Saturday, March 4th, 2023
When tax season comes around, it is time for the yearly grind of tax preparation for your business. Few things have the potential to be so time-consuming, frustrating, and problematic. The IRS has the power to levy serious penalties that can severely affect the finances of your business. It is just a smart move to hire a tax expert for SMBs to help you navigate the complexities of the tax code and the filing process. If you search for tax preparers near me, you will find both certified public accountants and federally licensed Enrolled Agents, but which is best for your business? In this article, we will look at the differences between them and help you figure out which is best for your business.
Who is a Certified Public Accountant?
There are a number of requirements that it takes for someone to become a Certified Public Accountant. They must have a bachelor’s degree in business, finance, or accounting. It is also mandatory that a CPA candidate have a minimum of two years of accounting experience and finish 150 hours of education. Passing the Uniform CPA Exam is the final hurdle to becoming a Certified Public Accountant. Then they must be licensed by the Board of Accountancy for their state.
Who are Enrolled Agents?
To begin with, a Federally Licensed Enrolled Agent (often abbreviated to EA) is a highly trained specialist in tax issues. In order to become an Enrolled Agent, a tax professional must either complete at least five years of employment with the IRS or successfully pass a complex exam administered by the IRS. Being given the designation of Enrolled Agent is the most distinguished credential granted by the IRS. An EA is an expert in a wide range of tax topics, including tax planning, IRS representation, 1040, and much more. That expertise means that they usually earn $15,000 to $20,000 more a year than a CPA.
Which of the Tax Preparers near me should I Hire?
When you hire a tax expert for SMBs, you will want to take a few things into consideration. Both a Certified Public Accountant and a federally licensed Enrolled Agent can be a lot of help to your business. Both are highly trained, but there are differences that you should keep in mind. Because of the direct experience that an Enrolled Agent has with the IRS and their specialization in tax law, they can be enormously helpful in getting business taxes in order. Their title also lends weight to their representation of your company.
EA or CPA: Which Will You Choose?
A Certified Public Accountant, on the other hand, is a great choice for helping your business with bookkeeping, both in organizing and maintaining your books. They are also useful for business advice and help you manage your business’ assets. They often offer a wider range of services than an EA and often charge less. A CPA can, of course, also help you with taxes and represent you before the IRS. Whether you choose an EA or a CPA for your business will depend on your specific needs and which has the special skills to address them.
Book your free consultation today with BMH Accounting.
Tags:
accounting,
Enrolled Agents,
tax planning
Thursday, December 8th, 2022
Are you filing small business taxes for the first time? Tax preparation and planning are vital parts of owning a company. You’ll need to be sure it’s filed accurately and in a timely manner, which can be stressful. Along with state taxes, federal taxes are another area you’ll need to focus on.
6 Tips For Safe Tax Preparation and Planning for SMBs
Not only will you want to make sure your taxes are completed properly and on time, but you’ll also certainly want to maximize your tax return and claim all your deductions as well. Here are suggestions to follow to help ensure your first time filing taxes is successful:
1. Cash vs. Accrual Basis
Small business tax services recommend that one of the first steps you take is to analyze your business situation when deciding if you want to prepare your tax return on an accrual or cash basis. Under the accrual basis, your income is recognized by being effective when it’s earned and expenses are recognized when they are incurred. Under the cash basis, however, income becomes effective when it’s collected, and expenses are recognized as they are actually paid. If you have a small business accountant, he or she will most likely go with a cash basis if your new business has more unpaid expenses than paid ones. Later, as business begins to pick up, the accrual basis may work best for you.
2. Depreciation Method
For optimized tax preparation and planning, you’ll need to choose a depreciation method. In the first year, the Internal Revenue Service (IRS) will allow up to $1,040,000 in deductions for furniture and equipment. You’ll be able to elect if you want to take the deductions all at once or to write the cost over five or seven years. There are advantages to both ways of figuring out the deductions. A small business tax service can help you make the most advantageous choice, but with some research and analysis, you can figure it out on your own if you want to do so.
3. Home Office Deduction
In your tax preparation and planning, you’ll want to deduct for your home office if you are a sole proprietor. That is when you deduct a portion of your residence if it is used in conducting business. The area must be used only for business when you claim it, however. It is figured by the square footage. You cannot take this deduction if you are claiming a loss through. But, if you do claim it, you are also able to deduct such things as landscaping and maintenance as well.
