Tag: bookkeeping company

Will the hybrid work schedule be here to stay?

Posted on August 9, 2023 by udtadmin - Bookkeeping Services

The hybrid experiment is gaining traction. Gallup’s research showed that by 2023, the number of U.S. employees who worked exclusively remotely had stabilized at 28%, while 20% were on-site, and 52% were working in a blended arrangement. The overall economy, the labor market and the impact of recession will determine whether these proportions continue.

The Best of Both

The basic models for hybrid work can be easily understood:

Shifts – the entire team works remotely for the remainder of the week.
Split teams – some people can work remotely and others on site.
Flexible – Employees can choose the location they want to work.

Most hybrid employers have experimented with weekly configurations that include three days at the office and then two days away. Although three days at the office are seen as a good balance, there are many different patterns. Harvard Business School’s research, for example, recommended only one day in the office!

Different employees have different preferences. However, it is important to note that executives are more likely to want to work in offices full-time than workers. All employees have different preferences, but they are not based on seniority. Gallup conducted a survey of 8,090 respondents in 2022 to assess the pros and cons for hybrid arrangements.

Findings demonstrated that there are many benefits.

Improved work-life balance.
Time is better spent.
You can choose where to work and when.
Productivity is higher.
Reduced fatigue, burnout and stress.
Coordination, collaboration and communication between departments will be easier.

Stanford University found that hybrid employees are more productive away from noisy offices, they reduce commute time and costs, they gain self-esteem and their managers trust them.

The availability of a wider talent pool and the cost savings in space (rent, utilities and supplies) and materials (supplies, food and other materials) are appreciated by employers.

The respondents also cited notable challenges. The respondents cited a lack in access to equipment and resources, as well as a separation from the office culture and relationships. It can also be emotionally draining for people to constantly switch between schedules and locations. This may also not be possible for those who have client- or customers-facing jobs and may cause resentment towards other colleagues with more flexible deals. Should those who toil in the office get paid more?

Making hybrids succeed

Managers can ensure that hybrid arrangements run smoothly by taking certain steps.

Designate which days will be for office work. Prodoscore’s research shows that Tuesday to Thursday between 10:30 am and 3 pm is the most productive time for workers. However, creative tasks are best done at home. If a team is working from home, they will all perform poorly, because no one wants the extra time.

The manager should establish initial expectations. They should ask themselves why they are actually going hybrid. Will the team members be able to schedule their own work hours? They can also help the employees to interact with each other and use equipment while they are on site.

Communication policies should be clear. Provide feedback in person. Virtual tools and constant updates can be used to connect remote employees with in-house staff. You may have to modify software platforms in order to include data visualizations and progress reports, as well as project management.

The benefits of hybrid work are many

Insufficient longitudinal data exists to prove that hybrid workers are more efficient. It is evident that the ability to be flexible attracts and keeps talent. Make sure your employees are aware of their responsibilities, whether it’s for mental health, child care or access to green spaces. What do they do during their free time? Gallup says that they spend their at-home hours a mixture of working (86%), learning (27%), innovating (26%), attending meetings (24%) as well as exercising (22%).

You should take that with a grain of salt. Probably some are watching TV. Some managers are willing to make a trade-off in order to keep their team happy.

Navigating Employee Taxes: A Guide for Employers

Posted on July 10, 2023 by udtadmin - Bookkeeping Services

Managing employee taxes may seem overwhelming at times, but as an employer, it is crucial to be well-informed and compliant in order to ensure the success of your business. In this article, we will guide you through the process of tax withholding and reporting, as well as delve into other key responsibilities associated with employee taxes.

Withholding Income Tax from Employee Wages

As an employer, it is your responsibility to withhold income tax from employees’ wages. To do this, you must refer to each employee’s Form W-4 and follow the instructions provided in Publication 15-T, Federal Income Tax Withholding Methods. Based on your organization’s size and the total amount of withheld taxes, you’ll deposit your withholdings accordingly.

