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The Complete Guide to Payroll Taxes in Texas for 2022

Payroll Taxes in Texas in 2022

The Complete Guide to Payroll Taxes in Texas for 2022

November 29, 2022

Payroll Taxes in Texas in 2022

peakreliance

Accounting, Bookkeeping, Taxes

Payroll taxes are a major financial burden on many small businesses who are forced to take out large loans in order to fund expenses. However, the good news is that payroll tax season is almost over. The deadline for filing your 2022 taxes has passed, and now you can focus on other business matters such as developing a marketing strategy and hiring new employees. The following guide will provide you with everything you need to know about payroll taxes in Texas for the upcoming year. 

What is Payroll Tax Season? 

Payroll taxes are one of the biggest yearly expenses for many small business owners. You are required by law to pay these taxes when you take out an employee or contractor. However, they can also be filed by an employer-employee as well as a joint employer. Payroll taxes are calculated on a percentage of your total income, usually 40% or 50%. Some employers may be required to pay more than 50% of their income in payroll taxes. The IRS publishes a list of standard deductions and other income-based deductions that most people can use to reduce their taxable income. Moreover, many employers will also reimburse employees for some or all of their payroll taxes. These are known as self-employment taxes.

Where Do Payroll Taxes Come From? 

Most payroll taxes fall under the category of income taxes, including income tax, Social Security, and Medicare taxes. However, there are also a few payroll taxes that are paid by a trust fund or other government-issued bonds. These are known as employment and occupation-based taxes and are popular with local and state governments.  

How Texas Payroll Taxes Are Determined 

Payroll taxes are calculated based on a percentage of all income received by employees, including tips, wages, overtime, and other forms of compensation. Other taxes, including property taxes, sales taxes, and income taxes, are all calculated on a percentage of income as well as total assets. If the ratio of employee income to employer income is high, then employees may experience higher stress levels and be more likely to develop disorders such as cardiovascular disease, high blood pressure, and diabetes. 

What Are the Different Types of Payroll Taxes in Texas? 

There are three main types of payroll taxes in Texas: employment and occupation-based taxes, trust fund taxes, and income taxes.

Employment and Occupation-Based Taxes: These taxes are calculated on the number of employees and their respective wages or salary. These taxes are usually paid by the employer and apply to all employees, even if they work for less than 10 hours per week.

Trust Fund Taxes: These taxes are paid by a special fund managed by the IRS. They are calculated on the total amount of bonds issued by the state or local government in which the business is located. These taxes are meant to fund public works and other projects throughout the country.

Income Taxes: This is the main source of payroll taxes in Texas. It is calculated on the total income of the employer, including income from sources within and without the employee. The IRS publishes a list of standard deductions and other income-based deductions that most people can use to reduce their taxable income. These are known as standard deductions. Moreover, many employers will also reimburse employees for some or all of their payroll taxes. These are known as net operating losses (NOLs) and are generally carried forward to future years.  

The Bottom Line 

Payroll taxes are a major financial burden on many small businesses. You are required by law to pay these taxes when you take out an employee or contractor. However, they can also be filed by an employer-employee as well as a joint employer. The deadline for filing your 2022 taxes has passed, and now you can focus on other business matters such as developing a marketing strategy and hiring new employees. 

 

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Payroll Taxes, Payroll Taxes in Texas, Tax filing, Tax Season

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Do’s and Don’ts if You Haven’t Filed Taxes in Years

Do's and Don’ts if You Haven't Filed Taxes in Years

Do’s and Don’ts if You Haven’t Filed Taxes in Years

November 28, 2022

Do's and Don’ts if You Haven't Filed Taxes in Years

peakreliance

Accounting, Bookkeeping, Taxes

If you haven’t done a tax return in years, it could have serious repercussions and cost you money. You run the risk of forfeiting your right to a refund or owing the IRS hundreds of dollars in the form of taxes, fines, and interest.

Now, you legitimately have a tax problem.

Fortunately, you still have time to file past-due tax returns, which may help you fix some of these problems. And if you recruit a bit of help with the paperwork, it might be smoother than you’d expect. Below, we have listed some of the consequences of failing to file your taxes and some ways to present them in a timeline format for your convenience.

What will happen if you haven’t filed taxes for 10 years?

There are a few types of consequences to consider with the IRS when you haven’t filed tax returns.

IRS and Penalties

The IRS may initiate a lawsuit against you if you don’t file your taxes for a long period of time. This can entail putting a mortgage on your residence or having your assets seized. In some circumstances, you can also face criminal prosecution. It is ideal to contact a tax lawyer or other tax experts if you are concerned about any of these repercussions. With Peak Reliance and their highly qualified tax experts, you need not worry about that.

Every month your tax return is overdue, the IRS charges you a ‘failure to file’ penalty and a ‘failure to pay’ penalty totaling about 5% of the unpaid amount. However, the overall fees are limited to a maximum tax penalty of 25%, so luckily they won’t continue to rise indefinitely.

The IRS may decide to collect your salary or bank account to pay your tax debt if you haven’t filed taxes in a number of years. Wages or other sources of income may be taken as a result of this.

Additionally, the IRS may publish a notice of a federal tax lien, which may limit your future financial options. Your ability to obtain credit or take out loans may be restricted by an IRS tax lien. The government can now have a role in your transaction and will deduct the tax due from the proceeds of any sale, which can limit the amount of property/assets you can sell.

In the worst-case scenario, the IRS can impose a penalty of up to $250,000 in fines and up to five years in prison for deliberately failing to file taxes.

