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Expert Tax Tips for Estates: Maximizing Your Savings

Mon, 30 Mar 2026 20:47:39 GMT

If you’re managing or inheriting estates in Lacey, WA, understanding estate tax obligations is crucial to ensuring your estate’s financial health and maximizing savings. At Bliss & Tuttle, CPAs, we know how overwhelming estate matters can be, especially when it comes to taxes. This blog aims to capture your attention by offering clear, actionable tax tips tailored to estates in Lacey, WA, guiding you step-by-step through recent state tax updates and how they impact your estate planning. Whether you are an executor, beneficiary, or simply exploring estate options in this area, learning these insights can lead to significant tax efficiencies and peace of mind.

What Are the Estate Taxes in Lacey, WA?

Washington State, where Lacey is located, has its own estate tax laws distinct from federal estate taxes, making local tax knowledge imperative. If an estate’s value exceeds the exemption threshold set by the state, it may be liable for Washington State estate tax. For estates in Lacey, WA, it is essential to note that this exemption amount adjusts regularly, so staying informed about current limits can prevent surprises during the probate process.

Estate tax applies to the net value of the estate after debts, expenses, and deductions. Executors or estate administrators must calculate these values carefully, report timely to the Department of Revenue, and file any required tax returns. Understanding how these rules apply specifically in Lacey ensures compliance and helps maximize the estate value passed on to heirs.

Recent Updates in Washington State Estate Tax Laws

Washington State revised its estate tax law threshold in recent years to account for inflation and economic changes. Currently, estates valued above a certain amount (which you should verify in the most recent state publications or official resources) will be subject to the estate tax. This change means more estates could be liable, but it also offers valuable estate planning opportunities to reduce taxable value through established strategies.

One important update is how Washington treats deductions and exemptions. For example, funeral expenses, certain debts, charity bequests, and family-owned business interests may qualify for deductions that reduce the taxable estate. Combined with Washington’s graduated tax rates, these deductions can be powerful tools in effective estate planning if applied correctly.

Practical Tax Strategies for Estates in Lacey, WA

While estate taxes can seem complicated, there are practical, approachable strategies to minimize your tax liability and protect your wealth.

Here are some effective tax tips:

1. Utilize Estate Tax Exemptions and Deductions

Ensure that your estate leverages all available exemptions. You can deduct funeral costs, unpaid debts, and qualified charitable donations, which can considerably lower the taxable portion. Consulting with a tax professional who understands estates is key.

2. Consider Gifting Before Death

Washington State does not have a gift tax, which means you can transfer assets during your lifetime to reduce the estate’s size. Making strategic gifts can significantly lower the taxable estate, but it’s advised to plan these transfers thoughtfully to avoid unintended tax consequences.

3. Establish Trusts

Certain types of trusts can protect estate assets from taxes and simplify the distribution process. Trusts can be tailored to meet your family’s needs and help keep estates in Lacey, WA, under control regarding tax exposure.

4. Keep Accurate Records and Documentation

Proper documentation of all estate-related expenses and transactions makes tax filing easier and minimizes the risk of audits or penalties. Executors should maintain organized records, especially for deductions and credits.

5. Plan for Liquidity

Estate taxes often require timely cash payments. Ensuring sufficient liquidity to cover tax obligations without forcing the sale of property or other assets preserves estate value.

What Executors and Beneficiaries Should Know

If you are an executor or beneficiary of an estate in Lacey, WA, understanding your role in tax compliance is critical. Executors are responsible for filing Washington estate tax returns within nine months of the date of death and paying any taxes due from the estate’s assets. Failure to comply can result in penalties or delays in estate settlement.

Beneficiaries should also be aware that while inheritance itself is not taxed under Washington law, certain distributions may affect income taxes owed on income generated by the inherited assets. Keeping communication clear with executors and tax advisors can smooth the process and reduce surprises.

The Importance of Professional Guidance for Estates

Navigating estate tax law without specialized knowledge can be challenging. While this article highlights foundational tax tips for estates, working with qualified estate planners or tax professionals familiar with state-specific regulations can provide personalized strategies and ensure accurate filings.

Professionals can help you explore options like estate freezes, valuation discounts for family businesses or real estate, and other nuanced strategies that might save thousands or even more. Early planning and ongoing tax review are highly recommended to keep your estate optimized.

Take Control of Your Estate Tax Planning

Managing estates in Lacey, WA, involves understanding complex tax obligations, but armed with the right knowledge, you can maximize your estate’s savings and safeguard your loved ones’ inheritance. Stay informed on Washington State estate tax updates, employ smart deductions and gifting strategies, and consider professional assistance to guide you through the process efficiently. If you are dealing with estates and want to ensure you are making the most of your estate tax planning opportunities, don’t hesitate to reach out today . Taking proactive steps can save significant financial resources and provide lasting peace of mind.

Estate Planner Tips: Common Estate Planning Mistakes

Tue, 03 Mar 2026 14:49:45 GMT

If your goal is to secure your legacy and protect your loved ones from unnecessary stress or financial surprises after you’re gone, knowing how to avoid key pitfalls in estate planning is essential. As a trusted estate planner serving Olympia, WA, Bliss & Tuttle, CPAs understands how even small errors can create major problems. With guidance from the right estate planner, you can ensure your documents are in order, your wishes are clear, and your assets transfer smoothly to the next generation.

The Value of a Strategic Estate Planner

Some people assume that only the wealthy need a detailed strategy for passing on their assets, but the truth is that everyone can benefit from professional help. Whether you own a small home or a thriving business, working with an estate planner gives you confidence that your intentions will be carried out. Our firm provides Olympia-area clients with tailored strategies, thorough document reviews, and regular updates as life circumstances evolve.

Regular Updates Are Critical

One of the most common mistakes in this process is failing to update essential documents. Life changes—such as marriage, divorce, the birth of a child, or acquisition of new assets—should always trigger a review of your estate plan. An estate planner will check if you need to update beneficiaries or make other adjustments. For example, many people forget to remove an ex-spouse from a life insurance policy or fail to include a new child as a beneficiary. Updating your documents every few years ensures your plan works exactly as you intend.

Don’t Ignore Washington’s Estate Tax

Many Washington residents are surprised to discover the state estate tax exemption is lower than the federal level, and your estate could be subject to taxes that you didn’t anticipate. An estate planner familiar with local laws will examine your situation, explain your options, and help design solutions so more of your assets go to your loved ones. Strategic planning, including the use of gifts and trusts, can help minimize or avoid this tax for your heirs. Far too many families lose value simply by not consulting with an estate planner who understands regional tax implications.

Properly Fund and Manage Your Trusts

A trust can be a powerful way to protect assets and control their distribution, yet it’s surprisingly common for people to fail to carry out every step required. Establishing a trust is just the start; you must also transfer ownership of assets into the trust’s name. If that isn’t done, property could still go through probate, costing time and money. Working with an estate planner ensures your trust is properly funded. If you have questions about trusts and how they fit into a larger plan, you can read more here .

DIY Planning Isn’t Enough

Many people use online forms and templates to create a do-it-yourself will or trust, but few are aware of the risks. Estate laws can be complicated, and templates do not cover all the details specific to your situation. An estate planner brings expertise to the process and can anticipate issues before they become problems. We’ve helped many Olympia families correct errors made in well-intentioned, but incomplete, DIY documents.

Digital Assets: The Hidden Heirlooms

Our online lives have grown dramatically. Email accounts, cloud storage, photos, social media, and even cryptocurrency are all important pieces of today’s estate plans that are often forgotten. As estate planners, we work with our clients to inventory all these digital assets and include clear instructions in the event of incapacity or death. Without this, your family may lose access to valuable or sentimental items.

Understanding Probate and Non-probate Assets

Probate is the court-supervised process of settling an estate. Not all assets must go through probate. Assets with named beneficiaries, such as life insurance or retirement accounts, are non-probate, while possessions like real estate and personal belongings often do go through this process unless structured otherwise. Understanding this distinction means you can make decisions that streamline the process for your heirs. If you’d like more detailed information, this resource explains the difference .

Beneficiary Designations: Don’t Overlook the Details

Another commonly missed detail is the priority of beneficiary designations. An estate planner knows that the names listed on retirement accounts or insurance policies supersede your will. Neglecting to update these records after major life events can lead to unintended consequences. We always help clients review and update their designations in coordination with their larger plan.

Don’t Procrastinate

Delaying your planning is one of the costliest decisions you can make, leaving your family vulnerable to unnecessary court involvement, delays, or disputes. A sudden event can strike at any age, so tackling the process now provides protection, peace of mind, and control over your wishes.

Overlooked Assets: Cast a Wide Net

People often think about homes, bank accounts, and vehicles, but intellectual property, digital files, and business interests may also play a role in your plan. Regular review with your estate planner ensures all aspects of your life are covered, from the most valuable to the most sentimental. No detail is too small when it comes to your legacy.

Start Planning With Bliss & Tuttle, CPAs

Partnering with a dedicated estate planner means every detail, asset, and scenario will be addressed the right way. At Bliss & Tuttle, CPAs, we guide Olympia-area families from the first conversation to the last detail. Ready to get your affairs in order or update your plan? Call 360-754-5848 or contact us today to work with an estate planner who puts your family’s well-being first.

