How Tax Planning Saves You MoneyPosted on June 28th, 2019
Considering how complex and time-consuming taxes are, it’s no surprise that many put off thinking about them until April rolls around. However, while it may seem less stressful in the short-term, this last-minute approach means you could be paying out money you might not have to.
Tax planning involves much more than organizing and preparing records – it’s a process for evaluating your tax liability and determining the best approach to help you keep as much of your hard-earned income as possible. Here are the most common ways people and businesses can save money with tax planning.
Earn Tax Credits
Many of the larger financial events in your life can earn you tax credits. These include money you put toward college expenses, saving for retirement, or making eco-friendly purchases such as solar energy and electric cars.
Children are also a huge qualifier for tax credits. Daycare, babysitting, and other childcare costs can all be counted toward a tax credit. There’s also a significant credit to be earned if you adopt a child. Children aren’t the only dependents who qualify, either; if you are caring for a spouse or parent who is incapacitated, or a family member with special needs, tax credits may be available to help you provide for their care.
Utilize Tax Deduction Opportunities
While tax credits give you money toward reducing your liability, a deduction allows you to reduce the adjusted gross income (AGI) you have to report. Tax planning helps you identify what deductions you can expect to qualify for during the year, even some that may not occur to you.
Common deduction opportunities include health care expenses, state and local taxes, interest on a mortgage, job expenses, and charitable donations or gifts.
Increase Withholding or Defer Income
Withholdings take money directly from your paycheck throughout the year. By choosing more withholdings up front, you essentially pay off your tax liability in small installments, rather than owing a larger sum at the end of the year. While this strategy is not for everyone, some can enjoy a more significant refund when it comes time to file.
Make Large Purchases Work to Your Advantage
Planning a large individual or family purchase, like a house, boat, or RV? Is your business looking to acquire new machinery or technology? With proper planning, you can use these large purchases to gain tax credits or deductions, especially if they are put toward a business purpose.
Avoid Adding on to Your Tax Liability
Just as important as finding ways to get money back, it’s essential to know what financial actions will raise your liability. Taking money out of a retirement fund early, for example, turns the withdrawal into taxable income, requiring you to pay more while also losing out on accrued interest.
Haven’t tried tax planning before? It’s never too late to start! Total Business Services offers effective tax planning for individuals and businesses throughout Burke and the surrounding Virginia counties. Contact us for a free consultation today!
3 Reasons to Outsource Your Company’s PayrollPosted on February 22nd, 2019
Accurate and consistent payroll is essential to any business managing employees, but the payroll process is complex and often tedious. With timecards, taxes, and records to contend with, managing payroll on top of other duties can be time-consuming and stressful.
Fortunately, even small businesses can subvert this by seeking the assistance of an experienced payroll professional. Outsourced payroll offers several positives. Here are three reasons your payroll should be outsourced today.
Time Saved, Operations Improved
Payroll requires immense focus and meticulous attention to detail. Even for professional accountants, it’s a lengthy process. But for the inexperienced, it can turn into a slog. Between inexperience and divided attention, devoting time to learning the payroll process is difficult for business owners and new employees to handle.
With an outsourced payroll system, your payroll is placed in the hands of experts. Not only does this ensure it will be done in a timely and efficient way, but it leaves you and those working for you to put their skills to work in other areas of your business. Fewer distractions means that your business can function better and more competitively, fostering company growth.
While having payroll done in-house may seem like a good way to cut costs, this approach can backfire drastically in the long run. Whether payroll is handled by the business owner or an employee, lack of proper training leaves room for errors, which can result in late or incorrect paychecks and hefty government fines.
By outsourcing your payroll, you ensure that your payroll is complete, accurate, and ready when you need it. You’ll also have a clearer picture of your payroll expenses each month, allowing you to create better financial projections and plan accordingly.
Payroll audits are no laughing matter. If the IRS suspects that your payroll has inaccuracies – classifying employees as contractors, for example – they can enact an audit that will cost you not only in overdue wages and taxes but will add penalties that add up quickly.
A professional accountant is familiar with an employer’s full responsibilities regarding their payroll, and can ensure that accurate classifications, tax withholding, and garnished wages are all handled as required by law.
If your business is without reliable payroll, consider outsourced accounting with Total Business Services. We help companies in Burke and the surrounding regions with experienced outsource payroll services. For more information, contact our office for a free consultation.
5 Benefits of Outsourced BookkeepingPosted on October 28th, 2018
You are committed to the success of your business, but with all the responsibilities laid on your shoulders, trying to keep up with everything can be demanding on you and your time. Bookkeeping is vital to a business, but it can also feel tedious and time-consuming.
Putting your bookkeeping into someone else’s hands allows you to focus your efforts where they’re needed and maintain the solid accounting that helps your business thrive. If you’re on the fence about whether outsourced accounting is right for you, these five benefits could show you what you’re missing.
Saves You Time
Accurate bookkeeping is a lengthy process, one that needs to be done frequently and consistently. If you are relatively inexperienced at bookkeeping, it can make the task even more arduous. Hiring an experienced accountant to manage your books for you will free your time both to work on your business and to enjoy time outside of it. They can also help you establish a system of organizing and documenting your financial transactions, reducing the time and mental energy you need to devote to your accounting.
