QuickBooks Online versus QuickBooks Desktop Software

Ahhh, the thought of being able to access your QuickBooks data from anywhere in the world…multiple offices in different locations being able to access one central file…being able to review reports from the comfort of your hotel room…just think of the possibilities.

Now, think of the price of doing this. No, not the monetary price…in fact, the QuickBooks Online Edition only costs approximately $200 more for one year of service than the actual desktop software version (such as QuickBooks Pro or QuickBooks Premier). The price I’m speaking of is in terms of speed, and functionality:

1. The biggest downside for me and the average business owner is speed. The Online Edition adds a tremendous amount of time to your day-to-day operations…reports that generate in just a few seconds on the desktop edition now take 10-60 seconds depending on the size of your company file and the speed of your internet connection. Limitations on keyboard shortcuts add to the amount of time you will need to spend entering data.



2. While all users won’t experience a decline in functionality due to their limited use of the program, any business that uses QuickBooks as more than just a “checkbook” program will notice a dropoff in features offered by the Online Edition. One of the features that I find most frustrating is the fact that you can only have one report/screen displayed at a time. On the desktop software, you can have several windows opened at one time and flip back-and-forth between them as needed.

If remote access is your main reason for leaning towards QuickBooks Online, I would suggest that you combine the QuickBooks desktop software with some type of remote access program such as GoToMyPC, WebEx, Citrix, VPN, or some other similar type of remote access software. This way, you have the full functionality of the QuickBooks desktop software and you are still able to access it from remote locations.

Already have QB Online? Don’t worry. QuickBooks has developed a wonderful conversion process where they take your Online Edition company file and convert it to a working company file that can be used with your desktop software. It takes about a 24-48 hour timeframe to complete, during which time you cannot add new data to your file. However, it is well worth that minor inconvenience in order to avoid the ongoing inconveniences of the Online Edition!

----------

Effective Tax Planning for the MicroBusiness is in stores now.
Click on this link to receive 20% OFF plus FREE Shipping!

The Problem With LLCs

If it walks like an LLC and talks like an LLC, it probably stinks (like an LLC).

For the majority of small business owners, all that an LLC delivers is higher setup costs, higher annual fees due to New York State, higher audit risk, and higher taxes.

Yet, so many people are forming LLCs these days.

Why? I chalk this craze up to misinformation. The two biggest culprits of this misinformation include uninformed websites touting LLCs and attorneys/accountants steering entrepreneurs towards the LLC so that they can charge higher setup fees.

For most small business owners, the S-Corporation still reigns supreme...significantly lower setup costs, significantly lower audit risk, lower annual fees due to New York State, and potentially significantly lower taxes.

If you are at the stage of determining which type of business is best suited for you, feel free to contact me for a free analysis of exactly how much tax you can save and how much lower your audit risk will be by forming an S-Corporation instead of an LLC.

If you have already setup an LLC and are now kicking yourself for doing so, cheer up. There is a three-step procedure that we use in order to petition the IRS to tax your LLC as an S-Corporation. We have been successful with 95% of the petitions we have filed. Taking this step is much cheaper, easier, and cleaner than shutting down your current LLC and setting up a new S-Corporation.

----------

Effective Tax Planning for the MicroBusiness is in stores now.
Click on this link to receive 20% OFF plus FREE Shipping!

Incorporate For Free

Any of you who have attended one of my seminars or have read some of my articles know I believe in promoting the benefits of incorporating.

In addition to reducing your audit risk and minimizing your tax liability, incorporating also provides you with personal liability protection. It is hands-down one of the smartest moves any business owner, self-employed individual, independent contractor, or entrepreneur can make.

Rather than just talk about the benefits, I have decided to "put my money where my mouth is" and offer a unique situation for 25 lucky business owners to incorporate for free each month.

For more details, visit one of the following websites:

Corp-4-U, Inc.

Merl & Hanley, LLP

----------

Effective Tax Planning for the MicroBusiness is in stores now.
Click on this link to receive 20% OFF plus FREE Shipping!

