As we embark on the start of 2019, tax preparers are preparing for the start of busy season.  With January comes due dates for 1099s and W-2s.  Most of the time, taxpayers do not realize that they need to prepare any 1099s.  Within the last few years we have seen the following questions appear on Schedule Cs, Schedule Es, and business tax returns:

1.)        Did you make any payments in 20XX that would require you to file Form(s) 1099?

2.)         If “Yes,” did you or will you file required Forms 1099?

As paid preparers, we have to make sure that we answer these questions correctly, which means verifying with you, the taxpayer, whether or not you had any required 1099s to be filed.  The penalty for not filing a 1099 ranges from $50 per 1099 to $100 per 1099, depending on when the forms are filed.

 

Do You Need to Prepare 1099s?

If you have paid someone over $600 for services (including subcontractors, repairs, computer service and any other service someone provided you) or for rent, then you most likely need to send them a 1099.  However, if you paid a corporation or paid them via credit card, debit card, Paypal or Stripe, then you are not required to send a 1099.  Some corporations are still required to receive a 1099, such as attorneys.  We advise all clients to have people who are providing services for them to fill out a W-9.  This helps us determine if they need to receive a 1099 because they have to tell us what type of entity they are by checking a box.  The following payments would require issuance of a 1099:

-Rent over $600 – reported on 1099-Misc

-Royalties over $10 – reported on 1099-Misc

-Other Income over $600 – reported on 1099-Misc

-Nonemployee Compensation over $600 (Independent Contractors) – reported on 1099-Misc

-Gross Proceeds Paid to an Attorney over $600 (this is reported in Box 14 of 1099-Misc  it typically applies if you paid out a settlement, any other legal services would be reported in Box 7 on 1099-Misc)

-Interest on Business Debt to Someone over $10 (excluding interest on an obligation issued by an individual) – reported on 1099-Int

-Dividends or other distributions to a company shareholder over $10 (most applicable to C Corporations) – reported on 1099-Div

 

What Do We Need to Prepare a 1099?

As mentioned previously, you should have anyone fill out a W-9 who will be receiving payment for any of the items listed above.  On the W-9, they list their legal name, federal ID or social security number, address and type of entity.  I cant stress the importance of having the W-9 before you pay the person.  If you pay somebody one time for $2,000 and do not have any of their information, and then in January you are not able to reach the person to get their information, youre in trouble and potentially could face penalties from the IRS for not submitting a complete 1099.

Please feel free to reach out to us if you have any questions regarding 1099s.

If you owe a balance for your Corporate income tax return, you have several options to pay.

 

If you are a C Corporation and owe federal, you must pay that via EFTPS.  We can point you in the right direction to set this up if you don’t have it already.  If you are an S Corporation, you should not owe anything with the federal income tax return.

 

Your first option to pay is by mailing a check with payment vouchers.  If we had an in-person completion meeting with you, we provided you a printed voucher at that time.  The voucher is also available on your Sharefile as a separate PDF file.  You write the check and mail it in with the voucher.  The voucher typically also lists helpful information for who to make the check payable to, where to mail it, and important information to include on your check.  We advise sending certified return receipt.

 

You may also pay your taxes online.  Below you will find step by step instructions for paying the NC balance.

 

NC

Go to https://eservices.dor.nc.gov/cdv/

  1. Fill in your contact info and click next.
  2. Select Calendar Year or Fiscal Year. If your return reports January-December, you are a calendar year taxpayer.
  3. Fill in all information.
  4. For franchise tax due and corporate income tax due, refer to the vouchers we provided you. The voucher indicates whether it is franchise tax or corporate income tax, as well as the amount that needs to be paid. Enter the amount you are paying and click next.
  5. If you are only paying Franchise Tax, select File CD-V and Pay Franchise Tax Only. If you are only paying corporate income tax, select File CD-V and Pay Corporate Income Tax Only. If you are paying both, select File CD-V and Pay Franchise and Corporate Income Tax.  Click next.
  6. Choose payment selection and continue through remaining prompts and screen until you receive confirmation. Please be sure to print a copy of the confirmation and save for your records.

If you are filing an individual income tax return and owe, you have several options to pay.

