Are you receiving state payments (from IHSS and/or WPCS) to be a care provider for someone that lives with you?

If so, you may be eligible to amend your returns and potentially get a refund back.

IRS Notice 2014-7 states “that wages received by IHSS and WPCS providers who live with the recipient of those services are not considered part of gross income for purposes of federal income tax.”

The Department of Social Services can supply you with a form SOC 2298 Live-In Self-Certification Form. It is recommended that you file this as soon as possible with them so that they can supply you with the proper W-2 and/or 1099-MISC information for the upcoming tax season.

Talk to your tax consultant as soon as possible to see if this applies to you.

Take time out to play too

Stop what you are doing right now! You work 80+ hour weeks. You strive to grow our companies and you give up everything to see them achieve success. That’s what you grew up believing; work hard and long hours and you will succeed.
Is that right though?
Putting a firm foundation down in the beginning of starting a business usually means putting in a few extra hours. That’s to be expected. There are days that take longer than others, even seasons (like tax season) where you cram in as many hours as you can. Also expected. When does it become an issue? When a few extra hours become 24-7! When you realize that you are trying to meet everyone else’s needs and your needs are being ignored.
With today’s computers, cell phones, tablets and the myriad of other electronic gadgets, we are constantly connected to our businesses. Gone is family/friends time, gone are the vacations, gone are the weekends. All work, no play.
Look at your day objectively.
Set up a strict schedule. Schedule certain times of your day to answer your emails, make your calls and have your meetings. Schedule an hour, an afternoon, a day in the week that focuses on the growth of your business.
Learn to prioritize.
Most importantly, decide what time your workday is over and don’t answer your business emails, phone calls and texts after that time unless it is an emergency. Same goes for weekends and vacations!
Time for play is just as important as time for work. If all you do is work, you get stressed. You get stressed, you end up with health issues. You end up with health issues, the business suffers… and on it goes. You time is for the benefit of the business. Taking time out for yourself rejuvenates the batteries, ‘clears out the cobwebs’, helps the creativity to flow and makes going back to your business a pleasure rather than a burden.
Start adding your life into your schedule today!

No more excuses!

We’ve all been there:  Having to hunt down the monthly fees from our clients. Ugh.  Most of the time it’s a doable process but sometimes it’s just not.

The problem is that the clients have their excuses ready:

I thought it was due the end of the month.
I didn’t receive the invoice.
My email program went down.
I was out of town so I’m late paying everything.
Huh, I didn’t pay that yet?  I thought I did.  I’ll put the check in the mail today.
And my personal “favorite”:  The holidays are coming.

When you have a small business, missing or late payments can bring your business to a full stop. We assume that every business has enough put away to bring them through the slow times but the truth is that many small businesses and start-ups do NOT have enough funds to last past a month or two.  If your clients aren’t paying you, you aren’t paying your employees, your employees leave and you are stuck doing everything with still no pay.  Hmmm… not seeing a happy holiday there for you.

Besides bettering cash flow, adding a savings plan and building up a fuller bank account for your business, which is an article for another time, there are automatic and recurring payment processes.  Granted, this is not for every business but it does work for those that offer recurring services.

You can search online but PayPal offers it, your bank may offer it and there are a myriad of other online services available to you to set this up.  Price them out and read the reviews… and make sure that they are legitimate.

Just imagine, every month on the same date your client gets an invoice and it is automatically charged to their credit card! They don’t have to worry about missing that payment and, more importantly, neither do you!

You will never have to hunt down payments again.  Your income will become a steady stream instead of this stop and go ebb and flow.  After all, you deserve to have good holidays too!

 

Are you and your job a match made in Heaven?

We all know that sometimes we take on jobs just to pay the bills and not because we love that particular job.  After a while though, the job becomes more and more of a chore than a joy and that’s when you have to start taking a good look at the situation… and at yourself.

Does your job/career really fit you? Are you happy where you are at? Do you wake up in the morning and think how joyous it is to have this job?  Really?  Are you being honest with yourself or are you just hanging on because you feel there is nothing else? Are you afraid of what would happen if you left?

There are many reasons that a person hangs on to a job or a business even though they know deep down that it isn’t the right fit.  This article is not about the reasons.  Whatever the reason, eventually those that you work for, or that work for you, will start to feel it too and with that feeling comes a loss of confidence in your abilities and a loss of interest in what you can bring to the table.

If the business is yours, make a list of your passions, skills and strengths and compare them to what you need in order to run a successful business in your industry.  Do they seem compatible?  If not, and you absolutely want to stay in the industry you are in, can you do additional training to get to the point where you need to be?  Are you willing to do whatever it takes?  If training sounds like a complete drag or you are doing it begrudgingly and you cannot think of other ways to make it work, then maybe you are in the wrong business. If going the extra mile to be successful doesn’t fit in your schedule or doesn’t take priority, then maybe you are in the wrong business. Look around and see what you really want to do then and change direction.  There is no shame in change, only in not trying.