How an Estate Planner Can Help Business Owners

Tue, 03 Mar 2026 14:27:12 GMT

Have you considered what will happen to your business if you suddenly can no longer run it? For business owners in Olympia, WA, safeguarding the future of their company is just as important as growing it. An estate planner in Olympia, WA plays a crucial role in helping entrepreneurs protect their legacy by developing well-structured plans that ensure a seamless transition of their business interests. Whether you own a small family-run operation or a larger company, having expert guidance on estate and succession planning is essential to preserving your hard work and providing security for your family and employees.

At Bliss & Tuttle, CPAs, we specialize in providing services in the Olympia, WA area, assisting business owners in developing effective strategies that protect their assets and promote business continuity. In this article, we’ll explore the key ways an estate planner can support business owners in preserving their legacy and crafting a secure future for the next generation.

Why Business Owners Need an Estate Planner

Many business owners understandably focus their energy on day-to-day operations and growth strategies, often overlooking what happens when they step away or are no longer able to manage their business. Working with an experienced estate planner helps ensure you don’t leave your business vulnerable to uncertainty or conflict.

An estate planner understands the complexities of business ownership combined with personal estate concerns. For example, they help you:

Navigate complex tax laws affecting business transfers
Ensure your estate plan aligns with your business objectives
Protect your business assets from probate delays and disputes
Create strategies that will minimize family conflicts after your passing

With the right estate planner in Olympia, WA, you gain a partner who can coordinate with your legal and financial advisors to develop a comprehensive plan tailored to your unique situation.

Succession Planning Strategies for Small Business Owners

One of the most significant challenges business owners faces is planning for retirement, unexpected disability, or death. Succession planning involves creating a roadmap for transferring ownership and management of the business, so it continues to thrive long after the original owner steps down.

An estate planner in Olympia, WA, helps business owners craft custom succession planning strategies focused on:

Identifying and grooming key successors within or outside the family
Establishing clear leadership roles and timelines for transition
Minimizing tax consequences related to estate and gift taxes
Protecting business assets from creditors and legal disputes

By working with professionals familiar with the unique needs of small business owners in the Olympia, WA area, you gain the peace of mind that your business will remain in trusted hands. Succession planning not only prepares you for the unforeseen but also strengthens your company’s long-term stability and value.

Buy-Sell Agreements and Valuation Planning

Another key tool in protecting a business legacy is a well-structured buy-sell agreement. This legally binding contract defines how the business interest will be handled if an owner leaves the company due to retirement, death, or other circumstances.

Buy-sell agreements typically include provisions for:

Who can buy the departing owner’s shares or interest
How the business is valued at the time of the transaction
The terms of payment and financing arrangements

Estate planners in Olympia, WA, offer expertise in drafting and reviewing buy-sell agreements tailored to your specific business structure and goals. They also provide valuation planning services that determine the accurate worth of your business, which is critical to avoid conflicts and ensure fair buyout prices.

With buy-sell agreements and valuation planning, business owners in Olympia, WA, can:

Prevent unwanted owners from entering the business
Ensure liquidity to execute buyouts efficiently
Protect family members’ financial interests
Reduce potential conflicts among owners and heirs

Leveraging these strategies effectively safeguards the business while protecting personal and family wealth.

Reducing Tax Burdens Through Estate Planning

A comprehensive estate plan can help reduce the tax burdens that often accompany business succession or transfer. Without proper planning, estate taxes can significantly erode the value of your business or create cash flow challenges for your heirs.

An estate planner works closely with accountants, such as the team at Bliss & Tuttle, CPAs, operating in the Olympia, WA area, to:

Structure your estate to minimize inheritance and gift taxes
Take advantage of tax exemptions and credits for family businesses
Implement strategies like trusts or family limited partnerships that protect assets
Coordinate charitable giving options to reduce taxable estate value

Tax-efficient planning preserves more of your wealth and ensures your business remains a viable enterprise for successors.

Asset Protection and Risk Management

Business owners face various risks, from lawsuits to creditor claims. Without careful planning, personal and business assets can become vulnerable. An experienced estate planner helps you take proactive steps to safeguard your assets. This might include:

Establishing trusts that protect assets from creditors
Separating personal and business assets through legal entities
Creating buy-sell agreements funded with life insurance policies
Developing contingency plans for unexpected business disruptions

By integrating risk management with estate planning, you create a shield around both your financial legacy and the future of your business.

Your Business Legacy Deserves Expert Care in Olympia, WA

Protecting what you have built requires foresight and experienced guidance. Bliss & Tuttle, CPAs, serving Olympia, WA, is committed to helping business owners secure their legacy through expert estate planning services. Our team works closely with you to develop tailored succession planning strategies, implement buy-sell agreements, manage valuation issues, optimize tax planning, and protect your assets.

To discuss how our estate planning expertise can help you safeguard your business and family’s future, visit our contact page or call us directly at 360-754-5848 .

Take Charge of Your Business Future Today in Olympia, WA

Protecting your business legacy requires thoughtful planning and the right team at your side. If you’re a business owner operating in the Olympia, WA area, partnering with a knowledgeable estate planner is the best way to ensure your company continues to thrive for generations.

Bliss & Tuttle, CPAs, providing estate planning services in Olympia, WA, is ready to help you navigate complex challenges with personalized, comprehensive solutions. Don’t leave your legacy to chance. Contact us today at 360-754-5848 or reach out through our contact page to learn how we can assist you.

Revisit Your Estates: When to Update Your Estate Plan

Mon, 14 Jul 2025 21:35:57 GMT

Estate planning is a crucial aspect of securing your family's future and ensuring that your assets are distributed according to your wishes. Maintaining up-to-date estates in Lacey, WA, is paramount. Life is ever-changing, and your estate plan should reflect these changes to remain effective and aligned with your current circumstances. Here are key moments when a review and update of your estate planning trusts are essential.

Major Life Events Prompting an Estate Plan Review

Significant moments in life can drastically alter your financial and personal landscape, making it essential to update your estate plan to ensure they accurately reflect your current situation and goals.

Marriage

Marriage is one of the most significant milestones in life. When you tie the knot, your financial and personal lives merge, creating new dynamics and responsibilities. It's vital to revisit your estate planning trusts to include your spouse. This update not only ensures they are legally recognized but also protects their rights and interests.

Specific actions you may need to take in Lacey , WA, include:

Updating Beneficiary Designations : Ensure your spouse is listed as a beneficiary on insurance policies, retirement accounts, and other essential documents.
Revising Asset Distribution : Determine how your assets will be divided between your spouse and other beneficiaries to reflect your combined financial situation.
Joint Ownership Implications : Consider the implications of jointly owned assets or estates, such as property or bank accounts, and how they fit into your overall estate plan.

Divorce

Divorce is another major life change that impacts your estate plan. Post-divorce, your priorities and relationships shift dramatically. You may want to remove your ex-spouse as a beneficiary or alter the distribution of your assets to reflect your new circumstances.

Key steps include:

Updating Wills and Trusts : Review and revise your will and any trusts to exclude your ex-spouse and ensure your assets go where you intend.
Beneficiary Changes : Update beneficiary designations on essential financial documents, such as retirement accounts and life insurance policies.
Asset Reallocation : Reallocate your assets to support your new financial situation and personal goals, ensuring proper planning for dependents if applicable.

Birth of a Child

Welcoming a new family member changes everything, necessitating updates to your estates. Establishing estate planning trusts to benefit your child ensures their financial security and welfare.

Essential updates may include:

Revising Your Will : Add your child as a beneficiary, and stipulate guardianship arrangements in case something happens to you or your spouse.
Creating New Trusts : Establish trusts to allocate funds for your child's education, healthcare, and overall future financial security.
Updating Asset Allocation : Review and adjust the distribution of your assets to ensure adequate provision for your child's needs.

Significant Inheritance

Receiving a significant inheritance can dramatically alter your financial landscape, requiring updates to your estate to integrate these new assets effectively.

Actions you may need to consider include:

Including New Assets : Determine how the inheritance fits into your current estate plan and update them accordingly.
Tax Implications : Consult with a CPA to understand and manage inheritance tax implications effectively.
Asset Protection : Make provisions to protect these newly acquired assets and ensure they are distributed according to your wishes.

Retirement

Retirement is a profound life milestone that affects your financial strategy and future planning. As you transition into retirement, reassessing your estate plan ensures they reflect your current income, assets, and future financial goals.

Necessary steps include:

Reviewing Income Sources : Update your estate plan to account for changes in income, such as pensions and retirement accounts.
Adjusting Asset Allocation : Shift your focus to preserving wealth and ensuring your estates support your retirement lifestyle and goals.
Planning for Healthcare : Consider potential healthcare costs and make provisions within your estate plan to manage these expenses effectively.

Changes in Tax Law

Tax laws evolve, and these changes can significantly impact your estate plan. Staying informed and updating your trusts and estates accordingly ensures compliance with the latest regulations and optimizes tax benefits for your beneficiaries.