 

Your first option to pay is by mailing a check with payment vouchers.  If we had an in-person completion meeting with you, we provided you printed vouchers at that time.  The vouchers are also available on your Sharefile as a separate PDF file.  You write the check and mail it in with the voucher.  The vouchers typically also list helpful information for who to make the check payable to, where to mail it, and important information to include on your check.  We advise sending certified return receipt.

 

You may also pay your taxes online.  Here are step by step instructions for making federal and NC individual income tax payments online for an original return.  (If you are paying in for an amended return, do not use these steps.)

 

Federal

Go to https://www.irs.gov/payments/direct-pay

  1. Click Make a Payment.
  2. Reason for payment -> Tax Return
  3. Apply payment to -> 1040
  4. Tax Period for Payment -> Select year for the return you are filing.
  5. Click continue and input data to verify your identity. You will need a prior year return for this step. If we prepared your return, it’s available on Sharefile.
  6. Continue following prompts until you receive confirmation. Be sure to save or print the confirmation page.

 

NC

Go to https://eservices.dor.nc.gov/d400v/d400vContact.jsp

  1. Fill in your contact info and click next.
  2. Select Calendar Year – it will auto select most current year. If you are paying in for a different year, select that year.
  3. Fill in all information and click next.
  4. Select payment method.
  5. Input payment information, payment amount and date you would like it to draft.
  6. Click next. Be sure to save or print the confirmation page.

If you need to make a quarterly estimated income tax payment, you have several options to pay.  Note that these payments are due April 15th, June 15th, September 15th, and January 15th.

 

Your first option to pay is by mailing a check with payment vouchers.  If we had an in-person completion meeting with you, we provided printed vouchers to you at that time.  The vouchers are also available on your Sharefile as a separate PDF file.  You write the check and mail it in with the voucher.  The vouchers typically also list helpful information for who to make the check payable to, where to mail it, and important information to include on your check.  We advise sending certified return receipt.

 

You may also pay your taxes online.  Here are step by step instructions for making federal and NC individual estimated income tax payments online:

 

Federal

Go to https://www.irs.gov/payments/direct-pay

  1. Click Make a Payment.
  2. Reason for payment -> Estimated Tax
  3. Apply payment to -> 1040
  4. Tax Period for Payment -> Select year you are making the payment for.
  5. Click continue and input data to verify your identity. You will need a prior year return for this step. If we prepared your return, it’s available on Sharefile.
  6. Continue following prompts until you receive confirmation. Be sure to save or print the confirmation page.

 

NC

Go to https://eservices.dor.nc.gov/nc40/NC40ContactServlet

  1. Fill in your contact info and click next.
  2. Select Calendar Year – it will auto select most current year.
  3. Fill in all information and click next.
  4. Select payment method.
  5. Input payment information, payment amount and date you would like it to draft.
  6. Click next. Be sure to save or print the confirmation page.

Business Budgeting

A question that accountants often get is “If I’m showing that much income, where did it all go?”.  This question highlights the issue of not having a formalized budget in place (amongst other issues).

The effectiveness of a budget, like almost anything else, is determined by the effort and focus you put into it.  The back-of-the-napkin approach simply will not suffice in today’s rapidly changing business environment. A robust budgeting process should be prioritized by small businesses and large corporations alike.

Generally, small businesses do not have the time nor resources to invest in processes or systems that large corporations can afford.  A meticulous and intentional budget, however, is an exception to that rule.  It only requires the willingness and focus of its users.

Determining what a budget is and how it fits into your organization should precede building and implementing one into your operations.  The former is discussed below.

Budget vs Forecast:

All budgets should be closely aligned with the goals and strategic objectives of the company.  Consequently, a budget represents where a business wants to get to by quantifying aggressive goals that are set for the fiscal year.  If the company is in a growth phase, then the budget may reflect hitting a goal of X percent increase in top line revenue.  However, if the business is maturing, the budget may reflect more focus on enhancing margins.

Forecasting, however, is a process used to determine if the budgeted goals will be met.  In other words, forecasting assists with budget-to-actual analyses.  Forecasting provides information to decision makers to determine if the business is heading in the right direction.

Both processes should be used in conjunction with one another and revisited at minimum on a quarterly basis.

Flexible vs Fixed Budgeting:

The two predominant types of budgets are fixed and flexible budgets.  A fixed budget remains static irrespective of the activity levels of the company (i.e., whether the business is manufacturing 1,000 or 10,000 widgets).

