Why Hiring a Tax Professional is Your Best Business Option

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Whether you are self employed, run your own business or do not get taxes paid through your employer for another reason, hiring a tax professional can be a great decision and can save a good amount of stress and headaches at the end of the tax year. Here are some of the top reasons to hire a tax professional next time your tax return is due, so that your taxes don’t have to be taxing.

1. It’s their profession
Because most accountants will have spent years filling in tax forms, returns documents and producing the required evidence, they will be well abreast of current rules and regulations to make sure you are 100% above board and still getting the most for your money. Because they know the current legislation and rules, they may be able to save you a great deal of money through deductions and offsetting tax against expenses, which many small business owners are unaware of.

2. It saves you time and effort
Even if you are great at keeping your books in order and know exactly what you are doing with your tax return, by getting someone else to do it for you, you can free up your time to do what you do best – run your own business. If you are self employed or run your own small business the tax return can be extremely complicated, and it is estimated most people in this situation spend between 10 and 20 hours sorting everything out. If you view this in terms of the money you could earn if you were working rather than doing your tax return, it can make the accountants fees seem much better value for money.

3. Avoid costly mistakes
If you haven’t done a tax return before, it is highly likely you will make some mistakes when filling in your tax return. These can turn out to be very costly if you have underestimated your tax liability for the year, so use a professional to ensure you get it right first time. The added bonus of using a professional is that they will be around to answer any questions or queries that the tax office has with your submission, so that you can be left to carry on with business as usual.

4. Help with audits and other financial planning
If you are asked to be audited you can be sure it will not be a pleasant process. You will need to have a professional accountant to help you, and by already engaging with one for your tax return you will have built up a relationship with them and they will be aware of your business and better placed to help you. Accountants are also good at financial projecting, so if you are considering taking on a member of staff, expanding your office space or otherwise making a change that will impact the turnover of the business, you can enlist their help to project whether this will be a good business decision or not.

This article has been written from a Professional Cyprus Tax Firm PHS Hadjizacharias and Co. The Company is located in Cyprus and is offering Taxation, Audit, Accounting, Company formation and other corporate services for International Companies

5 Critical Accounting Tips for Freelancers

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Freelancing has its privileges. It’s nice to be able to pick and choose your work, set your own hours, work from wherever you want to, and call yourself your own boss. However, along with all of those awesome pluses come a set of responsibilities that are unique to the self employed. One such area that seems to stump freelancers more often than not is accounting. Unfortunately, accounting mistakes can be very costly; therefore, freelancers must make special considerations throughout the year to ensure there are no mistakes come tax time. Here are five critical accounting tips for freelancers:

Automated invoicing. Sure, creating your own custom spreadsheet and doing your invoicing by hand is cheap and easy . . . but it also tends to turn into a mess when your freelancing business takes off. Invest in an invoicing software program that automates the process, or do your invoicing via an online accounting interface like freshbooks.com.

Estimated taxes. Pay your estimated taxes on time throughout the year, rather than wait for the big bill come tax season. Chances are those smaller payments will be much easier to make than one huge lump sum amount, so think ahead by paying now.

Record keeping. Buy a simple filing cabinet and organize all of your records. This includes contracts, invoices, and all important receipts. You will need them to itemize your tax forms at the end of the year and when they are all over the place, you are bound to leave some out. This could ultimately cost you, so it’s better to get into good record keeping habits now.

Don’t forget the small stuff. Many freelancers forget some of the simplest tax write offs associated with being a freelancer. For example, it is not unusual to leave things like office supplies and PayPal fees off the deductibles list, and those things can really add up.

Profit and loss statements. Make it a point to document all of your income and expenses as you go, and to use your accounting software to generate profit and loss statements on a regular basis. That way you are not in the dark when it comes to your finances and taxes.

As you can see, handling your accounting the right way is not that complicated. It is actually just a matter of forming some good habits and being diligent about the details. Follow these five simple tips throughout the year to make tracking your freelance income and filing your taxes as painless as possible.

