Month: March 2019

Accounting Quickbooks

Tracking Jobs in QuickBooks: Part 1

Job-costing is not just for contractors. While that’s probably the most common understanding of this concept in QuickBooks, you can also use the software’s jobs tools to track income and expenses for any related group of items and/or services.

Think of them as projects. If you’re an expert in business promotions, for example, you probably have multiple projects going on simultaneously that consist of materials you might need to order for your client (like special paper) and the actual work you do (design, content-creation, etc.). You could also have to track expenses like mileage, and you may price your services by the hour.

QuickBooks can handle all of this. If you’re conscientious about documenting all of the pieces that go into every job, you’ll be able to run reports that show you how much you spent and took in on each. This information can help you better price your services and manage your time to maximize profitability.

Many Elements

In part one of this of a two-column series, we’re going to explore the basic elements that go into job-tracking. Keep in mind that there are many different ways to work with jobs. How you choose to do it will depend on the structure of your business.

First, let’s look at a simple example. The first step involves setting up a job for an existing client. Even if you think you’re only going to be doing one project for them, you can still set it up as a job so you can assign all related income and expenses to it. This will make it much easier if you get additional work from the customer down the line – and if you have to bill the customer for something that’s not related to a specific project.

To create a job, open the Customers menu and select Customer Center. Make sure the Customers & Jobs tab is highlighted. Select the customer by clicking on it. Right-click the name and select Add Jobfrom the drop-down list. When the New Job window opens, click the Job Info tab.


Figure 1: You can track your Jobs by keeping their status current in the New Job window.

Fill in the Job Name field. In this example, we’ve selected a name that’s broad enough that we’ll eventually be able to break down into specific tasks. If your customer has an outstanding balance as of the current date, that amount will appear in the Opening Balance field.

Enter a Job Description. The Job Type field is optional, but creating these classifications can help with advanced reports that gauge profitability. Consult with us if you want to explore these.

Open the Job Status list and select the correct one, then choose a Start Date and Projected End Date. You’ll document the End Datewhen you’re finished. Click OK.

Creating Item Records

You may already know that if you buy and/or sell products and/or services, you have to set up individual records for each one so you can include them on sales and purchase forms. You’ll need these to record income and expenses related to your Promotion job. If you’re new to QuickBooks, here’s how it works.

Open the Lists menu and select Item List. In the window that opens, click the arrow next to Item in the lower left corner and select New. A window like this will open:


Figure 2: The New Item window. 

The Item Type list will drop down. Select Service. In the example above, you’re creating a record for a service you sell: Website Development. Enter that in the Item Name/Number field. Ignore the U/M Set field; this is not available in QuickBooks Pro or Premier.

Enter a Description and your hourly (or project) Rate. Choose the correct Tax Code status and select the Account. When you’re done, click OK.

Warning: You may not have an Account in your Chart of Accountsthat fits the specialized income and expenses you want to track. If you need assistance setting this up, don’t hesitate to call.

You’ll repeat this process for other types of promotional work you do (making flyers and brochures, designing and ordering branded products, general content creation, etc.).

Think it through first

Before you create your first job, spend time envisioning how you want it structured. Remember that every invoice or timed activity or other income or expense you enter will only be assigned to one Customer:Job, but you can include as many Items as you want. If you need help envisioning this, please call, and a QuickBooks professional will be happy to help you think this through and go through the setup with you

.

Next month: a look at how the records you’ve created can be used.

Tax

Safe Harbor for First Year Passenger Auto Depreciation

Under the Tax Cuts and Jobs Act (TCJA), there is an additional first-year depreciation deduction that applies to qualified property, including passenger automobiles, acquired and placed in service after September 27, 2017, and before January 1, 2027.

Generally, both the section 179 and the depreciation deductions for passenger automobiles are subject to dollar limitations for the year in which the taxpayer places the passenger automobile in service and, for each succeeding year. For a passenger automobile qualifying for the 100-percent additional first-year depreciation deduction, TCJA increased the first-year limitation amount by $8,000.

If the depreciable basis of a passenger automobile for which the 100-percent additional first-year depreciation deduction is allowed exceeds the first-year limitation, the excess amount is deductible in the first taxable year after the end of the recovery period.

While this may be somewhat confusing for taxpayers, guidance is now available for a safe harbor method of accounting for passenger automobiles. Here is how the safe harbor works:

The safe harbor allows a depreciation deduction for the excess amount during the recovery period. It is, however, subject to the depreciation limitations applicable to passenger automobiles.

To apply the safe-harbor method, the taxpayer must use the applicable depreciation table found in Appendix A of IRS Publication 946, How To Depreciate Property. Taxpayers should note that the safe harbor method does not apply to a passenger automobile placed in service by the taxpayer after tax year 2022, or to a passenger automobile for which the taxpayer elected out of the 100-percent additional first year depreciation deduction or elected under section 179 to expense all or a portion of the cost of the passenger automobile.

Taxpayers can use the safe harbor method of accounting by applying it to the depreciation deduction of a passenger automobile on their return for the first taxable year following the placed-in-service year.

For more information on the additional first-year depreciation deduction, don’t hesitate to contact the office.

Tax

Five Facts about the Additional Medicare Tax

Some taxpayers may be required to pay an Additional Medicare Tax if their income exceeds certain limits. Here are some things that you should know about this tax:

1. Tax Rate. The Additional Medicare Tax rate is 0.9 percent.

2. Income Subject to Tax. The tax applies to the amount of certain income that is more than a threshold amount. The types of income include your Medicare wages, self-employment income and railroad retirement (RRTA) compensation. See the instructions for Form 8959, Additional Medicare Tax, for more on these rules.

3. Threshold Amount. You base your threshold amount on your filing status. If you are married and file a joint return, you must combine your spouse’s wages, compensation or self-employment income with yours. Use the combined total to determine if your income exceeds your threshold. The threshold amounts are:

  • Married filing jointly: $250,000
  • Married filing separately: $125,000
  • Single: $200,000
  • Head of household: $200,000

3. Withholding/Estimated Tax. Employers must withhold this tax from your wages or compensation when they pay you more than $200,000 in a calendar year. If you are self-employed you should include this tax when you figure your estimated tax liability.

4. Underpayment of Estimated Tax. If you had too little tax withheld, or did not pay enough estimated tax, you may owe an estimated tax penalty. For more on this, please call.

5. Form 8959. If you owe this tax, file Form 8959, Additional Medicare Tax, with your tax return. You also report any Additional Medicare Tax withheld by your employer on Form 8959.

If you have any questions about the Additional Medicare Tax, help is just a phone call away.

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