Other Penalties

You may have problems for a variety of additional reasons if you don’t file your taxes. You risk losing out on potential tax refunds as well as opportunities in your life where you must provide your most recent tax returns. You won’t have any tax returns to offer if you haven’t recently filed your taxes.

When you apply for a passport, for instance, you could be required to present your most recent tax records. When you apply for a mortgage, rent, or other loan, you’ll almost probably be required to provide your tax returns. When you apply for health insurance, you can also be asked for your most recent tax returns.

Your most recent federal income tax returns are also required if you are applying for financial aid on behalf of yourself or your child. Finally, the income you disclose on your tax returns is a factor in determining your retirement benefits, including Social Security and Medicare. Your future financial security may be at risk if you fail to file your tax return for several years.

The Way Out
Step 1 – Check your standing with the IRS.

The IRS frequently files a ‘Substitution for Return’ on your behalf if you fail to file your taxes. The IRS makes an estimate of what it believes you owe, but it ignores any exclusions or deductions.

The IRS will next notify you via tax notice CP3219N, often known as a ‘90-day letter’, of what it intends to file on your behalf. The IRS will submit the tax return it believes you are required to file if you don’t respond to the notice, at which point costs will start to accrue.

Step 2 – Decide if you want to pay or file your own returns

You can choose how to proceed if the IRS has filed substitute tax returns on your behalf. One choice is to just pay the tax and associated fees that the IRS estimates you owe. The IRS does give several tax relief alternatives, like an installment arrangement, if you are unable to pay the full amount due at once. This tax payment method is rather straightforward.

A tax levy will be resolved by paying the due taxes and fees, but you may not receive the tax documents you require for other purposes, such as obtaining a new mortgage loan. Additionally, you’ll probably pay more than necessary because there are no deductions on the IRS substitute filings.

You may spend far less and have the tax documents you may need for future financial decisions if you choose to file your own tax returns for the missing years.

Step 3 – Collect the numbers to complete your tax forms.

You’ll need to perform some forensic accounting to estimate your income and expenses over the years if your bookkeeping become a little sloppy during the last 10 years for which you had unfiled tax returns. If you want to outsource some of the work, a forensic accountant or a certified public accountant (CPA) can assist you with this.

·         Completing Records:

To be ready to submit, sort out all of the gaps and missing data in your financial records. To properly calculate your income and claim the most tax deductions and credits on your tax return, you need to accurately record your income and spending for each year.

·         Supporting Paperwork:

Your receipts and income statements will be included in your financial records, but keep hold of them and any further proof that may assist you to justify why you took so long to file your taxes. You might feel more at ease once you complete the clean-up procedure if you have documentation to back up your calculations and your delay.

Step 4 – File The Pending Tax Returns

You can mail the IRS your unfiled tax forms as soon as you obtain the necessary documentation because there is no deadline for doing so. Better yet, if you meet the requirements, you may still file a tax return up to three years beyond the filing date.

Keep in mind that submitting a company tax-return consists of two steps. The first step is to send the IRS the company tax forms. With the help of this form, you may formally file your taxes and inform the IRS about your income and outstanding debt.

Step 5 – Pay your taxes through whichever method

Paying the taxes you owe is the second step in filing the missing tax returns. You may easily pay your taxes with a bank draft or credit card. Of course, you will have a huge tax burden to deal with if you’re filing years’ worth of tax returns at once.

Fortunately, even though the due date has passed, the IRS is ready and able to deal with taxpayers who are unable to pay the entire amount owed in back taxes by the deadline. If you are unable to make the entire payment right away, there are various choices and installment plans you can choose from.

Some options include:

  • Setting up an installment or payment plan.

  • Pursuing an offer in compromise; a deal with the IRS to settle your tax debt for less than you owe.

  • Request a ‘Currently Not Collectible’ status to delay payment until you can afford to pay it.

  • Take out a loan to cover your tax debt.

Step 6 – Prepare for Future Taxes

Make sure the accounting software has been updated for future tax filings before you close it, after organizing your recently updated tax forms. Tracking income and spending and submitting taxes on time each year may be made simpler with a clear accounting system. Set up your company’s accounting system now to ensure that you won’t have to worry about tax problems with federal or state tax returns this year or in the future.

If you’re prepared to take on years of unfiled tax returns, you might need assistance going back over your accounting records, updating your income and spending, and making sure you’re not overpaying taxes. Peak Reliance has the necessary experience in organizing the finances. We have experienced and qualified tax experts to assist you in filing the missing returns. Check out our pricing plans  or call us at +1 (718) 218-5558 for more information.

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Tax filing, Tax Season

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Estimated Taxes in Texas in 2022: How to Get Your Tax Return Done in the Most Efficient Way

Estimated Taxes in Texas in 2022: How to Get Your Tax Return Done in the Most Efficient Way

November 22, 2022

peakreliance

Accounting, Bookkeeping

With the passage of the new federal tax laws, the standard deduction has been doubled and individuals must now pay their state income taxes based on where they live. In other words, if you live in a high-tax state such as New York or California, you’ll likely owe more in taxes than under the old rules. You may also be able to deduct some of your state taxes from your federal return. Thanks to these changes, many people are now reassessing how much they spend each year on taxes and what services they can cut to lower their cost. If you’re one of those people looking to reduce your tax bill, this blog is for you! We’ll explain everything you need to know about Texas’s new tax laws in 2022 including how they will impact personal taxpayers and businesses. 

What is Estimated Taxes in Texas? 

Estimated taxes are taxes paid in advance of the actual tax return due date. This can be a good way to get your tax return done early if you live in a high-tax state such as New York or California. These states now tax residents on their income at a higher rate than before. In Texas, estimated taxes are due at the end of February, April, June, August, and October each year. Estimated taxes are commonly used by people who live in high-tax states like New York or California, who want to avoid receiving a large tax bill at the end of the year. Estimated taxes are also commonly used to pay early for a large expense like a new roof or car repair.   