About the Author: Nichol Linebrink is a freelance business consultant specializing in communications. She helps small businesses locate VOIP service provider contacts and other critical services so that they can keep themselves running with minimal overhead.

Top 5 tips for choosing Business Accounting Software

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If your current business accounting processes are running out of steam or your business is simply growing too big for the standard accounting package you currently use, upgrading is the logical next step.

Whether you’re a small start-up or a complex enterprise, you’ll be met with myriad of software choices. Let’s look at five no-nonsense tips for choosing the right accounting software package for your needs:

  1. Identify extra features you may need – most businesses will need the basic out of the box finance package as a given which usually includes accounting, sales and purchasing management, asset registering and payroll. But do you also need stock control? What about intercompany reporting?
  2. Make sure the new software integrates with your existing processes – Let’s face it, your staff are used to doing things in a regular way and while it’s still effective, why change it? Some of the better accounting software products such as MYOB EXO Business will fit into your existing business processes and also help improve them.
  3. Multi users and security – Dealing with sensitive company financial data should be limited to those who have the rights to do so, but going a step further, you need to be able to limit what each user can access. For example, a junior accounts person should be setup with a restricted login with less access privileges than the chief financial controller.
  4. After sales support and training – learning your new accounting software and sorting out inevitable teething problems are made easier with quality support and training. Phone and email support are essential as is face to face training involving all relevant staff. This help can be particularly useful when software updates need to be applied.
  5. Speak to others in your industry – at your next networking function, actually raise the subject of accounting software. Now, you may think it’ll send people running for the toilet of a drink refill, but you’ll be surprised how many people will tell you their experience. They’ll often recommend business software experts who helped them.

So, there we have 5 brief but very important considerations to take into account (bad pun intended) to help you make the right decision. Making the wrong choice of software can lead to headaches further down the track and even worse, you could end up making some bad business decisions because of it. Take the time to weigh-up the functions and features you need and look for a product which comes with upgradable modules you can ‘snap’ in as and when you need them.

If you’re looking for a consultant who can scope, design, implement and configure a business accounting software solution specialising in MYOB EXO, try Horizon Business Systems, a Perth based, MYOB Platinum Partner.

Proper Bookkeeping for a Solid Business Future

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Business owners would agree that a proper bookkeeping system is not only essential, but it’s also the foundation that will secure your company’s financial future.

Running a business means more than just keeping your clients happy; it requires proper systems that are in place to secure your company’s future, whether this is looking after your employees, providing top-notch customer service, or maintaining a decent set of books. Bookkeeping is one of the most important aspects of managing an organization and failing to look after this important part of your office can ultimately lead to a financial disaster.

The Basics of Bookkeeping

The main purpose of bookkeeping is to keep an accurate record of a company’s financial transactions. This can be done in-house, but you may also find a bookkeeper from an external source to handle your company’s books. The person does not necessarily need to be qualified, but he or she should be very knowledgeable regarding the functions of a bookkeeper and the specific guidelines and State laws that your company should adhere to.

Bookkeeping also entails proper record keeping of the company’s various spending and income activities; such as supplier payments, customer payments, employee salaries and advertising costs. These items should be categorized and properly filed, in a way that the records are easy to find. Financial statements are also an important aspect of every company’s books, and they give you an accurate overview of your performance, and they are reliable measuring tools when comparing your performance against those of your competitors.

Budgeting is equally important and allows you to set sustainable financial goals and constantly guard against overspending. Comparing your budgets against your actual spending also gives business owners a good indication of the goals accomplished, and the areas that can be improved. If you are looking to hire an individual that can accurately prepare budgets on you company’s behalf, try to find a bookkeeper that has significant experience and sufficient knowledge to assist you.

Complying with tax laws is also an area that every business needs to focus on. Filing tax returns is very important and if your financial system is in order, it will make this task so much easier. Your tax returns need to accurately reflect your company’s profit, turnover and spending. This is best done by a professional and it is advisable that you hire such a person to oversee these activities.

