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QuickBooks Online’s Sales Tax Tools: The Basics

April 27, 2018 by Admin

Are you paying the correct amount of sales tax to the proper agencies? QuickBooks Online can help.

It’s hard to imagine that small businesses used to have to manage sales tax manually. It was quite a time-intensive process, and it was so easy to make mistakes.

QuickBooks Online can handle the mechanics for you. Its sales tax tools are quite simple; they help set up both single and combined (up to five) rates. Then when you create invoices and other sales forms, you can select the appropriate rate(s). The site does the necessary calculations and includes sales tax in the totals. It also keeps a running tally of how much you owe to taxing agencies.

Bear in mind, though, that absolute accuracy is required for this often-confusing process. States have their own individual requirements, and in some geographical areas, you’ll have to charge county and/or municipal sales tax. So before you start entering rates and charging customers, we should sit down and go over issues like:

  • Whether you need a sales tax permit,
  • How to handle sales in other states,
  • What transactions are exempt from sales tax, and
  • How often – and to whom – you submit the money you’ve collected from customers.

Figure 1: QuickBooks Online simplifies the mechanics of charging sales tax. But let us work with you before you start using them.

This element of accounting is so critical that QuickBooks Online includes a special section devoted to it. To get to the Sales Tax Center, you’d click on Sales Tax in the site’s toolbar.  The page that opens will eventually display information about the sales tax you owe for a specific period and recent payments you’ve made.

It’s the Related Tasks over to the right that we’ll address first. The Edit sales tax settings link opens a small window that asks whether you charge sales tax. It also wants to know whether you want to specify one rate as your default – the rate that fills in automatically when you enter a taxable item on a sales form – and whether all customers, products, and services should be considered taxable.

Note: Even if you choose a default tax rate, you’ll be able to change it on individual forms as needed.

Figure 2: One of the things we’ll do as we help you get started with sales taxes is to make sure that your site settings are correct.

QuickBooks Online will now include a Tax column on sales forms like invoices. After you’ve entered all of your taxable items, you’d look below the line over to the right that says Taxable subtotal. Directly below that is a field where the sales tax rate should appear.

If you’ve created rates and they aren’t showing, you’d click the up-and-down arrow to display the list. Either select the appropriate one or click +Add new. QuickBooks Online would then multiply the taxable subtotal by your tax percentage and enter the result in the box to the right.

Figure 3: Once you’ve entered all of your items and/or services and you have a taxable subtotal, QuickBooks Online will calculate the sales tax payable based on the rate selected.

When you want to see where you stand with your sales tax obligation to date, you can run three reports designed to display this information:

  • Taxable Sales Summary shows a summary of all of the sales to which you’ve assigned a tax rate in your sales forms.
  • Sales Tax Liability Report tells you what you’ve collected in sales tax, as well as what you owe to taxing agencies.
  • Taxable Sales Detail is a more comprehensive version of the Taxable Sales Summary report. Its columns include Date, Transaction Type, Customer, Quantity, Rate, Amount, and Balance.

When sales taxes are due, you will pay them directly from the Sales Tax Center. Its Sales Tax Owed table will display the amounts you owe and to whom. If they’re recorded as a paid bill or a check, they won’t appear in the Recent Sales Tax Payments table.

We can’t emphasize strongly enough the importance of correctly setting up your sales taxes from the start or of meeting the deadlines that your local taxing agencies enforce. Let us know when you want to start implementing this element of QuickBooks Online. We are Certified Quickbooks Pro Advisors. Our Los Angeles QuickBooks CPA firm offers a complete range of QuickBooks consulting, set-up, training and ongoing support to meet the needs of your business. Give us a call at 818-404-1084 to learn more or request a free consultation online.

Filed Under: QuickBooks

Simple Answers to Tax Questions About Using Your Vehicle for Business

March 28, 2018 by Admin

Los Angeles CPA FirmIRS rules and exceptions abound, but there are some questions we can answer simply when it comes to using your vehicle for business.

