4 Tips for Surviving Scary Situations

Ah, Halloween. A great excuse for dressing up like a princess, stuffing our children into pumpkins, and of course, eating lots and lots of candy. And since it is that time of year, let’s look at some scary situations that may arise in your business.


1. Eat that Frog - From Mark Twain, via Brian Tracy; Mark Twain once said, “If the first thing that you do when you wake up in the morning is to eat a live frog, you’ll have the satisfaction of knowing that’s probably the worst thing that’s going to happen to you all day long.”

Okay, so you may not want to eat a live frog; however, don’t ruin an entire work day by procrastinating. If you have a tough phone call to make, collections that need to be made, or have an employee to discipline, get it done first thing. The rest of the day will be easy after that.

2. Interview questions – So you are ready to make that new hire, but you aren’t sure what questions you can ask because you think the Human Resource Police will get you?

Fear not, entrepreneur! You can check out the do’s and don’ts of interview questions from monster.com, here. Monster.com….you get it….because of Halloween? Yep, we thought it was clever, too.

3. Networking – One of, if not the biggest source of business for entrepreneurs, is referrals. Then why do so many entrepreneurs put off networking? Because it can be scary! You are filled with a room of strangers and you don’t know what you should do.

Don’t worry. They are just like bees. They are more afraid of you than you are of them. Or is that snakes? Anyway, you can be successful by having an elevator pitch handy, listening intently to what the other person is telling you, and simply collecting a few business cards.

4. Reading an Income Statement – Do you ever pick up an income statement and feel like you are playing a game of “Where’s Waldo”? There are a lot of numbers and it can be a little overwhelming.

Key things to look at are how you compare to your year-to-date numbers from last year, how much you are spending on expenses compared to other businesses in your industry, and if you are making enough profit.

And as always, you can always consult your favorite CPA firm for any assistance!

QuickBooks Tip - Perform Simple Calculations in Any Number Field

Did you know that in many input forms within Quickbooks (bills, checks, invoices, etc.), that you can make simple calculations in any number field?  No?  Oh you are missing out.  We just love this.  But we love numbers too, so we may just be weird cool that way.

So, if you’re creating an invoice/bill/check/whatever and you need to quickly add, subtract, multiply or divide, you can highlight the field you want to use and quickly make the calculation.

Let's say to add, enter the first amount, then press the “+” key. Continue adding each number followed by the “+” key. After you’ve entered the last number, press the “Enter” key to total your numbers and put the total figure in your amount.

This is much easier than switching back and forth between your calculator and the open QuickBooks screen.

Tell your old tape calculator we never meant to hurt it.  It's not them, it's us.

Kid President's 20 Things We Should Say More Often

Love us some Kid President.

Fun Fact - He is from Henderson, TN.  Not Hendersonville, TN, but close enough.

Miscellaneous Deductions Can Cut Taxes

IRS Tax Tip 2014-19, August 15, 2014

You may be able to deduct certain miscellaneous costs you pay during the year. Examples include employee expenses and fees you pay for tax advice. If you itemize, these deductions could lower your tax bill.  

Here are some things the IRS wants you to know about miscellaneous deductions:

Deductions Subject to the Two Percent Limit.  You can deduct most miscellaneous costs only if their total is more than two percent of your adjusted gross income. These include expenses such as:

• Unreimbursed employee expenses.
• Expenses related to searching for a new job in the same line of work.
• Certain work clothes and uniforms.
• Tools needed for your job.
• Union dues.
• Work-related travel and transportation.

Deductions Not Subject to the Two Percent Limit.  Some deductions are not subject to the two percent limit. They include:

• Certain casualty and theft losses. Generally, this applies to damaged or stolen property that you held for investment. This includes items such as stocks, bonds and works of art.
• Gambling losses up to the amount of your gambling winnings.
• Losses from Ponzi-type investment schemes.

There are many expenses that you can’t deduct. For example, you can’t deduct personal living or family expenses. You claim allowable miscellaneous deductions on Schedule A, Itemized Deductions.

