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Accounting Bookkeeping

5 Best Bookkeeping Software Tools for Small Businesses

5 Best Bookkeeping Software Tools for Small Businesses

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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Accounting Bookkeeping Taxes

Why Outsourcing Your Bookkeeping is a Great Idea

Why Outsourcing Your Bookkeeping is a Great Idea

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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Accounting Taxes

All About Automating Your Bookkeeping

All About Automating Your Bookkeeping

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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Empowering small businesses and individuals with efficient and reliable bookkeeping & tax services.

Accounting Bookkeeping CPA

All About IRS: Tax Filing and Audit

All About IRS: Tax Filing and Audit

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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Accounting Bookkeeping CPA

How to Hire an Appropriate CPA for Your Business

How to Hire an Appropriate CPA for Your Business

Accounting, Bookkeeping, CPA

What does a CPA do?

Usually, when a business is just starting out, the financial tasks fall squarely on the owner’s shoulders. As tempting as it can be to maintain that arrangement once the money starts to flow, not only to avoid paying someone else to do it but also to avoid allowing someone else to have access to the information, it can become a tiring and mundane task in the long run.   

Hiring an accountant at the right time through the journey to establishing a successful business is an integral step towards victory. It is a great idea to hire an online CPA when it comes to this. A CPA is a tax expert with a sound knowledge of tax laws and legal processes. CPAs can take a good legal care of your business’s taxes, answer important financial questions and potentially save your business a lot of money. They, unlike general accountants have passed the challenging Uniform CPA Exam that tests their understanding of tax laws and standard accounting trials. Through this exam they attain a state license. 

 The kind of exposure and skill that a CPA has can improve your overall tax representation.  

Some of the tasks that they can help you with include: 

  • Addressing legal requirements: tax return filing, compliance documents, audits.
  • Preparing yearly financial statements, statements of accounts, and reports.
  • Presenting a breakdown of company’s financial conditions.
  • Evaluating financial decisions about the company progress.

CPAs are equipped with hands on skills to help small businesses and start-ups with a lot of technical financial matters. 

Is your business ready to hire a CPA?

Every owner of a small business should consider hiring a professional accountant before the need even arises. Accounting services are extremely vital for the health of your business, so as soon as you start to feel overwhelmed by managing your finances, that is the best time to hire an accountant or a CPA. However, taking other factors into consideration, hiring one at the wrong time can slow down your processes as well. 

Here are a few appropriate instances to hire a CPA: 

  1. At the beginning of the fiscal year to ensure you start right. 
  2. At the end of a month and going into newly reconciled accounts to maintain a fresh set of financial statements and records. 
  3. When it’s time to file your taxes. 
  4. When you as the owner feel overwhelmed by bookkeeping and financial record maintaining and other areas that need your dedicated time and focus are being over looked. 

Hiring a CPA can help you keep your business agile regardless of the economic or societal changes that may occur around you. 

Tips for finding an appropriate CPA:

1. Do background research by looking for referrals and reviews

It’s a good idea to start by asking around for recommendations from other experienced people and companies in your area who have a CPA onboard. This is a chance to use your connections. Ideally, you should be able to find a valuable referral for a new CPA through your bank, realtor, or employees. 

In case your local referrals aren’t working, you can search online for accountants in your area and use online reviews about their services to help you make a decision. Forums and other online platforms like Yelp, LinkedIn, or Facebook groups can be helpful resources. Making sure you find a skillful and dignified CPA is an integral part of the process because of the responsibilities that they will be looking after for you and your company. 

2. Evaluate your needs and their quality service

CPAs specialize in many different services. Some choose being a tax preparer for numerous companies, while others would rather assist a handful of small business owners steer financial decisions year-round. Some offer bookkeeping services and will prepare the company’s tax returns, and others will prefer intricate compliance cases. 

As part of your preliminary consultation with an accountant, inquire about the services they provide to their clients. Also, discuss how they tend to work with their clients and how much experience they have in your industry.  

It is important to be clear about the kind of services you need to avail from a CPA before you bring them on board. 

3. Examine their qualifications

CPAs specialize in many different services. Some choose being a tax preparer for numerous companies, while others would rather assist a handful of small business owners steer financial decisions year-round. Some offer bookkeeping services and will prepare the company’s tax returns, and others will prefer intricate compliance cases. 

