Now’s a great time to purge old tax records

Whether you filed your 2016 tax return by the April 18 deadline or you filed for an extension, you may be overwhelmed by the amount of documentation involved. While you need to hold on to all of your 2016 tax records for now, it’s a great time to take a look at your records for previous tax years to see what you can purge.

Consider the statute of limitations

At minimum, keep tax records for as long as the IRS has the ability to audit your return or assess additional taxes, which generally is three years after you file your return. This means you likely can shred and toss — or electronically purge — most records related to tax returns for 2013 and earlier years (2012 and earlier if you filed for an extension for 2013).

In some cases, the statute of limitations extends beyond three years. If you understate your adjusted gross income by more than 25%, for example, the limitations period jumps to six years. And there is no statute of limitations if you fail to file a tax return or file a fraudulent one.

Keep some documents longer

You’ll need to hang on to certain records beyond the statute of limitations:

Tax returns. Keep them forever, so you can prove to the IRS that you actually filed.

W-2 forms. Consider holding them until you begin receiving Social Security benefits. Why? In case a question arises regarding your work record or earnings for a particular year.

Records related to real estate or investments. Keep these as long as you own the asset, plus three years after you sell it and report the sale on your tax return (or six years if you’re concerned about the six-year statute of limitations).

This is only a sampling of retention guidelines for tax-related documents. If you have questions about other documents, please contact us.

May 15, 2017

Enhance benefits’ perceived value with strong communication

Providing a strong package of benefits is a competitive imperative in today’s business world. Like many employers, you’ve probably worked hard to put together a solid menu of offerings to your staff. Unfortunately, many employees don’t perceive the full value of the benefits they receive.

Why is this important? An underwhelming perception of value could cause good employees to move on to “greener” pastures. It could also inhibit better job candidates from seeking employment at your company. Perhaps worst of all, if employees don’t fully value their benefits, they might not fully use them — which means you’re wasting dollars and effort on procuring and maintaining a strong package.

Targeting life stage

Among the most successful communication strategies for promoting benefits’ value is often the least commonly used. That is, target the life stage of your employees.

For example, an employee who’s just entering the workforce in his or her twenties will have a much different view of a 401(k) plan than someone nearing retirement. A younger employee will also likely view health care benefits differently. Employers who tailor their communications to the recipient’s generation can improve their success rate at getting workers to understand their benefits.

Covering all bases

There are many other strategies to consider as well. For starters, create a year-round benefits communication program that features clear, concise language and graphics. Many employers discuss benefits with their workforces only during open enrollment periods.

Also, gather feedback to determine employees’ informational needs. You may learn that you have to start communicating in multiple languages, for instance. You might also be able to identify staff members who are particularly knowledgeable about benefits. These employees could serve as word-of-mouth champions of your package who can effectively explain things to others.

Identifying sound strategies

Given the cost and effort you put into choosing, developing and offering benefits to your employees, the payoff could be much better. We can help you ensure you’re getting the most bang for your benefits buck.

May 8, 2017

Turning next year’s tax refund into cash in your pocket now

Each year, millions of taxpayers claim an income tax refund. To be sure, receiving a payment from the IRS for a few thousand dollars can be a pleasant influx of cash. But it means you were essentially giving the government an interest-free loan for close to a year, which isn’t the best use of your money.

Fortunately, there is a way to begin collecting your 2017 refund now: You can review the amounts you’re having withheld and/or what estimated tax payments you’re making, and adjust them to keep more money in your pocket during the year.

Reasons to modify amounts

It’s particularly important to check your withholding and/or estimated tax payments if:

You received an especially large 2016 refund,

You’ve gotten married or divorced or added a dependent,

You’ve purchased a home,

You’ve started or lost a job, or

Your investment income has changed significantly.

Even if you haven’t encountered any major life changes during the past year, changes in the tax law may affect withholding levels, making it worthwhile to double-check your withholding or estimated tax payments.

Making a change

You can modify your withholding at any time during the year, or even several times within a year. To do so, you simply submit a new Form W-4 to your employer. Changes typically will go into effect several weeks after the new Form W-4 is submitted. For estimated tax payments, you can make adjustments each time quarterly payments are due.