If you work for someone else, then the same thing applies… with one major difference.  Working for someone else means that if they feel you are nor a good fit, they may eventually terminate the working relationship despite your best efforts.  If your goals don’t match or go in line with the company objectives, or your colleagues’ goals, the fit may be wrong.  If you are the type to believe that they owe you and should keep you on even though you aren’t up to par for the position, you are grossly mistaken.  They are in business to make money, not to help you. You are not their responsibility. If they haven’t let you go yet, and you want to avoid that from happening, then you need to make the decision for yourself; Am I going to move on or am I going to be the best damn ________ (fill in the blank) that this company has ever had?  The choice is yours, until it no longer is.

If you have a pretty good idea that the fit isn’t right, it makes no sense to drag it on.  Don’t linger around because there is nothing else for you… there is always something else but you should not stick your insecurities on your company. Unfortunately, as is often the case, we tend to hang on to what we think we know because to us it’s better than facing the unknown.  You cannot let your fears take over. It affects those you work with and it’s not fair to your colleagues.  Also it’s not doing you any justice.

There are solutions though.  You could look into and propose another position if you really want to stay with your current employer or, if the company is yours, hire someone else to do your current job while you focus on another area within your company. In other words, perhaps you don’t like making widgets but you’d really love to sell them.  Ask if that is an option.  Other ideas are to go back to school to learn something you love, start a new business in an area that truly suits you, or work for a company that you honestly share a passion and goals with. Start working on making your dreams come true.

First and foremost, do a little “soul-searching” and just be honest with yourself.

 

 

 

Exciting News for Xero!

I am personally very glad to see that Xero is doing so well.  While there are a few minor things that still need to be modified for the U.S. market, or for those that are so QuickBooks oriented that they can’t see the good in Xero, the truth is that this company has been nothing less than amazing in its approach, hard work, diligence and fabulous customer service!

“Xero announced today that the rumors are true: It’s planning on filing for a U.S. initial public offering in 2015.

The announcement is a major bid for the U.S. market and a dig at Intuit, a leader in business software who holds sway in this part of the world.”

Read More

Funny… but not!

I rarely post another person’s article, or link to it, but let’s face it, Kelly Phillips Erb, Contributor to Forbes, wrote this too well and it’s funny… but not!

“Crime doesn’t pay. Despite using money from crime to temporarily fund a lavish lifestyle, Rashia Wilson of Tampa, Florida, learned her lesson the hard way this week. While she was briefly able to cash in on her crimes before landing a record prison sentence, the details of her spree read like a “What Not To Do” map when stealing from…”

Read more: How To Stay Out Of Jail: Lessons Learned From The ‘Queen Of IRS Tax Fraud’

Do I still owe franchise tax fees if…

“I’ve sold my business and I no longer have my corporation/LLC?”  The real question is did you sell your corporation or just its assets?  If you sold the assets and never closed out the corporation/LLC with the Secretary of State, the corporation/LLC is still responsible for paying the annual franchise tax fee to the Franchise Tax Board every year.  This can come as a nasty surprise to anyone whom receives a letter sometimes years later saying that they owe for all the preceding years.  If you sold the corporation, make sure that the Secretary of State knows that you are no longer in business and/or the responsible party and file a final tax return with the Franchise Tax Board during the appropriate tax season.  Either way, the broker or escrow office should inform you of what is required at the time of the sale.  If they don’t, you may want to ask them.

“I’ve kept the corporation/LLC name so that I can use it in the future again but I haven’t done any business in years?” I’ve heard this a few times and the same rule applies:  If you have left it open with the Secretary of State, you are still liable for the annual franchise tax fee.  It comes as no surprise that many shareholders/members are shocked to find out that they have this responsibility even if they don’t do anything with the business.  It is actually cheaper to dissolve the business at the time and later re-open it and/or rename it (if needed) than it is to pay a minimum of $800 a year just to keep that name.

So who actually owes the fees?  In reality, the corporation/LLC owes them.  As they are considered separate entities, you should not be the one to personally pay these fees. However, LLC’s may also be regarded as ‘disregarded entities’ so make sure you know which you have as the rules may be different and you may have to pay the fees in that case.

You should always discuss these types of scenarios with your tax professional.  Having the right information can save you thousands of dollars in the long run.

Eight options when you owe taxes.

You owe the IRS money.  If it’s a small enough amount, then you just pay it.  What are your options when it’s a large amount?

The IRS will work with you and you have eight options available to you.

Change your payroll check withholding.  While this may not help you this year, it would help you from potentially owing taxes in future years.  File a revised W-4 with your employer and have them withhold more in taxes by either lowering your number of dependents or having them withhold an additional dollar amount.

The IRS takes debit/credit card payments.  There may be an additional fee for the transaction through a third party but it may be a cheaper fee than the one that you pay to set up a payment plan with the IRS.