Quarterly Filing and Year-End Reporting

Employers are required to file tax returns four times a year, and at the end of each year, prepare and file Form W-2, Wage and Tax Statement. This form is used to report wages, tips, and other compensation paid to employees. Ensure that each of your employees receives a completed copy of their Form W-2. To submit the forms to the Social Security Administration, use Form W-3, Transmittal of Wage and Tax Statements.

Additional Employer Responsibilities

Apart from withholding income tax, employers must also withhold Social Security and Medicare taxes from employees’ wages. Additionally, you are responsible for submitting matching amounts for these taxes.

To compute the correct tax withholding, refer to the employee’s Form W-4, Publication 15, Employer’s Tax Guide, and Publication 15-A, Employer’s Supplemental Tax Guide. Make sure to deposit these taxes according to IRS requirements.

Social Security and Medicare Tax Rates

Keep in mind that the current tax rate for Social Security is 6.2% for both you, the employer, and the employee. For Medicare, the rate is 1.45% for each party, totaling 2.9%. Furthermore, an Additional Medicare Tax is applicable to individuals earning over a certain threshold.

In conclusion, employers have several important responsibilities when it comes to withholding and remitting employee taxes. By staying informed and compliant with IRS regulations, you can promote the smooth operation of your business

Navigating Business Succession in the Post-COVID-19 World

Posted on July 7, 2023 by udtadmin - Bookkeeping Services

COVID-19 has undoubtedly transformed the way businesses operate, pushing many owners to reconsider the future of their ventures. As the world slowly adapts to the new normal, it is time to address critical issues that were sidelined during the pandemic, one of which is business succession. This topic is essential for a company’s longevity and involves several options for owners to consider:

Selling the business
Choosing a successor and transitioning the business
Filing for bankruptcy
Closing the business

Determining the best course of action is not a simple task, mainly because the pandemic has introduced new challenges that may have altered the original succession plan. Thus, business owners should conduct a thorough analysis of the current situation, taking into account the following key questions:

How well did the business handle cash flow during the pandemic? Assessing the company’s financial health is crucial. A business that maintained adequate cash flow during these trying times may be in a better position to transition or continue operations.
Can pandemic loans or grants be forgiven (fully or partially)? Understanding the total financial burden and potential relief can have significant implications in the decision-making process.
How have supply chain issues been addressed? Identifying any changes in suppliers and understanding the impact on business operations can shed light on the company’s resilience and adaptability.
What was the pandemic’s effect on sales and margins? Analyzing whether they will recover, continue to grow, or decline can give valuable insights into the business’s future viability.
Has the company’s vision and mission been altered? Understanding the strategic changes made during the pandemic will help forecast potential long-term effects on the business.

Approaching these questions with a professional and thorough mindset can help business owners better understand their options and make informed decisions about the future of their companies. While uncertainty still surrounds us, developing and implementing a well-informed succession plan will contribute to the business’s continued success and survival amidst a changing world.

In conclusion, the post-COVID-19 landscape demands new strategies and considerations for business owners. As they navigate the challenges of business succession in this evolving environment, asking the right questions and embracing the adaptations that have been made during the pandemic can lead to a more stable and successful future.

How to Invest and Then Still Sleep at Night

Posted on May 19, 2023 by udtadmin - Bookkeeping Services

Individuals possess varying levels of risk tolerance or risk appetite, indicative of their comfort level with uncertainty in investment. However, it is crucial to question whether they are truly aware of their personal level of risk acceptance. It is often the case that one would only recognize their capacity for risk when confronted with a significant potential loss. Until faced with a substantial decline, it remains a challenge to determine whether they possess the fortitude to withstand such a situation. In times of bullish markets where portfolios are continuously on the rise, it may be too simplistic to assume that everyone has high-risk tolerance.

Individual risk capacity

In the realm of finance, it is important to differentiate between subjective risk tolerance and risk capacity. The former refers to an individual’s willingness to endure financial discomfort, while the latter pertains to one’s overall financial situation and resources. Financial planners take into account various factors in order to determine an appropriate score, which ought to be reassessed as clients approach retirement.