While reducing withholdings or estimated tax payments will, indeed, put more money in your pocket now, you also need to be careful that you don’t reduce them too much. If you don’t pay enough tax during the year, you could end up owing interest and penalties when you file your return, even if you pay your outstanding tax liability by the April 2018 deadline.

If you’d like help determining what your withholding or estimated tax payments should be for the rest of the year, please contact us.

February 21, 2017

New HRA offers small employers an attractive, tax-advantaged health care option

In December, Congress passed the 21st Century Cures Act. The long and complex bill covers a broad range of health care topics, but of particular interest to some businesses should be the Health Reimbursement Arrangement (HRA) provision. Specifically, qualified small employers can now use HRAs to reimburse employees who purchase individual insurance coverage, rather than providing employees with costly group health plans.

The need for HRA relief

Employers can use HRAs to reimburse their workers’ medical expenses, including health insurance premiums, up to a certain amount each year. The reimbursements are excludable from employees’ taxable income, and untapped amounts can be rolled over to future years. HRAs generally have been considered to be group health plans for tax purposes.

But the Affordable Care Act (ACA) prohibits group health plans from imposing annual or lifetime benefits limits and requires such plans to provide certain preventive services without any cost-sharing by employees. And according to previous IRS guidance, “standalone HRAs” — those not tied to an existing group health plan — didn’t comply with these rules, even if the HRAs were used to purchase health insurance coverage that did comply. Businesses that provided the HRAs were subject to fines of $100 per day for each affected employee.

The IRS position was troublesome for smaller businesses that struggled to pay for traditional group health plans or to administer their own self-insurance plans. The changes in the Cures Act give these employers a third option for providing one of the benefits most valued by today’s employees.

The QSEHRA

Under the Cures Act, certain small employers can maintain general purpose, standalone HRAs that aren’t “group health plans” for most purposes under the Internal Revenue Code, Employee Retirement Income Security Act and Public Health Service Act.

More specifically, the legislation allows employers that aren’t “applicable large employers” under the ACA to provide a Qualified Small Employer HRA (QSEHRA) if they don’t offer a group health plan to any of their employees. Annual benefits under a QSEHRA:

• Can’t exceed an indexed maximum of $4,950 per year ($10,000 if family members are covered),
• Must be employer-funded (no salary reductions), and
• Can be used for only IRC Section 213(d) medical care.

QSEHRA benefits must be offered on the same terms to all “eligible employees” (certain individuals can be disregarded) and may be excluded from income only if the recipient has minimum essential coverage. There is a notice requirement and employees’ permitted benefits must be reported on Form W-2.

If you’re interested in exploring the QSEHRA option for your business, contact us for further details.

August 21, 2013

Newspaper Advertising: Will We Ever See the End of Newsprint?

Recently, the Washington Post announced its impending sale to Amazon founder, Jeff Bezos, for $250-million – in cash.

This is a good thing—isn’t it?

It means that a corporate giant like Amazon sees the value in the newspaper industry. It means that the Washington Post, at least, has a future in the electronic marketplace. It means that Amazon will more than likely be making new strides into the “art” of newspaper advertising; but does it mean that the actual physical paper will continue?

So many human habits occur around the daily newspaper. From reading the funnies on Sundays to enjoying the latest news with a cup of coffee in the morning, reading the newspaper is a time-honored tradition. But is it one that will stay?

More and more newspapers are switching from copy that blackens the fingertips to being accessible at your fingertips, as there are mobile apps for Android and Apple devices, plus of course the Kindle and Kobo. But as new strides are made in technology, does this mean the end of newsprint; or just a new revival?

Take newspaper advertising for example. It is obvious that people are still reading the newspaper, whether it is on a tablet, smart phone or at the kitchen table with their cup of joe. Therefore, advertising in the newspaper is still an excellent way to spend money—especially when you’re smart about it.

QR codes – codes that when scanned with a smart phone or device, bring up a dedicated mobile website – are more and more commonplace. Other apps like Layar, that allow for interactive content to show up over top of the text, are also available. Simply put, newspapers are here to stay; but not necessarily in the form we’re used to.

