always consult with your trusted accounting advisor before acting upon any Tax Tip.
2011 Business Plan
As you approach the start of another year, you need to project a positive attitude for your business. One way to get things off on the right foot is to draw up a business plan for 2011 and make sure it is properly executed.
Essentially, a "business plan" is a blueprint for running the company on an annual basis. But a comprehensive plan can do much more than that. Here are several benefits you may typically realize from a business plan:
*The plan can provide a needed sense of direction. It will show you where you are, where you're going and how to get there. Of course, the plan does not have to be "unchangeable." For instance, new developments may require slight deviations from your original plan. However, your business decisions probably will be more solid if they are made within the framework of the original plan. If something is way off base, it should raise suspicions.
*A plan forces management to be proactive instead of reactive. Frequently, business managers in small companies tend to "put out fires" as problems arise. Committing a business plan to writing requires a great deal of discipline, but going through the process is worth it. For example, you can poke holes in a hastily conceived plan once you see it in black and white.
*Advance planning usually leads to better communication. For one thing, the process will force you to crystallize your vision of the company. For another, it encourages input from the personnel involved with the planning. This kind of dialogue may be particularly vital, especially in small firms. Reason: The employees have a chance to engage in valuable give-and-take with management.
*A business plan may give you instant credibility in your industry or profession. It can be especially impressive to creditors and the lending officers of the banks you deal with. And it may satisfy a psychological need for you and your company to be taken seriously.
*The plan may be used to help raise capital for the company. For instance, by focusing on accounts receivable in your business plan, you may be able to free up additional funds. Furthermore, a lender will likely require you to present a business plan plus cash projections to obtain a loan.
How do you construct a business plan? In general, most plans include the following: a statement of objectives, strengths and weaknesses, position in the marketplace, future direction, critical issues and so forth.
Generally, it helps to obtain the assistance of an experienced professional. However, there is no magic formula. It's your plan, so you can shape it into a format that seems right to you. In fact, you probably will make changes in the plan's format from year to year. The important thing is to touch all the bases essential to your particular line of work.
Reminder: Use your business plan as guidance--but do not treat is as the "bible." Feel free to modify the plan regularly during the course of the year as circumstances dictate. Your business advisers can provide the necessary assistance in this area.
2011 Business Plan
As you approach the start of another year, you need to project a positive attitude for your business. One way to get things off on the right foot is to draw up a business plan for 2011 and make sure it is properly executed.
Essentially, a "business plan" is a blueprint for running the company on an annual basis. But a comprehensive plan can do much more than that. Here are several benefits you may typically realize from a business plan:
*The plan can provide a needed sense of direction. It will show you where you are, where you're going and how to get there. Of course, the plan does not have to be "unchangeable." For instance, new developments may require slight deviations from your original plan. However, your business decisions probably will be more solid if they are made within the framework of the original plan. If something is way off base, it should raise suspicions.
*A plan forces management to be proactive instead of reactive. Frequently, business managers in small companies tend to "put out fires" as problems arise. Committing a business plan to writing requires a great deal of discipline, but going through the process is worth it. For example, you can poke holes in a hastily conceived plan once you see it in black and white.
*Advance planning usually leads to better communication. For one thing, the process will force you to crystallize your vision of the company. For another, it encourages input from the personnel involved with the planning. This kind of dialogue may be particularly vital, especially in small firms. Reason: The employees have a chance to engage in valuable give-and-take with management.
*A business plan may give you instant credibility in your industry or profession. It can be especially impressive to creditors and the lending officers of the banks you deal with. And it may satisfy a psychological need for you and your company to be taken seriously.
*The plan may be used to help raise capital for the company. For instance, by focusing on accounts receivable in your business plan, you may be able to free up additional funds. Furthermore, a lender will likely require you to present a business plan plus cash projections to obtain a loan.
How do you construct a business plan? In general, most plans include the following: a statement of objectives, strengths and weaknesses, position in the marketplace, future direction, critical issues and so forth.
Generally, it helps to obtain the assistance of an experienced professional. However, there is no magic formula. It's your plan, so you can shape it into a format that seems right to you. In fact, you probably will make changes in the plan's format from year to year. The important thing is to touch all the bases essential to your particular line of work.
Reminder: Use your business plan as guidance--but do not treat is as the "bible." Feel free to modify the plan regularly during the course of the year as circumstances dictate. Your business advisers can provide the necessary assistance in this area.
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