That last minute scramble before tax time

I have heard from so many people how they are stressed out and under the gun to get all their paperwork together for their tax preparer.

The truth is, you eat an elephant one bite at a time, and if you do your paperwork one month or one week at a time; it won't feel like you're eating an elephant.

Having a professional bookkeeper is a cost effective and sure fire way to stay on top of your paperwork. When you look at how much time is spent doing payroll, payroll taxes, and trying to reconcile your bank and credit card accounts each month, how much is that worth? A professional bookkeeper can handle all of that for you and have your financial information ready to go when you are, in a fraction of the time, allowing you to spend your time growing your business.

If you have recently purchased or downloaded QuickBooks, get the training necessary to keep yourself up to date in a fraction of the time and take advantage of all this powerful accounting software has to offer.

Call me for a FREE 1 hour consultation to discuss your bookkeeping needs.

www.checkedandbalanced.vpweb.com

TOP 10 BOOKKEEPING MISTAKES MADE BY SMALL BUSINESSES

From one-person entities to major corporations, bookkeeping is a significant part of any business endeavor. While it is typically not one of the more glamorous jobs, bookkeeping is at the heart of a company's success, and errors can cost the company significantly. Below are 10 of the most common errors that you want to avoid.


Not saving receipts of less than $75. While such receipts may not be required by the IRS, they provide backup documentation for the many deductions you may claim. It is very simple to have a folder for such receipts, which can prove valuable at tax time.


Doing it yourself. No matter how much they hate it, many small business owners insist upon handling the books themselves. Having a competent bookkeeper coming in to handle the books can be extremely beneficial in that they have the skills to do the job quickly and efficiently and will provide a second pair of eyes to find errors and make suggestions.


Forgetting to track reimbursable expenses. Small business owners often pay for expenses out of pocket or with their own personal credit card then make the mistakes of failing to track these expenses. They then fail to submit the expenses to the company for reimbursement.


Not properly classifying employees. The proliferation of independent contractors, consultants, and freelancers has made it difficult to determine who is on staff and who is not. This results in misfiling when it comes to filing taxes since there are different rules and regulations for employees and non-employees.

Lack of communication. Having someone handling bookkeeping is only effective if they are filled in and kept up to date on all financial transactions. A frequent mistake is paying someone a bonus and not reporting it or buying supplies and not providing the bookkeeper with the information or receipts.

Not reconciling the books with the bank statement each month. One of the fundamental aspects of bookkeeping is reconciling the books and bank statements every month. Nonetheless, there are businesses that do not do this and others where errors are made by not doing it properly. Again, this is a good reason for hiring an experienced bookkeeper.


No backup. The paperless office does not exist in the real world, where audits do still exist. A paper trail, documentation or verification in the form of backup documents should be available, especially if all files are on the computer system, which could be prone to technical problems.

Not deducting sales tax. A common mistake in retail businesses is not deducting the sales tax from the total sales. This results in a higher total sales amount and does not lower the amount of taxes due.


Petty cash nonchalance. A system should be set up whereby a set amount of money is in petty cash and each time money is taken out for any purpose, a petty cash slip is filled out. When the fund is exhausted, the slips will total the original amount and a check can be written to cash to set up the full amount again. Many offices are nonchalant about using the petty cash fund without keeping accurate records.

Miscategorization or overcategorization. There are fairly standard categories for expenses. However, often expenses are entered into the wrong categories or too many categories are created. Use general bookkeeping guidelines for standard categorization and create as few new categories as possible. Try to follow generally accepted accounting practices.

THE IMPORTANCE OF PLANNING YOUR ADVERTISING

PLANNING YOUR ADVERTISING SHOULD BE SIMPLE
You choose your target customers, then decide on the product or service you know they need. You work out the best way to reach them through advertising, advertise, and then wait for them to respond. You measure the return, to ensure you made more profit than the cost of the ad.

But it doesn’t always work like this. For many small businesses, advertising happens when a persuasive media salesperson talks them into buying a series of ads, or when they are reminded they need to renew their directory advertising.