Time horizon: In the context of a lengthier time horizon, an investor may elect to undertake greater risk with the anticipation that market fluctuations will be mitigated over the course of months and years.
Goals: The feasibility of an investor taking on a particular risk at a specific time is contingent upon their income and future plans, including but not limited to home ownership and retirement. It is advisable to compartmentalize these investments into distinct categories.
Age: Investors of a younger age are afforded the luxury of an extended timeline to effectively manage fluctuations in the market.
Portfolio size: The acquisition of additional assets serves as a protective measure. A larger and more diversified portfolio results in a reduced percentage of loss.
Comfort and stress: Individuals exhibit varied thresholds and psychological dispositions in the face of loss. Research indicates that, on average, the negative impact of losing financial resources outweighs the positive effects of gaining them.

In order to effectively manage investment portfolios, it is crucial for investors and their financial planners to ensure that risk capacity and risk tolerance are in line with each other. However, this can prove to be a challenging task as many investors possess a low risk tolerance despite having a high capacity for risk, or vice versa. For example, certain investors may be inclined towards making investments that are considerably risky despite not having adequate assets or prospects to support such decisions. Similarly, individuals who have begun saving for their retirement at a later stage may require assuming more risk than they would prefer in an ideal scenario.

Creating profiles

Financial planners utilize a standardized set of client profiles to delineate appropriate investment options. These classifications serve as a foundation for constructive dialogues.

Conservative investors prioritize preservation of capital as a primary objective and tend to lean towards interest-bearing securities like treasuries or blue-chip corporate bonds, accompanied by a small number of growth socks.

Moving along the investment continuum, investors with a moderate risk appetite and a slightly longer investment horizon exhibit a preference for a comparable blend of defensive and growth assets, typically seeking a 70/30 defensive/growth ratio.

Balanced portfolios, which typically consider a time horizon of approximately five years, allocate assets evenly between growth-oriented investments such as equities and listed real estate, and more defensive positions such as cash and fixed income. This approach aims to achieve a balance between risk and return, while also providing diversification benefits.

Finally, the most assertive investors tend to shift towards portfolios consisting solely of equities, with a forward-looking time horizon of up to nine or ten years.

Quizzes and questionnaires

Financial planners employ various techniques to determine clients’ risk appetites and facilitate their comprehension of how their attitudes influence their decisions. One such method is administering quizzes, which feature a series of questions designed to elicit pertinent information, including:

What is your anticipated timeline for initiating withdrawals, and what is the projected duration of your withdrawal period?

When considering investment options, would you prioritize protection or returns as your primary concern?

Anticipated changes to your income: Do you project an increase, decrease, or stability?

Regrettably, a significant number of questionnaires employed in the financial industry are inadequately constructed and overlook crucial topics such as longevity and inflation risk. They neglect to establish a correlation between risk and specific objectives and instead center too narrowly on clients’ risk appetites as a preliminary screening tool, rather than conducting a comprehensive evaluation of their goals.

Given the aforementioned constraints, it is advised to initiate a dialogue with your financial advisor to gain a more comprehensive comprehension of how your risk tolerance is affecting your investment choices.

How To Handle Your First Payroll

Posted on May 16, 2023 by udtadmin - Bookkeeping Services

Irrespective of the number of employees involved in your first payroll, it is imperative that the process is carried out with precision and adheres to compliance regulations. To achieve this objective, we have outlined a set of steps to assist you in managing your initial payroll.

It is imperative to obtain an Employer Identification Number from the Internal Revenue Service and complete any necessary state registrations. This includes registering with the state department of revenue for employee tax-withholding purposes and the state department of labor for state unemployment tax purposes. As such, we recommend promptly acquiring an EIN and fulfilling all applicable state requirements to ensure compliance with all relevant regulations.

When selecting a payroll system, it is important to consider the available options. These options include performing all payroll tasks in-house using internal resources, outsourcing the entire payroll process to a service provider, or combining in-house and outsourced activities. To make an informed decision, it is recommended that research be conducted regarding the advantages and disadvantages of each system..

