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Virtual Accounting Blog

Hiring Family Members

When you hire and work with your family it can be pleasant or sometimes a big pain. This is especially true if things aren’t working out and you have to terminate a family member’s employment. Here are some tips that may ease the tension if the pleasant situation becomes strained.

* Hiring a family member because they can’t find other employment is not usually a good reason to hire a relative. Make sure that you’re hiring or firing decision is based on skills that you need to keep your business running smoothly.

* Make your expectations clear. Convey the job performance requirements to your family member right from the beginning. You will also need to state the company policies when it comes to compensation, promotion, and termination. Be sure that it’s clearly understood that no unethical conduct will be tolerated.

* You should be sure to avoid nepotism. It’s a natural reaction to favor a family member over others. Though you should be aware that your non-family employees will be sensitive to any favoritism that you might show a relative.

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What You Should Know about Taxes and Virtual Currencies

These days’ virtual currencies seem to be all the rage. Did you know about the tax consequences? Before you decide to try out the virtual currencies here are some tax consequences that you need to know.

You should be aware that the IRS is watching virtual currency transactions very closely. There have been some misconceptions about tracing virtual currency transactions. However, they can be traced back to their owners by cyber sleuths and governments. If you live in the U.S. you will have to report all of your Bitcoin transactions as well as other virtual currencies, to the IRS.

You must carefully report and pay tax on your transactions if you decide to hold or use virtual currencies. You would be wise to act as if you are being audited, because there’s a good chance you could be audited.

Because Bitcoin or other virtual currencies are not legal tender, they are considered property by the IRS. This means if you are paid in Bitcoin, you will have to report it as income based on its fair market value, on the dateyou received it.

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An Instruction Guide for Travelling the Country in A Van (while working full time)

Have you ever thought about quitting your job and travelling the country in a van? Stop the presses. You can travel the country in a van without quitting your job—if you work for a distributed-model company. The bigger question: Have you thought through all the details?

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Small Business-What You Should Know

Many small business owners are optimistic about the good economy but still have a lot of questions about the new tax bill and how it will affect them in 2018. A lot of owners are also concerned about all the sexual harassment issues that have been headlining the news too. Here is a list of things that may affect your small business.

* Economy. Though it may not always result into more jobs, if the economy continues the way it’s going it may translate into more profits and growth. In 2017 surveys, most small businesses said that they planned to stick with their current hiring patterns, some saying they would add 1 or 2 employees in the next 6 months.

The stock market was up as was consumer spending at the end of 2017, giving a boost to those who have a 401(k) a stronger feeling of financial stability. Though in the past few weeks the markets have been fairly volatile, they seem to be stabilizing at this time. If the economy slows do you have a plan to keep your company afloat?

* Taxes. The benefits of the new tax bill aren’t across the board, even though the tax rates will change for many small business owners no matter what your entity. Some business owners will lose out because work in accounting, law, or consulting, or have income above the tax thresholds. The IRS is still in the process of writing some of the regulations for the new tax bill. There are some things that are known, such as;

* Section 179 deduction. Small businesses can get an immediate tax break on equipment purchases such as, computers, vehicles, or manufacturing equipment. This deduction doubles in 2018 to $1 million.

* Standard mileage rate. The 2018 business mileage rate is 54.5 ¢ per mile.

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Small Businesses in 2018

It’s a new year and time to review your plan of action for 2018. One big change for your business is the effect that the new tax reform bill will have on your company. You will likely need to make a lot of revisions this year to your tax plan. There may also be a list of things you want to do to improve your business. Here are a few things to consider in your 2018 planning.

* Tax plan changes. There are a lot of changes since the new tax act was passed in December. If you’re not up-to-date on all the new tax changes find a good CPA firm to go over the different changes and how they will affect you and your business. 

* Health insurance mandate. Though the president signed an executive order that was intended to promote competition and health insurance choices, it’s not yet clear exactly how this order will affect your business. This is a good question for your CPA.