4. Non-Employee Compensation
Non-employee compensation is an area that many small business owners forget about or don’t completely understand. This deduction comes from independent contractors you’ve paid during the tax year. To set it up, you give any contract for whom you pay $600 or more a 1099-NEC rather than a W-2 form, as you do pay to your regular employees. Failure to report wages paid to an independent contractor gives you a false gross income, which means you’ll owe more in taxes.
5. Automobile Expenses
Be sure to file your automobile expenses because there will be a deduction. Keeping an auto log is highly recommended by most accountants who work for small business companies. Record where and when the travel took place, who was driving, and if there was business conducted on the trip. Each vehicle should be kept separately as it will be filed separately.
6. Self-Employment
You’ll need to prepare for paying self-employment taxes, as it will be a significant part of your federal taxes for small businesses. It includes Social Security and Medicare tax, which is part of your total taxes. Monitor your available cash flow to ensure the amount covers self-employment tax.
Hire an Expert Small Business Accountant for Reducing Your Business Taxes
If the points above and the process of filing federal taxes for small businesses is overwhelming to you, you can get help with your tax preparation and planning by hiring a small business tax service.
Tags:
business finances,
tax planning,
tax service
Sunday, May 1st, 2022
Want to see improvement in your business or brand’s bottom line? Pay attention to your company’s Financial Variables and discuss these influences with a qualified accounting professional to determine if your revenues can be improved, or to learn more.
Five financial variables that can improve your bottom line are:
1) Look at your Profit & Loss Statement
When was the last time you looked at your Profit and Loss (P&L) statement? This document lays out your revenues, expenses, and costs during a determined period of time.
All public companies are responsible for issuing these statements quarterly, as well as at the end of the fiscal year. Reviewing and understanding a P&L statement can help you evaluate your business’ fiscal health.
2) Know the Shape of your Finances
Over half of small businesses are negatively impacted by late payments; how are your finances? Make a resolution to pay invoices on time and save late fees and charges. These expenses impact your cash flow and bottom line, over time.
3) Get Familiar with Your Cash Conversion Cycle
The cash conversion cycle (CCC) measures the amount of time that it takes to move inventory, get paid, and, in turn, pay your own creditors. This cash flow determines how long between payments as well as how quickly you can turn-over your product.
A familiarity with your CCC can indicate if you have a healthy cash flow as well as how long your company can survive in tight times.
4) Become More Aware
Part of your business self-awareness comes from checking out your financials. Develop and revisit a cash flow forecast and business budget for your company.
It makes good sense to set aside a time, such as the end of the fiscal year, to review all your management practices and financial habits with a reliable and reputable accountant. Don’t have an accountant? Make now the time to retain one.
5) Tally Cash on Hand
Do you know how much cash and liquid assets you have on-hand? It may surprise you; sometimes, companies don’t have as much readily available capital as they think – and need- which could put you in a bind if business is slow.
Don’t risk the fiscal health of your company; take time to count up what you have on hand for liquid assets, i.e. cash, and begin to think about setting up a rainy-day fund.
Making changes or deciphering financials for your business can be confusing; make sure to discuss your options further with your accountant before altering the way you operate your company. These industry experts may be able to help guide and advise you on the best ways to reach a better bottom line.
Want to learn more about these financial variables, or other ways to enhance the condition of your company? Talk to the accounting professionals at BMH Accounting; they are familiar with financial variables that can make a significant difference in the overall value of your business investment.
Tags:
accounting,
business finances,
business operation,
business taxes,
cash conversion cycle,
financial variables,
liquid assets,
tax planning
Friday, April 1st, 2022
It makes sense to consider Hiring an Accountant for year-round provision, rather than just at tax time. There are numerous benefits of hiring a year-round accountant for your business, and the cost is a prudent investment to make in your company, brand, or business.
Some benefits of hiring a year-round accountant include:
Managing Money
One of the specialized accounting services that accountants offer is money management. When you are in business, how you manage money can make or break your success. An accountant is a shrewd and smart resource that can help you manage money well.