For more about this topic see Publication 529, Miscellaneous Deductions. You can get it on IRS.gov or by calling 800-TAX-FORM (800-829-3676).

I Always Break-Even. Or Do I?

One person that knows if he is breaking-even is Jerry Seinfeld.  Well, at least the TV version of Jerry does.  Case in point, in one episode of Seinfeld, Jerry loses a stand-up gig and minutes later he gets another gig.  Then, he loses a $20 bill and finds another $20 in his old coat pocket.  Lastly, his usually down-and-out friend George starts seeing some success, and his usually successful friend Elaine becomes down-and-out.  Everything seems to even out for Jerry or in business terms, Jerry always hits break-even.

Break-even is the point in your business where you are generating enough revenue to pay all of your expenses.  Knowing your break-even point is one of the most important pieces of information that a business owner should know.  Whenever we talk to some of our clients, we find out they do not know what their break-even is.  They feel like they have a “round-about idea of what it is”.  However, this is not good enough to make significant business decisions, such as, purchasing inventory, hiring your next employee, or selling a new product or service. 

Let’s look at the most simple way to figure out your break-even:

Breakeven = Fixed Costs (FC)/Gross Margin (GM)%

Fixed costs are any costs that your business incurs whether you make money or not, such as, rent, utilities, insurance, payroll, etc.

Gross margin percentage is what you make after you pay immediate expenses associated with the product or service you offer.   This could be materials to make the product, payroll for the service, and even other costs associated with creating or delivering the product or service. 

Let’s take a look at the example below to calculate break-even for Miss Natalie’s Sandwich Shop. 

Fixed Costs = $5,000

Rent, utilities, insurance, payroll, etc.

Gross Margin% = 70%

Inventory (food and drinks)

Break Even = $5,000/70% = $7,143

This means that Miss Natalie’s Sandwich Shop has to make $7,143 every month just to pay the bills.  So, let’s take this a step further.  How many sandwiches will Miss Natalie’s Sandwich Shop have to sell to break-even?  Divide the break-even point by average sales price per sandwich.  In this case, the break-even is $8,000 and the average service fee is $5 per sandwich.  

$7,143/$5 = 1,429 sandwiches

This means it will take 1,429 sandwiches a month to break even.  Breaking this down even further, this means she needs to sell approximately 48 sandwiches every day.  Whew that’s a lot of bread, deli meat and cheese!   Knowing her break-even will give Natalie with the information she needs to be successful in making business decisions, such as pricing, when it is time to hire more personnel, marketing needs, etc.

This is Cute!!! - 4 year old learns about deleting photos, is heartbroken

And this exactly how business owners feel, when their computer crashes and they realize they didn't back up QuickBooks!

IRS Withholding Calculator

Tired of trying to figure out why you have to pay in so much at the end of the year, or even, tired of trying to figure out how NOT to give the IRS an interest-free (you are getting a large refund) loan?  Check out this 2 minute video to learn how to use the IRS Withholding Calculator.

Do You Have Employees or Contractors?

    Employee, contractor, tomato, tomatho, potato, potatho, let's call the whole thing off!  Okay, so it sounds a lot cuter when Fred Astaire and Ginger Rogers do this, but we have a lot of our clients that seem to get employees and contractors confused.  And some of them do this because they want to avoid paperwork, taxes, overtime, and other headaches that can come with having employees.  This becomes an issue, with the IRS, since they have reason to believe that not all contractors pay their taxes appropriately.

    However, it is not up to the employer to choose one over the other.  The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done. The earnings of a person who is working as an independent contractor are subject to Self-Employment Tax and they have to take care of that personally.

