Tax

*  Job-seeking expenses in the same field of employment are deductible.

*  When making contributions of used furniture, appliances and clothing to non-profit organizations, request a receipt from the organization. Attach a record of items donated to the receipt for proof of this deductible contribution. Contributions must be in good or better condition to be deductible.

*  Loan origination fee, known as points, is deductible as interest paid by a buyer of new principal residence. New homebuyers are also allowed to deduct seller-paid points. Points paid on refinancing an existing residence must be deducted over the life of the mortgage.

*  Gain tax is excluded if the taxpayer(s) owned and occupied the principal residence for at least two years of the five-year period ending on date of sale.

*  If stock or mutual fund dividends are automatically reinvested instead of receiving the payments in cash, be sure to maintain good records of all reinvested dividends each year. These re-investments will increase your cost basis and reduce taxable gain or increase loss upon sale.

*  You can deduct qualified education loan interest for college, university or vocational school expenses.

*  Non-deductible contributions can be made to a Roth IRA. Distributions, including earnings, are tax free and it is subject to an AGI-based phrase-out. There is 10% penalty for early withdrawals but it will be waived if the funds are used for: 1) Medical expenses in excess 7.5% of AGI; 2) Qualified educational expenses; 3) A first-time home purchase for up to $10,000; 4) Medical insurance for those who are unemployed for at least 12 weeks. IRA withdrawals are subject to regular income tax.

*  Hope Scholarship credit is available on a per-student, per-year basis for each of the first two years of qualified post-secondary tuition and fees but not books or room/board. It is subject to AGI (Adjusted Gross Income) phrase-out. Lifetime Learning Credit is also available for post-secondary educational expenses which are subject to the same limitations as the Hope Scholarship credit except that: 1) The credit is per taxpayer per year; 2) The credit is available for an unlimited number of years; 3) The credit is available for undergraduate, graduate, professional degree and other students acquiring or improving job skills enrolled in one or more courses

Bookkeeping

Financial Picture - It is hard to know how your business is doing without a clear financial picture. Is your business making profits on a regular basis? Are sales increasing? Are expenditures increasing faster than sales? Which expenses are high based on your business level of sales? Does some expenditure appear to be out of control? That is where accurate financial information becomes very important!

Business Decisions – To evaluate the financial consequences should be a part of your business decision you make. Without accurate records and financial information, it will be hard for you to know the financial impact of a given course of action. Will it pay to hire another employee? How much will another production employee cost? Is this particular product line profitable? That is something for you to think about!

Budget - Your business should develop annual budget for planning purposes. A budget will help keep your business stay on track by forecasting your cash needs and helping you control your expenditures. In addition, if you are seeking bank financing or other sources of capital, a banker or prospective investor will probably want to see your budget as evidence that your business is well planned and stable. Your business must have solid financial information first in order to prepare a meaningful budget!

Payroll Taxes - If your business has employees, you must be aware of the strict rules and regulations relating to payroll taxes. Late deposits of payroll taxes to federal and state will result in severe and unnecessary penalties. With this in mind, your bookkeeper or accountant must file payroll tax return monthly or quarterly and reconcile it with the payroll deposits made during that month or quarter. Then at the end of the fiscal year, your business is required to submit W-2’s to all employees and other forms as required to IRS. This total must agree with the total of all monthly or quarterly payroll taxes deposited during the year. Sound bookkeeping practices will make your business in compliance with all these payroll rules easy and poor record keeping will make this task impossible!

Tax Return - Whether your business is a sole proprietorship, partnership or corporation, you still must file income tax return and pay income taxes. With good record keeping, preparing federal and state tax returns will be easier and more likely to be filed on time. With poor record keeping, it may result in your business’s underpaying or overpaying the taxes and filing tax returns late with additional tax penalties. That is where good record keeping is critical to the success of your business!

Bank Loan / Capital - When you wish to obtain bank financing, a banker will want to see your business’s balance sheet, income statement and cash flow budget for the current and prior years as well as projected statement showing the impact of the requested loan. A banker may even want to see your business bookkeeping procedures and documents to verify whether you run your business in a sound and professional manner. On the other hand, if you are seeking for other sources of capital and need to take in a partner or an outside investor, partner/investor will also want to be familiar with your business’s financial picture. Even your supplier and other creditors may ask to see certain financial records as well. With good record keeping, your bookkeeper/accountant can provide this information to you in a timely manner!