Business Planning
The first step in starting a business is typically a business plan. Consult with an accountant for their input at this very critical phase of your company. An accountant can help outline the financial parts of the plan- and make sure that your investment is a pragmatic one with potential returns. They will be able to explain and navigate the processes associated with business loans and financing, too.
Setting-Up
Just getting started? An accountant can make sense of a wide range of bookkeeping responsibilities that you may not even realize you have. You will need to set up an accounting system and appropriate accounting software to implement this. An accountant can make the transition for you.
Growth
You may find that you are in over your head trying to maintain books as your company grows and becomes larger. An accountant can set-up payroll, benefits, and reporting systems so that it runs smoothly as your business burgeons. They may also advise you as to the best strategies to keep your company fiscally healthy.
Retirement
An accountant is an excellent ally when you are planning retirement. They can help you prepare in the years, months, or weeks leading up to leaving your job, and help advise you on your retirement plan options. They may also be able to guide personal investments that can grow and mature into your retirement savings. If selling your business in order to retire, they can be an invaluable resource during that often-complex process, also.
Tax Time and Audits
Naturally, you want an accountant on your team at tax time. An incidental audit can tie you up for weeks and cause you undue hassle and headache. Accountants are familiar with the process and can stay abreast of the most recent tax info that might make a difference for you at year’s end. Let your accountant deal with the IRS and you can focus on your business.
Consider the benefits of having a year-round accountant and talk to the professionals at BMH Accounting to learn more. From specialized accounting services to a tax time audit, don’t go it alone. Rely on the expertise of a reputable accounting firm; call to learn more today.
Tags:
bookkeeping,
business plan growth management,
business planning,
business start up,
business tax preparation,
business taxes,
managing money,
retirement planning,
tax audit,
tax planning,
tax preparation
Tuesday, March 15th, 2022
When it comes to Tax Planning, being proactive pays. Being vigilant and precise with your tax reporting and expenses can minimize your tax liabilities- and save you money at year’s end. Tax prep and documentation should not be something that only occurs at tax-time; proactive tax planning is something that happens year-round to avoid nasty penalties and maximize deductions.
Some tax planning tips include:
Provide Proof
Prepare to be vigilant about keeping track of business expenses- which can be a bear! A good rule of thumb is that if you plan to deduct an expense, you will need some sort of proof of the purchase, like a receipt, invoice, or canceled check. You can also use bank records, if needed, to document purchases related to business that you do not have an actual receipt for when it comes time to complete or file your taxes and reports.
Document Diligently
Always save invoices or receipts for all your business-related purchases. It helps to write and attach a note explaining the purchase for documenting later, when you may have forgotten the specifics surrounding the expense.
Segregate Accounts
Make sure to keep personal accounts separate from business accounts whenever possible. It can make accurate record-keeping nearly impossible and you could suffer by missing out on certain business deductions this way.
Classify Carefully
Don’t misclassify your workers as the income-tax withholding and employment taxes are quite different. While you do withhold federal income tax and FICA taxes from your employees, you also are responsible for unemployment taxes and your own share of FICA. When you are dealing with staff that are actually independent contractors, you are not required to withhold taxes, making the individual responsible for their own self-employment tax liability. This also eliminates the need to pay separate FICA or unemployment taxes. Talk to your accounting professional to learn more.
Pay Promptly
Pay the employment taxes that you collect from the wages of your employees and staff for federal income tax and FICA (Social Security and Medicare) taxes promptly. The IRS is not tolerant of delayed payment and noncompliance penalties can be severe.
Industry experts offer tax tips for small businesses, including that you need to be careful and cautious when making tax deductions. This may look suspicious and trigger an audit, further reinforcing the need for organized documentation. The IRS frequently assesses business tax deductions, like vehicle use and travel expenses, to ensure you are sticking to their guidelines and limits.
Consider Hiring Help
Take the worry out of your business taxes with some professional help from BMH Accounting. If you own or operate a company or brand, outsourcing your financials and tax reports to a certified accountant makes good business sense. Don’t risk penalties and fines by going it alone; hire a tax professional today.
Tags:
accounting,
business tax preparation,
business taxes,
FICA,
small business,
small business accounting,
tax planning,
tracking business expenses