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SOC Reports-Why It’s Important to Your 401(k) Plan

What is a SOC Report? It’s a Report on Controls at a Service Organization Relevant to User Entities’ Internal Control over Financial Reporting.

Many third-party providers such as record keepers, custodians, or trustees will have an “SOC Report” prepared to provide information related to the internal controls over specific portions of their internal operations.

Typically, these reports provide a description of the internal controls in place over functions such as;

* A new plan setup

* Accuracy of participant transactions

* IT controls (access security, program changes, backup, daily maintenance)

* Daily asset pricing

* Custody of assets

* Reconciliations

Various other controls specific to the responsibilities of the third-party provider. 

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Secure Your Investments-Diversify

Are you heavily invested in your company’s stock? No matter how much you love your job or how well your company is doing right now, it’s never a good idea to invest too heavily in only one stock. Even if it’s the company stock, the market can be pretty unstable at times. You could be taking a big risk by not diversifying your savings. Your whole retirement savings could be gone in a flash if the market were to bottom out. That’s why it’s important to diversify your investments.

Exactly what risks are you taking when you load up on your employer's stock?

* The belief that employer shares are less risky is an illusion. Over investment in any company minimizes diversification, exposing your portfolio to increased risk.

* You have a double whammy potential. No company has protection from economic downturns. If your employer's business slow down, you may lose your job, as well as growth in your retirement portfolio from the company's market value.

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Sunk Costs- Know When to Walk Away

What is “sunk costs”? Generally speaking, sunk costs are past expenses that are no longer relevant to your current decisions. For instance, if you purchased new software and hired the firm to install the software on your computer system and for whatever reason, there are a lot of errors that keep occurring. Soon you find that you are having to spend even more cash to have the software company update the system over and over. You have to decide if the cost is worth it or if it’s time to move on to something different.

Sometimes an owner or manager may feel they have invested a lot of time and money and if they moved on to something different they will have wasting all their initial investment. This is not true. This is “sunk cost”. It’s time to move past sunk costs with the confidence of knowing it's the smartest business decision you can make. 

Other examples of sunk costs are sometimes found in advertising,

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How will the New Tax Cuts Affect You?

In December 2017 the Tax Cuts and Jobs Act was passed by congress. So how will these changes affect you? Here are some of the changes in the Tax Act and how they may affect you.

* Medical expense deduction. The new threshold for medical expense tax deductions will be “retroactive” for 2017 and lowered to 7.5% of your adjusted gross income (down from the previous 10%). The new 7.5% will also be in effect throughout 2018. The lower rate will revert back to 10% beginning 2019. Will you meet the new deduction threshold?

* Individual Mandate penalty for healthcare. The mandate will remain in place through 2019. You will still need to provide evidence that you have healthcare coverage and retain Forms 1095. Those who do not have proof of coverage will pay the $695 or 2.5% of your income, whichever is the higher of the two. Unless there are changes there will no longer be an individual mandate in 2019.

As you work on your 2018 tax planning you should consider these changes. Here is a short list of some of the changes.

* A reduction in income tax rates.

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Payroll Fraud- Is Your Company Vulnerable?

No matter how careful you are, every business can be susceptible to payroll fraud. Even if you only have a few employees, there is no guarantee that your cash will be safe unless you, as the owner, handle all the aspect of your accounting and payroll. 

So, how can something like this happen? One way that payroll fraud could happen is when there is an overpayment of payroll or withholding taxes. Your bookkeeper could simply withhold or overpay the government. Then when the refund comes in, the bookkeeper deposits it into his/her personal account. There have been cases where the employee might have an account in the company name at a different bank. These accounts can be used for fraudulent deposits and other business receipts. 

The more employees the easier it is to pull off the payroll fraud. Your bookkeeper might create a fictitious employee or even falsely increase hours or commissions for another employee that may want to share the stolen funds. They could also hold the payroll deposits in a personal interest baring account until it’s time to make the payroll tax deposit to the government. 

What can you do to prevent payroll fraud? Large companies generally have good effective fraud controls in

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