Below are the general characteristics of employees and independent contractors:

Independent Contractor ·         Free from direction and control ·         Has necessary skills and training to complete job ·         Has a business location ·         Performs services for multiple customers ·         Sets own hours ·         Determines own price for contracted services ·         Not eligible for employee benefits ·         Provides equipment and tools used to complete job ·         Supplies materials needed to do job ·         Personally liable for errors and/or accidents ·         Files self-employment taxes ·         Has right to hire and fire workers ·         Must legally complete each contract

Employee ·         Means and manner of work are (or can be) controlled by employer ·         May be trained by employer to perform job ·         May work at employer’s business location ·         Works for one employer, may serve that employer’s customers ·         Hours set by employer ·         Accepts wage, salary, or commission determined by the employer ·         Employer may provide and control equipment and tools ·         Employer may purchase materials and supplies ·         Employer liable for employee errors and/or accidents ·         Is hired and can be fired by employer ·         May quit working for an employer at any time ·         Employer may require specific attire to be worn while at work such as a uniform or shirts with company logo

So if looks like a duck, waddles like a duck, and quacks like a duck, don’t call it a contractor.  To avoid these types of issues give a us call or email.

Entrepreneurs are Not Fully Utilizing Their Accounting Tools

   We have received client's books every way conceivable.  We have gotten several old shoe boxes full of receipts, paper bags full of invoices, and even a laundry basket full of laundry (maybe that one was not accounting related though.)

  

  While we are always very, very, very happy to take these piles of paper and make accounting magic with them, we still strongly advise clients to start taking advantage of accounting software and apps.

From, (http://www.godaddy.com/news/article/small-business-owners-not-taking-advantage-of-technologies-that-save-time-money-during-tax-time.aspx)

  This survey reveals some of the issues we are referring to:

•Almost half (46 percent) of small business owners reported they do not work with an accountant.

•Of those small business owners who do work with an accountant, 47 percent see their accountant once a year at tax time or only when they have a question or need help.

•In the last 12 months, nearly a quarter of small business owners said they had lost track of whether a customer has paid them or not, or could see it happening in the future.

•32 percent of small business owners do not set aside money throughout the year to pay income taxes.

•12 percent of small business owners have no idea how much they will owe in income taxes, while 74 percent reported that they usually know the “ballpark” of what they owe, while just 15 percent know exactly how much they owe.

   By using accounting software like QuickBooks and Peachtree or using apps like Wave or Freshbooks, an entrepreneur can see can keep track of who owes them money, know how much they will owe in taxes, and sleep better at night in general.

   Give us a call or email for any suggestions to help your business start taking advantage of one of these tools or even provide you the training (QuickBooks specifically) to make it happen.

Sheldon, from the Big Bang Theory, knows that CPA's are the life of the party!

CPA, CPA, CPA

What to do if You Get a Notice from the IRS

IRS Summertime Tax Tip 2014-01, July 2, 2014

Each year the IRS mails millions of notices. Here’s what you should do if you receive a notice from the IRS:

1. Don’t ignore it. You can respond to most IRS notices quickly and easily. And it’s important that you reply promptly.
   
2. IRS notices usually deal with a specific issue about your tax return or tax account. For example, it may say the IRS has corrected an error on your tax return. Or it may ask you for more information.
   
3. Read it carefully and follow the instructions about what you need to do.
   
4. If it says that the IRS corrected your tax return, review the information in the notice and compare it to your tax return.
   
   If you agree, you don’t need to reply unless a payment is due.
   
   If you don’t agree, it’s important that you respond to the IRS. Write a letter that explains why you don’t agree. Make sure to include information and any documents you want the IRS to consider. Include the bottom tear-off portion of the notice with your letter. Mail your reply to the IRS at the address shown in the lower left part of the notice. Allow at least 30 days for a response from the IRS.
5. You can handle most notices without calling or visiting the IRS. If you do have questions, call the phone number in the upper right corner of the notice. Make sure you have a copy of your tax return and the notice with you when you call.
    
6. Keep copies of any notices you get from the IRS.
   
7. Don’t fall for phone and phishing email scams that use the IRS as a lure. The IRS first contacts people about unpaid taxes by mail – not by phone. The IRS does not contact taxpayers by email, text or social media about their tax return or tax account.

For more on this topic visit IRS.gov. Click on ‘Responding to a Notice’ at the bottom left of the home page. Also see Publication 594, The IRS Collection Process. You can get it on IRS.gov or call 800-TAX-FORM (800-829-3676) to get it by mail.