How Much Does Texas Tax Earners Pay on an Estimated Tax Return? 

The average taxpayer in Texas pays about $2,115 on their annual estimated taxes. This amount can vary based on a number of factors including income, filing status, and even how quickly you get your return done. The amount you pay on your estimated taxes is based on your income and any deductions you claim on your tax return. For example, a married couple with two children earning $90,000 a year will likely pay roughly $2,115 on their annual estimated taxes.   

Who Pays Estimated Taxes in Texas? 

When it comes to paying estimated taxes in Texas, everyone is a potential taxpayer. This means that even people who don’t earn any money and don’t expect to have any income in the next year are required to pay estimated taxes. The only exceptions to this rule are people who are getting a specific type of government assistance such as the Earned Income Tax Credit. You can also exclude yourself from paying taxes if you are a sole proprietor or a partner in a partnership.   

The pros of paying estimated taxes 

  • Tax return is done a month earlier (this can be a good thing if you’re a high-tax state) 
  • Less chance of getting audited
  • Less chance of being audited if you pay early
  • You can spread out the cost
  • Low risk of your tax return being audited
  • Most people pay their taxes on time
  • You can estimate your taxes and reduce your risk of underpayment   

The cons of paying estimated taxes 

  • If you pay too much, you could end up owing more interest and penalties later on your federal and state tax returns.
  • If you don’t have enough money withheld from your paycheck, you’ll have to pay interest on that amount.
  • If you owe taxes and you’re due to pay them in October, you’ll have to extend your payment date.
  • There is a small chance that you’ll have your return audited.
  • You don’t get to take deductions on your taxes like you would on a regular return.
  • If you have to file an extension, it will take you longer to get your taxes done.   

How to Pay Estimated Taxes in Texas 

You can pay your estimated taxes by logging into your online tax account, going to your local tax office, or mailing your payment. You can also pay by check or money order. However, depending on your income, you may be able to get a lower percentage of your refund by paying this way. If you choose to pay by check or money order, you must do so by the tax due date. This can be tricky because the due date is different depending on the type of taxpayer you are.   

Which Year Should you pay Estimated Taxes in Texas? 

There are a few different ways to approach this question. You could pay estimated taxes in Texas for the year you earn the money, or you could pay for the year you spend the money. If you’re going to pay estimated taxes on your income from the year you earn it, estimate your taxes based on the new tax rates and pay your 2022 taxes in February 2023. If you’re going to spend the money from your tax return, we recommend estimating your taxes based on the current tax rate and paying them in 2023. 

Final words 

With the passage of the new federal tax laws, the standard deduction has been doubled and individuals must now pay their state income taxes based on where they live. In other words, if you live in a high-tax state such as New York or California, you’ll likely owe more in taxes than under the old rules. You may also be able to deduct some of your state taxes from your federal return. Texas is a relatively low-income state that doesn’t impose a great deal of taxes on its residents. That means your estimated taxes will likely be in the $2,000-$3,000 range based on your income. With that in mind, you may want to consider paying your estimated taxes in 2023 as this will save you from paying taxes on the money you don’t have to spend on something you don’t have. 

 

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Estimated tax, Estimated Tax in Texas, Tax Season

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5 Best Bookkeeping Software Tools for Small Businesses

5 Best Bookkeeping Software Tools for Small Businesses

5 Best Bookkeeping Software Tools for Small Businesses

November 21, 2022

5 Best Bookkeeping Software Tools for Small Businesses

peakreliance

Accounting, Bookkeeping

The perfect accounting software assist small business owners to conveniently track their accounts and expenses, prepare for the upcoming tax season, and stay on top of their finances. For numerous small businesses, engaging a third party to handle taxes and payroll is a more cost-effective option. But with so many options on the market today, choosing can be difficult. That’s why we’ve rounded up our top 5 accounting software for small businesses so you can instantly find the right solution.

What is Accounting & Bookkeeping Software?

An accounting/ bookkeeping software can be used to keep track of a business’s’ finances. The best options to choose from are those that offer the following:

  • Set-up accounts and make journal entries.

  • Can get linked to your company’s bank account.

  • Pay bills automatically and meet all deadlines.

  • Generate invoices & send them when due.

  • Log all payments & expenses.

  • Run reports and provide accurate data for audit.

There may be other additional functions you need depending on the nature and size of your company. You want a software that makes the work of running a business easy and spontaneous, freeing you up, as the decision maker to do other more significant things.

Who Can Benefit from Using Accounting and Bookkeeping Software?

Any business can benefit a great deal from automating their finances and using accounting and bookkeeping software. Regardless of the nature and structure of your business, there are financial procedures that can be simplified with the right software. For example, in case you need recurring invoices for a client, having a software enables you to generate specific ones in no time. These can be configured to run automatically in your bookkeeping and bookkeeping software.
Businesses of every size can, benefit from using accounting software. It can be used to incorporate data entry, track payables and receivables, handle payroll, and modernize journal entries. It’s also excellent for running reports that help you meet your short-term and long-term business goals.

Are Automated Accounting & Bookkeeping Software Secure?

Some of the most common questions circulating around about online accounting software are related to the topic of security. It is fair enough for business owners to be worried about this aspect as financials is a sensitive and confidential matter for everyone. If you are going to store your accounting information in the cloud, you need to be confident that your data is safe.