Saves Your Business Money
Many business owners mistakenly believe that an outsourced accountant is an unnecessary expense when the opposite is actually true. Not only is outsourcing less expensive than hiring an in-house accountant, but a professional accountant has the expertise to help you save money in a variety of ways. Whether finding deductions with tax planning, helping you set a budget, or highlighting unnecessary expenses, an accountant provides insight into your finances you might never have had otherwise.
When your focus is split between multiple tasks, errors become more likely to crop up in your accounting. Left unnoticed, these errors put you at risk of serious expenses down the line. Since an outsourced bookkeeper’s attention is dedicated solely to keeping your ledgers complete and accurate, the likelihood of errors is much lower.
Helps Build Effective Strategies
Your business ledgers are an integral part of company decisions, from upgrading equipment to marketing to hiring new staff. Without accurate records, you may have difficulty setting budgets or maintaining operations, and plans based on incorrect information can go bad very quickly. When you know your books are properly balanced, you can plan with confidence.
Optimizes Your Business Operations
An outsourced accountant has experience working with a wide variety of businesses. This gives them an inside look into the operations of these companies, allowing them to see where some find success and others fail. They can point out areas of weakness in your operations that might have gone unnoticed due to growth or divided attention, and work with you to streamline your processes.
Your business deserves the attention of a financial expert. Total Business Services offers experienced outsourced accounting to companies in Burke and the surrounding areas. For more information, contact us for a free consultation today.
5 Things You Need to Start a Business and 5 Things to Watch Out ForPosted on August 31st, 2018
You’ve decided to start a business, but don’t yet understand everything needed to get up and running. From understanding employee payroll to the tax benefits of operating out of your home, there is a variety of operational do’s and don’ts you’ll want to understand prior to getting started. You’ll first need these five components before you can legitimize your business:
- Name – You’ll need to decide upon what you want your business to be called. While important to establishing your brand, don’t let it stand in the way of getting the other steps started. Your name can always be changed later, should you think of something more fitting down the road.
- Employer Identification Number (EIN) – Apply for your EIN as required by federal tax law. This number is similar to a social security number for your business and allows the IRS to tax your business appropriately.
- Register Your Trade Name – Your trademark will allow you to protect your business name should another similar business try operating under the same name. It will also give you the peace of mind that the name you’ve selected is not already in use by a similar company.
- Get Your Business License – Before you’re legally allowed to sell products and services, cities and states require you to obtain a business license based on their local legal processes. Be sure to research your local laws and ensure you comply.
- Obtain Additional Permits – Your locality may require additional sellers, buyers, or other permits. Be sure to research their requirements and obtain these permits prior to beginning to sell goods and services.
When you’re starting your own business, there are also pitfalls you want to look out for and avoid when possible. Some of these things include:
- Know When to Ask for Help – Financial management, marketing, and other roles that aren’t part of your core skillset can always be outsourced. You don’t want to dig a hole because you’re caught up in your pride or are afraid to seek assistance.
- Don’t Get Caught up in Tasks That Don’t Make Money – It’s easy to dwell on logo design or nailing your first press release, but focus on things that directly contribute to revenue first, then worry about the non-essential details later.
- Don’t Borrow Against Debts You Can’t Recover – Unless you or your family members have money to burn, don’t accept their offers to invest in your idea, at least not until it’s profitable. This includes retirement plans, real estate, and other investments.
- Set Realistic Expectations – Whether planning your grand opening or mapping out the date you plan to be profitable by, be honest with yourself. Unrealistic expectations set you up for failure and are not conducive to planning for success.
- Don’t Neglect Technology – Sooner or later someone will want to research your company online, so don’t neglect to claim a web domain and social media profiles for your business.
If you’re just starting out and need help incorporating, our team is experienced in helping small business owners get up and running. Contact our staff today!
How Do CPAs Help with Cash Flow Management?Posted on October 18th, 2017
Our team at TBS Tax helps businesses with all aspects of their accounting functions, including tracking the influx and outflow of money used for daily operations. Cash flow may seem like a function best left to managers, but our accounting firm can thoroughly assist you throughout this function. In fact, having an outside firm advise you on cash flow management can be more beneficial than it may seem.
Small Business Management Decisions
Cash flow is important for businesses of any size, but small and newer companies will have their decisions more closely tied to the inflow and outflow of money than larger companies will. Using an accounting firm for cash flow management support limits the impact a high-expenditure, low-income day has on your small company’s future.
Part of this problem is that small business owners often try to decipher a balance sheet or their QuickBooks accounts without assistance, creating an inaccurate view of cash flow. Instead, they should have an accounting firm more carefully track the daily flow of operational cash and examine bookkeeping documents for them. The information given by accountants is easier to digest, giving business owners a better picture of which decisions have to be made.
Because cash flow refers to the money available to spend for daily business operation, many people associate it solely with liquid assets. However, permanent assets—that is, your business property—can influence the money available on a day-to-day basis. Certain assets require continued monetary investment, limiting the cash you can afford to spend in a day.