Conduct employee verifications and classifications. This includes:

The process of ascertaining the eligibility of employees to work in the United States through the completion and submission of Form I-9.
To ensure accurate classification, it is essential to verify the employment status of individuals as employees rather than independent contractors.
In accordance with the Fair Labor Standards Act and relevant state regulations, it is imperative to accurately categorize employees as either nonexempt or exempt.

Give employees the appropriate payroll forms to complete. Typically, these include:

The proper documentation for federal income tax withholding is the W-4 form.
Forms for state or local tax withholding are required to be completed in order to comply with state and local tax regulations.
Please complete the direct deposit form to receive your electronic wage payments.
Forms for enrolling in employee benefits, such as health insurance and 401(k) plans.

It is imperative to ensure that your employees are furnished with the necessary labor posters and notices mandated by federal, state, and/or local law. Kindly take note of this critical requirement.

Best practice advice

Establish a regular pay frequency for your esteemed employees, with options such as weekly, biweekly, or semimonthly. Provide clear and concise pay period start and end dates.
Design a comprehensive time and labor system to monitor the work hours of nonexempt employees. Consider implementing an automated timekeeping system that can seamlessly integrate with the payroll software for efficient tracking and processing of employee hours.
As a responsible employer, it is imperative that you remain mindful of your legal obligations. This includes upholding obligations for wages and hours, employee taxes, employer taxes, payroll reporting, and payroll recordkeeping. It is crucial to ensure that all relevant legal requirements are met to maintain your business’s compliance with the law.
When considering ways to streamline business operations, outsourcing payroll management is a viable solution for business owners who prioritize growth and management over the nitty-gritty details of payroll administration.

Additional considerations

When considering your business’s payroll practices, it is important to determine the optimal approach for managing payroll taxes. One option is to handle regular payroll processing internally while outsourcing payroll tax administration to a third-party provider. Alternatively, some businesses choose to handle all aspects of payroll management in-house. It is recommended that you carefully evaluate your company’s needs and resources before deciding on the most appropriate approach for your organization.
Familiarize yourself with the available integrated payroll software solutions. Certain systems offer a comprehensive platform for HR management, time and labor tracking, payroll processing and benefits administration, while others only incorporate specific functionalities.
We propose the implementation of a self-service platform that empowers employees to independently carry out specified payroll duties, including the retrieval of pay stubs and Form W-2s.

When outsourcing your payroll, it is important to ensure that your provider is equipped with all necessary resources to effectively handle your first payroll. Additionally, it may be beneficial to leverage online resources, such as the U.S. Department of Labor’s Employer.gov and the IRS’ Publication 15: Employer’s Tax Guide, in order to gain a comprehensive understanding of your payroll obligations.

Prepare Your Business For 2023: Get the Latest Tax Rate Information

Posted on April 6, 2023 by udtadmin - Bookkeeping Services

Discover the latest updates on federal payroll tax rates and benefit contribution limits for 2023, ensuring you stay informed and up to date. The Social Security tax remains consistent at 6.2% for both employers and employees. However, note the increase in the Social Security wage base, rising from $147,000 in 2022 to $160,200 in 2023. Self-employed individuals should be aware of the 12.4% rate applicable to the first $160,200.

Additionally, the Medicare tax rate remains steady at 1.45% of all wages for employers and employees, with self-employed professionals paying 2.9% on net earnings. Prepare for the new year by familiarizing yourself with these crucial financial updates.

Additional Medicare tax

As we venture into 2023, the landscape of financial planning offers new opportunities for growth. The Medicare tax, consistently at 0.9%, will continue to apply to individuals surpassing specific income thresholds, ensuring the stability of the healthcare system.

Exciting adjustments to 401(k) limits are on the horizon, allowing younger employees (49 and below) to contribute a generous $22,500, a noteworthy increase from 2022’s $20,500 limit. Employees aged 50 and above are not left behind, with a bump in their catch-up limit from $6,500 to $7,500. Additionally, SIMPLE 401(k) plan contributions see a captivating rise as well, with the 2023 limit set at $15,500, up from $14,000 the previous year.

These enhancements open up avenues for more considerable investments in securing a stable and prosperous financial future.