Online accounting software and accounting software are safe. The companies analyzed here take all precautions to protect their customers’ information. In numerous ways, keeping data in the cloud is more secure than storing it on your device. If your device fails or you lose your laptop or tablet, you can wipe the device storage. With cloud storage, you can access your information from anywhere, on any device.

Free Accounting & Bookkeeping Software

If you run a small business, you may need to consider the price first when it comes to choosing an appropriate bookkeeping software. If your business is in its beginning phase you may be looking out for cost-effective options or considering if there are any free options.

Good news! Many auto accounting software have free versions!

However, the thing to keep in mind is whether you’re getting the features and functionality you need with free software version. If you need basic assistance until you can afford the premium software, it is recommended to use the free version.

How Much Does Accounting & Bookkeeping Software Cost?

Accounting and bookkeeping software costs vary by product. As mentioned, there are free options with limited functionality. Many of the options we reviewed have tiered pricing, from budget options for small businesses with only a few users to enterprise-level pricing for larger organizations. Many companies offer discounts on the monthly fee if you pay annually in bulk. This is something to keep in mind if you need to limit your spending.

Accounting Software:

  1. QuickBooks Online

QuickBooks Online is a solid accounting software with quite a lot of exceptional features. It was developed to be intuitive and easy to use. The process of setting up an account is simple because of the user-friendly interface. It is laid out in an organized manner, making it easy to find whatever you are looking for. Best part is that the software doesn’t entail you to have accounting experience.

Although QuickBooks Online isn’t quite as resourceful as QuickBooks Pro, it has everything a small business needs and is cloud-based. The software is updated by the company regularly, with new features being added constantly, it is easy to share information with your accountant.

  1. Xero

Xero’s cloud-based program offers account management, billing, expense reporting, and payroll. It also integrates with thousands of other apps, so you can add more functionality as you need it. The interface is clean and user friendly. The company updates the product every 3-6 weeks based on user feedback through community forums. They also offer excellent customer service. Xero is headquartered in New Zealand but supports US customers. The software is cloud-based, so there is no need to download the program to your computer. The company targets small and medium enterprises. They facilitate importing data from other accounting systems.

  1. Zoho Books

Zoho Books is not only easy to set-up and use, but its focus on automation makes it easier to manage than most tools. Its robust features include a one-time and recurring billing, online and offline payments, banking reconciliation, automatic tax calculation, reporting, 1099 contractor management, and more.

Zoho also offers add-ons such as add users and advanced automatic scans.

With such a wide range of features, this tool has almost everything you need to manage your business finances now and in the future.

  1. FreshBooks

FreshBooks offers an easier way to generate and manage millions of bills and if this sounds at all relatable, this could be the tool for you. It offers a higher level of customization than most other accounting programs and software and requires little experience to use as well.

Freshbooks’ customizable features make it easy to send quotes, manage project budgets, automatically add late charges, customize unlimited invoices, send payment reminders, accept deposits and payments. It allows you to bill your customers in multiple currencies, languages, subscription or retainer bases. You can also integrate tax apps, filing tools, and other tools like Gusto, GSuite etc. with FreshBooks.

  1. Sage

Sage Business Cloud Accounting, like the others mentioned so far, is a cloud-based accounting software that does not require accounting knowledge to use. In fact, we recommend this as one of the best accounting solutions based on your industry, company size, and unique business needs.

Sage enables its users to:

    • Generate and track invoices, track and forecast cash flow, accept and make payments, automate admin, manage inventory, track expenses, and much more.

    • Scale with add-ons such as human resources management and estimating.

    • Augment multiple users such as employees to your account, as well as share real-time access with your accountant at no extra cost.

    • Sync information from your bank and apps such as Miro, and Gmail.

 

 

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Accounting, Bookkeeper, Bookkeeping Software, Outsource Bookkeeping

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Why Outsourcing Your Bookkeeping is a Great Idea

Why Outsourcing Your Bookkeeping is a Great Idea

Why Outsourcing Your Bookkeeping is a Great Idea

November 20, 2022

Why Outsourcing Your Bookkeeping is a Great Idea

peakreliance

Accounting, Bookkeeping, Taxes

Being the head of a small-scale business, you spend the majority of your time overseeing daily operations. Performing a number of activities is likely a source of great pride for you, including the task of bookkeeping.

Performing these tasks singlehandedly might be a personal achievement for you as a business owner, however the task can quickly start to feel like a mountain of work after a busy work-day. This becomes even more daunting when you factor in other financial responsibilities like the mandatory tax filing deadline that needs to be met or the monthly bank reconciliation. Sooner than later, it’s better to start thinking of alternative ways of bookkeeping. 

The Best Time to Hire a Bookkeeper

At the early stages of your business, it may make sense to manage bookkeeping by yourself, given that the client numbers and subsequent transactions would be at the tip of your fingers.

The key is to know at what point must you begin looking for a professional bookkeeper. The following conditions might help you as a guide in reaching that decision within a good time-frame.

  • Unlike before, book management takes up more and more of your time.
  • Profit margins, cash flow and expense calculations and records are pending and there is minimal clarity on finances. 
  • Like clockwork, this leads to a barrier against your ability to make important business decisions since you don’t know the clear financial standing of the company. 
  • Inevitably, without proper records, you struggle in doing your income taxes.

When this becomes a norm and your finances are all over the place, it is imperative to start looking for a professional bookkeeper or an accountant. 

Fortunately, there are a number of ways to get around this, otherwise messy, task of bookkeeping. The following are some of these ways:

DIY Accounting Software

If you feel that you must do the bookkeeping yourself, there’s good news. There are plenty of accounting software options which provide tools that help you lay out and manage incomes and expenses along with generating financial statements for you.  Of course, learning how to use accounting software can be a challenge in itself, and your first couple of entries may include errors, thus wasting your efforts without expert oversight. 