Advertising is the key to generating a revenue stream, which in turn allows you to post a profit to your bottom line. Ideally you should create an advertising process that is usable on all platforms; from newsprint to TV, from social media to your website. The point is to cross-promote; mention your new website during your radio commercial, make sure to mention “follow us on Facebook” in your newspaper ad. The times of getting away with one single advertising media are definitely gone; most TV commercials now are ignored, or are never seen because of the fast forward button. Radio commercials aren’t the answer either, as many people listen to commercial-free broadcasting or pay-per-month subscriptions.

Newspapers can be an extremely important part of your advertising strategy, but you need to encompass all of the potential revenue markets out there rather than one. Invest in a QR code, or a new technology that allows your customers to quickly get to your website. And while you’re at it—ensure your website is easy to navigate, with good quality content that speaks to readers. Try new things; if you aren’t on social media, definitely start at least a Facebook page.

So yes, newspapers and newsprint is here to stay … but the black fingers, perhaps not.

July 24, 2013

Are bookkeepers simply bean counters?

Bookkeepers are overlooked and underestimated because many people think that “bookkeeping” is simply entering numbers into accounting software, or in other words—a higher level data entry clerk.

This is entirely untrue.

Bookkeeping services, such as those that Forbush & Associates provides, are much more than that – and is much more valuable. Bookkeeping includes the following services, which we provide and have included a bit of information about.

Real-time accounting

When a business uses quarterly or monthly financial reports to make decisions, they are using data that are weeks, if not months, old. Wouldn’t it be nice to use data from last week, or even yesterday, to base your decisions on? Real-time accounting provides you with the most updated and relevant information.

After-the-fact bookkeeping

Do you need a reliable set of reports that is up to date, easy to read and understand? After-the-fact bookkeeping is what you need. We will consult with you as to exactly what information you need on what scheduled basis, and will contact your team on a regular basis to access all pertinent types of information (such as credit card invoices and deposits).

Payroll services

One of the most tedious tasks of running a business is running payroll. From a small business of only four employees to one of four thousand, the same type of information is needed and deductions handled; time off, taxes included, bonuses, the list goes on. We can handle your payroll, ensuring you have more time to dedicate to the running of your business.

Bank account reconciliation

A reconciliation is a comparison of two different records; with bank account reconciliation, we compare the bank’s record of events with that of your own internal records. This allows us to catch any overcharges, bank fees and other errors, and is an extremely effective way of discovering theft or fraud.

Credit card reconciliation

Credit card reconciliation is the same sort of idea as bank account reconciliation, but in this case we match your credit card invoices against the records of the credit card company. This can weed out mistaken invoices, missed payments or other mistakes.

Cost reporting

Cost reporting is one of the main reports that you need to be able to make important financial decisions for your company. Essentially, cost reporting sets out all the costs and expenses related to one job, project or class; this allows you to decide which is the better course of action for many situations.

Financial statement preparation

Again, one of the more arduous jobs that relates to owning a business is financial statements. Financial statements include the balance sheet and statement of income, amongst others. We are able to produce quarterly and annual financial statements for all sizes of companies.

So there you have it. Bookkeeping and the services related to bookkeeping are extremely handy for any type of business, and some of them are essential. Give Forbush & Associates a call today for help with your bookkeeping needs!

June 21, 2013

What the Affordable Care Act Means for Your Small Business

Finding accurate information on the Patient Protection and Affordable Care Act of 2010 (ACA) can be cumbersome, especially when you’re already short on time. At Forbush and Associates, we are committed to making sure our clients are up-to-date on new laws that affect their business.

With 2013 half done, we take a look at how the law has and will affect our self-employed and small business clients.

What 2013 Brought

Medicare Assessment on Net Investment Income

Self-employed individuals and small businesses may have noticed a hit on their bank accounts when the new Medicare assessment on net investment income began this year. In January, a 3.8% tax was placed on all net investment income such as taxable capital gains, rents, dividends, and royalties.

For singles, the interest for those with a Modified Adjusted Gross Income over $200,000 will be taxed. For married joint filers, those with a MAGI over $250,000 will notice the additional tax. Income not affected by the new tax: wages, unemployment wages, Social Security benefits, operating income from a non-passive business, self-employment income, alimony, and-tax exempt income.