As part of your preliminary consultation with an accountant, inquire about the services they provide to their clients. Also, discuss how they tend to work with their clients and how much experience they have in your industry.  

It is important to be clear about the kind of services you need to avail from a CPA before you bring them on board. 

4. Meet with prospective accountants

Once your background checks are complete, you need to set up meetings and have a more meaningful conversation with each of your shortlisted accountants. You can consider focusing on the following things when interviewing them: 

  • Questions about licenses, certification, relevant qualifications or professional organizations.  
  • Their experience working in your industry.  
  • Their rates for several services like tax preparation fees.  
  • Do they use outsourcing and if yes then for which services?  
  • The kind of accounting software they use.  
  • Their E-file policies for tax return.  
  • Their communication policies (Email, phone etc.)  
5. Determine your level of comfort

The right choice for an accountant will be a professional whose financial and legal advice will direct you through long-term decisions for your business. Their advice will be your direction every year through legal statutes at tax time. 

A talented accountant will not only formulate your tax documents but will also sign them with their credentials. They will represent you if any tax questions or issues arise throughout their tenure. You, as a business owner, want to be confident in your decision with giving access to information this sensitive and essential to an outsider. 

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Accounting, Bookkeeper, Bookkeping, cpa, Home office deductions, Online CPA, Tax Deductions, Taxes

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Accounting Bookkeeping Taxes

Reclaiming Home Office Deductions: Tips and Tricks

Reclaiming Home Office Deductions: Tips and Tricks

Accounting, Bookkeeping, Taxes

“The first mistake people make when it comes to home-office deductions is they fail to claim them,” says Bob Meighan of San Diego, a lead CPA for a famous company in USA. 

Many business owners with home offices waive off the tax breaks because they fear that the write-offs will trigger a tax audit and bring accountability on their shoulders. Tax experts say that now home offices no longer set off alarms at the IRS (Internal Revenue Service). Although, there are some parameters one needs to examine, when it comes to checking if you are eligible for the home-office deduction. Millions of Americans have shifted to worked from home this year, due to the COVID-19 pandemic. 

The endorsed tax break is generally only available for the people who are self-employed, gig workers or independent contractors. As a small business owner, whichever industry your business may belong to, you can by all means claim this deduction while filing your taxes. 

Expenses You Can Claim

There are two types of expenses that you can deduct:

The first, direct expenses, lets you deduct 100 percent of costs linked specifically with your home office. It includes everything from hiring someone to paint/ renovate your room to buying equipment like work computer, office supplies or cell phone dedicated for the home-based business.  

Businesses can also write off remodeling, if the home office is being used to meet with clients or customers. This is because, logically, the appearance of the house is important to the success of the business. 

The other deductible home-office expenses are indirect expenses. These are proportioned equally, based on the dimensions of the home office space including your utility bills, property insurance, mortgage and a home security system.  

The write-off amount can be calculated in two ways. First is calculating the portion of the house that is being used for office work. That is then taken as a percentage of the whole house area and the business owner is eligible to write-off that percentage. 

Second method is counting the total number of rooms and taking the number if rooms as a portion of the house used for home office. The business owner can write-off that portion only. Out of these two, the percentage method is more widely used.  

However, the monthly charges/ fees for the primary phone line in your home cannot be deducted, though long-distance calls for work, call waiting and call forwarding can be claimed. Also, if you have only one cell phone being used partly for work and partly for personal things, it’s a gray area that needs to be discussed with a tax advisor. 

Tips and tricks for claiming the deductions: 

Taxpayers and business owners must solely and regularly use the dedicated part of their home as their primary place of business-related work. This means, a place where you greet clients or customers and have meetings, conduct your business, store supplies and inventory etc.  

The good thing is that you don’t have to be the homeowner to claim the deduction — apartments, mobile homes, boats or other property are also eligible according to the IRS. 

Another possibility is to claim only a part of the deduction, which accounts for the time the business spent being operated in a certain location. The business owners must have proper documentation for all home office spaces that were used within a tax year. What better documentation can there be than an actual picture of the work space. This was, once the deduction has been claimed and IRS initiates an audit, owners can have a solid proof. 

