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Virtual Accounting Blog

5 Myths About Working From Home

A couple months ago, I began a new job that is 100% working from home. All interactions within the company and with external clients occur using video conferencing technology. When considering the job offer, my main concern was I didn’t think I would enjoy working at home. I remembered times during previous jobs when I would work from home and found that I was distracted easily and would get frustrated that my family interrupted me frequently to help them. I’m also a fairly social person and thought I would be lonely. Working from home is now one of the best things about my job and I’m surprised it was a pretty easy transition after working in a traditional office environment for more than 25 years.

There are several factors that are important to make working from home successful. Technology that allows for smooth interactions is a must and you must be comfortable working with it and be flexible when it’s doesn’t work. I’ve had cases where my computer, camera or audio stopped working in the middle of a meeting. You need to quickly figure out how to fix it or move to another option. It’s important that team members respect working from home. At my office, everyone works from home so that’s easy. However, it can be a challenge to be the only person calling into a meeting. Or, having co-workers think you don’t work as hard as they do because they don’t see you in the office. Intentional communication and updates are even more important than in an office where a lot of information is shared around the water cooler.

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How to Handle Back Taxes

Let’s face it, no one really likes filing an annual tax return. You may have taken an extension to file your taxes later, but you still need to pay your taxes by the deadline or pay penalties and late fees. So, what happens if you don’t file a tax return? For starters, the IRS will consider you to be delinquent and you will owe “back taxes” that will very likely have penalties and late fees added on.

So, what should you do if you owe back taxes? It doesn’t matter how late your tax return is or even what your excuse is, contact a tax professional for assistance completing your tax return to avoid even more tax penalties. Try these tips to get a handle your unfiled returns.

* Find a licensed tax professional. Never try to fix the back tax issues without the advice and assistance of a tax professional. If the IRS has contacted you about back taxes your tax professional can help you contact the IRS and help resolve the issues. The longer you delay the worse things get.

* Your Rights and Options. The IRS can be intimidating but a licensed tax professional can advise you of your rights and options for payments.

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401(k) Forfeiture Accounts

If your 401(k) Plan has made employer contributions to your company’s 401(k) account, you may have built up amounts in an account called “Forfeitures”. 

This account holds amounts that accrue when an employee leaves the Plan and their account is not fully vested. The funds need to be used by the Plan as soon as possible but only for the transactions allowed by the Plan Document. Usually, the funds can be used to pay Plan expenses or to fund future employer contributions.

It is important to review the Plan financial reports to see if you have any forfeitures that can be utilized. If you need assistance reviewing your reports you should see the help of your service provider. 

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We’re Taking a Break Today

Summit CPA will be closed today, Wednesday, April 18th. We are taking a much needed break today after a long and busy tax season.

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TAX DAY IS HERE!

Wow! The tax filing deadline is here, ready or not. Below is a list of tax filings that are due today.

April 17 – 

* Individual income tax returns for 2017 are due. 

* First installment of 2018 individual estimated tax is due. 

* Deadline for making 2017 IRA contributions.

* 2017 annual gift tax returns are due. 

* 2017 calendar-year C corporation income tax returns are due. 

Note: Extensions are available for your 2017 tax returns. If you aren't able to finish your federal income tax return by today’s deadline, you can still get an automatic six-month extension.

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Five Tax Myths

Everyone has tax advice but beware, some of it is just bad advice. It’s always better to check with you tax advisor before you get caught up in bad tax tips. Here are 5 tax myths:

* You will have more time to pay your taxes if you get an extension. Of course, this is incorrect. An extension only gives you more time to file your taxes. If you owe money, you must still pay what you owe when you file your extension. If you don’t have all the cash to pay your entire tax bill, don’t ignore it, get on a payment plan through the IRS.

* If you get an extension you will get audited. We all know someone that waits till the last minute to gather their tax information then rush to get their taxes done only to find that they are missing some documents or receipts, etc. Under reporting income may be the cause of an audit. Rather than to rush around and make errors on your tax return. It’s better to get an extension and file them correctly to begin with rather than send a return full of errors.