Steps to take include:

Consulting a CPA : Engage with a CPA to understand how changes in tax law affect your estates and make necessary adjustments.
Reviewing Trust Structures : Ensure your estate plans are structured to maximize tax efficiency and comply with current laws.
Updating Documentation : Revise necessary documents to reflect the latest tax regulations and optimize your estate's financial benefits.

Estates Are Dynamic: Regular Reviews Are Essential

Estates are not static documents; they require regular scrutiny to stay current and effective. Too often, individuals create an estate plan and neglect it for years. Regular consultations with a CPA like Bliss & Tuttle in Lacey, WA, ensure your estate plan remains relevant and adapts to evolving personal circumstances and legal requirements.

Here's why regular reviews are essential:

Personal Changes

Your personal life is continually evolving, from changes in health to relationships. Regular reviews of your estate planning trusts can catch these changes early and adapt your plan to protect your interests and your loved ones. After a significant health diagnosis or other major life shifts, updating your plan can ensure that your wishes regarding medical care and asset distribution are clear and honored.

Legal and Financial Updates

Keeping abreast of legal and financial updates is crucial. Estate laws, tax regulations, and financial landscapes can change, affecting your estates directly. A CPA ensures your estate plan conforms to the current laws and maximizes your benefits. They can guide you through complex updates and help you navigate new legal requirements efficiently..

Ensuring Plan Efficacy

A well-maintained estate plan is effective and aligns with your wishes. Regular reviews with a CPA ensure your assets are protected, your beneficiaries are supported, and your legacy is intact. This not only provides peace of mind but also mitigates the risks of potential conflicts or misunderstandings among your loved ones after your passing.

Avoiding Complications

Neglected estate plans can lead to legal conflicts and complications. Regular reviews prevent these issues by ensuring your estate planning trusts are clear, updated, and legally sound. This proactive approach helps avoid lengthy legal battles and ensures smooth transitions for your beneficiaries.

Secure Your Estate in Lacey, WA

Life changes, so should your estate plan. Whether it's marriage, divorce, the birth of a child, receiving a significant inheritance, retirement, or changes in tax law, revisiting and updating your estate planning with the guidance of a professional is essential. Bliss & Tuttle, CPAs, can help you navigate these changes and ensure your estate plan remains effective and aligned with your current circumstances. Don't delay—secure your family's future and protect your estates in Lacey, WA, today. Call Bliss & Tuttle today at (360) 754-5848 to schedule a consultation and keep your estate plan up-to-date.

Protect Your Family’s Future: Trusts & Estates in Lacey, WA

Wed, 02 Apr 2025 19:44:58 GMT

When it comes to securing your family’s financial future, planning is essential. For residents of estates in Lacey, WA , estate planning and trusts are powerful tools that can help protect your assets, ensure your loved ones are cared for, and minimize legal complications. Whether you’re a homeowner, business owner, or simply looking to preserve your legacy, understanding the importance of estate planning and trusts in Lacey, WA, is the first step toward peace of mind.

Why Estates in Lacey, WA, Need Proper Planning

Estate planning is more than just drafting a will—it’s a comprehensive approach to managing your assets and ensuring they are distributed according to your wishes. For families in estates in Lacey, WA, this process is especially important due to the unique local considerations, such as state-specific laws and tax regulations. Without a proper plan in place, your loved ones could face lengthy legal battles, unnecessary taxes, and emotional stress during an already difficult time.

By working with professionals like Bliss & Tuttle, CPAs, you can create a tailored estate plan that addresses your specific needs. From setting up trusts to designating beneficiaries, their expertise ensures that your family’s future is protected.

The Role of Trusts in Estates in Lacey, WA

Trusts are a key component of estate planning and trusts in Lacey, WA, offering flexibility and control over how your assets are managed and distributed. Unlike a will, a trust allows your estate to bypass probate, saving your family time and money. There are several types of trusts to consider, including:

Revocable Living Trusts: These allow you to maintain control over your assets during your lifetime while ensuring a smooth transition after your passing.
Irrevocable Trusts: These provide added protection from creditors and can help reduce estate taxes.
Special Needs Trusts: These are designed to support family members with disabilities without jeopardizing their eligibility for government benefits.

Trusts are not just for the wealthy—they are a practical solution for anyone looking to protect their family’s future.

Local Considerations for Estates in Lacey, WA

Lacey, WA residents face specific challenges and opportunities when it comes to estate planning. Washington State has its own set of laws governing estates and trusts, making it crucial to work with professionals who understand the local landscape. For example, Washington does not have a state income tax, but it does have an estate tax that applies to larger estates. Proper planning can help you navigate these complexities and maximize the value of your legacy.

Additionally, Lacey’s growing community and thriving real estate market mean that many residents have significant assets to protect. Whether you own a home, a business, or other investments, estate planning and trusts in Lacey, WA, can help you safeguard what you’ve worked so hard to build.

Take the First Step Toward Protecting Your Legacy

Planning may seem daunting, but it’s one of the most important steps you can take to protect your family. At Bliss & Tuttle, CPAs, we specialize in helping Lacey, WA, residents create comprehensive estate plans that meet their unique needs. From setting up trusts to navigating local tax laws, our team is here to guide you every step of the way.

Don’t wait until it’s too late—start planning today to ensure your loved ones are cared for and your legacy is preserved. Contact us to schedule a consultation and learn how we can help you protect your family’s future with expert estate planning and trust services.

How Often Should You Update Your Estate Plan in Olympia, WA?

Tue, 28 Jan 2025 16:17:40 GMT

Estate planning is essential for ensuring that your assets are distributed according to your wishes when you pass away. Whether you're just starting to plan or need to revisit your existing plan, it's crucial to know how often you should update it. If you're looking for an experienced estate planner in Olympia, WA, here’s what you need to consider when determining how frequently to review and update your estate plan.

Why You Need an Estate Plan in Olympia, WA

An estate plan typically includes a will, trusts, power of attorney, and healthcare directives. This legal framework ensures your assets are managed and distributed as you desire after your death or if you're unable to manage them yourself. However, simply creating an estate plan isn't enough. Life events and legal changes can impact how your estate should be handled, making it important to revisit your plan regularly with an estate planner in Olympia, WA .

Major Life Events That Require Updating Your Estate Plan

There are several significant life events that should trigger an update to your estate plan. These events include:

1. Marriage or Divorce: Marriage typically means new assets, potential beneficiaries, and possibly a new home. Divorce can drastically change who you want to inherit your assets or make financial decisions on your behalf. It’s essential to review your estate plan after both events to ensure that your intentions are clearly documented.

2. The Birth of Children: If you have children, particularly young ones, you’ll want to establish guardianship and ensure that they are adequately provided for. As your family grows, you may need to revise your estate plan to include new beneficiaries or guardians for minor children.

3. Significant Changes in Assets or Income: Whether you receive a large inheritance, sell a business, or experience a significant financial change, it's important to update your estate plan to reflect these changes. A shift in your financial situation might also affect tax strategies, which an estate planner in Olympia, WA can help adjust.

4. Health Concerns or Disability: As your health changes, so too should your estate plan. You may need to appoint someone to manage your healthcare decisions or financial matters should you become incapacitated. Ensure your healthcare directives are in place and up to date to reflect your current desires.

5. Changes in Tax Laws or Legal Regulations: Estate planning laws and tax codes can change over time. For example, changes to estate tax exemptions or the legal status of trusts can affect your planning strategy. A trusted estate planner in Olympia, WA will keep you informed about these changes and help you adjust your plan accordingly.

How Often Should You Review Your Estate Plan in Olympia, WA?

As a general rule, it’s wise to review your estate plan at least once every three to five years. Even if you haven't experienced any major life changes, it’s a good idea to periodically reassess your estate plan with an expert in estate planning in Olympia, WA to ensure it’s still aligned with your wishes.

If you're unsure about whether your plan is up to date, it's always a good idea to consult an estate planner for advice. An estate plan is a living document that should evolve along with your life. For example, if you move to a new state, different laws could affect your estate planning strategies, making an update necessary.

Stay Prepared for Life's Changes with Estate Planning in Olympia, WA

It’s essential to stay prepared for life’s changes by regularly updating your estate plan. Whether you're dealing with major milestones like marriage, divorce, or the birth of a child—or navigating shifts in tax laws and regulations—having a solid, up-to-date estate plan is key to protecting your loved ones and ensuring your wishes are carried out.

If you're in Olympia, WA, and need an experienced estate planner to review or update your plan, contact us today . Our team of experts is ready to guide you through the process and help ensure your estate planning needs are met with professionalism and care.

Smart Ways to Manage Cash Flow in Your Small Business

Wed, 03 Jan 2024 21:21:00 GMT

Cash flow represents the money flowing in and out of your business. Having a positive cash flow is essential for covering your expenses, investing in growth, and weathering financial challenges. Here are some smart strategies for effectively managing cash flow in your small business.

Secure Credit Ahead of Time

Secure credit ahead of time helps to smooth out the peaks and troughs in your cash flow. Businesses often face seasonal variations in revenue or unexpected expenses. With credit in place, you can access funds when needed, ensuring your business can continue operating smoothly, even during challenging times.

Furthermore, having access to credit in advance provides a financial safety net. It allows you to address unexpected emergencies, such as equipment breakdowns, sudden drops in sales, or unforeseen expenses, without disrupting your operations or needing to scramble for funds.

