Month: February 2020

Start 2020 Right: Get into the Report Habit

Whether or not you made New Year’s resolutions, for many business owners, the beginning of a new year means a fresh start – including incorporating new habits that help improve your company’s financial bottom line such as committing to using the reporting tools QuickBooks offers. After all, you can’t possibly know how your business is doing unless you take advantage of this critical feature. Think of it as the payoff for all the hard work you do keeping up with your daily accounting workflow. To help you get started, here’s what you need to do:

Visit QuickBooks’ Report Center

As you know. QuickBooks devotes an entire menu to reports, dividing them into types (Sales, Purchases, Inventory, etc.). When you hover your mouse over one of these categories after opening the Reports menu, you’ll see a list of all related reports.

Click on Report Center, though, and you’ll see a kind of home page for reports. They’re categorized by type, just like in the main Reports menu, but there’s much more you can do here.

Figure 1: Click on a report name in the Report Center and you’ll have numerous options.

When you click on the graphic representing a report, you’ll first be able to change the date range by clicking on the down arrow. Then you can Run the report, see a brief explanation by clicking Info, click on Fave to add it to your list of Favorites, or open Help. The tabs at the top of the screen allow you to toggle between these Standard views, reports you’ve Memorized, Favorites, Recent, and Contributed (report templates created by individuals outside of Intuit).

If you know exactly what reports you want to run it’s probably easier to just use the Reports menu, but the Report Center is a great place to learn about and organize your content.

Customize Your Reports

You’re probably used to changing the date range on your reports, but have you ever explored any of QuickBooks’ other customization tools? You can use them in any report. Click the Customize Report button in the upper left. Click on the Display tab, and you can change the report’s columns by checking or unchecking entries in the list. Filters are more complex, and you may need our help setting up very specific, multi-filter reports. They offer a way to pare down your report to contain just the data you want. You could, for example, prepare a report that only includes one or more Transaction Types or customers who live in a specified state.

Memorize Your Reports

Once you’ve changed columns and filters in a report you’ll run frequently, you can save those settings, so you don’t have to go through all of that again. Open any report and click the Memorize button in the upper toolbar. The window that opens will ask if you want to save that customized report to a Memorized Report Group, which you can do by clicking the box and opening the list of groups. Either way, you can find your report by opening the Reports menu and selecting Memorized Reports.

Figure 2: If you want to create a new Memorized Report Group, open the Reports menu and click Memorized Reports | Memorized Report List. Open the Memorized Report drop-down menu and select New Group.

Schedule Your Reports

The best way to get your report habit started is by creating a schedule of reports you need to see regularly. You can do this by setting up Reminders (Company | Reminders). Click the gear icon in the upper right corner to specify your Preferences and the + (plus) sign to add a reminder. QuickBooks 2017 and later versions offer a scheduling tool that allows you to share reports with others, but please don’t try this on your own. It’s a complicated procedure with many rules.

You’ve probably noticed that there is a report category called Accountant & Taxes. Some of these should be created monthly or quarterly, but you’ll need our help analyzing them as well.

Without knowing the current financial state of your company, it’s difficult to make realistic, effective plans for the future. If you’re ready to start the year off right, help is just a phone call away.

• By Leon Clinton
• February 28, 2020

Tips for Taxpayers Who Make Money From a Hobby

Many people enjoy hobbies that are also a source of income. From soap making to pottery and jewelry making to calligraphy, these activities can be sources of both fun and finances. Taxpayers who make money from a hobby must report that income on their tax return.

Generally, if someone has a business, they operate the business to make a profit. In contrast, people engage in a hobby for sport or recreation, and not to make a profit.

Taxpayers should consider the following nine factors when determining whether their activity is a business or a hobby and base their determination on all the facts and circumstances of their activity. No one factor alone is decisive, however, and it is important to consider all of these factors when deciding whether an activity is a business engaged in making a profit.

1. Whether you carry on the activity in a businesslike manner and maintain complete and accurate books and records.
2. Whether the time and effort you put into the activity indicate you intend to make it profitable.
3. Whether you depend on income from the activity for your livelihood.
4. Whether your losses are due to circumstances beyond your control (or are normal in the startup phase of your type of business).
5. Whether you change your methods of operation in an attempt to improve profitability.
6. Whether you or your advisors have the knowledge needed to carry on the activity as a successful business.
7. Whether you were successful in making a profit in similar activities in the past.
8. Whether the activity makes a profit in some years and how much profit it makes.
9. Whether you can expect to make a future profit from the appreciation of the assets used in the activity.

If a taxpayer receives income for an activity that they don’t carry out to make a profit, the expenses they pay for the activity are considered miscellaneous itemized deductions and cannot be deducted for tax years 2018 through 2025. The taxpayer, however, must still report income they receive on Schedule 1, Form 1040, line 21.

If you have any questions about whether your hobby is actually a business in the eyes of the IRS, don’t hesitate to call.

• By Leon Clinton
• February 26, 2020

Figuring out Your Correct Filing Status

Your filing status determines which tax forms you need to file, the amount of your standard deduction, eligibility for certain tax credits, and how much tax you owe. In some cases, it may even impact whether you need to file a federal income tax return.

Single, married, divorced? Kids or no kids? These are just a few of the questions that help you figure out your correct filing status when filing your income tax return. While the most common filing statuses are “Single,” “Married Filing Jointly,” and “Head of Household,” there are five different filing status options listed on a federal tax return. Here are the five:

1. Single. Single filing status generally applies if you are not married, divorced or legally separated according to state law.

2. Married Filing Jointly. A married couple may file a return together using the Married Filing Jointly status. If your spouse died during 2019, you usually may still file a joint return for that year.

3. Married Filing Separately. If a married couple decides to file their returns separately, each person’s filing status would generally be Married Filing Separately.

4. Head of Household. The Head of Household status generally applies if you are not married and have paid more than half the cost of maintaining a home for yourself and a qualifying person.

5. Qualifying Widow(er) with Dependent Child. This status may apply if your spouse died during 2017 or 2018 and you didn’t remarry before the end of 2019, you have a dependent child and you meet certain other conditions.

Sometimes more than one filing status applies, so it is important to work with a tax professional that can help you figure out which filing status is more beneficial, resulting in the lowest amount of tax owed. Something else to keep in mind is that your marital status on the last day of the year is your marital status for the entire year, so if your divorce is not final on December 31, you are still considered “married” for the 2019 tax year. If you have any questions about filing status, please call.

• By Leon Clinton
• February 23, 2020