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Tax Advice

Satire Alert: The IRS is On Its Way or How to Really Mess Up Your 2018 Income Tax Preparation

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You have read many blogs and articles, here and elsewhere, that give you steps 1, 2, 3, etc., on how to save money, pay your tax bill, incorporate your business. They all have tried and true advice which you may have used in your business and personal finances.

Blah, blah, blah…

We know that they can all be boring after awhile. So, to break up the boredom of your typical “How-to” finance article, we are going to offer you a satirical,  tongue-in-cheek Guide to Messing Up Your 2018 Income Tax Preparation:

  1. Don’t organize any of your documents: Be sure to pile them in a shoebox, willy nilly, with absolutely no organization whatsoever. Make sure they are ripped, have nothing noted on the receipts and are the wrong year.
  2. Forget to include statements: Credit cards, payroll, expenses. They are so much trouble to print.
  3. Travel expenses mileage: Don’t use mileage records during the taxable year, just make up a mileage number! It’s just fuel after all.
  4. Write all your contractors expenses on a piece of paper: Instead of submitting contractor expense receipts, just use a notepad with amounts on it. No dates or receipts needed. Too much trouble!
  5. Don’t ask for any receipts for donations to non-profit/charitable organizations: Donations are just a nice thing we all do. Sure, you may owe less to the IRS if you accepted them or kept them, but you did it for a good cause. Who needs to brag about it, after all!?
  6. Turn in all your tax documents to your accountant on April 14: Everyone is so persistent in getting the tax filing postmarked by April 15, Tax Day. That is so arbitrary! Besides, your accountant is working 24 hours a day anyway, from January 1 to April 15. They won’t mind one more client bringing their files in at the last minute. They should be happy to be doing your taxes, anyway. It’s job security, right? Be sure your shoe boxes have your last name and phone number on them.
  7. Argue with Your Accountant over their fee: Your accountant is charging that much per hour to add up numbers? Good grief that is highway robbery. All they need is a calculator and number two pencil and they got it made. Make sure they know you can do it better and be late in paying the bill.
  8. Forget to pay the IRS bill: They had the temerity to charge you even more after you have paid them all year from your paychecks!! You’ll show them. Yeah, pay late. That will scare them. Mean old government agency.

Now, do you feel better? Actually, no. This was after all, satirical,  tongue-in-cheek blog not meant to be taken seriously. You should do EVERYTHING OPPOSITE to what you read above.

After all, there are serious legal complications if you fail to comply with the tax laws. The IRS has an ITA (Interactive Tax Assistant) online which can help you with some legal questions you may have.

In fact, the best tax advice, besides doing exactly opposite of 1-8 above, is to contact our A.K. Burton, PC offices in Bethesda, Maryland. Our experienced and licensed tax lawyers and accountants can answer all your questions and also assist you with your income tax filing preparation. We serve clients in the Washington, D.C., Bethesda, Maryland and Northern Virginia region.

Tax Advice

Ten Tax Preparation Things Your Small Business Can Do Now

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This year is almost over.

In fact, by the time you read this blog, 2018 may have already arrived. Christmas has passed, the New Year’s parties have ended, school has reopened and regular life has returned.

Ho hum…

Well, I hope you had a safe and enjoyable holiday.

But, now that the New Year has arrived, I am going to bring up a topic you need to consider and now: Taxes. Yes, taxes. Tax season has just begun for small businesses and you can do something you may have never done before as a small business owner or an employee who works the accounting department: you can get ahead of the game.

Helping you and your small business be smart and successful in your bookkeeping and accounting is one of my own accounting firm goals. So, here are Ten Tax Preparation Things Your Small Business Can Do Now:

