Month: January 2016

Quickbooks

Get Ready for 2016: QuickBooks Can Help

There’s something very satisfying about turning our calendars to January. It always feels like a fresh start. We resolve to develop new, better ways of using our work and leisure time. We reflect on what we accomplished in the last 12 months, and we look forward to achieving even more in the next 12.

But sometimes we have a nagging feeling that we forgot something. And it often has to do with our finances, both personal and professional.

You can take steps now to make the new year less worrisome. Doing some extra work in QuickBooks now will ensure that you start the new year ready to move ahead, rather than scrambling to see what you missed on come January.

Thinking Ahead

Where to start? Depending on how conscientiously you entered transactions and ran reports, you might need to set some extra time aside in the midst of your other year-end and holiday-related commitments.

For example, did you instruct QuickBooks to “close your books” at the end of the year? QuickBooks will automatically make year-end adjustments if you entered December 31 as a closing date inPreferences. However, it is not required, and there are both advantages and disadvantages to doing so. We can help you decide if this is the best decision for your company.


Figure 1: If you set a closing date of December 31 in QuickBooks’Preferences, you need to prepare your company file for this deadline in advance.

Prior to this, though, there’s another important task you should complete before the end of the year. It is common sense, but not everyone thinks of it during the December rush: Make sure you have entered all transactions and payments that should be included in your QuickBooks file for 2015.

If anyone else on your staff works in QuickBooks, make sure they know that you are trying to wrap up the year. If they are holding anything back because of questions and comments, now is the time to confer with you.

Taxes and Accounts

You may already be working with us on tax planning, but if you are not, then it is never too early to project your incoming and outgoing funds for the new year.


Figure 2: Use QuickBooks to make decisions about income and/or expenses to reduce your tax obligation next year.

Talk to us about your tax situation if you think this may be necessary. We may not be able to prepare your taxes just yet, but we can create financial reports and projections that help you prepare for filing.

Odds and Ends

How do you back up your QuickBooks company file? Is it on a local drive or in the cloud? How often do you do this? Archiving your data is critical. Think about what would happen if you lost your customer records or a month’s worth of transactions or multiple payments. This is an area where we can provide guidance. Is there a better, safer way to ensure data security? Are there special backup activities you should do at year’s end?

Some companies wait until the end of January to do a physical inventory count. Rather than being surprised, you may want to consider doing this now if it is feasible.

And when you think you have entered everything but payments or transactions that may come in at the end of the year, all accounts should be reconciled.


Figure 3: By late December or early January, you should do a final reconciliation of all accounts for the previous year.

QuickBooks makes it easy to do this regularly, but if you need assistance, we can help you ring in the New Year on a more confident note.

Tax

IRS Announces Standard Mileage Rates in 2016

Beginning on Jan. 1, 2015, the standard mileage rates for the use of a car, van, pickup or panel truck are:

  • 54 cents per mile for business miles driven, down from 57.5 cents for 2015
  • 19 cents per mile driven for medical or moving purposes, down from 23 cents for 2015
  • 14 cents per mile driven in service of charitable organizations

The business mileage rate decreased 3.5 cents per mile and the medical, and moving expense rates decrease 4 cents per mile from the 2015 rates. The charitable rate is based on statute.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile, including depreciation, insurance, repairs, tires, maintenance, gas and oil. The rate for medical and moving purposes is based on the variable costs, such as gas and oil. The charitable rate is set by law.

These optional standard mileage rates are used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Taxpayers always have the option of claiming deductions based on the actual costs of using a vehicle rather than the standard mileage rates.

A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously. Call if you need additional information about these and other special rules.

In addition, basis reduction amounts for those choosing the business standard mileage rate, as well as the maximum standard automobile cost that may be used in computing an allowance under a fixed and variable rate plan and the maximum standard automobile cost that may be used in computing the allowance under a fixed and variable rate (FAVR) Plan were also announced by the IRS.

If you have any questions about standard mileage rates or which driving activities you should keep track of as tax year 2015 begins, don not hesitate to call the office.

Tax

ALES: Information Reporting and Health Coverage

The Affordable Care Act requires applicable large employers (ALEs) to file information reporting returns with the IRS and employees. ALEs are generally those employers with 50 or more full-time employees, including full-time equivalent employees in the preceding calendar year.

The vast majority of employers are not ALEs and are not subject to this health care tax provision. However, those who are must use Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns, and Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, to report the information about offers of health coverage and enrollment in health coverage for their employees.

Here are eight things ALEs should know about the information returns they must file at the beginning of 2016.

1. Form 1095-C is used to report information about each employee who was a full-time employee of the ALE member for any month of the calendar year.

2. Form 1094-C must be used to report to the IRS summary information for each employer, and to transmit Forms 1095-C to the IRS.

3. ALEs file a separate Form 1095-C for each of its full-time employees, and a transmittal on Form 1094-C for all of the returns filed for a given calendar year.

4. Employers that offer employer-sponsored self-insured coverage use Form 1095-C to report information to the IRS and to employees about individuals who have minimum essential coverage under the employer plan.

5. The information reported on Form 1094-C, and Form 1095-C is used in determining whether an employer owes a payment under the employer shared responsibility provisions.

6. Form 1095-C is used by the IRS and the employee in determining the eligibility of the employee for the premium tax credit.

7. An ALE may satisfy this requirement by filing a substitute form, but the substitute form must include all of the information required on Form 1094-C and Form 1095-C and satisfy all form and content requirements as specified by the IRS.

8. Forms 1094-C and 1095-C, or a substitute form must be filed regardless of whether the ALE member offers coverage, or the employee enrolls in any coverage offered.

Questions?

If you have any questions regarding information reporting and health coverage, please call.

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