HOW IT SHOULD WORK
 
You decide what advertising tactics fit a particular type of customer, product, or service.


For example, a sports shop might consider conducting an advertising campaign for their baseball equipment in February, preceded by a direct mail campaign to customers in December.


THERE ARE FIVE STEPS TO EFFECTIVE ADVERTISING PLANNING:

 
1) Target your customer.
2) Select appropriate products and services.
3) Choose your form of advertising.
4) Fit tactics to targets.
5) Put someone in charge.

5 TIPS ON ADVERTISING BASICS

1. Be consistent in your ad message and style including business cards, letterhead, envelopes, invoices, signs and banners.


2. Newspapers, radio and TV stations are helpful in producing the advertising that you will be running with them.


3. While word-of-mouth advertising has been around a long time, it usually falls short of being able to attract the number of customers needed to be successful in business.


4. Promote benefits rather than features. A benefit is the emotional satisfaction your product or service provides, or a tangible performance characteristic.


5. Know your competitors. Knowing everything about your competitors is just as important as knowing everything about your own business.

3 REASONS TO HIRE A BOOKKEEPER

Think you don't need to hire someone to keep your books? Think again. Many new business owners spend more than they save both time and money-wise when doing the books themselves. Here's what you need to know about letting go.



1) How much is your time worth?


Most business owners who do their own books contend that they want to maintain privacy of their financial matters. However, most of them spend far too much time focusing on keeping their books in order and therefore, forfeit time that could be spent on other tasks or with family, friends, or even relaxing.

2) Find yourself scrambling to get your books in order for tax season?


If your books aren't in order, you risk having your CPA (who can cost as much as $150/hour) having to organize them prior to doing your taxes. By having them ready to go and properly prepared, you can save valuable time and money.


3) How much do you really know?


Bookkeepers are skilled in just that: keeping books. Its what they do for a living. Not only can they make sure your checks are written out properly and expenses and assets are properly accounted for, but they can also find different tax exempts you may not be aware of currently.

10 TOP WAYS TO PROMOTE YOUR BUSINESS

Business promotion, particularly for small business is a very arduous process given the lack of branding and local nature of the market. But with a definite strategic perspective and effort this can be one of the most exhilarating and fulfilling in business growth and in reaching out to wider markets. Here is a list of most inexpensive but effective small business promotion tools.


1. Make most out of official communication: whether it is communicating through papers work, emails or anything do not forget to promote your brand through effective slogans, service listing and product information.


2. Resource contribution: write meaningful content about your market, analyze related products and find proper place to submit these expert resources such as online submissions.


3. Press releases: write effective press release to promote your service and do not forget to release it online in various free press release sites.


4. Online business promotion: online advertisement is cheap and local listing sre still cheaper. So get listed in local directories, run an online campaign to let people know more about your brand.


5. Social networking: it is best time to be on the social media and social networking can make a big difference to your brand and business growth whether in terms of contacts, brand awareness or getting more sales. Linked in, Face book and Twitter are some of them.


6. Customer support: I would rate it as the most important business promotion tools. Be proactive in your customer interaction, make them feel important and wanted and they are ever willing to pay you more as well as promote your brand through appreciation.


7. Business or marketing specialists: interact with your respective market specialist, offer them some freebies as well as keep in touch. They are the expert’s people listen to while choosing services and some of them may trickle down to your brand as well.


8. Organize and participate in events: Be it seminars related to your market or trade shows, promotions you have to be present there to get your brand accepted both within experts as well as general public. And more important pay some experts to speak in favor of your business.


9. Use transportation method to your advantage: whether it is company provided car, Buses or even employees own conveyance some promotional material can always find a place and even little business promotion through it is valuable.


10. Website: website in some instances are the first interaction with your potential clients and having a good website which is attractive, user friendly and explaining the service offerings in a nice way are a good way to leave a lasting impact on the visitors. And do not forget to interact with visitors who are willing to give their emails and phone numbers.