When opportunities for growth or expansion arise, having secure credit in place enables you to act quickly. You can invest in new ventures, hire additional staff, or expand your product line without waiting for slow approval processes. This agility can give you a competitive edge in the market.

Don't Wait to Send Invoices

Several positive outcomes can be observed when a business promptly sends out invoices for products or services delivered to clients or customers.

Clients or customers are more likely to process and settle invoices sooner when they receive them promptly. This shorter payment cycle means that money flows into the business more quickly, which is vital for maintaining liquidity.

Moreover, sending invoices creates a more predictable cash flow pattern. Business owners and financial managers can better anticipate when payments will be received, allowing them to plan for upcoming expenses, investments, and financial commitments with greater accuracy.

This predictability can be instrumental in avoiding cash flow crises and ensuring the business's day-to-day operations run smoothly.

Create a Cash Flow Forecast

A cash flow forecast essentially serves as the financial roadmap for a business. It provides a clear, forward-looking picture of how cash will flow in and out of the company over a specified period. A business can engage in more effective financial planning.

This planning includes budgeting for day-to-day operational expenses, setting aside funds for debt servicing and interest payments, and earmarking resources for strategic investments and growth initiatives. Without such a forecast, businesses may make financial decisions blindly, which can lead to unforeseen cash flow problems.

Cash flow forecasts are also excellent tools for spotting potential cash flow issues before they become critical problems. For instance, if the forecast indicates that expenses will exceed income in a particular month, the business can take preemptive measures to rectify the situation.

These measures might include reducing discretionary spending, delaying certain expenditures, negotiating better payment terms with suppliers, or exploring short-term financing options.

Review Your Pricing Strategy

Here's how reviewing your pricing strategy can contribute to effective cash flow management:

Maximizing revenue: Adjusting your pricing strategy can help you maximize revenue. By regularly reviewing your pricing, you can identify opportunities to increase prices where the market allows. This can result in higher sales revenue, which positively impacts your cash flow.
Cost control: A pricing strategy review can also help you identify areas where you can reduce costs. Lowering production or operational expenses can free up cash that can be reinvested in the business or used to cover other financial obligations.
Profit margin optimization: Analyzing your pricing structure can reveal whether your current profit margins are sufficient to cover all costs and generate a profit. Adjusting prices to achieve healthier profit margins ensures your business generates enough cash to remain sustainable.

These strategies can increase sales and improve cash inflow.

Bliss & Tuttle CPAs offer various financial services, such as bookkeeping and accounting. We can also help you with tax filing and planning. Contact us now for more information.

Are You Claiming All Possible Dependent Tax Benefits?

Fri, 29 Dec 2023 08:30:13 GMT

Everyone wants to lower their income tax burden, but not everyone is eligible to use some of the more high-end tax strategies to do so. However, claiming dependents is a tax reduction strategy that every American taxpayer has access to. Are you getting the most out of your dependent deductions and benefits? Discover a few key ways you may be able to lower your taxes even more.

1. Claiming Qualifying Relatives

Dependents come in two basic varieties. The first is a qualifying child. This is what most Americans think of when they think about claiming someone as a dependent. These are typically the taxpayer's own minor children or a minor descendant of their immediate family members.

However, you can also claim unrelated and more distantly related individuals—even those who are not minors. Qualifying relatives are generally persons in your household for whom you are providing more than half the support. They cannot make more than $4,700 in 2023, and most must actually live in your home. But some—like parents and grandparents—may live elsewhere.

2. Claiming Your Partner

The qualifying relative rules provide a surprising opportunity to claim another dependent: your partner. Legal spouses cannot be claimed as a dependent, even if they have no income. However, your boyfriend, girlfriend, or partner may qualify as a dependent. They must meet all the qualifications of the category, including income limits. This strategy can be very helpful if one partner is unemployed or going back to school.

3. Using Dependent Expenses

Once you can claim a qualifying child or relative (including a non-related person), you can also claim a range of expenses related to them. The most common include things like premiums you paid for their health insurance, child care services, tuition, and medical expenses.

Deductible expenses are easily overlooked, especially when they are for people you did not expect to claim. But they add up quickly, so if you suspect you may be able to claim a dependent at the end of the year, save those receipts now.

4. Filing Separately

Do you file income taxes with someone who could qualify as your dependent or the dependent of someone else? IRS rules stipulate that you cannot claim a dependent if you can be claimed as a dependent by someone else. This also holds true if your joint filer can be claimed as a dependent.

In some cases, you may want to consider not filing jointly with your partner if either of you are in these categories. If your partner, for instance, spent the year living with their aged parent to help care for them, the aged parent may be able claim that partner. Filing jointly with them would prevent you from claiming any other dependents in your household, such as a shared child. You may file separately to maintain that ability.

5. Becoming Head of Household

A qualifying child or qualifying relative brings another tax status change: from single to head of household. This is more than just semantics. Heads of household qualify for higher deduction limits, larger tax credits, and more favorable tax rates. Even if you get little benefit from actually claiming a dependent, switching to head of household could help a lot more.

Are you underutilizing any of these dependent strategies? Missing out on the head of household status, expenses to deduct, or a qualifying household member? Find out by meeting with Bliss & Tuttle CPAs . We will assess your family situation, locate all tax reduction methods you may be eligible for, and even help you make amendments to prior years if needed. Call today to make an appointment.

Which Inventory Accounting Method Should You Use?

Thu, 30 Nov 2023 04:34:21 GMT

First-In, first-out (FIFO) and last-in, first-out (LIFO) are two standard methodologies that are particularly prominent in the domains of inventory management and accounting. Both strategies have distinct benefits and drawbacks, and each has a substantial impact on a company's bottom line in various ways.

Choosing the right strategy for your organization necessitates a deep understanding of what each provides. This is not an easy choice because it affects the cost of goods sold, taxes, and metrics related to profitability in a lot of different ways. Let's untangle the complexities of FIFO and LIFO inventory accounting methods and assist you in determining which inventory accounting technique is best suited for your organization.

First-In, First-Out

The FIFO method prioritizes the speedy turnover of stock by prioritizing the sale of the most recently acquired or produced items. This means that the most recently purchased items are not deducted from the inventory total and the oldest items make up the cost of goods sold (COGS). This is in keeping with the normal turnover of stock, as most stores will sell their oldest items first.

The straightforwardness and openness of FIFO is one of its primary benefits. Accounting errors are less likely to occur due to its user-friendliness. Furthermore, FIFO is a more accurate reflection of the market value of the last inventory since it uses the most up-to-date acquisition prices as its basis. This makes it an obvious pick for businesses that put their oldest stock to use first.

A business may pay more in taxes if it follows the FIFO method. This is due to the higher net income and associated tax liability that results from the lower COGS. Because of the potential increase in tax liability, businesses operating in an environment of rising prices may find FIFO less appealing.

The need for meticulous record-keeping is another factor to think about while implementing FIFO. Determining the cost of goods sold can be difficult for businesses with lengthy periods of inactivity or stock accumulation because it requires reviewing past information.

Companies might have to depend on complex accounting procedures to automate what is otherwise a time-consuming operation.

Last-In, First-Out

To calculate remaining stock at the conclusion of an accounting period, the LIFO method uses the presumption that the most recent units added to stock will be the ones to sell first.

By using the most up-to-date inventory costs first, businesses can reduce their tax liabilities, as these costs are more likely to be accurate. However, because older stock may not be sold and may not reflect current market prices, the declared profits with LIFO might not be as reliable as with other systems.

Companies dealing with perishable items or inventory that does not adhere to a logical manufacturing method will find LIFO to be impractical. Using the most up-to-date stock levels to calculate COGS can result in an underestimation of inventory value if the remaining stock is antiquated or irrelevant. LIFO will also increase COGS and decrease profits in an inflationary economy.

The LIFO approach reduces a company's tax burden by selling its most expensive assets first. In practice, however, many businesses aim to shift older stock to avoid utilizing it first, so this approach may not reflect actual inventory movement.

The United States Generally Accepted Accounting Principles (GAAP) permits LIFO, while the International Financial Reporting Standards (IFRS) prohibits its usage by foreign corporations. This approach could be simpler to execute for businesses with readily available stock. Still, it requires meticulous bookkeeping to guarantee correct records and could cause unused stock to sit on the books for extended periods.

Contact us at Bliss & Tuttle, CPAs for further advice on accounting standards and methods for more accurate bookkeeping and accounting.

3 Reasons Professional CPA Services Are Essential for First-Time Restaurant Owners

Thu, 07 Sep 2023 22:30:15 GMT

Many owners spend their whole lives preparing for the day when they can finally open their own restaurant. Unfortunately, it won't take long for the dream of being your own boss to meet the reality of becoming a small business owner. The daily duties of managing a restaurant include numerous routine tasks, including everything from payroll to tax planning.

While few owners enjoy these aspects of running a business, they're essential to keeping any restaurant afloat. Fortunately, working with a good certified public accountant (CPA) can take most of the stress and complexity out of these financial necessities. If you think you can handle your first year in operation alone, check out these three ways a full-service CPA can help your restaurant survive and thrive.

