Thursday, July 9, 2009

Mixing business with personal

I've worked in the accounting field now for about 11 years and one thing I can certainly tell you is that if you mix up your personal affairs into your business affairs, things get really sticky.

The sheer volume of entries required to process the accounting alone will cost you big time! There are almost always mistakes made when someone else is trying to figure out whether or not an expense was incurred personally or for the business. You may shop at Sam's, for instance, personally and also for your business supplies. What ends up happening is, the accounting clerk is left to audit every receipt and make decisions and ask a bunch of unnecessary questions...when it is possible for you to write yourself payroll (if that is how you are set up) or a draw check, then pay your personal affairs through your personal accounts.

You shouldn't waste money paying your accountant to process checks written to your home cable company. Chances are for smaller accounting firms like this one, we end up spending an unreasonable amount of time completing the financials and that makes you unhappy, your bank or lender unhappy and we never recoup the loss of time put in vs. amount charged.

Keep your personal affairs-personal and your business affairs-busniess.

Monday, March 23, 2009

Making Work Pay Tax Credit begins April 1st

If you haven't heard by now, the government has passed the Making Work Pay provision which is giving people a bit more back on their paychecks. As an employer, you must be aware of the change and what the new tax tables will be in order to comply with the tax credit changes. Chances are pretty good, your employees know atleast enough that their normal net pay will be slightly higher, so if it's not, they will ask!

From the IRS website:

For 2009 and 2010, the Making Work Pay provision of the American Recovery and Reinvestment Act will provide a refundable tax credit of up to $400 for working individuals and $800 for married taxpayers filing joint returns.

This tax credit will be calculated at a rate of 6.2 percent of earned income and will phase out for taxpayers with adjusted gross income in excess of $75,000, or $150,000 for married couples filing jointly.

For people who receive a paycheck and are subject to withholding, the credit will typically be handled by their employers through automated withholding changes in early spring. These changes may result in an increase in take-home pay. The amount of the credit must be reported on the employee's 2009 income tax return filed in 2010. Taxpayers who do not have taxes withheld by an employer during the year can also claim the credit on their 2009 tax return.

It's not necessary to have any employees re-submit any forms W-4 in order to participate, it will be to all employees.

If you use a computer program to generate your payroll, make sure you get proper updates from your software provider in plenty of time to begin the changes on April 1, 2009.

If you use a professional payroll preparation service, be sure to check in with them if you have any specific questions about the tax credit.

Wednesday, February 4, 2009

Change your payday, save money on preparation costs!

If you use a professional service to generate your business payroll, you might consider an alternative payday in an effort to save money!

Friday is the #1 day used as payday. I'd say that is followed by #2 Wednesday. If the service you use to prepare payroll offers lower fees for having your payday on an alternative day such as Tuesday or Thursday, you should consider switching paydays! Some payroll preparation services are extremely over run with payrolls due on these busier days and offer lower or discounted rates for companies who's payroll can be prepared for an alternative, less congested payday.

Another option is if you currently pay weekly, you might consider moving to a bi-weekly or semi-monthly pay period. This would automatically lessen the frequency of your preparation and drop your costs in half.

Of course there will be a period of adjustment on both the employee side and the administrative side but in the end, it could prove beneficial in more ways than you'd think.

If you are unsure if your payroll service offers these types of discounts, it never hurts to check into it. It could potentially save you hundreds of dollars or more each year!

Monday, February 2, 2009

February 2, 2009 - W-2 & 1099 Postmark Deadline

If you haven't already, make sure you complete and mail the recipient copies of the forms W-2 & 1099 with today's date.

You will also be required to file and/or pay other 4th Quarter 2008 payroll forms. If you are not sure about the specific filing requirements for your business, please consult your accounting and tax professional.