Next, to your home, your car is probably the most expensive investment you make. And the costs of paying for and maintaining it can be considerable. Can you recoup some of your investment by claiming vehicle expenses on your tax return?

Sometimes. The IRS has many restrictions on the business use of a vehicle, and those restrictions have many exceptions. Better to know these upfront than to have to correct a tax return after you’ve filed it. Our Los Angeles CPA firm specializes in IRS tax for businesses and individuals. Here are some questions and answers that may help you decide whether you’re eligible.

How does the IRS identify a “vehicle”?

A car, van, pickup, or panel truck.

What are transportation expenses?

These are “ordinary and necessary expenses” incurred when you, for example:

Visit customers,
Attend a business meeting held at a location other than your regular workplace, or
Go from home to a temporary workplace that is not your company’s principal location.
The daily commute to and from your regular office is not deductible. The IRS considers this personal commuting expenses.

What if I’m on an overnight business trip away from home?

The IRS considers these travel expenses, and they’re reported differently. Your car expense deduction, though, is calculated the same way in both situations.

What if I use my car for both business and personal purposes?

You’ll calculate the expenses incurred for each by determining how many miles you drive for business and how many you drive for personal reasons.

I work in a home office. Can I deduct any driving expenses?

Yes, you can deduct the cost of driving to “another work location in the same trade or business.”

How do I calculate my deductible expenses?

There are two options. Use the standard mileage rate. You are required to use this method for the first year you use the vehicle for business purposes. After that initial year, you can choose between the standard mileage rate and actual car expenses. These include depreciation, oil and gas, insurance, and repairs.

Depreciation? Isn’t that difficult to calculate?

Yes, especially for cars. If you plan to take this kind of deduction, please let us handle your tax preparation for you. Depreciation is very, very complex, and sometimes requires more than one calculation method.

Can I take a Section 179 deduction for my vehicle?

Possibly, if you use the car for business more than 50 percent of the time — and only for the first year.

What kind of vehicle expense records do I need to maintain?

You know the drill here. If the IRS ever wants to examine your return, it will expect evidence like receipts, canceled checks, and credit card statements. You’ll need to document the date and location where you incurred the expense. You’ll need accurate mileage records (miles are driven, the purpose of the trip, etc.).

These requirements scream for some kind of organized computer log or written diary, along with a safe place for any paper receipts, bills, etc. There are numerous mobile apps that can help you with this task. We can steer you in the right direction.

If you’re planning to deduct car expenses, it’s important that you keep careful paper or electronic records.

Where will I be reporting transportation expenses?

If you are self-employed, you will report business-related vehicle expenses on Schedule C or Schedule C-EZ (Form 1040). Farmers should use Schedule F (Form 1040). You’ll also want to complete a Form 4562, which is used to report depreciation and the Section 179 deduction.

Maintaining accurate records for car and truck expenses is time-consuming and detail intensive. And that’s once you understand all of the IRS’s rules and exceptions surrounding this deduction. To avoid having to fix completed tax documents that the IRS has questioned, talk to us before you put a vehicle into business use. We’ll be happy to evaluate your transportation situation and guide you through the process. Give us a call at 818-404-1084 to learn more about our tax services.

Filed Under: Los Angeles CPA Accounting, Los Angeles Tax Services

Why You Should Rethink a Big Tax Refund

March 1, 2018 by Admin

 Los Angeles, CA CPA firmSo, the IRS is sending you a big check again this year? Bet you’re excited about it! But that money could have been in your paycheck — and your bank account — all along. Instead, you’ve allowed Uncle Sam to “borrow” your money throughout the year without paying interest on the loan.

Making Adjustments

The number of allowances you claimed when you filled out your Form W-4 dictates the amount of tax your employer withholds from your paycheck. The more allowances you claim, the less tax is withheld, and vice versa.

You can change the number of withholding allowances at any time. All you have to do is fill out a new Form W-4 and give it to your employer.