Open Enrollment for Health Insurance Marketplace

In October 2013, individuals and small businesses will be able to participate in the open enrollment in the Health Insurance Marketplace. The Marketplace is designed to ease the burden of finding insurance plans that are within your budget. While more information will be released in October, healthcare.gov provides a good checklist to prepare for the coming changes:

Understand how insurance works.
Learn about different types of insurance.
Set your budget.
Determine when you will start your new coverage.
Get organized.
Develop a list of questions to ask before it is time to choose your health care plan.
Seek help from insurance brokers with whom you already have a relationship.

Self-employed individuals will be able to join open enrollment for the Health Insurance Marketplace. You will be to choose from four different plans that differ by the percentage of costs the health plan covers. Some may be able to qualify for tax credits and subsidies based on a sliding scale.

Let’s talk about 2014.

Next year is perhaps the biggest year for the Affordable Care Act for small businesses. From 2010-2013, the maximum tax credit was 35% for small businesses and 25% for tax-exempt organizations. On January 1^st, 2014, the Small Business Health Care Credit will become effective, meaning an increase to 50% and 35%.

To be eligible, your company must cover at least 50% of single health care coverage. Your company must have fewer than 25 full time employees who earn less than $50,000 per year. This is where it gets a little tricky.

Let’s say you have two part-time employees. According to the ACA, they count as one full time employee. So if you have 20 part time employees, you will count 10 full time employees.

To determine wages, divide the total you pay in wages by the number of full time employees. Your tax credit may change depending on your final number. For more guidance, the IRS provides a step-by-step guide.

Transitional Reinsurance Program Fees

Designed to help stabilize premiums for coverage, this three-year program will run from 2014 through 2016. It reimburses insurers in the individual insurance Marketplaces for high claim costs. This reimbursement will be paid by self-insured employers whose plans provide major medical coverage, including retiree programs.

In 2014, HHS estimates that the fees will be $5.25 a month (or $63 for the year) for each individual covered under a health care plan, with the required fee for the following two years to be somewhat lower.

Reporting

We saw that grimace. Unfortunately with new rules comes new paperwork. Employers with self-insured plans must submit reports to the IRS detailing information on each covered individual starting in 2014. These reports must be filed by 2015 and the IRS will be providing more information in the coming months.

While the list of changes the Affordable Care Act grows, we’ve identified several of the changes that may take a little more time and money depending on your situation. As always, feel free to contact us with questions about the law or if you need advice on the best steps to take for you and/or your small business.

May 19, 2013

Would you like to pay less Taxes Next Year?

Just when you thought you could tuck away the thought of taxes for while … here we are talking about it again. Relax. It’s all good and simple information that will make your tax season that much easier the next time around.

So how do you that? Here are a few ideas from Forbush & Associates that will lower the stress and increase your success for holding on to more cash this year than ever before.

Celebrate the end of tax season.

You made it. Your taxes are done, the IRS is paid, and you can stash your shoe box full of receipts in your favorite spot for another year. Nuff said.

Start over. Really.

There’s no better time than now to take a good look at what your final net income was this past year and start to plan on how you can keep more money in your piggy bank next year. Think of it as New Year’s Day when you and your friends toss out new resolutions to make your life ahead a little better. Use this time to set a new budget for yourself, household, or business. There are lots of simple steps to make this process actually enjoyable. For a good guide, you might want to invest in the book “All Your Worth: The Ultimate Lifetime Money Plan.

Think 50/30/20

We like the idea that is outlined in that publication so much so we’ll share our own insight on how to make saving money a simple process this year, and in years to come.

The 50% Rule ~ Your total expenses for the year on household goods, groceries, healthcare and personal care should not exceed 50% of your total gross income. Take a look at your budget from last year and total up all of those expenses – and highlight them if you need to. Then, review where you think you can cut while you save some income for the more critical life-supporting elements (re: health care, etc.)

The 30% Rule ~ Here’s where it gets real personal. I call this ‘needs v/s the wants”. Do you really need flowers or a few nice bottles of wine every week? What about the cut of steaks: do you really need Filet or can you enjoy a nice BBQ of New York’s instead? The fact is, once you review your standard purchases, we’ll bet you can find some things you really don’t HAVE to have every week. Try to trim these costs to just 30% of your income.