HSA and HDHP limits

Looking ahead to 2023, prepare for some changes in health savings account (HSA) contributions and high-deductible health plan (HDHP) limits. For both employers and employees contributing to an HSA, expect maximums of $3,850 for individuals and $7,750 for families. Additionally, those aged 55 or older can catch up with an extra $1,000.

Regarding HDHPs in 2023, anticipate minimum deductibles of $1,500 for self-only plans and $3,000 for families. Prepare for maximum out-of-pocket expenses reaching $7,500 on individual plans and $15,000 on family plans. Stay informed to optimize your healthcare benefits!

FSA limits

In 2023, employees can take advantage of a slight increase in the contribution limit for their Flexible Spending Account (FSA), up to $3,050. Those filing single or jointly may contribute up to $5,000 toward dependent care expenses – an unchanged amount from 2022 – and married individuals who file separately are able to claim a maximum FSA deduction of $2,500.

QSEHRA limits

Elevate your employee benefits in 2023! With a qualified small employer health reimbursement arrangement, businesses can now offer more robust health care support, boosting reimbursement amounts to $5,850 for individuals and $11,800 for families. Take advantage of this opportunity to invest in your team’s wellbeing and show them you truly care.

Commuter benefits limit

Experience enhanced commuting in 2023! Elevate your journey with a generous boost in commuter benefit allowances – skyrocketing to $300 per month, a significant leap from 2022’s $280. Indulge in your choice of mass transit or parking conveniences for a seamless and joyful ride to work.

Adoption assistance exclusion limit

By 2023, the adoption journey could become more affordable as employer-sponsored adoption assistance sees a significant increase, rising from $14,890 in 2022 to $15,950. However, keep in mind that these figures are based on federal rates only. State and local payroll rates may differ, so it’s essential to consult the relevant authorities. To make the most of this financial boost, seek expert guidance from a financial advisor, as each case may be subject to specific rules and limits.

See Why Workers Love the 4-Day WorkWeek and Why You Should Too

Posted on April 2, 2023 by udtadmin - Bookkeeping Services

Employees recognize the value of balancing their work and time spent on personal pursuits – so it is no surprise that flexible schedules with fewer hours have become an attractive option. To maintain 100% productivity, short bursts of work can be interwoven or layered into four-day weeks, allowing employees to refresh themselves through hobbies and other activities during intervals in between. By fostering a healthy lifestyle and providing leisure opportunities outside of traditional working days, businesses may benefit from more engaged employees who are energized by regular breaks throughout their week.

Pilots and surveys

Is it possible to achieve a work-life balance utopia? Exciting pilot projects are currently underway, seeking to prove that reduced working hours can lead to enhanced productivity and happier employees. An intriguing Icelandic study monitored 2,500 public service workers and observed no decline in their performance. Similarly, a Swedish investigation of nurses found reduced sick hours and better well-being, despite no monetary advantage. Additionally, a promising project in the U.K., involving 70 companies and 600 workers, is ongoing. Keep your eyes peeled for the outcomes of upcoming trials in Spain and Scotland in 2022. The future of work may be closer than we think!

Recent research from Qualtrics unveils the growing desire among US employees for an alternative work arrangement: the four-day workweek. Garnering the support of 92%, this innovative approach upon implementation would bring forth benefits in productivity, mental health, and dedication to the company. Interestingly, while 74% of employees are confident they would maintain their current work output during such a schedule, a substantial 72% also recognize the need for extended daily working hours to meet their goals. Moreover, the enthusiasm for this revolutionary workweek model even prompts 37% of them to accept a 5% pay reduction – all for that enticing extra day off every weekend.

The history of the four-day workweek

In 1890, it was estimated that American manufacturing employees worked a staggering 100 hours weekly. Fast forward to 1908, weekends off emerged as a refreshing change in labor standards. Moving into the mid-20th century, extensive research by Henry Ford demonstrated that 40 hours per week was the optimal efficiency sweet spot for workers. Labor unions played the crucial role in enshrining this balance into legal framework, and the Fair Labor Standards Act, passed in 1940, became the foundation for labor regulations throughout that century.