Have your tax preparer figure out if you owe taxes. If you owe, pay that amount or get with the IRS to set up a payment plan. An extension will only give you extra time to gather all your documents and file correctly.

* Buying real estate will give you tax breaks. Unless you itemize your taxes your mortgage interest and property taxes are not deductible.

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Making Your Business a Success

There is a lot of work to running a successful business. You may also think that no one can do the job the way you want it done. Sometimes, you may be right. However, if you have hired competent employees there is no need for you to do everything yourself. Learning to delegate efficiently is likely the best way to a successful business, and it will mean a lot less stress for you.

Once you learn to delegate your business will begin to run more smoothly and you will have a lot more free time to spend with the family. Here are some suggestion:

* Have a plan. You will need to decide what tasks you want to delegate and which employee will be responsible for that job. It doesn’t have to be a permanent job assignment, but you need a plan in place to divide the different jobs. Some employees will be better at certain things than others so you may need to make some adjustments at some point, but at least you will have a starting point.

* Find the most reliable and self-sufficient employees. Choose an employee that you can count on to be reliable and who can think for themselves. It defeats the whole purpose if you have to continuously guide an employee through the process.

* Give authority. If an employee is required to obtain your approval on each and every decision you may as well be doing the job yourself. Once you’ve chosen a reliable employee, give them the authority to act independently and make decisions on your behalf, when necessary. Though there will still be times they should ask for your approval first.

* Keep track of work progress. You can’t keep looking over your employee’s shoulder, but you will want to keep track of employees and their progress. Do your best to sensitive in handling this aspect.

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To Incorporate or Not to Incorporate

When you own a business it's up to you to decide if it’s a good idea for you to incorporate your business. One big advantage of incorporating is that it limits your legal liability. Meaning that your responsibility for liabilities and debts that are incurred by a corporation is usually limited to the assets of your business. Though there are some exceptions, your personal assets are not usually at risk. There is a cost to incorporate, in some cases, its tax consequences.

Depending on the type and size of your business, you may not need to incorporate because liability may not be an issue for your business or it can be covered by insurance. There are numerous companies that operate as an unincorporated sole proprietor.

If you make the decision to incorporate your business, you will have to decide what corporate forms to use. Here are your options:

* C corporations. This is the traditional form of corporations. It has the most flexibility in structuring ownership and benefits. It is the form in which most large businesses operate. The main disadvantage is double taxation. The corporation first pays tax on its profits and then these profits are taxed once again when they are paid as dividends to individual shareholders.

* S corporations and LLCs. These are called “pass-through” entities. This is because both of these entities have no taxation at the corporation level. Rather, profits and losses are passed through to the shareholders and reported on their individual income tax returns.

There are some ownership limitations for S corporations.

* There cannot be more that 100 shareholders that are U.S. citizens or U.S. residents according to tax law.

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April 2018 Tax Filing Reminders

Won’t be long and tax filing time will be here. Are you ready? With tax time is just around the corner and here are some important things that have an April 17 filing deadline:

April 17 –

* Individual income tax returns for 2017 are due.

* First installment of 2018 individual estimated tax is due.

* Deadline for making 2017 IRA contributions.

* 2017 annual gift tax returns are due.

* 2017 calendar-year C corporation income tax returns are due.

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How to Track Time in QuickBooks- Part 1

Tracking your company services is different than selling a product. When you sell a product, your inventory is reduced and signals time to reorder the product. When you track a service you provide, there is no inventory to count, you are selling the time and skills of your employees. It’s just as important to track your time accurately as it is to track products you have sold.

Fortunately, there is a tool in QuickBooks that will help you to record the hours your employees spend doing work for your customers, allowing you to bill for services rendered. This feature, will also allow you to track employee time for payroll purposes. There are 2 options offered here: time sheets and single-activity records.

Building the Foundation

The QuickBooks’ software was designed to be flexible so it can support small businesses with a wide variety of structures and needs. Before you explore new features, we recommend that you check in with your “Preference” options.

You must first open the Edit menu and select Preferences. In the left vertical pane, click on Time & Expenses, then click on the Company Preferences tab at the top. Here is a look at the top part of the window that opens:

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