The 20% Rule ~ Ideally, you should designate 20% of your income to cover debt and increase your savings. As noted in the book, a mortgage payment or minimum payment on credit card debt is actually a need (which counts toward your 50 percent), but anything beyond that is an additional debt repayment, which qualifies towards this 20 percent. You can learn more about that here.

Don’t wait. Plan now.

We realize that you are probably done with analyzing your finances for a while. So take a month off – yet no more. The longer you wait to evaluate your income v/s expense, the shorter the time you have to truly decide what you ‘need’, ‘want’, or ‘have to have’ to survive 2013 while you enjoy life along the way.

Need help?

At Forbush & Associates, we think like this all the time. In fact, we actually enjoy reviewing spreadsheet after spreadsheet. Honestly, it’s an art to us. If you can’t even fathom the thought of reviewing your expenses again, just give us a call. We’d be happy to use our creative juices and professional insight to help you save money next year, and in years to come.

Call Forbush Associates today at 775-337-6001.

March 30, 2013

Who’s got your back?

Why small businesses should secure consultants in today’s economic times.

I don’t know if you have ever seen the movie “Blindside” yet there’s a great underlying theme about how the most successful teams take care of its players. In today’s small business world in particular, nothing could be more important. Long gone are the days of full-time Directors of various departments. Today we need to seek out the best in the business and partner with those who do their job best.

Who Should You Have on Your Team?

Ideally, a well-rounded small business should have a hit list like this one to be the caregivers of its operation. Sure, it’s important to have the contacts yet to be most successful, it’s critical for the owner of the business to develop and maintain close working relationships. You never know when you may need to reach out and touch their talent; often it is when you least expect your need for advice. Some team members are obvious, others are not: all are vital in today’s complex business world.

employees

a banker
an accountant/tax specialist
a lawyer
a sales and marketing professional
an IT specialist

The Employee

You’ve certainly heard the saying: “The customer comes first”. I’m OK with that infamous business mantra yet fully believe it’s the EMPLOYEES that must come first. They are the face of your company. This relationship could be the most important of all of the relationships for the owner of any business to cultivate. The time and effort that you invest in your employees can be the best return on investment that a small business can make.

The Banker

Do you really know your banker? Would he or she recognize you from a distance? If not, it’s time to repair that relationship gap and get to know the person who can make or break your business in the best or worst of times. Sure, the day to day banking support is a given, but what about when you need some serious cash for a capital investment, make a significant commercial real estate purchase, or need to get your credit in line? Make your banker your best business friend.

Accountant or Tax Specialist

If you have a knack of balancing your own books, that’s a bonus when running a small business. Yet what time do you really have to allocate to this critical component of your business operation? Having an accountant and/or tax specialist in your back pocket is one of the best investments you can make. It also helps your credibility with your bank and other financial partners. When you have an accountant that you can trust to handle the intricacies of your day to day operations, you’ll have more time to focus on your future. And that alone is worth the partnership with a financial specialist.

Lawyer

I know lawyers in general don’t have the best rep, yet they should. They have brought some of the best advice to our business and can do the same for you. Be it a liability attorney, business lawyer, or legal firm, find one that fits your personality and business style and keep their number handy. With all of the challenges that come with owning your own business, it just makes good sense to have a friend who can offer some sound legal advice when you need it most.
A Sales and Marketing Professional

Many of the world’s largest companies continue to trim from the top and with that, many of the finest sales and marketing professionals in the world have opened their own consulting firms. And that’s a great thing for the small business world. Today you can contract with someone who used to hold a Chief Marketing Officer position, spend a few hours a month to tap their brain and voila ~ you receive their professional opinion at a fraction of the cost that you would have paid if they were a full time employee. Run, don’t walk, to partner with a marketing consultant today.