  1. Create a checklist of what you need: This checklist can be shared, such as on Google Documents, among you and your employees. It is a good way to keep updated on each item. (An excellent tax preparation checklist can be found at H. R. Block.)
  2. Find last year’s tax return: This will help you with deductions and other facts. Some businesses have the same deductions each year. It is also a legal document that may help you stay accurate for this year’s return.
  3. Balance Sheet: Your IRS tax return is based on income and expenses. It is that simple. So, you will need a balance sheet showing gross receipts, expenses and assets. It is an excellent one-glance document summarizing your past year.
  4. Asset purchases: Your business equipment can be included in your return. Some assets may written off using depreciation deductions for a number of years. For instance, if your company purchased new laptops, printers and cell phones for employees, they can be added on your tax return. Use receipts for each purchase and have them available for your accountant.
  5. Payroll Records: Payroll is, for most businesses, the largest tax deduction of all. All full-time, part-time employees, temporary employees and subcontractors’ pay should be included.
  6. Asset Dispositions: If your small business sold any depreciable assets, you will need to calculate gainsor losses on the sales. You will need a description of the asset, sale date, asset price, sale expenses and accumulated depreciation.
  7. Business vehicle(s): This may be a crucial deduction as most small businesses have fleet and/or service vehicles. You will need to get the total miles driven for business and commuting miles. (Personal mileage is not allowed to be deducted.)
  8. Credit card statements: Many small business owners use a company credit card to purchase gas, lodging, office supplies, business meals and other pertinent business purchases. The entire statement of the year’s credit card purchases need to be submitted. (Make sure that if any personal purchases were made with that card that they are marked as “personal” and not included in the business tax return.

This is a great start! In fact, if you get these all compiled and sent to your accountant, you may be able to file your federal tax return early and know how much you owe. (You may have to pay in installments, but at least you will know how much you owe and can budget it.)

It seems too early, to many small business owners, to be tackling their tax records and preparation in January. Yet, most owners will tell you that getting their tax preparation done now is a relief. Then, they can get on with running their business.

A.K. Burton, PC, which serves the Washington,D.C. and Bethesda, Md area, has experienced and licensed small business tax advisers on staff. If you need more advice on business and individual tax planning, contact us at (301) 365-1974 for more information or email us at info@cpa-maryland.com.

 

Accounting, Non-Profit Accounting, Tax Advice

How to Get Tax-Exempt Status as a Nonprofit, Part 2

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In our previous blog we covered a number of steps you can take to get tax-exemption for your non-profit that you have just created. There are quite a few steps to take so we had to split the blog up into two. charity a k burton

Anyway, let’s continue, here are the next Steps to take to get Tax-Exempt Status for your Non-Profit, Part 2:  

  1. List of directors and employees and compensation: You will have manager(s) of your charitable organization and the IRS wants to their names and how much they will be paid by the charity. Your list should include: initial or starter directors, starter officers (executive director, financial officer, chief executive officer, secretary and others); trustees; top five employees who make more than $50,000 a year and any independent contractors which make $50,000 per year.
  2. List of beneficiaries of your charitable organization: Your non-profit serves a specific population (i.e. homeless, elderly, youth, religious group, etc.) and the IRS wants to see that specific list to make sure that you are legitimate. Your population served is a crucial part of your underwriting. (Researching the local, state of national population is helpful and having that on hand to submit to IRS should they ask is wise to do.)
  3. Description of your non-profit activities: Provide a complete narrative of all that you do and plan to do with your charity. It should include step-by-step workflow (without including every detail, that may be too much) of your activities and how you plan to do it with your staff. Make sure the pieces fit. In other words, there is no waste in your processes and the staff members all have a role. (Political activity and gambling are prohibited. Be sure to research that or consult a licensed tax advisor.)
  4. Data on finances: Any 501 C 3 must provide its last five years of financial records to the IRS for review. Other groups have to show finances for all years they have been in existence for three to four years and in good faith for future years depending on the history of the organization. (For more details check with your tax advisor about Form 1023 and IRS non-profit requirements.)
  5. Are you a “Private Foundation” or a “Public Charity”?: Typically churches, temples, hospitals, schools, etc. are categorized as “public charities” whereas “private foundations” may be organizations that exist to donate money to causes, individuals and others (i.e. Gates Foundation, Kiwanis Foundation, etc.). There are specific rules, of course, for these too so please consult your licensed tax advisor.
  6. IRS Fee: You didn’t think you could do this for free with the IRS, did you? They do charge certain fees and there is a list of those fees available online and with your tax advisor. Be sure to include the fee payment with your filing or it will be delayed.

Yes, anything worthwhile takes work, sometimes a lot of work. But, if you follow these steps you may be able to get your non-profit organization up and running.

Contact us if you need personal or professional counseling, from tax planning, to payroll to Business/Financial Entity planning and many other services, A. K. Burton, PC, can meet all your personal and business accounting needs. Call us at (301) 365-1974 for more information.