In-House Bookkeeping

When your bookkeeping becomes a job itself, your best bet might be to just hire an in-house bookkeeper; an employee who will take care of all that financial workload without you having to worry. 

The costs of that do come along, however, as not all small businesses can afford personal bookkeepers. You would need to provide office space for your new employee, along with a computer to work on. We haven’t even mentioned the mandatory holidays and medical insurance that will have to be ensured for the bookkeeper, along with retirement perks. A cost-benefit analysis will have to be done before you, as a small business, make this decision. 

Accounting Services

Large businesses often hire accountants or CPAs that help them in navigating with taxes, business planning, strategic financial decisions and forecasting. 

However, if all you require is bookkeeping assistance, an accounting firm might not be the best choice. In general, bookkeepers are more involved in administrative tasks, whereas accountants provide knowledgeable strategic help. They can manage your books, of course, but that knowledge frequently comes at a price that a small business might not be able to afford.

Outsourced bookkeeping

You may get professional support without having to hire a full-time staff by using outsourced accounting services, which are frequently the ideal middle ground between DIY and in-house bookkeeping.

All of your bookkeeping needs can be met by the knowledgeable professionals at outsourced bookkeeping services. They’ll manage all of your accounts payable, receivable, and credit card transaction entries as well as the preparation of your financial reports, including balance sheets.

  • Save staffing and payroll costs

You would wind up spending more on insurance, perks, and training if you hire a bookkeeper. Even if your internal bookkeeper is working on part-time basis, it wouldn’t save you from high payroll expenses given that employment taxes will have to be paid. 

When you outsource your bookkeeping, whether on a weekly or monthly basis, you only pay for the job that is accomplished. By doing this, you might avoid paying a staff bookkeeper who might work longer hours between busy seasons.

  • Access a pool of experts and resources 

An internal bookkeeper frequently works alone, which may see them running into unexpected delays, leaving them helpless without the help of necessary resources to seek help from. Additionally, they can lack the expertise needed to modify bookkeeping systems to accommodate additions and modifications you make to your company.

When you outsource your bookkeeping to a trustworthy company, you get access to a larger knowledge base of seasoned financial professionals. An outsourced bookkeeper is more likely to keep up with state and federal regulatory changes that could affect your company now or in the future because they frequently manage the books for a range of clients.

  • More time to focus on your business 

Often, small business owners learn the hard way how time-consuming and difficult bookkeeping is. In fact, the average small business owner puts in a full day’s worth of labor keeping their books each month. You can focus on expanding your company once you have outsourced this duty.

  • Enjoy a stress-free tax season

It is a blessing to be on top of the game long before the tax filing deadlines approach. Having an accurate record maintained and having the satisfaction of a stress-free audit in case IRS decides to carry it out is completely worth the cost you will be paying to an outsourced accountant. 

  • Take advantage of the latest technology

Since an outsourced bookkeeper’s career depends on maintaining effective procedures, they are more likely to make technology investments to speed up their job and ensure the accuracy of your data. The majority of outsourced bookkeepers utilize systems that automatically import transactions, necessitating less input on your part as the business owner. Without needing statements or receipts from you, your bookkeeper can organize and reconcile your books. Many also use cloud-based platforms like FreshBooks, Xero etc., which make it safe and simple to access your information from any device, at any given time and place.

  • Scale your books with your business

Your organization will require additional bookkeeping assistance as it expands. Recruiting and educating a second bookkeeper increases payroll expenses significantly and reduces your profit margins.

 

What happens if your business experiences stagnation? The bookkeeper on your staff continues to get paid while working less and still obtaining the same benefits. Even with less money flowing in, your obligation to pay employee taxes stays the same. Outsourced bookkeeping services are adaptable and simple to scale to changes in your company’s requirements. This is especially practical if your business is seasonal because the service is flexible enough to meet your demands.

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Accounting, Bookkeeper, Bookkeping, Online CPA, Outsource Bookkeeping

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All About Automating Your Bookkeeping

Automating Your Bookkeeping

All About Automating Your Bookkeeping

November 19, 2022

Automating Your Bookkeeping

peakreliance

Accounting, Taxes

Keeping a track of all the finances and managing accounts can be extremely overwhelming, especially if you’re a small business owner. Bookkeeping eventually can become majorly time and energy consuming and since money matters need to be accurate to avoid legal problems, it’s best to ensure that and automate finances. Automating your finances can reduce the bookkeeping burden and make it more efficient. 

What does it mean to Automate?

Accounting and bookkeeping can be automated by using an appropriate accounting app or software. It means that you will not need to make any calculations by yourself or keep any hard records, the app or software will do all these for you, give you your company’s current financial status, maintain records, maintain all necessary financial statements and will do so along with saving you tons of effort and time. 

Features of an automated bookkeeping system:

  1. Expense management and transaction classification

Many modern accounting software can be classified as automated bookkeeping programs and their operations are fairly simple to grasp. These softwares basically need data that they can apply formulas to and work with. You will need to put in numbers like your total sales, expenses, bank account details etc. for the software to generate relevant statements.

Properly sorting and recording your transactions helps you catch more deductions, which makes your life easier in case you get audited by the IRS, and generally makes looking through your financial records a much less painful experience. With an automated system, you need not worry about errors and that some audit pressure off your chest.

Automated bookkeeping software’s like Mint and Quickbooks Online are some of the first apps offering this kind of service. Some recent and newer tools like Expensify and Bench have become preferences among start-ups and small business owners looking for low-cost automated bookkeeping solutions.