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Accounting, Bookkeeper, Bookkeping, cpa, Home office deductions, Online CPA, Tax Deductions, Taxes

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Accounting Bookkeeping Taxes

The Top 7 Tax Deductions for Your Small Business

The Top 7 Tax Deductions for Your Small Business

Accounting, Bookkeeping, Taxes

What is a tax deduction?

A tax deduction is a compulsory expanse that every business is liable to pay to the state or the government at end of a financial year. Tax is calculated as a small percentage of the total income of a business.  

Paying off taxes can be a botheration for business owners since the total amount can go up to a lot. Also, filing taxes accurately is a huge task that requires focus and precision so to ensure transpiracy and eliminate risk business owners are compelled to hire tax experts, bookkeepers or CPAs.  

There are tons of small and huge tax deductions in play for small and large businesses alike. Below mentioned are the 7 common and major tax deductions. 

Top 7 Tax Deductions:

1. Home Office Expense  

Home office expense is a major expenditure and a primary one. It is one of the most common small business deductions. This expense can be calculated using two state-approved methods: 

    • The standard option; this requires you to calculate the percentage of your home space being used for business versus personal use. You then apply that percentage to your other qualifying expenses like mortgage, utilities, and insurance. To do this, detailed records must be kept on all relevant expenses. 
    • The simplified option; it needs you to take a standardized amount of say $5 per square foot of home office space and multiply that to a specific square foot of area being using for office work. Hence, home office deduction is calculated. The standardized amount varies with time and according to the state rules.  
2. Insurance Premiums 

Insurance deductions can include the following depending on certain attributes of the business: 

    • Property coverage for office equipment like furniture, equipment, and other major items like the building itself 
    • Liability handling   
    • Auto insurance which includes business vehicles 
    • Health insurance for employees; Group health, dental and vision  
    • Owners’ professional liability or malpractice insurance
    • Workers’ compensation coverage 
    • Life insurance that covers employees
3. Advertising and Promotion 

Reasonable amounts of expenses that are used for marketing and promotion of the business are definitely deductible. These costs include things like: 

    • Hiring a graphics person to design your business logo 
    • The cost print publications like business cards or brochures 
    • Purchasing ad spaces in print or electronic media 
    • Sending printing or digital greeting cards to clients/ other stakeholders 
    • Investing in a new website and its maintenance  
    • Running a promotional social media marketing campaign 
    • Sponsoring branding and other event 
4. Rent Expenses 

This deduction is conditional to if a location is rented by a business for their day-to-day operations or equipment. You can deduct the payments made as rental expense for the business. 

What needs to be taken into consideration is that rent paid on your home should not be deducted as a business expense even if a home office is in place. That rent will be deducted as a portion of the home office expenses. 

5. Utility Expenses 

These include all utilities that the business is using for its operations like telephone, internet, office supplies, refreshment, air conditioning etc. 

These services are deductible if they are integral to your business’s operation. 

 The thing to keep in mind is that if you use a landline at home you cannot deduct that cost, even if you use it solely for work. However, a way out is having a second, dedicated landline devoted to the business’s needs only, the cost of that line is deductible. The same conditions are to be followed for internet and other utilities. 

6. Travel Expenses 

For this expense to be deductible in tax, the trip needs to qualify as business travel. It has to be regular, essential, and away from your tax home; the city or area where your business operates. The trip needs to be a travel away from the tax home and should be longer than a normal day’s work. 

Deductible, approved business travel expenses are listed below: 

    • Travel by plane, train, bus, or car 
    • Parking and toll fees and tips 
    • Use of owner’s personal vehicle 
    • Meals and lodging 
    • Laundry and dry cleaning during the trip 
    • Business calls 
    • Shipping cost of baggage and sample or display materials etc. 

It is essential to keep a record of all costs and amounts incurred during the trip like, fuel along with documents supporting the return/departure etc for these expenses to qualify as deductible taxes.  

7. Bank Fees and Interests 

All business must have separate bank accounts and credit cards as this is always a good idea. Bank fees including annual or monthly service charges, transfer fees, or overdraft fees are all deductible. Merchant or transaction fees paid to a third-party payment processor can also be deducted. These include PayPal and Stripe. 

Fees related to personal bank accounts and credit cards are not deductible.  