1. You'll Avoid Costly End-of-Year Delays

Quarterly tax filing is one of the largest hurdles many first-time business owners face. Paying estimated taxes has numerous benefits, including helping you avoid penalties and preventing massive end-of-year tax bills. However, tax filing for restaurant owners can be complex. Restaurants typically need to deal with standard payroll taxes, sales taxes, and even withholding obligations on tips.

Dealing with these taxes typically requires keeping detailed records, making estimated quarterly payments all the more crucial. Unfortunately, your first year in operation can often be hectic, which may mean leaving your filing until the end of the year. Sorting through a mass of paperwork and records while looking for inconsistencies can lead to costly end-of-year delays and extensions.

Working with a CPA from the start can help you avoid nearly all these issues. A public accountant will help you collect and manage your records throughout the year, alerting you to problems or inconsistencies as they arise. As a result, you can focus on running your restaurant without worrying that a major tax hurdle will leave you struggling at the end of the year.

2. You'll Catch Payroll Mistakes Quickly

Payroll is often one of the most complex aspects of any restaurant, even relatively small ones. While payroll is a challenging task for new business owners in any industry, dealing with tipped employees can add additional layers of complexity. Tips are subject to FICA (Federal Insurance Contributions Act) taxes, so you should have a good system for reporting and recording employee tips.

Mistakes relating to tipped income or other aspects of your business's payroll can have a long-term impact on your tax obligations and can negatively impact your employees. If your first restaurant is also your first business, the learning curve involved with managing payroll can often be steep. Relying on payroll software isn't always enough and may even provide a false sense of confidence.

An experienced CPA can provide critical back-end services, including support with payroll. While working with a CPA will be more expensive than handling payroll yourself, you will save money by reducing your workload and minimizing the potential for serious errors. You can even avoid costly fines or penalties resulting from common mistakes such as misclassifying employees or miscalculating FICA limits.

3. You'll Receive Crucial Advice Beyond Tax Planning

A full-service CPA is more than just a tax preparer. While bookkeeping and tax management services are essential, especially for first-time business owners, the advice that an experienced CPA can provide may be even more important. Since your CPA will have access to most of your business's financial records, they have a unique position to provide counseling and advice.

Although working with an accounting professional is essential for businesses at any stage, it can be especially crucial in the first year. Your CPA can identify problems with cash flow, look for ways to minimize or plan for your tax burden, and help you develop good record-keeping habits that you can carry forward through many years of operation.

The Bliss & Tuttle Certified Public Accountants team has experience working with a wide range of small businesses. Our staff can help you get your restaurant off on the right foot, ensuring you'll continue serving happy customers for many years. Contact us today.

CPAs and Fiduciary Services—Why This Title Matters

Thu, 17 Aug 2023 22:26:34 GMT

Most Americans rely on professionals to handle certain matters using skills and training that the ordinary person doesn't have. CPAs are one of these professionals to which many people turn for help.

To benefit fully from this financial help, though, you need to understand what you can expect from a CPA. In this case, this means understanding the role of a fiduciary. What is a fiduciary? Is your accountant one? And what does it mean for you? Here's what every client should know.

What Is a Fiduciary?

A fiduciary is a person who is charged with managing the property of another party. They have a fiduciary duty, which means that they are obliged to act in the best interests of the client whose property they manage rather than their own best interests.

How does this work in real life? If you hire an investment advisor to manage your portfolio, they are a fiduciary for you. They are expected to use their training and expertise to make the best investments with your money. If they would make more commission off of selling you a product that isn't in your best interests, they cannot put their own financial interests ahead of yours.

Is Your CPA a Fiduciary?

Many different professionals can be fiduciaries at varying times. Most accountants do not automatically have a fiduciary role, as they are not in control of your money. They offer advice and help you with tasks like tax preparation, but you remain in control of your property.

However, you may hire a CPA for certain work that does come with a fiduciary duty. For example, if they work as a trustee for a trust or an executor for an estate, they are in control of others' property and must act in the client's best interests.

There are also expectations within the codes of ethics for CPAs that are similar to those of a fiduciary. The Association of International Certified Professional Accountants notes that "the AICPA Professional Code of Conduct embodies standards of conduct which are closely analogous to a fiduciary relationship—objectivity, integrity, free of conflicts of interest and truthfulness."

Why Does This Matter?

This may seem like a matter of semantics, but it has big implications for the client. First, if a fiduciary relationship applies, it is a legal obligation. A trustee or executor must act in accord with their fiduciary duty or they can be sued, removed by a probate court, or even face criminal charges. This protects you, your heirs, and beneficiaries of accounts.

Second, it allows you to have confidence when your CPA advises you. No one wants to worry that their tax preparer is completing unnecessary forms in order to charge them more or that a supposed tax planning tool only serves to create a commission for their planner. Knowing that your CPA is prioritizing your interests gives peace of mind.

Finally, the fiduciary relationship generally means that you're more involved in the decisions made. For instance, if the accountant may earn a commission from some recommended product, they may need to disclose it. You can then make informed choices. Similarly, a truthful and objective CPA gives you all the relevant facts and lets you make decisions for yourself—rather than doing whatever they want.

Where Can You Learn More?

Want to know more about the fiduciary duty and how it may relate to your accounting services? Meet with Bliss & Tuttle CPAs to learn more. We'll help you by tailoring our services to meet your specific needs, whether that includes official fiduciary roles or ordinary services to help you reach all your financial goals. Call today to make an appointment.

5 Reasons to Work With Quickbooks Certified ProAdvisors

Thu, 11 May 2023 22:34:15 GMT

When it comes to finding accounting professionals to help you manage your small business books, you likely want people you can rely on to help with a wide range of financial and technical tasks. And if your business uses or is starting to use QuickBooks, these professionals should include at least one QuickBooks Certified ProAdvisor. Why? Here are a few of the many reasons not to settle for just anyone.

1. ProAdvisors Know the Details

Many people have used QuickBooks — some for many years — but that does not mean they know all the ins and outs of the software. They may have done the same functions for most of that time, perhaps straying little and rarely into new features.

The ProAdvisor designation was created to help laypersons and business owners know that someone has actually trained and been tested in providing real service using QuickBooks. They know why the platform works a certain way, what is going on behind the scenes, and how to find root causes.

2. ProAdvisors Clean Up Your Messes

You are not an accounting professional. So there will be times when you do not get your own bookkeeping right. There is no shame in this. But you should want someone skilled enough to step in and fix what is not going properly. Because a ProAdvisor is trained in many aspects of the software, they will know the fastest and easiest ways to fix anything from incorrect original setup to unreconciled accounts.

3. ProAdvisors Boost Efficiency

Certification as a ProAdvisor goes beyond just knowing how to use the system. They are also always on the lookout for ways to use it better. Can you replace some invoices with recurring automatic billing? Are there ways to link more outside systems to automatically feed information so you do not do redundant data entry? Are you utilizing all the available reports? And what new features might help your business?

It can be difficult for established businesses to make changes in the way they do things. But as you grow, it is always important to work smarter, not harder. So seek outside professionals like ProAdvisors who look at things from a different perspective and can help reduce redundancy, waste, and inaccuracy.

4. ProAdvisors Can Fix Technical Issues

Sometimes, you need more than just an accountant. Sometimes, you need technical support. Your ProAdvisor is skilled enough in the details of QuickBooks that they can often help with backend issues like technical glitches with bank feeds or problems connecting with other apps. They also have an established network and resources at Intuit to help address technical issues beyond their personal scope.

5. ProAdvisors Train Others

The ProAdvisor position is set up to help the advisor teach others how to better use QuickBooks. This way, they make your in-house bookkeeping staff—no matter how basic their work or how much they do with your finances—better at their jobs too.

Along with being trained themselves and usually having an accounting background, they have access to training tools like videos and guides designed specifically for QuickBooks. And because they are a local person in your community, they provide both online and hands-on training tailored to your staff's needs and styles of learning.

Could a QuickBooks Certified ProAdvisor help your small operation use its resources better, keep more accurate books, and encourage growth? Yes. Start learning how by meeting with the team at Bliss & Tuttle CPAs . Our staff of certified pros will work with you to identify your business goals, strengths, and weaknesses to find the best ways to help you. Call today to make an appointment or learn more.

The Role of a CPA in Tax Preparation and Planning

Wed, 01 Feb 2023 20:00:29 GMT

The role of a Certified Public Accountant (CPA) in tax preparation and planning is critical for individuals, businesses, and organizations. CPAs offer a wide range of accounting and financial services, such as preparing and planning taxes.

In this blog, we will discuss the role of a CPA in tax preparation and planning and the advantages of working with a CPA for your tax needs.

Tax Preparation

A CPA's primary responsibility in tax preparation is to ensure that individuals and businesses follow federal, state, and local tax laws. This includes looking at and analyzing a client's financial documents and records to figure out how much tax they owe, as well as preparing and filing their tax returns.

A CPA may review and analyze financial statements to identify potential tax savings opportunities, besides preparing tax returns. This could mean figuring out what deductions and credits a client is eligible for and giving them advice on how to lower their tax bill in the future.