Do the Math

Your goal should be to have enough money withheld so that you won’t be subject to an underpayment penalty. Your tax advisor can help you determine the ideal number of allowances to claim.

For more help with individual or business taxes, connect with us today by calling our Los Angeles CPA Firm at 818-404-1084. Our team can help you with all your tax services from tax preparation to tax planning to IRS tax help.

Filed Under: Los Angeles Tax Services

What Records do You Need to Keep for the IRS?

January 22, 2018 by Admin

When you’re gathering your tax information this year, you may run across old information and wonder whether it’s okay to discard it. In general, you should retain supporting documentation for a minimum of three years after the date you file your return (or its due date, if later) — six years is safer. And there are some items you should never throw away.

Here are some guidelines.

Retain:

  • Copies of federal and state income-tax returns — indefinitely
  • Detailed information used to prepare your return, such as W-2s, 1099s, K-1s, receipts, and canceled checks — for six years
  • Records of investment and real estate purchases — for six years after you sell the investment or property
  • Once you have verified the accuracy of your W-2, there is generally no need to retain your old pay stubs. However, you should keep your year-end or final pay statement if you’ve had potentially tax-deductible amounts withheld from your pay, such as charitable donations, medical insurance premiums, or union dues.

Even when you no longer need your records for tax purposes, you might need them for other reasons. For example, your insurance company may require you to have certain records to substantiate a claim.

Don’t deal with tax issues on your own. Call us right now at 818-404-1084 to find out how we can provide you with the answers you need. Our Los Angeles CPA firm specializes in IRS tax solutions and strategies.

Filed Under: Los Angeles CPA Accounting, Los Angeles Tax Services

5 QuickBooks Reports You Need to Run in January

December 22, 2017 by Admin

The new year is about to begin. Does your accounting to-do list look like a clean slate, or are critical tasks from last year still nagging?

Getting all of your accounting tasks done in December is always a challenge. Besides the vacation time you and your employees probably took for the holidays, there are those year-end, Let’s-wrap-it-up-by-December-31 projects.

How did you do last month? Were you ready to move forward when you got back to the office in January? Or did you run out of time and have to leave some accounting chores undone?

Besides paying bills and chasing payments, submitting taxes and counting inventory in December, there’s another item that should have been on your to-do list: creating end-of-year reports. If you didn’t get this done, it’s not too late. It’s important to have this information as you begin the New Year. QuickBooks can provide it.

A Report Dashboard

You may be using the Reports menu to access the pre-built frameworks that QuickBooks offers. Have you ever explored the Report Center, though? You can get there by clicking Reports in the navigation toolbar or Reports | Report Center on the drop-down menu at the top of the screen.

QuickBooks’ Report Center introduces you to all of the software’s report templates and helps you access them quickly.

As you can see in the image above, the Report Center divides QuickBooks’ reports into categories and displays samples of each. Click on one of the tabs at the top if you want to:

  • Memorize a report using any customization you applied.
  • Designate a report as a Favorite
  • See a list of the most Recent reports you ran.
  • Explore reports beyond those included with QuickBooks, Contributed by Intuit or other parties.

Recommended Reports

Here are the reports we think you should run as soon as possible if you didn’t have a chance to in December:

Budget vs Actual

We hope that by now you’ve at least started to create a budget for this coming year. If not, the best way to begin is by looking at how close you came to your numbers last year. QuickBooks actually offers four budget-related reports, but Budget vs Actual is the most important; it tells you how your actual income and expenses compare to what was budgeted.

Budget Overview is just what it sounds like: a comprehensive accounting of your budget for a given period. Profit & Loss Budget Performance is similar to Budget vs Actual. It compares actual to budget amounts for the month, fiscal year-to-date, and annual. Budget vs Actual Graph provides a visual representation of your income and expenses, giving you a quick look at whether you were over or under budget during specific periods.

Income & Expense Graph

You’ve probably been watching your income and expenses all year in one way or another. But you need to look at the whole year in total to see where you stand. This graph shows you both how income compares to expenses and what the largest sources of each are. It doesn’t have the wealth of customization options that other reports due, but you can view it by date, account, customer, and class.