  1. Generate financial statements

Expense tracking is just one part of bookkeeping. Whichever automation software or bookkeeping service you choose should be able to generate financial statements for you, like balance sheets, income statements and cash flow statements.

Automated bookkeeping services are designed for full-scale bookkeeping and accounting. 

  1. Generate tax-ready financials

Accounting automation and bookkeeping software can radically cut down the amount of time you devote to getting your business taxes ready in general. They do this by:

    • Automatically classifying and marking potential deductions for tax filing.
    • Keeping all tax records in one place.
    • Reducing the amount of time spent hunting down receipts, invoices and other important tax relevant records.

Benefits of Automating

  • Cuts Down Human Calculation Errors:

Recording, classifying, and reconciling transactions requires moving large amounts of data from one place to another. No matter how careful you are with this task, there is always the risk of making simple errors. This is where automated accounting solutions come in and shine.

Automating accounting adds an additional layer of security to the accounting process by reducing human error and providing more reliable financial information and security.

  • Provides Financial Insight:

Auto Accounting is not only dependable it’s also fast. Instead of waiting until the end of the month, automated solutions present you real-time insight into your financial health so you can make critical business decisions faster and more confidently.

It can provide insight on the following:

    • Accounts payable/accounts receivable
    • Bank reconciliation
    • Billing and invoicing
    • Cash management
    • Collections
    • Expense tracking
    • Fixed asset management
    • Payroll management
    • Revenue recognition
    • Reporting
  • Saves Valuable Time:

    Automation is about allowing software do repetitive tasks and freeing them up to run your business and automation is no exception.

    If you’ve been doing manual bookkeeping in the past, you probably spend some time each week or month doing bookkeeping.

    Auto Accounting reduces the time you spend copying and pasting numbers into spreadsheets, helping you prepare financial statements, assess overall business health, and make strategic business decisions that impact long-term performance. You can spend more time on higher value tasks such as decision making. – term success.

This introduction to Auto Accounting is just the beginning of what is possible. As you begin to explore what else it can do, you can’t help but wonder how you would have run an accounting firm without Automated bookkeeping!

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Accounting, Automating bookkeeping, Bookkeeper, Bookkeping, Online CPA

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Claiming Losses to Reduce Tax on Stocks, Shares and Crypto Assets: Achieving Tax Advantages

Claiming Losses to Reduce Tax on Stocks, Shares and Crypto Assets Achieving Tax Advantages

Claiming Losses to Reduce Tax on Stocks, Shares and Crypto Assets: Achieving Tax Advantages

November 18, 2022

Claiming Losses to Reduce Tax on Stocks, Shares and Crypto Assets Achieving Tax Advantages

peakreliance

Accounting, Taxes

Claiming losses on your investments can be a useful strategy to reduce your taxable income and increase the amount of investment tax deductible. If you own stocks, shares, bonds or other securities that are subject to taxation, losses can be deducted from taxable income to offset any gains. However, making losses isn’t as easy as it sounds — you need to follow strict rules to claim them on securities held for trading or investments held for longer periods of time. Even so, it is still a good way of reducing your tax liabilities. This article focuses on explaining the process of claiming losses on securities, stock and shares, mutual funds and EFTs, and cryptocurrencies.

How to Claim Losses on Securities

The process of claiming losses on securities is fairly straightforward. You will have to keep track of the cost basis, the amount paid for the asset, and the amount you sell it for. The profit or loss you make from these trades will determine your total tax liabilities. First, take a close look at your investment portfolio. Are there any stocks, shares, or other securities that have dropped in value? If so, you can claim a loss. To claim a loss, you must first know your cost basis. This is the price you paid for the shares, bonds, etc. since you bought them. You can find the cost basis either by using the records you kept when you bought them, or using the broker’s records. You can also ask your accountant. Once you know your cost basis, you can subtract any subsequent gains from that basis. This is how much you will deduct as a loss. You will have to keep good records to make this process successful.

How to Claim Losses on Stocks and Shares

Making losses on stocks and shares is a bit more complicated than simply subtracting the profit you make from your cost basis. You will have to keep records of your cost, the amount you sell them for, and the amount you pay for them again. This will allow you to determine your total profit or loss for the stock or share. To claim losses on stocks and shares, you will have to keep good records of every purchase and sale you make. You will also have to keep good records of the amounts you paid and received. If you don’t, you may be audited and could be penalized. The profit or loss you make from these transactions will determine your total tax liabilities.

How to Claim Losses on Mutual Funds and ETFs

The rules for claiming losses on mutual funds and ETFs are similar to the rules for stocks and shares. You will have to keep records of the cost, amount you sell them for, and the amount you pay for them again. Note that the rules for mutual funds are a bit different than stocks and shares. When you make a loss with mutual funds, you can claim losses from a specific period. This period is usually the same as the investment period. So if you own stocks in a mutual fund for one year, you can also claim losses for that entire period.

How to Claim Losses in Crypto Currencies

The tax treatment of cryptocurrency currencies is unclear and may change in the future. Therefore, it is advisable to hold onto your cryptocurrencies for investment purposes rather than trading them to make a profit. If you choose to make a profit, you will have to report it as usual and pay taxes on it. As with stocks, shares, and other securities, you can make a loss on cryptocurrencies. Just like with stocks and shares, you will have to keep good records of your purchase and sale transactions. You will also have to keep good records of the amount you received and paid for your cryptocurrencies.

 

Losses on investments can be a useful tool for reducing your taxable income, especially if you have been making large profits. However, making losses isn’t as easy as it sounds. You must keep accurate records and follow strict rules to claim the losses on stocks, shares, and other investments. The good news is that you can also make a loss in your crypto holdings.