For example, a CPA may recommend that a client set up a retirement account or take advantage of certain business tax breaks to lower their tax burden.

Another important role of a CPA in tax preparation is guiding clients through the complex and often perplexing world of tax law. With changing tax laws and regulations, it can be difficult for individuals and businesses to stay current and compliant.

A CPA can help clients understand their tax obligations and ensure that they follow all applicable laws and regulations. This could mean giving tax advice and helping people fill out and send in any necessary forms.

Tax Planning

A CPA can undertake tax planning for individuals and businesses besides preparing and filing tax returns. Tax planning involves looking at a client's finances and coming up with ways for them to pay less tax in the future.

This could include recommending changes to a client's financials and identifying tax deductions. A CPA can also tell you how to record and report financial transactions to maximize tax efficiency.

Client Representation

Another important role of a CPA in tax preparation and planning is to represent clients during audits or other tax-related disputes. Suppose that the Internal Revenue Service (IRS) or a state tax agency disputes the accuracy of a client's tax return or asserts that the client owes more taxes. In that case, the CPA can represent you during the audit process.

CPAs can negotiate on behalf of their clients to reach a favorable resolution and reduce tax liabilities. CPAs are taught how to communicate with tax authorities and can assist their clients in negotiating a favorable settlement.

Advantages of Using a CPA

Working with a CPA will give you peace of mind that your taxes are being handled by a professional. A CPA will make certain that your tax returns are correct and complete and will work to reduce your tax liability to the greatest extent possible. This can provide a significant financial benefit as well as the assurance that your tax affairs are in good hands.

A CPA can also provide valuable insights and guidance on financial matters other than tax preparation and planning. For instance, a CPA can provide advice on financial and budgeting planning, and business planning. They can also tell you on how to improve your cash flow, cut costs, and make more money.

CPAs play an essential role in helping individuals and businesses to navigate the complex world of taxes and meet their financial objectives. Call us at Bliss & Tuttle, CPAs, to set up a free consultation if you are a business owner looking to reduce your tax burden or optimize your taxes. We will offer you valuable advice and support.

5 Reasons to Discuss Estate Planning During Your Annual Tax Appointment

Wed, 28 Dec 2022 22:26:33 GMT

Do you need an accountant to prepare your income taxes this year? While this is an important service for many Americans, you could make it even more valuable by adding another important discussion. This is a great time to add estate planning to your annual meeting. Here are a few of the most valuable reasons to take this opportunity.

1. They Offer a Different Perspective

When most people think about estate planning, they think about working with a lawyer. However, an accountant provides a different professional perspective. The financial issues and legal matters should both go hand-in-hand during estate planning. While your attorney may advise you to use an irrevocable trust for a large investment, for instance, the accountant can help you know if the tax benefits are worth it.

2. It's an Annual Event

While most people think of estate planning as a one-and-done task, it should actually be reevaluated regularly. Laws change, people's circumstances change, assets change, and family dynamics change. However, few people meet professionals about their estate planning on a regular basis.

Your tax appointment is a mandatory annual event during which you can easily extend the conversation with little extra prep or work and a minimum time investment. You can essentially kill two birds with one stone by discussing your taxes and your estate plan in the same appointment.

3. You Already Have the Data

In general, the accountant has current and past records of your income range, side earnings, business income, large assets, and investments. Armed with this data — and with most other financial data easily obtained via the internet or cloud storage — you can make short work of big financial decisions with a professional. You may never have all this information at your fingertips again throughout the year.

4. Your Accountant Knows Tax Changes

One reason to do a regular checkup on estate planning is that financial and tax laws change constantly. Few average taxpayers keep up with the bulk of these changes — or can fully understand their implications.

But your accountant does this for a living. They will know when tax laws could make inherited assets more or less valuable, the inheritance rules of tax-advantaged accounts, and limits and phaseout thresholds for various tax benefits. So they can keep you updated on what specific parts you should know and wade through the gory details so you don't have to.

5. They Can Keep You in Mind

You build a relationship with your accountant over time. They get to know your financial situation and goals. They see your family size grow or change, watch you start or end businesses, and even know about the financial implications of your messy divorce. This ongoing knowledge puts them in the best position to offer tailored guidance about your estate.

For example, your accountant knows that your dependent minors are reaching 18. They can remind you that inheritance laws are different for adults and that you can now leave money directly to your kids. But how much? What are the tax obligations for heirs? Should you gift tax-free money now or commit more to their college savings funds instead? Your accountant can help you answer these questions.

Your annual tax appointment could be a great place to discuss estate planning this year. If so, start by making an appointment with the accounting professionals at Bliss & Tuttle, CPAs . We'll help you find answers to all your financial questions, create a schedule to keep up with changing financial needs, and put together all the information you need to make wise financial decisions. Call today to learn more.

Are You a Freelancer? Check Out These Accounting Tips

Thu, 08 Sep 2022 18:24:03 GMT

Freelance business comes with many perks, from flexibility to freedom and self-management. But with these perks also comes great responsibility — keeping track of your finances to ensure everything is in order during tax payment.

For many freelancers, bookkeeping can be a daunting task. But you cannot afford to avoid this aspect of your business if you want to be successful in the long run. Fortunately, there are some steps you can take to make the accounting process a bit easier — and even help you save money in the process.

Take Your Business Seriously

Being a freelancer does not make what you do less of a business. On the contrary — because you don't have the safety net of a regular paycheck, you should take your freelance business seriously and keep good records from the start.

Set up a system for tracking your income and expenses, and ensure you always deposit payments into your business account rather than your personal account.

For instance, if you are a creative writer, you might want to keep track of the different projects you work on and how much each one pays. This step will help you stay organized and get a better sense of which projects are worth your time.

Also, track all your income and expenses, and keep all receipts and invoices safe. This step will make it much easier to prepare your taxes come tax time.

If you use accounting software, back up your data regularly. This way, you won't lose all of your essential financial information if anything happens to your computer.

Get Familiar with the Different Types of Taxes

You are responsible for paying your own taxes when you are a freelancer. As such, familiarize yourself with the different types of taxes that may apply to your business —- including income tax, self-employment tax, and value-added tax .

Income tax is the most common type of tax. This tax is based on the total amount of money you earn from freelance work over a year.

Self-employment tax is also prevalent among freelancers since most of the freelancers fall under the self-employed category. This tax covers Social Security and Medicare and is calculated based on your net earnings from self-employment.

Value-added tax (VAT) is a consumption tax applied to certain goods and services in some countries. If you are registered for VAT, you will need to charge this tax on all invoices issued to customers — and then pay the tax collected to the government.

Put the Tax Money Aside

A good rule of thumb is to set aside 30 percent of each payment from clients for taxes. This portion may seem like a lot, but it is better to overestimate your tax liability than underestimate the amount.

If you don't have enough money set aside when the time to pay taxes comes, you may be subject to penalties and interest charges — which can quickly add up.

If you can, pay your taxes quarterly. This tip eliminates the burden of a large tax bill once a year and can help you avoid penalties and

interest charges.

Hire an Accountant

If the thought of doing your taxes gives you anxiety, a professional accountant can help you out. While this tip may seem like an expense, an accountant can save you money in the long run by ensuring your taxes are done correctly. Moreover, an accountant will help you take advantage of any deductions or credits you may be eligible for.

Additionally, an accountant can help you plan for upcoming tax payments and ensure you are setting enough money aside.

You can count on us at Bliss & Skeen, CPAs, to help you with all your accounting needs. We are familiar with accounting and tax laws and can help you plan for a successful future. Contact us to set up an appointment.

Does Your Small Business Need an Accountant?

Mon, 08 Aug 2022 15:16:41 GMT

At the onset of your small business, you probably want to handle everything to cut costs. However, your effectiveness reduces when you have many tasks to accomplish without external help. For example, your business finances become more complex as you scale up. Therefore, accounting is one of the areas where you will need to outsource or hire an expert.

Explore when and why your small business would need an accountant.

When Do You Need an Accountant for Your Small Business?

Sometimes, you'll need an accountant for a few hours a week. In such instances, outsourcing makes more economic sense. Examples of situations that call for accounting services include the following.

When Tax Seasons Approach

Tax errors can cost you a lot of time and money. You would also have to spend considerable time to keep your records in order. Besides, you may miss essential deductions or the latest tax law changes. Conversely, an accountant is well oriented with the details of taxes and will do a perfect job in a shorter time.

When You Scale Up

Your financial transactions increase as your small business expands. As a result, you may not be able to handle all the records. In some cases, you may even forget to update some transactions. In such situations, hire a full-time or part-time accountant. A full-time accountant comes in handy if you cannot get accustomed to the new roles. Otherwise, you may end up with messy or inaccurate records.

During Audits

When you face an audit, the government has experts look into the details of your taxes. Even though you may not notice, minor errors add up over time and could be mistaken for fraud. An accountant helps you put all your taxes in order. If you have any problems, accountants understand how to deal with the IRS and resolve the issue with minimal or no negative impact on your business.

Why Do You Need an Accountant for Your Small Business?

Many benefits lie in store for you when you get professional accounting services. Some reasons you would want an accountant for your small business include the following.

