When to DIY and When Not to DIY

Case Study: When to DIY and When Not to DIY

I have a client who has worked as a Full-Charge Bookkeeper for various companies for over 20 years. A couple of years ago, she started up a side business and hired me to prepare her 2007 corporate tax returns (her first year in business). Then in 2008, she decided to save some money by doing them herself.

Last week, she came to my office and showed me a notice from the IRS for approximately $675 worth of penalties & interest and another notice from NYS for $500 worth of penalties & interest. While reviewing the corporate tax returns that she self-prepared and filed, I also discovered that she had overpaid her taxes by $1,600.

So, by trying to save my $500 year-end corporate tax return preparation fee, she cost herself $2,775 ($1,600 of unnecessary tax + $1,175 of penalties & interest) that she shouldn't have had to pay.

I’m fixing all of the mistakes she made by filing amended tax returns. I will be able to get her back $1,600 and some of the penalties, but the majority of the penalties & interest will stick and during the amendment process, her audit risk will be extremely high due to the fact that we’re asking for almost all of her 2008 tax bill back in the form of a refund.

And this is a woman who has been a professional bookkeeper for over 20 years! Imagine what happens when small business owners with even less bookkeeping/tax experience attempt to do the same!

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Why I can't stand the "my 401(k) became a 101(k)" quote

Over the past year or so, a popular new phrase has emerged that has people jokingly say that "my 401(k) became a 101(k)."

While it was clever at first, like all funny quotes, it became overused quickly. However, that is not what bothers me about it...

Although a more accurate statement would be "My 401(k) became a 201(k)," what really bothers me the most is that people are still saying it. That leads me to believe that people are not aware of their current financial situation and I blame two things for it:

1) After opening depressing brokerage account statement after depressing brokerage account statement last year, many people became programmed to stop opening their statements. Therefore, they have no idea where they stand these days

2) The media has been VERY diligent at telling us how miserable our lives have become over the past couple of years, but they have not yet started to tell us how things have turned around and that the economy is heading in the right direction

So, for those of you who have not been following the stock market, here is what the quote should be at the moment:

"My 401(k) became a 201(k) and now it's back up to a 301(k)."


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Buy Real Estate Now

Buy Real Estate Now

With real estate values approaching all-time lows and interest rates near their all-time lows, now is the perfect time to look at acquiring real estate. Here are some groups of people who can benefit:

• Business owners who want to stop paying rent and own their own building/office/store/shop/etc.
• First-Time Homebuyers
• People looking to purchase residential rental properties (especially multi-family units)
• People looking to purchase commerical rental properties

If you fit into any of the above categories and would like to explore your options, respond to this e-mail and we can discuss how you can make the most out of this historic real estate market!

Why business owners should own their own building:

• In most cases right now, your monthly mortgage payment may be lower lower, similar, or only slightly higher than your current monthly rental payment
• When you rent, you are subject to rent increases. When you own the building and you have a fixed-rate mortgage, you will lock in your monthly payment. The only item that will increase over time will be your property taxes. For example, if you are paying $1,000/month rent right now, you will most likely end up paying $2,650/month for the same space 20 years from now. However, if you lock in a $1,000/month mortgage payment, you will be paying $1,000/month 20 years from now.
• Once your mortgage is paid off, you won't have to worry about monthly mortgage payments or rental payments. All you have to do is pay your property taxes.
• When all is said-and-done and you are ready to retire or sell your business, instead of simply walking away from your lease, you can either sell your building (most likely for a lot more than you paid for it) or hold it and generate a monthly income stream by renting it out.
  
  

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New Law Takes Effect 10/26/09

New Law Takes Effect 10/26/09

Effective 10/26/09, ALL employers in New York must provide the following information IN WRITING to any new hire:

• Pay Rate
• Changes in Payday
• Earnings Statement (Paystub)
• Time Off Policies
• Termination

Additionally, all employers must obtain WRITTEN acknowledgement from each new hire that they have been provided with each of the above items AND employers must meet a minimum recordkeeping requirement by keeping detailed payroll records for at least three years.

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