A flexible budget uses variance analyses to determine if activity levels change and how does that affect the company’s profitability.

Each method has pros and cons.  For example, a fixed budget is simple and easy to implement.   However, if the business is experiencing seasonal or fluctuating revenues then a fixed budget may not provide as much value.  Conversely, a flexible budget provides more accuracy but can be a complex, costly process.

Both types of budgets, however, assists in meeting general goals that many small-businesses have.

 

Budgeting Goals:

Budgeting fulfills various goals of the organization, including:

  • Aiding in operational planning
  • Coordinating activities of the organization
  • Acting as a financial control over operations
  • Motivating employees
  • Assisting in evaluating individual and departmental performance

Budgeting Process:

1 – Planning – Plan and develop a budget from historical and industry data, expectations of the upcoming period, sales cycles, recent trends, and planned investments.

2 – Implementation – Share budgets strategically within your organization at an annual meeting and align the team’s goals with the budget.

3 – Monitoring – Track progress towards the budgeted goals by doing budget-to-actual analysis and using forecasts to determine if company is headed in the right direction.

4 – Utilizing – Make strategic changes to remediate areas where goals are not being met.

5 – Updating – Update the budget periodically to ensure goals are realistic and attainable.

6 – Learning – Evaluate the fiscal year’s budget-to-actual numbers and determine what areas can be improved on and refined for the following fiscal year budget.

Ultimately, a budget should integrate marketing, operational, HR, and capital and investment strategies of the organization. It is a proactive activity that enhances decision making and measures performance against goals.  When used appropriately, a budgeting process can help small businesses succeed in meeting their goals.

Wilmington, NC – December 21, 2018 – One of Wilmington’s fastest growing accounting firms, Adam Shay, CPA PLLC, has named its first additional equity partner. Caroline Montgomery, the firm’s tax manager, has been made an equity partner due to her leadership and the firm’s continued growth in serving clients throughout the Carolinas.

“Caroline consistently demonstrates her commitment to our firm’s growth,” said Founder and Managing Partner Adam Shay. “I’ve always been open to expanding ownership and for the past three years Caroline has demonstrated not just expertise and initiative, but outstanding leadership and judgement. Her vision to create a team with expertise for dental practices has put us on a sharp upward trajectory.”  The practice has also expanded its fraud and forensic accounting team and its Virtual CFO services for SME’s and start-ups.

Adam Shay, CPA, founded in 2010, has grown to 17 employees. “Caroline’s reputation as a mentor will be a plus for our staff development and recruiting,” Mr. Shay said.

“I am very excited to be part of a growing firm that continues to show success in our focus areas,” said Montgomery. “We are unique not only because of the lines of service we offer, but also due to our fixed price approach, strength in use of new technology, and our proactive approach to service.”

Montgomery comments that she has enjoyed developing the dental niche and finds pride in the quality of service provided by Adam Shay CPA. “A successful year for me involves helping clients grow their business while minimizing taxes with individualized tax strategies.

Montgomery graduated from Eastern Carolina University with a bachelors and master’s degree in accounting in 2010 and earned her CPA license in 2014. She worked for a CPA firm in Greenville, NC for eight years, having started there as a sophomore in college, and now has a combined 12 years of experience within CPA firms. She demonstrates her passion for the community by volunteering and is now Treasurer for NourishNC.

Forensic Accounting and Virtual CFO Also Contributing to Firm’s Growth

Adam Shay CPA has also strengthened its fraud investigations and forensic accounting services.  The firm has a robust forensic accounting team, providing fraud detection, litigation support, economic damage calculations, and investigations to support insurance claims.

“There are 2 million CPAs worldwide, but only some 4500 certified in forensic accounting and fraud investigations. We are unique in having such a strong team of senior staff in eastern NC,” said Mr. Shay.

Additional growth, primarily in North and South Carolina, has been attributable to the firm’s Virtual CFO offerings, which provide small business owners a team to oversee the financial health of their business, including budgeting, review of financial reports, expense and ratio analysis and other insights that contribute to business vitality.

 

About Adam Shay, CPA

Adam Shay CPA serves individuals and private companies throughout the United States and world. The firm’s fixed price approach combines with advanced technology to provide a proactive approach to financial accounting services. For more information, visit www.adamshaycpa.com.