To Get Accurate Forecasts

When you lay out your business plan, you must set realistic goals. Nonetheless, if you have never been in business before, you cannot accurately estimate your business's potential for the next few years. But an accountant who has worked with similar businesses provides accurate insights about cash flow and profit.

To Save Time

Accounting and related tasks can be complex, especially if bookkeeping is not your cup of tea. You'll have to record and analyze many transactions, which requires accuracy. In the end, you will spend a lot of time that you would otherwise spend on tasks that give you a better competitive edge. A professional accountant takes up the active role so that you can free your space for other activities.

To Get Financial Guidance

When you start a small business, you may not be able to make sound financial decisions without expert help. For example, accountants, who have dealt with small businesses before, can guide you based on their prior experience. An accountant eliminates trial and error, which is risky for your business, and provides informed guidance for better financial and business decisions.

To Boost the Chances of Financial Support

You can access different loan and finance options to boost your business. However, you must show your lenders you can manage your finances well. An accountant proves you are serious about your finances. Also, your accountant guides you through the ideal financial support options based on your current situation.

The benefits of professional accounting services for your small business outweigh the costs. Whenever you need an accountant for your business, ensure you work with a reputable company to reap maximum benefits. At Bliss and Skeen, CPAs , we are your number one choice if you want excellent and reliable accounting for your small business.

5 Ways an Accountant Can Help Households Face Rising Inflation

Wed, 06 Jul 2022 18:54:37 GMT

Americans are facing the threat of rising prices and high inflation. This puts many families, individuals, and businesses alike at risk of financial instability. Whether you're in this position or just want to solidify your finances proactively, an accountant can help. Read on to learn about a few areas in which a trained financial professional can assist you.

1. Minimizing Taxes

Are you overpaying in any areas of your tax obligation? Could you do more to minimize taxes legally? If you're not sure, it's time for a checkup from an accountant versed in tax planning.

Both high earners and average income households have opportunities to reduce taxes through things like harvesting investment losses, maximizing credits and deductions, and taking advantage of nontaxable income or contributions.

Unfortunately, some of these tools are hard to understand and apply, so professional help can be a good idea. Accountants can even go over prior tax returns to ensure you haven't overpaid in the past.

2. Improving Your Budget

Few people enjoy budgeting in their personal or household finances. But taking control over your spending and saving is one of the best ways to not only reduce expenses now, but also to prepare for future uncertainties. Just as they would with a business, an accountant can look over personal finances and help you make better choices.

Developing a good household budget can take a little time. Your accountant may analyze spending patterns and saving history. You may need to tweak your budget multiple times as you put it to use. And an impartial professional may help you stay on track when you encounter challenges.

3. Building a Passive Income

While you can't do anything to slow down inflation, you can combat it by developing more streams of income. Many Americans are pursuing other forms of income, ranging from selling crafts online to investing in rental properties. A passive income can be very valuable to you. They often don't require you to actively participate in order to continue to generate income.

How can an accountant help? They can advise you on the best business entities to choose, how to set up useful bookkeeping, how to meet and minimize tax obligations, and improving your profit margin. Even the most modest side income enterprise should be treated like a real business.

4. Boosting a Safety Net

Your financial safety net is composed of many things that can help you in times of emergency. It often includes liquid savings accounts, taxable investments, proper insurance coverage, targeted savings goals, and sinking funds.

How strong is your combined safety net? Businesses conduct stress tests, which use scenarios and projections to test how well their safety nets can fill in gaps. You may use similar tools to analyze your home finances and make them stronger.

5. Avoiding Family Conflict

Finally, the more financial trouble you face, the more likely it is to create conflict and arguments within the family. This can be an even bigger strain than the money troubles themselves.

Could an outside, impartial third party help reduce this risk? Rather than sitting down with your spouse or going over your finances when you're emotional, you do so in a professional environment. An accountant can help you both find and implement solutions that everyone can work with.

Where to Start

Which areas might an accountant help you get more prepared and build confidence even as prices rise? No matter where you can use help — whether in big changes or small ones — the financial professionals at Bliss & Skeen CPAs can help. We work with a wide array of clients, all with unique financial situations and needs. Call today to make an appointment and learn how we can help you too.

Financial Evaluations a CPA Can Perform for Your Business

Tue, 07 Jun 2022 18:24:15 GMT

As a business owner, you should know about the different types of financial evaluations that can give you some insight into your business's overall performance and value. But what are these evaluations, and what do they involve?

Here's an overview of the four most common types of financial evaluations.

1. Financial Statement Analysis

To perform a financial statement analysis, your CPA will take a close look at your business's financial statements, such as your balance sheet and income statement. They'll also analyze any other financial documents you have, such as bank statements and tax returns.

The CPA will use this information to identify any areas of concern or opportunity. For example, they might notice that you hardly take advantage of certain tax deductions, something that could cost you a ton of money.

Your CPA will also look at your company's trends over time to identify any areas of concern. For example, if your business's expenses gradually increase while the revenue remains flat, this discrepancy could be a red flag that shows when your business is in trouble. In other words, your operational costs are out of control, and your business doesn't generate enough revenue to cover them.

2. Financial Ratio Analysis

Here, your CPA will compare your business's financial ratios to see if they match the industry standards. Financial ratios are a way of measuring different aspects of your business's financial health.

For example, your CPA might look at your business's debt-to-equity ratio. This ratio measures how much debt your business has compared to the amount of equity (i.e., ownership stake) that stakeholders have in the business.

A high debt-to-equity ratio could be a sign that your business has way too much debt and could be in financial trouble. On the other hand, a low debt-to-equity ratio indicates that your business growth is slower than it should be. This situation happens when you don't use leverage (i.e., debt) to finance your growth.

Your CPA can also look at other financial ratios, such as your operating expense ratio and your gross margin percentage. These ratios can give insights into how well you manage your business and if the company generates enough profit per financial year.

3. Business Valuation Analysis

A business valuation is an estimate of what your business is worth. This analysis can be useful if you plan to sell your business or take on investors.

To perform a business valuation, your CPA will look at various factors, such as the value of your assets, the profitability of your business, and the growth potential of your industry. They'll also consider any intangible factors, like the value of your brand or how strong your customer relationships are.

Once they have all this information, they'll use the data to come up with an estimate of what your business is worth. This value can be helpful when you begin negotiations with potential buyers or investors. The analysis can give you a starting point for the price that you should be willing to accept.

4. Cash Flow Analysis

A cash flow analysis assesses your business's ability to generate and maintain enough cash to cover its expenses. Remember that even profitable companies can run into trouble if they don't have enough cash on hand to pay their bills.

To perform a cash flow analysis, your CPA will look at how much cash comes in and goes out of your business. This information gives them a picture of your business's overall financial health. The analysis helps the CPA identify any areas where you might need to improve your cash flow. You can collect receivables more quickly or reduce inventory levels to achieve reasonable cash flow.

These are just a few of the many forms of financial evaluations that a CPA can perform for your business. If you're not sure which ones would be most helpful, talk to us at Bliss & Skeen, CPAs so we can help you figure out what's right for your business

What Your Business Should Know About Employee Payroll Taxes

Mon, 21 Mar 2022 19:08:19 GMT

Payroll tax refers to the money withheld from employee paychecks and remitted to the IRS or other government agencies. If your business hires full-time or part-time workers, you're responsible for calculating and withholding the correct amount of payroll tax from each paycheck.

Payroll taxes form a significant proportion of government revenue. In fact, taxes for social security and Medicare alone account for 23% of government revenue. Read on to learn more about payroll taxes and why your business needs to remain compliant.

What are the Types of Employee Payroll Taxes?

There are 3 main types of payroll taxes: federal, state, and local. Federal taxes include social security and Medicare deductions, thus accounting for the biggest piece of an employee's tax burden. State-level taxes are the second-highest and they include deductions for retirement plans, insurance premiums, and child support payments.

Here's a more detailed breakdown of the 3 types of employee payroll taxes.

1. Federal Income Tax

Federal income tax is the money you withhold from employee paychecks for remittance directly to the IRS. The IRS calculates federal taxes based on income thresholds, Congress-enacted laws, and Department of Treasury regulations. As a result, federal income taxes function on a pay-as-you-go basis, and the IRS refunds any amount overpaid when the employee files a tax return.

Social Security Tax

Social security taxes are deductions made to finance the social security system. Both employees and businesses pay social security tax, which is calculated as a fixed percentage of gross income. For example, employers withhold 6.2% of each employee's paycheck up to a maximum taxable amount of $142,800. Employers also match this percentage amount for a total of 12.4%. The Social Security Administration (SSA) provides guidance on maximum taxable limits and revenue expectations during any given tax year.

Regardless of the current tax laws, your business should have a system in place for withholding, matching, and remitting social security taxes to the IRS. Timely remittance will help you avoid fines and penalties arising from delayed payments.

Medicare tax

Similar to social security, Medicare is a benefit program for older adults. Medicare tax withholdings go towards financing healthcare programs for retirees. You should remit these payments along with social security taxes.

2. State Income Taxes

State income taxes are amounts employers withhold for remittance to relevant state agencies. Washington is one of the few states that doesn't require income tax withholding. Instead, your business may be subject to a public utility or business occupation tax.