Notable figures like economist John Maynard Keynes and President Franklin D. Roosevelt were early champions of advocating for shorter work hours, with Roosevelt even supporting a bill in 1933. In the recent decade, the Organisation for Economic Co-operation and Development reveals that on average, employees worked 1,767 hours per year. However, the COVID-19 pandemic has disrupted these statistics, as people working from home saw a 25% increase in 60-hour work weeks with an added daily average of 2.5 extra hours.

Making the case

The allure of increased leisure time among employees isn’t hard to grasp. A satisfied workforce translates to lower turnover rates and acts as an alluring incentive for potential recruits. As a result, companies can enjoy a more robust business model with reduced recruiting and onboarding expenses. Not only that, but a less stressful and healthier office atmosphere leads to fewer employee absences and reduced time off.

From a social perspective, shortened work hours significantly impact working mothers, allowing them to better manage child care responsibilities and decreasing stress. Moreover, the environmentally conscious will celebrate the sustainability advantages, as reduced office days mean less commuting and a lower carbon footprint.

Embracing a shorter workweek comes with its fair share of obstacles, especially in customer relations. A swift response and human touch are highly sought after by clients, causing frustrations when not met. Over half of respondents in a Qualtrics survey experienced customer grievances, while 42% faced worries regarding sales and revenue. To offset this, additional overtime work may be needed, adding to financial strains.

As your organization takes on the four-day workweek revolution, watch out for these hurdles and adapt with strategies like:

– Elevating automation

– Streamlining meetings

– Refining processes

– Amplifying AI usage

– Boosting team collaboration.

For a successful transition to a four-day workweek, businesses must foster a harmonious environment where every member works collaboratively and efficiently towards this common goal.

Understand and File Your Business’s Schedules K-2 and K-3 Easily

Posted on March 29, 2023 by udtadmin - Tax Audits

In compliance with IRS guidelines, certain businesses with international financial activities are required to submit Schedule K-2 and Schedule K-3 forms. These vital documents pertain to a partner’s distributive share of international items and their overall share of income, deductions, credits, and more. Specifically, taxpayers filing Forms 1065, 1120-S, or 8865 must meticulously complete these supplementary worksheets to remain in good standing.

Say goodbye to outdated tax documentation and embrace the revolutionary Schedules K-2 and K-3! Launched for the 2021 tax season, these new schedules not only streamline the filing process for domestic partnerships and foreign tax credit claims, but also ensure a more organized and efficient approach.

However, beware the consequences of non-compliance!

Falling afoul of these new schedules may invoke penalties as per Internal Revenue Code Sections 6698, 6721, and 6722. Even domestic partnerships with exclusively domestic income and assets should pay heed, especially if partners plan to claim the foreign tax credit. Stay updated and compliant for smooth sailing in tax season!

The introduction of Schedules K-2 and K-3 has transformed the landscape of tax reporting by moving crucial data originally included in Schedules K and K-1. These new schedules focus on items of additional tax relevance; however, a precise and comprehensible interpretation of this concept is yet to be clarified, raising intrigue and questions in the professional sphere.

Discover the key insights from Schedules K-2 and K-3 that highlight their international significance – originally part of Schedules K and K-1. These elements include vital information on foreign tax credits, income particulars of foreign partners operating in the US, and critical data on various international taxes like base erosion and anti-abuse, foreign-derived intangible income tax, and global intangible low-taxed income tax. Stay informed about the transitional relief offered by IRS Notice 2021-39 for those proactively striving to comply with the updated regulations.

The IRS has recently revamped its systems, streamlined processes, and clarified procedures to ensure a more efficient approach to gathering crucial information. Amendments have been implemented in partnership agreements and other regulations to simplify the collection of data. Furthermore, the IRS firmly underscores the significance of incorporating information from Schedules K-2 and K-3 into all white paper statements, including the footnotes for Schedule K-1.

Tackling Schedule K-2 or K-3 can be a challenging endeavor due to the intricate knowledge of global tax principles involved. It’s essential for entities to seek guidance from their trusted tax adviser when navigating the complexities of these crucial forms.