Every year millions of people make resolutions to better themselves, but what if you took the same approach for your business? What better time to set a culture for change and an atmosphere of growth than the beginning of a New Year? Consider implementing these resolutions to better your business in 2019.

 

  1. Purpose over comfort.

This New Year’s resolution should be at the top of every business owner’s list. One of the most dangerous things that you can do as a business owner is to become too comfortable. Becoming comfortable causes us to lose sight of our purpose, and once we lose sight of our purpose we lose passion. Take a few minutes this year to remember the passion that gives your business purpose and don’t allow your business to be limited by your comfort zone.

 

  1. Be intentional.

Intentionality is something that cannot be falsely represented, which means it must be authentic. Being intentional means living with purpose. As a leader you have the ability to set a culture derived from intentionality or default.

Make it a priority this year to be more intentional in every aspect. Make conscious decisions. Ask your intern how her final exams went. Let your receptionist know how much you appreciate the work she does. Being intentional goes a long way and can be the differentiating factor between success and failure for your business, both internally and externally.

 

  1. Set new goals and realign your existing ones.

Setting goals is one of those things that business owners do on a regular basis, but how often do you revisit and evaluate your existing goals? Set aside time this year to revisit the goals that you have previously set for your company and realign those goals to your current business position.

 

  1. Plan strategically, organize, and communicate.

After redefining your ultimate purpose and evaluating goals, create a strategic plan that describes the steps you will take to achieve your goals. Focus on setting realistic, attainable goals while also catalyzing internal and external growth. Once you have set goals and determined how you will achieve them, it is imperative that you not only communicate these goals to your team, but to also ask them for input and feedback. Investing in your team and investing in external help can be the difference between actually achieving your goals verses merely going through the motions.

   

  1. Determine weak areas and invest in improvements.

As you evaluate your goals and plan for a new year, at some point in your career as a business owner you will identify weak areas that you do not have the time, capacity, or resources to devote to its improvement. Any experienced business owner will tell you that investing in external resources is one of the smartest business decisions that you will make in your career.

Running a business, managing a team, and managing customers is no easy task and leaves very little time to focus on anything else, especially areas that you are not familiar with. Don’t allow your business to be limited by your personal knowledge.

 

Developing a close relationship with your CPA can make a huge difference in business development. Our clients are our priority and we strive to offer our clients more than your typical accountant. We believe that a continuous relationship with your CPA throughout the year is the best way to ensure that you are taking every advantage possible to develop your business.  We know that every business is unique and has specific needs, which is why we utilize a fixed pricing business model that is tailored to each specific client based on their specific needs. Some examples of services that we offer throughout the year include quarterly income projections, planning strategy sessions, and much more. Knowing where your business stands during the year opens the door to endless opportunities of growth.

Contact us today to see how we can help you better your business in 2019!

Entrepreneurs often have a hundred things on their mind at a time. Mental capacity is at a premium. Smart entrepreneurs learn to only focus on what matters. They also learn to delegate tasks and optimize for efficiency. This is where your smart phone comes in. There are so many apps available to help you stay organized and free up mental real estate for more important items. Here is a selection of five apps for entrepreneurs that can help you stay focused on what matters most.

 

  1. Audible

No matter what problem your business is dealing with, chances are that there is an expert who has faced that issue and written a book about it. Ignoring the wealth of knowledge available by business authors is an unforgivable mistake. But who has time to sit down and read an entire book? This is where audible is so great. Put a book on your phone and let someone read it to you while you work out, drive between appointments, make dinner, or prepare for bed. Audible lets you multi-task while you are learning how to improve your business.

  1. Quickbooks

Staying on top of your accounting can be a significant time-drain. The QuickBooks app makes this a little easier. Since it’s mobile, you can use downtime to classify transactions. While you are waiting in line, watching tv, or sitting on the exercise bike, you can catch up your accounting records in a matter of minutes. Quickbooks links to your bank account and downloads all your transactions and uses its smart algorithms to put those transactions into categories. Most of the work is done for you. You just need to verify the new transactions and classify the few that QuickBooks didn’t recognize. Now with your accounting in the cloud, you can ask your CPA to look at a question you have without ever needing to send files back and forth. Quickbooks also lets you send estimates on the spot, send invoices, and collect payments, all from your phone.