Additional IRS Resources:

• Tax Topic 651 - Notices – What to Do
• Tax Topic 652 - Notice of Underreported Income – CP-2000
• Tax Topic 653 - IRS Notices and Bills, Penalties and Interest Charges

Should We Keep Score in Little League Games?

   You often hear the debate among parents about keeping score in Little League. Some parents say there is no need in it, since the kids are just having fun and learning to play the game. Other parents say that kids need to learn the value of hard work and skill paying off.  

   You would think with four mothers at Hardee Accounting, we would just like for our kiddos to have fun and not worry about winning or losing, right?  Wrong!   We are accountants.

We.  Keep. Score.

   We also think that keeping score or bookkeeping in your business is crucial. Unfortunately, we see many business owners taking the advice of the first set of parents.

   Here are 4 very good reasons for accurate bookkeeping in your business.

1. Paying Uncle Sam – One of the quickest ways to become extinct is to have inaccurate bookkeeping records.  That will cause you to fall behind tax deadlines and even pay too much in taxes. And with 20 – 40 tax deadlines throughout the year, accurate bookkeeping records are essential.
2. Freaking cash flow – Cash flow is the life blood of any business.  You can have a negative number at the bottom of your Profit and Loss statement, but not the Cash Flow Statement.  It must be positive and if not, that equals game over.  Not having accurate bookkeeping can easily result in not having cash flow.  This is one of the top reasons that businesses do not survive. 
3. Controlling expenses – Accurate bookkeeping lets you know where your money is going.  Also, your accountant can help you compare your expenses to other businesses in your industry, to see how close you are to them.  This tells you if you are high or low in particular areas.
4. Growing the business –It’s hard to see if you are growing your business without knowing how much money you are making and spending.  This would be like trying to double the size of your brownie recipe, without having the proper measurements of the first set of brownies.

   So how will you keep score?  You can buckle down and do it, hire another employee to do it, or you can outsource it.  What matters most, is that it is accurate and timely.

3 Routines That Make Your Life Harder

           We have been on quite the exercise kick here at Hardee.   Some of us have been bootcamp mamas others have been making the most of their gym memberships.  The routines we create can help us get into better shape.  The same goes with your business.  

     There are also some bad routines that can make your business more difficult to run and your life much harder.

1. Letting your cash flow do its own thing - Have you ever looked at your Profit and Loss statement and felt good, only to look at your bank account to feel bad?    This is a cash flow issue.  Make sure you are entering all transactions into an accounting system and keep an eye on cash flow.
2. Keeping your prices too low - Most small business owners think they need the lowest price possible to compete.  In fact, quite the opposite can be true.  People will pay for things they want.   So, if you haven't had a price raise in the last year, it is probably time do so. This will get rid of the bottom 2% of customers that take up 20% of your time and it will also raise your revenue by 5%-10%!
3. Not meeting with your accountant – You know how you find time to regularly go to the doctor?  Put your accountant on that same schedule.  Most business owners assume they only need their accountant during tax season.   A good accountant can assist you year-round and they will always save you more money than they cost.

Contractor vs Employee: Pros & Cons

This is something a lot of businesses have questions about.  Let's see what Rhonda Abrahms (super smart lady) has to say.

Keep Your Records Safe in Case Disaster Strikes

IRS Special Edition Tax Tip 2014-15, June 5, 2014

Some natural disasters are more common in the summer. But major events like hurricanes, tornadoes and fires can strike any time. It’s a good idea to plan for what to do in case of a disaster. You can help make your recovery easier by keeping your tax and financial records safe. Here are some basic steps you can take now to prepare:

