Extension of the due date for over the road Highway Tax

If you have a big rig or a bus and are required to file Form 2290 for highway taxes you got a reprieve.  Tax returns that would normally be due on August 31, 2011 will now be due November 30, 2011.  The current law is set to expire on September 30, 2011.  Although everyone expects that congress will renew the law there may be changes to the new law. 

In government speak changes to the law usually means an increase in the tax.  Those changes may be retroactive.  To prevent the need for amended filings the due date of the returns was extended. 

Do you have a backup plan in case of a disaster.

With all the news reports of floods, tornadoes and fires it brings to mind a friend who has a tax and bookkeeping business outside New Orleans.  After hurricane Katrina he asked what type of back up plan do you have for your business or your personal things.  The next day after the hurricane he went to check on his business.  The entire building was gone.  Nothing left but a concrete slab.  What kind of a back up plan do you have when the desks, computers, file cabinets and all the paper is gone.  Over the years I have had several clients that had fires that started next door but spread to their business.  Among the fire, smoke and water damages they were out of business for months.

Best approach is to make a back up of all your computer work and store it off site.  A bank safe deposit box would be ideal but it can also be at you accountants office.  If you do daily, weekly or monthly back up you can install the back up and only be missing a small amount of information.

Most businesses have computers setting on the floor under the desks.  Not a good place to try to protect against water damage. 

Another person commented the hardest thing was the loss of all the family pictures.  Items that can be scanned to a CD or a flash drive should be.  Everyone knows what needs to be done this is just a reminder that there is never a good time to do it.

IRS audits looking for unreported income

The primary focus on IRS audits is looking for unreported income. 

The cash disbursement method analyzes all the deposits to the accounts and compares the total of the deposits to the amount reported as gross income on the tax return.  The IRS will also analyze the changes to the taxpayers net worth.  The third area is the taxpayer's lifestyle.  The IRS will reconstruct the taxpayer's monthly payments and compare them to the claimed income. 

If you report income of $60,000 why did your saving account increase by $100,000?

If you report income of $30,000 per year how do you afford a house with $3,000 per month payments and a car with $1,000 a month payments?  How do you make up the short fall each month?

If you pay your bills in cash do you have corresponding cash withdrawals from your bank?  If not where did the cash come from?

If you have a small business that has losses year after year why are you still doing it?  Cut your losses and close the business. 

If they don't match the IRS assumes you are hiding income.

What are the odds of being audited?  Average wage earner about 1 in 100.  Have a Schedule C for a small business about 1 in 25.  Have a Form 2106 for unreimbursed business expenses about 1 in 25.  Have a Schedule E for rental properties about 1 in 25.

Have a S Corporation or Partnership about 1 in 250.  May want to consider converting your Schedule C business or Schedule E rental to a corporation or partnership.

Call us at 702-796-1040 for more information.

QuickBooks has a new item called Wasp Barcode

QuickBooks has a new item out that they call Wasp Barcode.  A handy product that has multiple uses.  You can use it for a time clock where all employees can clock in and out.  No they don't need a barcode tattooed on their foreheads they use a thumb print.  That way you don't have someone leaving early and having their friend clock out for them.  You use the barcode to track the time everyone spends on a project.  For example if I am working on a tax project for a client, I can track my time spent on the project, the bookkeeper's time and the payroll clerk's time.  They all scan the barcode when they start and stop their work time on each project and the computer will total the hours for each project.

Do you do point of sale transactions or need to track inventory?  If so this is a great system.  For example you assign a barcode to each inventory item.  Each item sold is scanned and you are able to keep a running total of how many are still in stock.  Ever been to a store and the person says yes the computer shows we have 2 of those items?  But no one can find them.  With Wasp Barcode you know how many are left in inventory and when to reorder.  Can't guarantee you can find the items but the system will help you keep a better control of the inventory.

If this sounds like something you might like or want more info on call Kathy and she will meet with you to go over it in more detail.