Differences between Schedule K-2 and Schedule K-3

Stay ahead in the game by keeping these four crucial aspects in check:

Navigate through the maze of 19 pages and 11 individual sections of Schedule K-2, and take on the 12-part challenge in Schedule K-3. Master the art of completing intricate tables and worksheets for a seamless international activity reporting experience.
Firmly establish your partners’ identities and ensure flawless documentation using the powerful duo, Form W-8 or W-9, to avoid any hiccups along the way.
Embrace change by identifying the gaps between your current reporting methods and the cutting-edge requirements of Schedules K-2 and K-3, ensuring a smooth transition and up-to-date compliance.
Time is of the essence! Beat the clock by allowing ample time to gather proof of essential information, avoiding any last-minute scrambles or complications.

In the end, Schedules K-2 and K-3 will bring a new level of transparency for shareholders and partners, streamlining the process of determining their overall U.S. income tax obligations alongside international income and relevant deductions.

A Guide to Finance and Taxes for Seniors

Posted on March 23, 2023 by udtadmin - Bookkeeping Services

As we mature, our financial needs and spending habits evolve simply as a matter of course. But having to live on a fixed income can be intimidating, making it vital for older adults to stay informed about how they can ensure their money is working hard too – from utilizing senior discounts and tax credits/deductions available to them, right through to building retirement portfolios that sustain long-term security in later life. This guide provides comprehensive advice around this topic, so you feel more financially prepared now – and secure your future with peace of mind!

Financial Planning Resources

With so much to consider, savvy financial planning can be the key difference between worry-free retirement and a struggle for everyday expenses. To maximize your long-term potential, it’s important to stay current on Social Security benefits that you qualify for as well as tax credits & deductions available in order to minimize costs wherever possible.

Trusts, Wills, and Estate Planning Resources

Having a trust, will and estate plan in place can give you peace of mind that your family is cared for- no matter what life throws their way. It’s the smart move to make today so your loved ones are secure tomorrow.

Social Security

More than 65 million Americans count on Social Security each year to supplement their retirement income. But is this enough? While it can be a great resource, financial experts advise that relying solely on Social Security benefits could lead to “big sticker shocks” during your golden years. To ensure you are financially safe and secure in the future, there are several strategies for understanding how exactly Social Security fits into overall savings and investment goals – join us as we dive deeper into these options!

Know Your Social Security Benefit Options

For married couples, widows/widowers, and former spouses, it’s important to note there are special considerations that can drastically affect Social Security benefits. It is essential for you and your family to gain an understanding of all the benefit options available, such as: survivor’s insurance; retirement income; spousal benefits; dependents’ benefits – so everyone has access to a secure financial future!

Social Security spousal benefits
Divorced spouse Social Security benefits
Social Security survivor’s benefits
Social Security Disability Insurance (SSDI) benefits

Tax Credits and Deductions for Seniors

As seniors, you may experience an increase in health and medical needs throughout your golden years. While this can be costly on its own, the tax burden that comes along with these expenses doesn’t make it any easier. To help ease the financial strain of being a senior citizen, take advantage of all applicable credits or deductions available to relieve some of that additional expense!

Health Care Tax Deductions

It may pay to take a closer look: if you itemize healthcare deductions, the IRS allows for potential tax credits and/or deductions on medical or dental costs incurred by yourself, your spouse, and dependents. Give yourself the benefit of financially-sound advice before filing this year’s taxes – it could save you money!

Tax Credits

Health care credits
Family and dependent credits
Income and savings credits
Homeowner credits
Education credits

Tax Deductions

Health care deductions
Investment-related deductions
Work-related deductions
Itemized deductions
Education deductions

For senior citizens living on a budget, there may be options to drastically reduce or even eliminate your yearly tax burden. Don’t miss out – check today and find the relief you deserve!

How Often Are Small Businesses Audited?

Posted on March 17, 2023 by udtadmin - Tax Audits

Small businesses can be subject to audits randomly, but the IRS usually pays closer attention when specific red flags appear. Unfortunately, many owners don’t know these audit triggers and may struggle with preventing them. To provide guidance for entrepreneurs we’re breaking down how often small businesses are audited and what alerts the IRS – helping business owners stay prepared in any circumstance.