1. Backup Records Electronically.  Many people receive bank statements by email. This is a good way to secure your records. You can also scan tax records and insurance policies onto an electronic format. You can use an external hard drive, CD or DVD to store important records. Be sure you back up your files and keep them in a safe place. If a disaster strikes your home, it may also affect a wide area. If that happens you may not be able to retrieve your records.
2. Document Valuables.  Take photos or videos of the contents of your home or business. These visual records can help you prove the value of your lost items. They may help with insurance claims or casualty loss deductions on your tax return. You should store them with a friend or relative who lives out of the area.
3. Update Emergency Plans.  Review your emergency plans every year. Update them when your situation changes. Make sure you have a way to get severe weather information. Have a plan for what to do if threatening weather approaches.
4. Get Copies of Tax Returns or Transcripts.  Visit IRS.gov to get Form 4506, Request for Copy of Tax Return, to replace lost or destroyed tax returns. If you just need information from your return, you can order a free transcript online or by calling 800-908-9946. You can also file Form4506T-EZ, Short Form Request for Individual Tax Return Transcript or Form 4506-T, Request for Transcript of Tax Return.
5. Count on the IRS.  If you fall victim to a disaster, know that the IRS stands ready to help. You can call the IRS disaster hotline at 866-562-5227 for special help with disaster-related tax issues.

Visit IRS.gov to get more about IRS disaster assistance. Click on the ‘Disaster Relief’ link in the lower left of the home page. You can also get forms and publications anytime on IRS.gov. To get them in the mail, call 800-TAX-FORM (800-829-3676).

Additional IRS Resources:

• Preparing for a Disaster
• Publication 584, Casualty, Disaster and Theft Loss Workbook
• Publication 583, Starting a Business and Keeping Records

IRS YouTube Videos:

• Preparing for Disasters – English | Spanish | ASL

IRS Podcasts:

• Disaster Assistance – English | Spanish

Subscribe to IRS Tax Tips

Yo-Yo Dieting

   It’s finally summertime!  The grills are going, pools are open, and it is time to show off our new summer wear.  We feel good and we look good.  And we should.  We have been killing it at the gym and drinkinggreen smoothies since January.  This seems to be a pattern among a lot of people that realize the holidays were not too kind to their waistlines and they want to fix it ASAP.  Then before you know it summer is over and we are back in full the holiday cram fest, just to find us back in the same shape we were last year.

To be truly healthy we have to adopt a lifestyle change and quit yo-yo dieting.  Simple things to fix this issue are:

• Eating more raw fruits and veggies
• Taking walks and doing more fun outdoor activities
• Avoiding most processed foods

   Did you know that the same goes with ourbusinesses?  Sometime during the year we realize revenue is down, employees are turning over, and our market share is slipping.  So we go into crash diet mode.  We attend every networking event, cram employee training in every available moment, and visit our lovely CPA to fix this issue.  And at first it works!  Revenue increases, employees seem happier, and there is money in the checking account.  But before long, we take our foot off the gas, because we get worn with networking and training, we are attracting the wrong customers, and there are new fires to put out. 

Yo-yo dieting does not work for our health and it does not work for our business.  Simple things to fix this issue are:

• Creating a marketing plan for each quarter of the year and sticking to it
• Scheduling employee training and fun events for your business
• Meeting with your CPA  2 – 3 times a year to review your financial statements and potential problem areas

 

Kid Excitedly Misspelling A Word Is Painfully Funny

Sure, everyone will talk about the first tie in the Scripps Spelling Bee in 52 years, but this is the kid we want to be when we grow up.  Go Team Jacob!

It's easy to play it cool and act like you have been there before, however, it is much more fun (sometimes) to "Go Big or Go Home."  Unfortunately, Jacob went home.

We are normally dog people, but this is definately the exception!

Ten Tips for Paying Your Taxes

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IRS Tax Tip 2014-55, April 15, 2014

If you owe taxes with your tax return this year, you should know a few things before you file. Here are 10 helpful tips from the IRS about how to pay your federal taxes.