Payment plans are another way to go.  Otherwise known as an installment agreement.  You can set up an agreement with the IRS to pay monthly.  You can also set up a direct debit so that the payment comes out of your account on the same date every month and you’ll never miss a payment that way.  The fees for this type of plan is $105.  An additional fee of $52 is for the direct debit agreement.  If your income is below a certain level though, they will only charge $43.

Maybe you are getting a loan or think you can come up with the money soon?  Then ask for a short term agreement.  This means that you can pay the full amount in 120 days or less.

There’s the tax bill payments option too.  Here you receive a bill from the IRS.  Pay it as soon as possible as interest and penalties accrue every month.  If you can’t pay it all, a loan may be the best option as their interest may be less than the interest and penalties that you get from the IRS.

Have you heard about electronic funds transfer?  This is a great way to pay your tax bill by phone or you can set up an account through the EFTPS website.

The IRS has a program called Fresh Start.  If you are really struggling to pay your taxes, you should look into this program. Their objective is to make it easier for you to pay back taxes and avoid tax liens.

Last, but not least, is an offer in compromise.  This program allows you to pay less than the full amount you owe. If the IRS agrees to your offer, then be prepared to pay the new and agreed upon amount in full as payment plans are not an option.  This one is the most time consuming process.  Even if everything is filled out perfectly, it can still take the IRS quite a long time to respond to it.  While you can do this yourself, you may be better off paying your accountant to do this for you.  He will know what documentation you will need to support your application for the offer.

Back to school!

I want to thank you all for the ongoing support during the last couple of years while I studied to be an Enrolled Agent.  It was a long road but it was worth it!

As you know, summer is almost over and you have a child going away to college soon.

Here are a few things about how your college student will affect your taxes.

As long as you are still supporting them, and they are attending school full time, and they meet the age guidelines, you can still claim them on your taxes.

There are also a few credits available to you now.

The American Opportunity Tax Credit can be up to $2500 per eligible student!  This credit is available for the first four years of post-secondary education.   60% of the credit lowers your tax bill while the other 40% is refundable, meaning that you could get up to $1000 back as a refund!  Qualified expenses for this credit include tuition and fees, course related books, supplies and equipment. Recently, the law extended this credit through December 2017!

The Lifetime Learning Credit has no limit on the number of years it can be used for an eligible student.  You may be able to claim up to $2000 on your federal tax return for qualified expenses.

You cannot claim both credits for the same student but you can use one credit per each student if there is more than one eligible college student in your household.

If you have student loans in your name, then you may be able to deduct student loan interest from your taxes.  The deduction can lower your taxable income up to $2500.

Education benefits are subject to income limitations and may even be completely phased out depending on your income.

If you have any questions, call me directly at 881-235-5406.

 

 

It’s your financial future

“Times like we are facing now, with complete financial uncertainty are perfect times to start on the road to getting ahead financially.” Mark Cuban, Blog Maverick

I love Mark Cuban.  There!  I said it.  Not in that gushy-mushy, lovey-dovey kind of way but as a fellow entrepreneur with that “balls to the wall” attitude.   I love his thought process, his ambition, his drive and the way he connects to the world around him.  This is a man, just like many, that came from humble beginnings.  He’s been there.  He ate the Mac & Cheese dinners to save money, he scrounged, he saved, made good decisions and he made bad decisions… but he always learned, he never gave up and he always believed that he would do well.  End result: he’s in a good place now financially.

Are you one of the many that got the dreaded pink slip?  Have you been able to find a job yet?  Rather than feeling sorry, inadequate or getting depressed, there are other ways to look at this.  You could take the opportunity to start your own business, for example. Become the master of your own destiny and make financial decisions for yourself!

There are support systems out there in place for you to help direct you and get you started.   Surround yourself with people that can guide you and that have already been down this path and are now in a much better place financially than when they worked for someone else.  It is up to you to make the changes in your life that, in the end, will be financially rewarding to you.

Start by looking at what you can do.  Is there a market for what you do?  Is there something you specialize in?  Do you see a lack in your industry and is it something that you can fill?  Do you love what you do?  Can you partner up with someone else who has the skills you lack (and vice versa) to make this work?  Start today.  Every day that you wait is a day further from your financial goals.

I won’t lie to you.  The honest truth is that you will be faced with some hard times.  There are bumps in the road.  Believing in yourself, being motivated, setting things up right, knowing that you are working towards a better future for yourself and your family, and getting the right type of advisors (whether it’s your accountant, a successful business person you know or reading success stories and business related books) will help you to meet your goals faster. The choice is to change your financial future as of today.  It all starts with you.

I’m sure that Mr. Cuban meant so much more in his statement than what I touching upon and some of my readers will see other meanings in his statement as well.  That’s okay because the bottom line remains the same:

Put your future in your own hands and not in the hands of others.