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Claiming Losses, Crypto Assets, Reduce Tax, Shares, Stocks

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5 Ways an Accountant Can Help Your Small Business

5 Ways an Accountant Can Help Your Small Business

5 Ways an Accountant Can Help Your Small Business

November 17, 2022

5 Ways an Accountant Can Help Your Small Business

peakreliance

Accounting, Bookkeeping, CPA

Having your own business is a great way to follow your passions and see a return on all that work you put in. But when it comes to numbers, many small business owners feel like they’re stuck in second gear.A certified public accountant (CPA) can help you get back on track with all things accounting related. An accountant can assist with financial reporting, tax preparation, and audit services. They aren’t just useful for big businesses. Small businesses also stand to benefit from hiring an accountant. Here are six ways an accountant can help your small business grow and thrive.

  1. Stay on top of your financial responsibilities.

    Accountants are highly trained professionals who can help you stay on top of your financial reporting and payment obligations. Whether it’s sales tax, payroll taxes, or filing your quarterly financial reports, your accountant can assist with all of these. Every state has its own set of rules for businesses to follow, and even a simple oversight could lead to fines and penalties. Having someone on your team to help keep you current and compliant can save you a big headache in the long run.

  2. Help you understand your company’s financial position.

    An accountant can help you understand your company’s financial position. This includes everything from your current assets and liabilities to your ongoing cash flow. The better you understand your current financial position, the better you can plan for the future. Hiring an accountant can help you identify the best path forward. From cash flow forecasts to long-term debt obligations, your accountant can help you understand all aspects of your financial position. This can also help you see where you may need to make some changes to improve your financial standing.

  3. Help you spot red flags in your company’s financial reporting.

    As you work with your accountant to create your financial statements, you can work together to identify any potential red flags in your financial reporting. This can include missing information or errors in your company’s financial reports. This can help you spot issues early and correct them before they turn into major problems. A quick audit of your financial reports from your accountant can help you catch issues before they cause major problems for your business.

  4. Assist with tax planning and preparation.

    Your accountant can also assist you with tax planning and preparation. This includes assisting you with choosing the best accounting method for your company and identifying any write-offs that you qualify for. But it also includes helping you plan for taxes in the future. Your accountant can help you forecast your company’s taxes and identify tax savings and breaks that you qualify for. Tax planning is a year-round process that can help you reduce your tax liabilities and improve your cash flow.

  5. Provide auditing services to make sure everything is in order.

    Depending on your company’s size and needs, your accountant may also be able to provide auditing services. An audit is a thorough review of your company’s financial statements to make sure everything is in order. This can include a review of your bookkeeping records, financial statements, and financial controls. An audit can help you identify issues early and correct them before they become major problems. This can also help you correct issues that were not caught during your financial reporting process. An audit may be required for certain government contracts, industry types, or for your company’s growth. Your accountant can help you determine if you need an audit and can assist with the process.

While it may not seem like an accountant can do much for a small business, the reality is that these professionals can actually help you save money and prevent problems from arising in the first place. If you’re not sure if hiring an accountant is right for you, ask yourself these questions first. Do you feel like you’re always behind on your financial obligations? Do you have no idea how to forecast your company’s financial position? If you answered yes to either of these questions, then it might be time to hire an accountant.

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Accounting, cpa, Online CPA, Small Business

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Estimated Tax in California in 2022 – How to Prepare for Tax Season

Estimated Tax in California in 2022 - How to Prepare for Tax Season

Estimated Tax in California in 2022 – How to Prepare for Tax Season

November 16, 2022

Estimated Tax in California in 2022 - How to Prepare for Tax Season

peakreliance

Accounting, Bookkeeping, CPA

When’s the Tax season? How much tax do I owe? What should I do to save money? All of these questions will be answered by those who sweat cash during Tax season, April 15-22. Many people panic when they see the date “Tax Season” comes out of the year. They think they’re going to struggle making their payments or get into big debt. But nothing could be further from truth! Tax season is when businesses and individuals alike start paying attention to their tax returns and understanding how much they owe. The amount owed will vary from person to person based on what kind of return and tax calculations were performed, but in all cases it will be something to focus on during this time.

What is Tax Season? 

During tax season, members of the public, businesses, and organizations file their own tax returns. The income they earn, as well as the amounts they pay, are reported to the Internal Revenue Service. The IRS then issues a tax return report card to each taxpayer to help them understand where they stand with their tax obligations. 

Why is Tax Season a Good Time to Start Planning? 

Because tax season is typically the most time- consuming part of the year for taxpayers, it’s a great time to plan ahead and take steps toward saving money. While Planning is not required, it’s a good idea to have some kind of strategy in place. If you’re filing a tax return for the first time, it can be helpful to have an expert prepare your tax return for you. The person who prepares your tax return is known as an “ Auditor-in-Chief ”. An Auditor-in-Chief is an accountant, an attorney, an economist, a IRS special agent, and an accountant-supervisioning surgeon. The Auditor-in-Chief works for and is paid by the organization that hired the Auditor-in-Chief to prepare the organization’s tax return. If you hire an Auditor-in-Chief, they will prepare your tax return for a fee. The Auditor-in-Chief will also audit your return, meaning they’ll go over your returns and make sure you’re compliant with the law. Without an Auditor-in-Chief, you’re on your own when it comes to auditing your own tax return. 