A/R Aging Detail

QuickBooks’ report templates offer generous customization options.

Which customers still owe you money from last year? How much? How far past the due date are they? This is a report you should be running frequently throughout the year. Right now, though, you want to clean up all of the open invoices from last year. A/R Aging Detail will show you who is current and who is 31-60, 61-90, and 91+ days old. You might consider sending Statements to those customers who are way past due.

A/P Aging Detail

Are you current on all of your bills? If so, this report will tell you so. If some bills slipped through the cracks in December, contact your vendors to let them know you’re on it.

Sales by Item Detail

January is a good time to take a good look at what sold and what didn’t before you start placing orders for this coming year. We hope you’re watching this closely throughout the year, but looking at monthly and annual totals will help you identify trends – as well as winners and losers.

QuickBooks offers some reports in the Company & Financial and Accountant & Taxes categories that you can create, but which really require expert analysis. These include Balance Sheet, Trial Balance, and Statement of Cash Flows. You need the insight they can offer on at least a quarterly basis, if not monthly. Connect with us, and we can set up a schedule for looking at these.

Social media posts

January is a good time to run reports you didn’t have time to in December. Talk to us about which are most important.

QuickBooks provides templates for some reports that you probably need help analyzing, like Balance Sheet. We can help with these.

Have you explored QuickBooks’ Report Center? It offers a variety of tools and guidance for managing reports.

Did you create a budget last year? Now’s the time to run QuickBooks’ Budget vs Actual report. You can contact our Los Angeles CPA Firm for all your QuickBooks accounting needs. Call us today at 818-404-1084 or request a free consultation online.

Filed Under: Los Angeles CPA Accounting, QuickBooks

Deciding What Business Structure is Right for You

November 14, 2017 by Admin

When you start a business, there are endless decisions to make. One of the most important is how to structure your business. Why is it so significant? Because the structure you choose will affect how your business is taxed and the degree to which you (and other owners) can be held personally liable.

Our Los Angeles CPA firm can assist you with business start-up, incorporation, and entity selection services. Leon Jaferian, CPA, Inc. has the experience to help advise and guide you in choosing the best business entity to meet your short and long-term goals.

Here’s an overview of the various business structures

Sole Proprietorship

This is a popular structure for single-owner businesses. No separate business entity is formed, although the business may have a name (often referred to as a DBA, short for “doing business as”). A sole proprietorship does not limit liability, but insurance may be purchased.

You report your business income and expenses on Schedule C, an attachment to your personal income-tax return (Form 1040). Net earnings the business generates are subject to both self-employment taxes and income taxes. Sole proprietors may have employees but don’t take paychecks themselves.

LLC

If you want protection for your personal assets in the event your business is sued, you might prefer a limited liability company (LLC). An LLC is a separate legal entity that can have one or more owners (called “members”). Usually, income is taxed to the owners individually, and earnings are subject to self-employment taxes.

Note: It’s not unusual for lenders to require a small LLC’s owners to personally guarantee any business loans.

Corporation

A corporation is a separate legal entity that can transact business in its own name and files corporate income-tax returns. Like an LLC, a corporation can have one or more owners (shareholders). Shareholders generally are protected from personal liability but can be held responsible for repaying any business debts they’ve personally guaranteed.

If you make a “Subchapter S” election, shareholders will be taxed individually on their share of corporate income. This structure generally avoids federal income taxes at the corporate level.

Partnership

In certain respects, a partnership is similar to an LLC or an S corp. However, partnerships must have at least one general partner who is personally liable for the partnership’s debts and obligations. Profits and losses are divided among the partners and taxed to them individually.

For more help with individual or business taxes, connect with us today and learn about our Los Angeles incorporation services. You can call us today at 818-404-1084 or request a free consultation online.

Filed Under: Business Incorporation, Los Angeles CPA Accounting

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