IRS Tax Rebate Checks - Not WHEN, But IF

Unfortunately, the most frequently asked question surrounding the tax rebate checks is "when will I get my rebate check." However, for many, the question should be "am I getting a rebate check?"

Here are a few key bullet points to note regarding the tax rebate checks:

1) As the name implies, they are in fact rebate checks. They are not free money. You must owe tax to receive the rebate. The rebate amounts are not simply $600 or $1,200. They are "the amount of tax you owed up to a maximum of $600 or $1,200" (with a couple of other minor exceptions).

2) You must actually file a tax return in order to qualify. If you typically do not file due to low taxable income or no taxable income, this is the year you need to file a tax return. This holds true for all taxpayers, young and old...from high school and college students all the way up to retirees.

3) Phaseouts start at $75k for a single filer or $150k for a married couple filing a joint return. If you are a single taxpayer earning over $75k or a married couple earning over $150k, you will not receive the full refund. If your income level is high enough, you will not receive a refund at all.

4) Avoid filing extensions for your 2007 tax returns. If you do not file by the April 15th deadline, you will delay the processing of your rebate check since it cannot be calculated until you calculate the amount of tax that is due.

----------

Effective Tax Planning for the MicroBusiness is in stores now.
Click on this link to receive 20% OFF plus FREE Shipping!

Seven Essential Tax-Planning Tips for Individual Taxpayers

Estimate your alternative minimum tax (AMT) liability. It may be possible to avoid or reduce the AMT by postponing certain “tax preference” items to the following year. Alternatively, you might accelerate income into the current-year if your AMT rate is lower than your regular tax rate.

Contribute to your favorite charities. Note, however, that tougher substantiation rules apply to monetary gifts made to charity in the current year. In general, the IRS requires written confirmation of your gift.

Bunch medical expenses in the year you may qualify for a deduction. Your unreimbursed expenses can be deducted only to the extent the total exceeds 7.5 percent of your adjusted gross income (AGI).

Avoid estimated tax penalties. No penalty is imposed if your tax payments for the current year, including withholding, equal at least 90 percent of this year’s tax liability or 100 percent of last year’s liability (110 percent if your prior year AGI was $150,000 or over).

Consolidate personal debts into a home-equity debt. Unlike nondeductible personal loans, you can deduct the interest paid on the first $100,000 of home-equity debt, regardless of how you use the proceeds. Caveat: The debt is secured by your home, so use this technique with discretion.

Use capital gains and capital losses to offset each other. Depending on your situation, you may realize gains or losses at year-end. Any excess loss can offset up to $3,000 of ordinary income in the current year.

Be mindful of the twenty most commonly overlooked deductions. Forgetting a few smaller deductions may not seem like a big loss, but those omissions add up. Comb your records for deductible business expenses, such as: advertising costs, association dues, bad debts, charity contributions, coffee and food expenses, clothing required for the job, equipment, gifts to clients, home entertainment, insurance, interest on credit cards for business expenses, Internet fees, investment expenses, legal expenses, licensing fees, office supplies, repair costs, subscriptions, theft losses and travel expenses.

----------

Effective Tax Planning for the MicroBusiness is in stores now.
Click on this link to receive 20% OFF plus FREE Shipping!

Five Essential Tax-Planning Tips for Small Businesses

Keep detailed records of collection efforts to support deductions for bad debts that became worthless in 2007.

Reschedule business trips planned for early next year to December to increase travel deductions for 2007.

Increase your business driving or decrease personal driving—or both—to preserve top-dollar deductions for personally-owned vehicles.

If your company operates on the accrual basis, set bonus amounts before January 1, but pay them early next year. Generally, the bonuses aren’t taxable to employees until the year they are paid but can be deducted on your company’s current-year return so long as they’re paid by March 15 of the following year.

Nail down current deductions for repairs to business premises by scheduling them separate and apart from major renovations. As opposed to repairs, capital improvements aren’t deductible but are added to the “basis” of property.

----------

Effective Tax Planning for the MicroBusiness is in stores now.
Click on this link to receive 20% OFF plus FREE Shipping!