The financial expertise of an accounting firm includes knowledge of the relationship between cash flow and property. We can help you limit your expenditures and keep enough money on hand to pay this investment.
One of the best ways to improve your cash flow is to get a better grip on your accounts receivables and accounts payables. An accounting firm that runs your cash flow management is able to streamline your payment collections process to best use available cash. They also seek ways to minimize the outflow, from searching for better deals on subscription services to credit card balance improvement.
Contact Us for Cash Flow Management Support
TBS Tax provides cash flow management support to Burke, Springfield, Fairfax, and all nearby communities. We help our clients overcome each challenge presented by poor flow of cash through the company. For more information about how we improve our clients’ regular business operations, call us and schedule your consultation today!
What is the Tax Differences between Various Business Entities?Posted on October 2nd, 2017
One of the more important decisions an owner will make is what structure is most beneficial at the launch of their business. Each entity operates a little differently, especially when it comes to their potential tax implications. Different business entities can expect varying obligation and regulation realities.
Sole Proprietorship and Partnership
A sole proprietorship is a business wherein there is no division between the owner and their company. When two or more individuals open and run a business together using their personal assets, their enterprise is a partnership. This entity is very similar to a sole proprietorship; the main difference is that the profits and expenses are divided equally among its partners.
Forming either a sole proprietorship or a partnership is a straightforward process, which is why many business owners choose to establish their new company as one of these entities. Additionally, because there is no division between business income and the personal assets of a proprietor or partner, these companies are not subject to double taxation. However, this lack of division also means that the owners of these enterprises risk levies against their personal property should the business owe back taxes or other debts.
LLC and S-Corporation
There are also business structures that, despite being considered distinct from their owners, avoid double taxation. These entities are referred to as pass-through, and S-corporations and limited liability companies, or LLCs, fall into this category.
An S-corporation has its corporate income taxed as personal income on its shareholders’ individual tax returns. This entity is often used as a transitional structure when a business is growing and its ownership is not yet ready to handle double taxation. On the other hand, an LLC is an entity that allows its owners to treat the business as either an S-corporation, sole proprietorship, or a partnership, thereby gaining the tax benefits of these entities without putting their personal assets at risk.
The drawback to operating as an S-corporation or an LLC is that there are usually several regulations they have to follow in order to maintain their pass-through status. These extra rules may complicate daily operations and long-term growth strategies.
A C-corporation is what many people think of when they think of a traditional big business. This structure is subject to double taxation: corporate profits are taxed as the income of the business, and the portion of remaining income paid out to shareholders is taxed again on their personal returns. While double taxation can make the company more expensive to run, C-corporations have more opportunities for growth than smaller business structures.
Contact Us for Formation Support
TBS Tax provides new business formation services to Burke, Springfield, Fairfax, and all surrounding communities. For more information about how we help you navigate your company’s tax realities, call our firm and schedule a consultation today.
Why Should a CPA Draft Your Statements?Posted on September 18th, 2017
Financial statements are cornerstone documents for every business’ bookkeeping functions. While many small business owners try to draft these statements themselves, they could outsource this task to a CPA. Having a certified public accountant prepare your financial statements gives you several advantages over trying to write up your own documents.
Though they can provide insight into your company’s performance and standing, your financial statements are for more than your use as a business owner. Before establishing a lending agreement or to fulfill existing loan covenants, the financial institution you’re working with will often want an audit or review, respectively, of your statements. Similarly, a yearly audit is required of businesses that conduct services within particular industries, attempt to gain a government contract, or are publicly traded.
A financial statement drafted by a CPA more easily meets the level of assurance needed by those performing the audit or review as well as the financial institution who requested the attestation service. With the expertise of a CPA behind these documents, you have an authoritative declaration that demonstrates to outside parties your ability to operate a business effectively. It also enables you to uncover any areas of improvement that may have otherwise been missed.
Inherent Understanding of the Documents
The financial expertise of a certified public accountant is beneficial beyond establishing the veracity of your records. A CPA understands what each statement needs to document for use as a depiction of your company’s current standing and capture what lending institutions or regulatory agencies are looking for during an attestation engagement. As such, the financial statements drafted by a CPA tend to be more accurate than those drafted without expert assistance. Your chances of having a successful audit or review process increase significantly when an accountant performs the write-up services.
Many businesses use QuickBooks® to balance their books. This accounting software has various plugins and reporting tools to help enterprises quickly gather the information needed for financial statement drafting. However, while convenient, QuickBooks also has its share of operational intricacies; successfully gathering accurate financial data can be challenging for owners or members of the management team who are new to the software or using its compilation features for the first time.
Our CPA firm in particular is well-versed in helping our clients get the most out of QuickBooks. In hiring our team for financial statement services, we can confirm that the data behind your records are accurate and show you how to compile that information in the future.
Contact Us for Write-Up Services
TBS Tax provides financial statement drafting in Burke, Springfield, Fairfax, and the surrounding communities. Preparing these documents for our clients is one of many ways we make sure they have access to accurate bookkeeping records. For more information, call our firm and schedule a free consultation today.