Common IRS Red Flags

Be Wary of Entertainment Spending

Though there are still deductions available for meals with potential or current clients, care should be taken when claiming other entertainment expenses. As the government eliminated business-related deduction allowances in 2017, all costs associated with such activities will have to come out of pocket. However, if you are present at a client meal and order reasonably priced food and beverages – 50% may potentially qualify as deductible. It’s wise to tread carefully when it comes to leisure events involving your business contacts lest an audit ensues!

Be Careful with Deductions

Business owners invest a substantial amount of time and effort into their companies to ensure success, so they should certainly take advantage of all applicable deductions. However, when it comes to accessing these benefits, caution is key. The IRS employs Discriminate Income Function screening – if your business makes significantly more deductions than those in the same industry typically do, you may be subject to an inquiry from the agency itself!

It’s easy to become tempted by the potential savings when it comes to miscellaneous deductions. But be warned that careless decision-making in this area could come with serious IRS consequences! To stay on the safe side, always make sure your business expenses are ordinary and necessary for your industry—particularly vehicle mileage or travel related costs which often face extra scrutiny from tax authorities. If you’re new to managing a small organization, expert financial advice is indispensable – don’t hesitate to seek out help so you can get off on the right foot as far as taxes go.

Always File on Time

The IRS is always keeping an eye out for any inconsistencies that could indicate a potential issue with your business taxes. Don’t take the risk of their unwanted scrutiny and ensure you file on time – whether electronically or via paper! To avoid exception, start filing now to guarantee timely compliance and prevent those costly penalty fees. If delays occur unexpectedly, be sure to request an extension before it’s too late and keep electronic filing in mind as it reduces errors significantly.

Consider Incorporating

With increased accountability and professional competence, small businesses that incorporate often find themselves less likely to be audited by the IRS than Schedule C income tax filers who are self-employed. According to one reliable legal source, this is because incorporation can demonstrate a higher level of financial responsibility which helps reduce suspicion for underreported incomes or unearned deductions – an issue frequently associated with smaller operations.

Financially savvy business owners and entrepreneurs are turning to corporations or LLCs for multiple advantages. Aside from reducing the risk of audit, incorporation delivers substantial tax benefits and safeguards personal assets while enhancing eligibility for loans. Incorporating is an ideal strategy if you value financial security – so why wait?

Be Cautious of Sudden Charity

Donating to charity is a great way of giving back, but if you give too much at once the IRS may become suspicious. Gradual donations spread over time are more likely to be taken as genuine support rather than tax evasion strategies–plus it gives your charitable cause benefits that last!

If Paying in Cash, Record Every Transaction in Detail

Companies engaging in cash transactions, such as purchasing large items like vehicles and equipment, should keep careful records to ensure they are up-to-date. Consider using a business credit or debit card instead for easier record keeping – not only can you track your expenses more accurately, but it could save time during the filing process if ever required by authorities.

Always Report ALL Taxable Income

Keeping accurate records of income is a key component to any successful business, and the IRS has high expectations when it comes time to file taxes. Make sure each taxable dollar earned in the US during tax season is properly reported; not doing so can easily lead to an audit should suspicion arise. Furthermore, businesses utilizing digital currency may be subject to even more intense scrutiny by government agencies – think carefully before incorporating such into your operations!

Provide Reasonable Salaries

As a small business owner, maintaining reasonable employee salaries is key. The IRS pays particular attention to overly large remuneration for shareholders and executives alike; accordingly, with enlarged incomes comes amplified audit risk – something that must be taken into careful consideration when navigating salary decisions.

UptoDate Bookkeeping

At UptoDate Bookkeeping, we are dedicated to equipping small businesses with the tools they need for success. Our team of experienced professionals use their knowledge and skill to provide tailored solutions that guarantee accurate records and balanced accounts every time. Get started on your business growth journey today by scheduling a call or chat session with one of our bookkeeping experts!