The bottom-line is that private businesses and start-ups, both have their own perks as different types of working organizations when it comes to tax deductions. However, claiming them all is tricky and sometimes if one does not seek professional help they may be overpaying their taxes. It is always best to invest in a tax expert such as an online CPA for this purpose. CPAs not only help with accounting and tax related matters, they are also well equipped with good insight about businesses and their financial status and hence can provide with good financial advise. 

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Internal Bookkeeping vs Hiring a CPA

Internal Bookkeeping vs Hiring a CPA

Accounting, Bookkeeping, CPA

Small business and start-up owners are always under a constant financial pressure as their business is in the growth phase and hence, seeking third party support for financial matter, tax filing, legal matters, business advise and managing accounts can be an ideal choice for them in numerous ways. It is not unusual in today’s changing world that business owners till the very last extent try to manage their finances themselves, but when businesses grow so do their financial operations. Sooner or later all founders are faced with this decision to hire an internal accountant or an accountant online, preferably a Certified Public Accountant (CPA). Both types of services have similar basic responsibilities including but not limited to:  

However, there are many ways in which internal bookkeeping and a CPA online are different and better than each other in their own ways. Ultimately, it is the job of the business owner, in choosing the best possible service, to take the right decision for their firm. 

Benefits of Bookkeepers

For many start-ups, a part-time bookkeeper may be a primary hire. Book keepers can take care of tasks such as maintaining general ledgers, completing financial reports, handling payrolls, and processing invoices.  

Business owners may constantly need to be in communication with their bookkeepers and have monthly meetings to ensure all financial matters have been dealt with properly. A regular and effective communication will very likely ensure good growth volumes, achieving sales and other company goals and more, as bookkeepers can inform you about the accurate growth status of your company. 

Here are some general tasks that a bookkeeper is capable of performing: 

  • Maintaining financial records such as ledgers, invoices, payment slips, tax documents. 
  • Keeping the financial numbers up to date  
  • Keeping all company accounts up to date 
  • Preparing the monthly and yearly financial report 
  • Preparing the regular financial status report of the company 
  • Manage payroll 

Benefits of CPAs

As much of a self-explanatory the term itself is, an online CPA or accountant is one providing accounting and bookkeeping services virtually. An online accountant will combine the best of the traditional accounting practices with effective cloud-based accounting software to manage the accounts and finances of your business. Some things that a CPA can bring to the table are as follows: 

  • Addressing legal requirements and communications: legal/compliance documents, annual audits. 
  • Preparing annual financial statements, statements of accounts, and other financial reports. 
  • Breakdown and analysis of company financial conditions. 
  • Evaluating financial decisions concerning company progress. 
  • Handling more complex tax matters like filing tax returns. 

Hiring a CPA is a great idea because as a business owner you can make sure that all information is being tracked appropriately. Additionally, they can also help you prepare your tax returns and conduct an annual analysis of your business.  

While making a decision about growing and scaling your business, a CPA can help you dive deep into the complexity of numbers to understand your existing opportunities and risks and help you make spot on financial decisions. They may also have recommendations that can help you function more efficiently as a business. 

CPAs are tax experts. They are well equipped with the necessary skill set to predict the right time to make a financial change or to alter the course of the finances. Having an online CPA enables businesses to have a go-to person for all related issues. For instance, if you decide to make a big change such as, moving, merging, business purchases, or closure, a CPA can help you a great deal in minimizing your costs, keeping you on track with your financial goals and targets while simultaneously analyzing all financial records. CPAs can at any point in time estimate and inform you about the fair market value of your business, meaning they can save you a lot of valuable time and effort. 

Making the Perfect Choice for Your Business

A bookkeeper has the basic skill set to help out with traditional accounting needs however, when it comes to more complicated and demanding accounting needs, a CPA is a good and smart choice for all start-ups. This is because of the plethora of additional services and helpful insight they bring to the table other than providing basic accountant services. 

Regardless of the size or complexity of a company, accounting is a core part of your business strategy, not an afterthought. It can be a great idea to start small and later get your books in order. As your business grows, you must be diligent enough to figure out how to make the right additions to your accounting staff, both internally and externally, so that you have the right information to progress, at the right time.  

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Accounting, Bookkeeper, Bookkeping, cpa, Online CPA

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