Taxation of Forgiven Debt - This could be scary....

If you owe a debt to someone else and they cancel or forgive that debt, the canceled amount may be taxable.

The Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief.


This provision applies to debt forgiven in calendar years 2007 through 2012. Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if married filing separately). The exclusion does not apply if the discharge is due to services performed for the lender or any other reason not directly related to a decline in the home’s value or the taxpayer’s financial condition.


More information, including detailed examples can be found in Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments. Also see IRS news release IR-2008-17.


The following are the most commonly asked questions and answers about The Mortgage Forgiveness Debt Relief Act and debt cancellation:

What is Cancellation of Debt?


If you borrow money from a commercial lender and the lender later cancels or forgives the debt, you may have to include the cancelled amount in income for tax purposes, depending on the circumstances. When you borrowed the money you were not required to include the loan proceeds in income because you had an obligation to repay the lender. When that obligation is subsequently forgiven, the amount you received as loan proceeds is normally reportable as income because you no longer have an obligation to repay the lender. The lender is usually required to report the amount of the canceled debt to you and the IRS on a Form 1099-C, Cancellation of Debt.

Here’s a very simplified example. You borrow $10,000 and default on the loan after paying back $2,000. If the lender is unable to collect the remaining debt from you, there is a cancellation of debt of $8,000, which generally is taxable income to you.


Is Cancellation of Debt income always taxable?


Not always. There are some exceptions. The most common situations when cancellation of debt income is not taxable involve:


Qualified principal residence indebtedness: This is the exception created by the Mortgage Debt Relief Act of 2007 and applies to most homeowners.


Bankruptcy: Debts discharged through bankruptcy are not considered taxable income.


Insolvency: If you are insolvent when the debt is cancelled, some or all of the cancelled debt may not be taxable to you. You are insolvent when your total debts are more than the fair market value of your total assets.


Certain farm debts: If you incurred the debt directly in operation of a farm, more than half your income from the prior three years was from farming, and the loan was owed to a person or agency regularly engaged in lending, your cancelled debt is generally not considered taxable income.


Non-recourse loans: A non-recourse loan is a loan for which the lender’s only remedy in case of default is to repossess the property being financed or used as collateral. That is, the lender cannot pursue you personally in case of default. Forgiveness of a non-recourse loan resulting from a foreclosure does not result in cancellation of debt income. However, it may result in other tax consequences.

LBCC receives $30,000 Grant from Verizon to support Young Entrepreneur Project

Long Beach City College (LBCC) has been awarded a $30,000 grant from Verizon to support its Young Entrepreneur Project. The Young Entrepreneur Project (YEP) is an accelerated 7-week training program designed to teach participants the fundamentals of starting and running a small business, and to assist potential entrepreneurs in identifying if entrepreneurship is an option for their current or future aspirations.


“Helping to create jobs for our students and to grow the local economy is a vital function of community colleges,” said LBCC President Eloy Oakley. “LBCC is grateful to Verizon for supporting this program because it is helping to create opportunities that otherwise would not exist for our students.”

“Verizon is delighted to support Long Beach City College’s Young Entrepreneur Project. It’s an important program for strengthening our communities by growing and developing our future entrepreneurs,” said Mike Murray, Verizon’s Director-Government & External Affairs.

Participants in the YEP start with an orientation session, followed by the intense 7-week training program that provides tangible skills that will give them the basic knowledge required to start and run a small business enterprise. “At the end of this program, our students know the basics of how to start their own company and have contacts with other local business experts,” said Bret O’Connor, the YEP Coordinator. “We have helped hundreds of young people explore entrepreneurship as a career path and helped launch new businesses. For example, some of our graduates are now selling custom suits that they manufacture in China and another group started a promotions company.”

The Young Entrepreneur Project is a program of the Small Business Development Center at Long Beach City College. The SBDC provides one-on-one business advising and training seminars in marketing, financing, business start-up, international trade, and procurement programs to small businesses. The SBDC can be reached at 562-938-5020.