The Fresh Start Provision 

One of the most important things you can do is request a “ Fresh Start ” with the IRS. The Fresh Start Provision allows you to start the process of getting your tax return Prepared for Filing. The Fresh Start Provision only applies if you’ve been audited by the IRS and want to start the process of resolving the issues with your tax return. If you want to start the Fresh Start process, the first step is to write a letter to the IRS explaining why you want a Fresh Start. You can find more information on the Fresh Start Provision in IRS Publication 519. 

How to Prepare for Tax Season 

Now that we’ve gone over what to expect during tax season, it’s time to get down to the nitty-gritty. The first and most important thing you can do is prepare yourself mentally. Remember, you’re not alone! There are millions of people who file tax returns and many of them have gone through this process before. Make sure you have the facts straight and know where you are legally as a taxpayer. It’s also a good idea to get a tax return preparer on retainer who can help you through the process and beyond. 

Bottom Line 

The best way to prepare for tax season is to make sure you know what your taxes are, where you’re legally required to pay them, and how much you’re obligated to pay. Once you know your answers to those questions, the rest will come easier. The information in this article is accurate and up-to-date as of the date of publication. The information is not intended as legal or tax advice. If you have specific questions about your situation, you should consult an accountant or tax lawyer. The information in this article is current as of the date of publication. The materials are not intended as tax advice or as a specific strategy to prepare for any given situation. The information is only meant as a guide. If you are interested in starting your own tax return, we recommend that you contact a tax attorney or your local IRS office for more information. The IRS does not accept unsolicited tax returns.  

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california, Estimated tax, Tax Season

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All About IRS: Tax Filing and Audit

All About IRS and Filing Taxes

All About IRS: Tax Filing and Audit

November 15, 2022

All About IRS and Filing Taxes

peakreliance

Accounting, Bookkeeping, CPA

What is IRS?

The Internal Revenue Service also famously known as the IRS is a bureau of the US Department of Treasury. The IRS is responsible for collecting tax revenue and assessing finances for companies operating in the US.

The IRS has gone through several reorganization and modernization changes, over the years since it’s foundation back in 1862, during this time it was renamed and experienced a change in authority by being placed under the Department of Treasury, USA.

IRS is very clear in its mission. The bureau’s work is to “Provide America’s taxpayers top-quality service by helping them understand and meet their tax responsibilities and enforce the law with integrity and fairness to all.”

What does IRS do?

IRS aims to carry out the tax laws in the US. It evaluates and collects taxes, assists taxpayers understand and meet their tax responsibilities and helps implements tax law to ensure everyone pays what they rightfully owe the state.

The IRS executes three main functions:

  1. Administer tax laws
  2. Process tax returns and collect revenue
  3. Taxpayer service
  4. Tax law enforcement

Collecting taxes

One of the most significant responsibilities of the IRS is to assess and collect taxes on behalf of the government. The sum consists of income taxes, employment taxes, business income taxes, excise taxes and estate and gift taxes etc.

Along with the timely collection of taxes, they are also in authority for issuing tax refunds, which an individual or business can collect as a result of the overpayment of the due tax amount.

Providing services to taxpayers

Another central responsibility of the IRS is providing services to taxpayers in the form of guidance and help regarding tax laws and legal matters. These services can be availed through the IRS website, its telephone helplines, IRS Taxpayer Assistance Centers and volunteer tax assistance.

Enforcing tax laws

A final responsibility of the IRS is the implementation of tax laws. The IRS identifies and pursues those who have underpaid/not paid their taxes, whether as a result of a calculation error or deliberate criminal activity. These examinations typically take the form of either correspondence or field examinations. They carry out criminal investigations and supervise tax-exempt organizations and qualified retirement plans. It is the responsibility and accountability of the IRS to ensure all companies and individuals pay their fair share on time and accurately.

The IRS and Audit

As part of its tax law implementation mission, the IRS audits a hand-picked portion of income tax returns each year. In the fiscal year 2020, the agency audited 509,917 tax returns.

The reasons for an IRS audit vary according to some factors which may also increase the chances of examination for some companies. The chief amongst these is higher income levels. Other factors that may prove to be red flags for an audit include; not declaring the right and accurate amount of income, claiming a higher-than-normal number of business-related deductions, making excessively hefty charitable donations compared to income, and claiming rental real estate losses. However, no single factor determines who does or does not face an IRS audit each year.

The IRS and Taxes

Companies can pay their due taxes to the IRS through the following ways:

  1. An electronic funds transfer from your bank account
  2. A debit/credit card
  3. A same-day bank wire or
  4. An electronic funds withdrawal at the time of e-filing your return.

There are other payment options available as well for businesses and individuals who cannot mare electronic payments. They can pay through:

  1. A personal check
  2. A cashier’s check, or
  3. A money order in the name of the US Treasury.

 However, they need to be sure that it contains the following information:

  • Company’s name and address
  • Phone number
  • Social Security number (where applicable)
  • Employer identification number (where applicable)
  • Tax year
  • Related tax form or notice number

Businesses can even pay in cash if they wish however, with each payment method all terms and conditions must be followed to avoid any future problems or delays as this is a sensitive legal matter.

Out of all of these options, the best and most efficient, quick and safe way is to use on of the electronic payment methods to clear the payment.

Do we really need IRS?

IRS claims to be one of the worlds most efficient tax administrators. The taxes that they collect are used to fund public utilities like national defense, aid for veterans, Social Security, medical care services, foreign affairs, community development and other services that the government provides.

IRS performs an important function for the US government, keeping all organizations, companies and business individuals in line with the tax laws. The bureau collects the necessary funds that the state needs to provide public services to its inhabitants and makes the functions of the entire federal government possible.

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Accounting, Audit, Bookkeeper, Bookkeping, cpa, IRS, Online CPA, Tax Deductions, Tax filing, Taxes

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