Top Three "Don'ts" For Small Business Owners

Disguise personal expenses as business expenses

Claiming 100% deduction for a vehicle that is used for both business and personal purposes

Claiming deductions for your spouse’s automobile, cell phone, gas, etc.

Claiming deductions for your children’s automobile, cell phone, gas, etc.

Pay workers “off the books”

Cannot deduct payments to workers if you do not issue corresponding W-2s or 1099s

Workers Compensation Insurance carriers are cracking down on ATM Withdrawals, Cash Withdrawals, and checks made payable to cash as the cash is typically used to pay workers “off the books”

Claim the Home Office Deduction if you own your home

While you may save a few hundred dollars each year you claim the deduction, doing so will not only expose your tax return to a high audit risk, but you may end up paying back thousands in additional taxes when you eventually sell your home

If you rent, the deduction is much more advisable…although you will still experience a high audit risk, you will not have any long-term negative tax consequences

----------

Effective Tax Planning for the MicroBusiness is in stores now.
Click on this link to receive 20% OFF plus FREE Shipping!

Top Three "Do's" For Small Business Owners

Retain copies of all receipts, especially those from any cash transactions

Your accountant or bookkeeper will have a good record of any purchase you make with a debit card, credit card, or check. However, the only way they will know about a cash purchase is if you provide them with a copy of the receipt.

Receipts justifying any ATM Withdrawals, Cash Withdrawals, and checks made payable to cash are now required by most Workers Compensation Insurance Audits. Any cash withdrawals that cannot be justified will be assumed to have been used to pay off-the-books workers and you will be charged for additional payroll.


Take advantage of Section 179 Bonus Depreciation

If you are planning to make any large purchases during the first quarter of the following year such as trucks, automobiles, or equipment, you may benefit from making that purchase before December 31 of the current year. Making the purchase in the current year may qualify you to expense the full purchase price under IRS Code Section 179 in order to quickly reduce your current-year taxable income. For 2007, the maximum deduction limit has been increased to $125,000

Talk to your accountant about the Manufacturing Credit

A business may be able to claim a manufacturing credit in 2007 equal to 6% of the taxable income from its qualified production activities. Due to new regulations issued this year, it may be easier to qualify for deductions.

----------

Effective Tax Planning for the MicroBusiness is in stores now.
Click on this link to receive 20% OFF plus FREE Shipping!

Employee Stock Option Plans

Here is a question that was sent by a reader to Karen Klein, a columnist at the LA Times. Karen contacted me for a response because of some work we had done in Newsday:

I am starting up a Web-based business and I'm leaning toward incorporation rather than LLC as the legal entity because I'd like to be able to attract employees by issuing stock in the future. I understand that there must be a board of directors in a corporation, and the board must hold meetings and vote to bring about actions. At this initial stage my company is just myself. Therefore I'm wondering if a one-person board of directors can legally exist, and how it can perform functions such as voting.
KC, Elkridge, MD


KC,

Great question.

This is a common misconception that many small business owners have and it prevents a great deal of them from incorporating even though that may be their best option.

Owning a corporation is not as daunting a task as you think. The common concept of a “board of directors” is not what is required for a small corporation. As the 100% owner of the business, you can act as the corporation’s sole director. You must hold an annual shareholders meeting during which minutes must be kept, a task that proves fairly easy for you as the sole shareholder.

Back to your statement about issuing stock to employees...

Although Employee Stock Ownership Plans (ESOPs) are typically a better fit under the C-Corporation structure, as a “solopreneur,” you should gain much greater tax advantages by operating as an S-Corporation (depending on your income level, you may be able to cut your total tax in half). Additionally, as the IRS continues to tighten their reigns on the tax laws surrounding stock options, ESOPs become less attractive to potential employees making them less likely to accept stock or stock options in lieu of pay. If you use the taxes saved by operating as an S-Corporation to replace stock options with higher salaries, you should be able to attract quality employees, retain full control and ownership of your company, and still have money leftover to pay yourself or reinvest in the business.

----------

Effective Tax Planning for the MicroBusiness is in stores now.
Click on this link to receive 20% OFF plus FREE Shipping!