1. Never send cash.
2. If you e-file, you can file and pay in a single step with an electronic funds withdrawal. If you e-file on your own, you can use your tax preparation software to make the withdrawal. If you use a tax preparer to e-file, you can ask the preparer to make your tax payment electronically.
3. You can pay taxes electronically 24/7 on IRS.gov. Just click on the ‘Payments’ tab near the top left of the home page for details.
4. You can also pay by check or money order. Make your check or money order payable to the “United States Treasury.”
5. Whether you e-file your tax return or file on paper, you can also pay with a credit or debit card. The company that processes your payment will charge a processing fee.
6. You may be able to deduct the credit or debit card processing fee on next year’s return. It’s claimed on Schedule A, Itemized Deductions. The fee is a miscellaneous itemized deduction subject to the 2 percent limit.
7. Be sure to write your name, address and daytime phone number on the front of your payment. Also, write the tax year, form number you are filing and your Social Security number.
8. Complete Form 1040-V, Payment Voucher, and mail it with your tax return and payment to the IRS. Make sure you send it to the address listed on the back of Form 1040-V. This will help the IRS process your payment and post it to your account. You can get the form on IRS.gov.
9. Remember to enclose your payment with your tax return but do not staple it to any tax form.
10. For more information, call 800-829-4477 and select TeleTax Topic 158, Ensuring Proper Credit of Payments. You can also get information in the instructions for Form 1040-V.

Money, Money Everywhere and Not a Drop to Drink

Ok, so that’s not quite right, but you get the point.  Actually, “water, water everywhere and not a drop to drink”, comes from a poem about the experiences of a sailor at sea and not from Kevin Costner’s very expensive movie, Water World.  Who knew?

The same could be said for a lot entrepreneurs and their money.  Their income statement shows that they are doing quite well, but their bank account could be telling a different story.  So what’s the deal?
 Well it could be that their customers have still not paid them.  And the longer this goes on, 

the worse it gets.  In fact, according to the Commercial Collection Agency Association, the probability 

of collecting on a bill drops to 70% after 90 days. And it plummets to 23% after a year.

Below are five easy to implement accounts receivable practices, to keep your bank account in line with your financial statements.

1. Do not wait to bill your customers -  A lot of businesses bill customers monthly, to keep things simple.  They offer 30 day terms to their customers.  In many cases, customers pay 45 – 60 days after they receive their invoice, and those are the customers that are paying on time.   Now consider this, business owners have to pay staff, vendors and taxes on time during the 45 - 60 day lag period. 

2. Use automatic drafts – You can use an automatic draft from the customer’s bank account through your bank. You can set up payments on a certain date or on a recurring basis. You will incur some costs to get this set up and may even incur costs each time the transaction occurs, however, it may be well worth it in the long run.

3. Get paid on the spot – There are several useful tools that will allow you to run a credit card on the spot.  Several are now available, reliable, and cost effective.

• http://www.payanywhere.com/
• https://squareup.com/
• http://gopayment.com/

4. Bill payment services - The easier it is for your customer, the quicker you will collect payment.

• https://www.paypal.com/
• https://paymentnetwork.intuit.com/

5. Just give them a call - Not an email or snail mail.  Simply call them and ask for a specific date you should expect payment in a polite, yet firm manner.

So long QuickBooks 2011:(

http://support.quickbooks.intuit.com/support/articles/INF12842

After May 31, 2014, access to add-on services will be discontinued for QuickBooks 2011 Desktop (Windows and Mac).  This includes all versions of QuickBooks 2011 (Pro, Premier, Enterprise Solutions, Accountant Edition, and Mac).  

Add-on services are:

QuickBooks Pro, Premier, and QuickBooks Enterprise Solutions 11

QuickBooks Payroll services

1099 E-File Service

Credit Card Processing

Check Solution

Bill Pay

Billing Solution (formerly QuickBooks Online Billing)

Online Payment Processing (Intuit PaymentNetwork)

Accountant's Copy File Transfer (ACFT) service

Online Banking

Third-party products

Enterprise Solutions Full Service Plan (FSP)

This also means that Intuit, the maker of QuickBooks, will discontinue support for all 2011 products.

What does this mean?

QuickBooks 2011 will not spontaneously combust on May 31st.  It will still function the way that it did on May 30th.  This just means that if you have software troubles with this version, Intuit will not support it and will not allow you to access any add-on services.

What should you do?

Well, it really depends on your situation.  If you are a solo entrepreneur, with only a handful of transactions each month and you are not accessing any add-ons, then you may consider rolling the dice and keeping your existing version of QuickBooks (always make sure you are backing up your database).  

However, if you are using any add-on services or entering into QuickBooks daily it is time to bite the bullet and upgrade.