An IT Specialist

With the ever-changing world of information technology (IT), you’d have to be extremely savvy in the art of IT to handle your computer needs in-house. Similar to the situation just noted above, there are endless professionals in the field who can make your life a lot easier. From the basics of keeping your computer alive and on-line, to elements that are just as crucial to keep your business competitive, your operating costs in line, and productivity in full motion, IT specialists can watch your internal operations so you can continue to concentrate on your company’s external products and services.

So Who’s Got Your Back?

As a small business owner, it seems like the list of “must haves” to succeed are never-ending.

Don’t let this short list stop your progress. In fact, when you have business specialists by your side to do their best on your behalf, you will have more time to do what you do best. And isn’t that why you got into your business for in the first place?

We do.

When you’re ready for some more advice about how small businesses are truly succeeding in today’s challenging business times, call us at Forbush and Associates.

March 1, 2013

Featured CPA – Brent Forbush

This article was posted in NevadaCPA.org

Brent Forbush, CPA

Forbush and Associates

Reno, NV

Why did you decide to go into the accounting profession?

I entered college as a music wonder kid, graduating from high school after achieving various accolades within the state in both vocal and trombone performance. As would be anticipated from a band nerd, everyone expected me to pursue music as my chosen career at college. After one semester at BYU and two years living in Venezuela, I returned to Reno to spend the three week Christmas break. During this time, I got my first taste of accounting working for the firm my father started in 2001. After another semester at school, I returned to Reno and completed a quasi-internship at my father’s firm that summer, where I did everything from payroll to clerk work. Most importantly, I sat in on meetings with clients and watched how decisions from tax planning to business strategy could make significant impact on the performance of their business. I fell in love with numbers, with the interaction with the clients, and how I could become a truly trusted advisor.

What do you like about your job?

I love getting to work with clients each and every day. From the firedrills to the mundane, each day provides a unique experience and another story to tell. I value the relationships with other business professionals, with my clients, and with my colleagues. I enjoy working with clients and knowing that they value my experience and lean on me in their critical decision making process.

What advice would you have for those considering entering the CPA profession?

I would say don’t be afraid to dive in with your feet first. A CPA provides an excellent credential and opportunity to understand the entire business, not just how one enters an invoice and writes a check. During my time at PwC, I watched the entire manufacturing process of a fortune 50 computer manufacturer, from arrival of inventory to the package being shipped out the door. CPAs must understand the operational, marketing and administrative side of the entire business. CPAs have a much more expanded breadth and depth of knowledge because of their inherent need to know the business. No other profession can provide you the access to the entire business like being a CPA can.

What do you think are the most important skills CPAs should have to be successful?

I would say the three most important skills that any CPA could have include: 1) Relationship building – build repore with colleagues, clients, suppliers, and prospective clients; 2) Communication – understanding the different forms of communication and different styles of communication can make you a more effective leader and team member; and 3) Stay current – as a CPA you will be the first one asked about economic changes, trends, forecasts, and law changes, so stay relevant and up-to-date. Five-to-10 minutes a day with the AICPA’s daily digests is a good first step.

How do you balance your personal and professional life? And does that change during the busy times of the year?

Is there a balance? With a small, growing firm, it is always difficult. But, one thing I do is to set aside time in the calendar. I physically set an appointment to do things like leave the office, or time with the family or each individual child, so that I know I cannot plan over it. When I get home, work is set aside and is not picked up again until the kids are in bed and the dishes are done. During busy season, we set a goal to have a lunch or dinner date as a family once a week where they come see me at the office. Recently, I also took to picking the kids up from school once every other week just so they know they are important for me to spend my lunch hour with them.

What is your most meaningful volunteer experience?

My most meaningful volunteer time has been the last four years teaching high school kids in an early morning bible study seminary class. I am out the door at 6:15 am and teach for one hour from 6:45 to 7:45 each morning. I cherish seeing the faces of 14 to 18 year old high school students who are sacrificing their time to learn religious topics. I truly believe I can make a difference in at least one of their lives.

What major obstacles do you think the CPA profession faces today and in the future?

I think it depends upon the area the CPA practices. I believe one of the strongest challenges, but one I believe younger CPAs will thrive with, is globalization. As more and more businesses expand their footprint whether through technology, infrastructure or operationally, CPAs must be proactive and knowledgeable in regards to both domestic and international matters.

Category: CPA