The Importance of Record Keeping

Document retention is something that every business should adhere to, and it can help a company with litigation and to ensure that all State laws and regulations are met. Here are the basics that every business owner should be aware of:

  • Records can refer to both hard- and soft copy documents; for example a physical receipt for goods purchased, or an email from a customer.

 

  • The length that you keep these records will differ, for example sales receipts are only valid up to the time the limitations expire. Important documents such as cancelled checks, duplicate bank deposits and employment records should be kept for a few years.

 

  • Documents are kept to avoid the burden of proof in the future. Documentation would need to be provided in case any issues or claims arise a few years from now.

 

Anthony Azevedo, CPA is the managing member of EZCFO, an accounting and bookkeeping company specialized in payroll, human resource and employer solutions.

Which Is Best for My Small Business? a SEP IRA or SEP 401k?

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A retirement plan for a small business can be tricky to find. You would want a plan that has low contribution minimums and affordable administration fees without sacrificing the benefits that your employees may receive. Of all retirement plans available for small business proprietors and self-employed individuals, the SEP IRA and SEP 401k plans are the top choices. What is a SEP IRA and what are the SEP IRA rules? A SEP 401k? What are their similarities and differences? Which is better for my business?

A SEP IRA is a retirement plan that allows the employer an easy method of contribution to the employee’s IRA. When to make contributions and how much will be contributed is all up to the employer. The limits of contribution are generous: $49,000 or 25% of the worker’s annual salary. The contribution to be made will be the lesser of the 2. An advantage of this plan is that it can include a big number of employees under the SEP.

Similar to a SEP IRA, the SEP 401k contributions are also employer discretionary. Contribution limits for this plan are: $15,500 maximum from employee’s salaries plus an additional 25% of the employee’s compensation as employer contributions. The catch is that this plan is only for the account older and his or her spouse, any employee cannot be part of the plan.

Of the two, the SEP 401k can potentially have a bigger contribution allowance. Say for example, an employee is receiving $100,000 a year. In a SEP IRA, maximum contribution possible would be 25% or $25,000. For a SEP 401k, that would be $15,500 taken from the salary, plus an employer contribution of 25% or $25,000. That would amount to a maximum possible contribution of $40,000fot the SEP 401k. The only drawback of the SEP 401k is that employees are not catered in the plan, so if you plan to expand your business and hire more to work from you, then the SEP IRA is the obvious choice.

Tax Deductions Can Help To Improve Your Bottom Line

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Small Business Often Overlooks Tax Deductions

You can have a successful tax season in your small business if you plan all round the year so that the deductions are maximized. This requires that tax matters should be kept in mind at all times, and you must constantly look for methods of reducing your bottom line, while continuing the profitability of the company.

Expenses for Start-Up

The expense of starting a business is quite often overlooked by small businesses and this can give one quite an advantage when the tax season is being considered. It is possible to deduct the expenses incurred for overhead,marketing and other expenses that are related and this can be done for a period of five years after starting the business. However the deduction of such expenses is only allowed after you have actually started the business and cash flows have commenced.

Education and Training Has To Be Continuous

A continuity in training and education, makes you eligible to deduct the expenses incurred for this. Attending a conference on new trends for treatment of cancer in horses allows a veterinarian who specializes in treating horses to deduct the expenses of attending that conference. As the conference is related to the field in which the veterinarian is practicing this seminar can be a part of the deduction form the yearly tax. However if he is not practicing in that field and only treats smaller animals, he would not be eligible for any deduction. The rules for the classes that qualify the deduction are quite strict.

Fees for Professional Services

Any professional fees that you pay to your accountant can be deducted from taxes.If however the work is for future years, the benefit has to be spread out over the term envisaged. If you have hired an architect for designing a building that may take two years to construct,the architects fees have to be spread over the period during which the building construction takes place.