  1. MileIQ

For many entrepreneurs, one of your biggest tax deductions is your auto expenses. Tracking your mileage is a painful, but necessary part of qualifying for that deduction. MileIQ does a lot of the work for you. It stays in the background and logs all your drives. You open it periodically and classify those drives as business or personal. MileIQ assembles these into a file that you can easily send to your accountant at the end of the year. On average, for every business trip you forget to record, it costs you about $2 in tax. That adds up fast! Let MileIQ help you maximize your tax deduction.

  1. CamScanner

This handy little tool lets you use your phones camera to quickly create a pdf document. So, if you need a copy of a contract, a receipt, or anything else while you are out and about, CamScanner will convert the picture to pdf and allow you to easily send it to yourself, your employee, your attorney, or your accountant all without having to go back to the office and fire up the scanner.

  1. CamCard

Use CamCard to capture all your business cards, and all the contact information can be quickly & accurately read and saved to your smartphone. In addition to extracting the information off a business card, CamCard has some very cool features that allow you to get notified when a contact changes jobs or gets promoted. It can also alert you when a contact’s company shows up in the news.

 

Leveraging the smart tools available to you on your phone can free up time and mental capacity for more important stuff. If you are willing to invest some time to learning some of these tools, they can make you a quicker more efficient business owner.

The year is quickly coming to a close, and with holidays right around the corner, year-end will be here before you know it.  There are tasks you can start doing now to ensure you are ready for tax filing time and prevent panic at the start of the year.

Income Tax Planning or Income Tax Projection

Income Tax Planning and Income Tax Projections are a vital service for taxpayers, especially during this first year of tax reform.  There are various ways that you can optimize tax reform for your situation, many of which would need to be addressed before year-end.  Engaging your CPA for these services will prevent any surprises when you are filing your income tax return and allow you time to make changes before the end of the year.

An income tax projection will involve gathering your income and deductions thus far for 2018 and projecting them out for the remainder of the year.  The result is that you will know what your income tax liability or refund will be. Knowing this information ahead of time will allow you to make necessary changes such as adjusting your withholdings or making estimated income tax payments.

Income tax planning takes the projection one step farther and allows us the opportunity to provide you with strategic ideas to minimize your income taxes.

Get Your Books In Order

Get your books in order. Be sure that all income and expenses are input into QuickBooks and all bank and credit card accounts are reconciled each month. Start gathering the various documents we will request from you. Some examples of items that we will need are: copies of invoices for any fixed asset purchases, quarterly payroll reports, December loan statements, December credit card statements and December bank statements (noting that these may not be available yet depending on when you read this).  If you’d like a list of items that we will need specific to your situation, you may reach out to your relationship manager to request.

Gather Personal Deductions

There were big changes to the standard deduction for 2018 – which could eliminate itemizing for many taxpayers. If your taxes (capped at $10,000), mortgage interest and donations don’t exceed $24,000 married filing jointly ($12,000 single and married filing separate), then you will not itemize.  That being said, if you itemize, we will need your mortgage interest statement, copies of vehicle tax bills and real estate tax bills, and copies of donation receipts.  If you have non-cash donations, we will need you to write the value of the donated goods on the receipt.

This is also a good time to gather estimated income tax payments that have been made. List who you paid (IRS, NC, etc.), the amount, and date paid.  If you have a child under age 13, and you (and your spouse if applicable) have earned income, and you pay for any after school care or childcare, we can deduct those as a credit.  We will need to know whom the payments were made to, their address, EIN and payments made per child.

1099s and Business Property Tax Listing

1099s and business property tax listings are due January 31, unless an extension is available.  We will be happy to discuss in more depth with you who is required to receive a 1099.  If you anticipate that someone will need a 1099, have them fill out a W-9, if you don’t already have one.  For the business property tax listing, if you have your books reconciled, we will be able to use that information to prepare the listing.  Otherwise, we will need record of any assets purchased or disposed of.

 

These are just a few helpful hints to get you ready for 2018 income tax filing. Good luck!

We have created a tax deadline calendar to help our clients.  You can use this calendar in a couple of different ways.

  1. You can integrate it with your existing calendar.  You can view it in parallel with existing calendars or add specific events from this calendar to your personal calendar.
    1. Google calendar users can use this link.
    2. Other iCal format calendar users can use this link.
  2. You can visit this web page to access the calendar.