If you operate in the transportation, energy, or communications field, you'll pay a varying public utility tax rate related to your specific operations. For example, energy companies are liable for a 3.8% tax rate for distributing electrical power. Businesses in other industries such as retail are responsible for paying business occupation tax, which is based on gross income or the total value of your products.

3. Local Income Taxes

Local taxes are withholdings for specific municipalities within the state. Revenue from local taxes goes towards funding school districts, city councils, and other local programs. As a result, your business should withhold local and federal taxes from employee paychecks.

While payroll taxes are an essential source of government revenue, they can be complicated to figure out yourself. And the burden is even greater if you hire many employees. If you don't meet payroll tax obligations, your company could face significant consequences.

Fortunately, a business tax service can help you handle payroll taxes and avoid critical mistakes. At Bliss & Skeen CPAs, we offer reliable business income, tax planning, and filing services. In addition, we work with you to meet both federal and state tax obligations so you can spend more time growing your business. Contact us today.

Debunking the Most Common Tax Filing Myths

Wed, 02 Mar 2022 18:33:05 GMT

Debunking the Most Common Tax Filing Myths

Do you know how many Americans don't pay federal income tax? In a survey that raised this question, only 2 out of 10 people got it right (around 45% of Americans don't pay federal income tax). Most other people underestimated this number. What's even more worrying is not the lack of this information but Americans believing tax filing misinformation.

Some people believe tax-filing lies and do the wrong things, which land them into trouble with the IRS. That's why you need to get the right information to avoid falling into this pitfall. Read on as this blog will debunk the most common tax filing myths.

All Gifts Are Tax Exempted

Most people will give you the advice to give out a gift to avoid paying taxes. These people believe the myth that all gifts are tax-exempted, which is not the case. The IRS general rule is that any gift is a taxable gift.

The good news is that there are several exemptions to this rule, for example, medical fees and tuition you pay for someone. To avoid problems with the IRS, educate yourself on these exemptions. Besides, if you are uncertain on whether a gift is tax exempted, consult a certified public accountant (CPA).

Filing Jointly Is Always the Best Option

Most married Americans assume that it's best to file joint tax returns to save money. These Americans don't even consider filing separately as they feel it's wrong. Yet, it's better to file separately than jointly in some instances.

If you've hefty medical bills or want to avoid your spouse's tax liabilities, then it's best to file separately. On the other hand, to earn more deductions and credits, go for joint tax filing. So, review your situation to determine which tax filing options fit you.

Customer Tips Don't Count as Taxable Income

Most taxis, restaurants, and hotels workers believe the myth that tips don't count as taxable income. They argue that there are no records for the tips they earn, so they don't have to report them as income. After all, some of them cannot even recollect how much in tips they've received in a given period.

If you're one of these people, know that the IRS classifies tips as a taxable income. And like all other forms of taxable income, you face hefty penalties when you don't report your tips. To avoid these problems, learn the IRS regulations on reporting the tips you earn to your employer.

If you're self-employed (for example, you're a self-employed driver), reach out for professional guidance on how to report tips. A CPA will guide you to know the right tax forms to fill in the tips you earned in a given period.

College Students Don't Have to File

Most Americans believe that being students automatically excludes them from filing tax returns. They argue that the side jobs they're doing at the moment don't generate huge amounts of cash. Besides, they still depend on their parents for financial support.

Yet, despite all these things, the IRS still requires you to file tax returns even if you're still a college student. Yes, it's challenging to know how to file taxes during this period, and that's why you need to seek professional help.

To avoid problems with the IRS, you must ignore the above tax filing myths. Understand that it's a myth that all gifts are tax exempted. Also, don't believe the lie that it's always best for married people to file jointly.

To get the right information on tax filing, reach out to Bliss & Skeen Certified Public Accountants. We are dedicated to helping all our clients file their taxes on time and avoid problems with the IRS. Call us today for individual and business tax services.

5 Steps to Create a Record Retention System for Your Business

Tue, 18 Jan 2022 21:21:53 GMT

5 Steps to Create a Record Retention System for Your Business

Does your small business have a universal records retention system? Records retention — how long to maintain documents and records as well as how to do so — is an overlooked but important part of protecting your business financially, legally, and physically. But how can you create a records retention program that works for your business? Discover a few steps to take.

1. Analyze Your Records

Any company's records retention program should be universal, or applied the same across all its departments. For this to happen, you first need to determine what records, media, documents, files, and digital material to include. Consult employees across all areas of the business and make a written list. Be as detailed as you need to be.

2. Consult With Professionals

Once you have an idea of all the records you must address, meet with professionals and do research to determine how long to keep each record. Your accountant and attorney should both go over the list of records and provide guidance.

Some categories — such as business tax returns or financial statements — have clear-cut parameters that government agencies provide. But many record retention guidelines are based more on the experience of professionals and possible scenarios wherein those records would be called on. So you may get more than one recommendation and need to decide on the best choice for your business.

3. Write Down Your Schedule

The creation of any universal business operating procedure relies on everyone being on the same page. This means putting your record retention list in writing and making it available to all employees. Group documents into categories or classes for ease of use. And if you update any retention periods on future guidance, update the master list and redistribute it.

4. Protect and Organize Stored Records

Of course, keeping old records for the required period also means ensuring you can access them when needed.

Analyze how your business keeps old records. How can you improve? Can you use more secure storage for accounting or company records, such as by replacing bankers boxes with locking file cabinets? Can you store things centrally for better security? Could records be better organized? Should you move hardcopy records to a digital format? Is this allowed according to legal or auditing standards?

Talk with your accountant and attorney about recommendations from their experience and what works for other business clients.

5. Destroy Records Regularly

Destroying expired records is important for many reasons. First, it reduces wasted physical and virtual space because you only use and pay for what you actually need. Eliminating old physical records also keeps your business clean and removes safety or fire hazards.

Perhaps more importantly, though, destruction reduces liability. The longer you have records in your possession, the more you risk theft, data breaches, and loss of personal information. And if old records still exist past their expiration dates, they could become part of future financial and business audits or even legal cases.

In general, most methods of destruction are allowable so long as they provide complete destruction. You may opt for cross-cut shredding, document destruction services, degaussing, burning, or physical breakage (for some forms of media). Corresponding digital files must also be completely and permanently deleted.

Are you ready to get started on your record retention system for your small company? No matter what questions you have about this important process, start by meeting with Bliss & Skeen Certified Public Accountants . Our experienced team will work with you to craft the right retention plan and implement it across the business. Call today to make an appointment. We look forward to helping you.

5 Tax Challenges to Address When Developing Multiple Income Streams

Fri, 17 Dec 2021 18:14:37 GMT

5 Tax Challenges to Address When Developing Multiple Income Streams

One smart move that can help guarantee you a lifetime of stable, sustainable finances is to develop more than one stream of income. For most people, this means adding to your regular income by turning a side hobby into a small business, making an idea into a real product, buying investment real estate, or taking advantage of the gig economy.

But while you can get great financial benefits, you'll also have to deal with a few tax consequences. To help you avoid tax problems or unexpected bills, here are five of the most common tax issues you may have to overcome when setting up multiple streams of income.

1. More Tax Forms

If you've always had just a salaried or wage-earning job, you may be surprised to find out about all the new tax forms you'll have to complete.

Starting as a sole proprietor? You generally must complete Schedule C. Becoming a landlord? It's Schedule E. Incorporating your business? You'll be responsible for both individual tax forms and corporate tax forms. Investment income? That's on Schedule D. Starting more than one business entity? You may have to file separate schedules for each.

2. Self-Employment Taxes

When you go to work for yourself — as an independent contractor or gig worker, for instance — you're likely going to be subject to an unfamiliar tax: the self-employment tax. The self-employment tax covers your Social Security and Medicare tax contributions on income not subject to FICA taxation.

The self-employment tax can wreak havoc with many new entrepreneurs because it may not be covered by your tax withholding from other sources of income. In addition, some types of tax credits do not apply to this tax. And finally, because you are both employer and employee, you pay the full amount due from both.

3. Tax Withholding Issues

The tax withholding system is designed to allow taxpayers to pay their annual tax bills via paychecks throughout the year. But if you have more than one form of income — and particularly any income from which withholding is not possible — finding the right target amount becomes more difficult. Landlords, entrepreneurs, and gig workers often have to calculate and make estimated tax payments on their own.

4. Keeping Things Separate

Reporting income and expenses accurately becomes more complex when you have more than one source. Business expenses generally must be claimed against the related income rather than personal income. This involves a new level of careful tracking and bookkeeping and a learning curve to achieve it.

If you have more than one side income, it can get even more challenging. A landlord, for example, may need to not only track expenses for their rental work but also which unit the expenses are for. Writing your first novel and consulting in your field? These income sources are different enough to likely call for separate expenses with separate tax forms.

5. Higher Risk of Audit

There is no clear-cut list of red flags for IRS auditing, but certain activities increase your chances. These activities include earning a higher overall income, being self-employed, claiming certain losses, and failure to report all your income. Any of these can happen to someone who starts a secondary income source, especially when they're new at it. So you'll want to be careful to file everything accurately.

Where to Start

The benefits of setting up multiple sources of income for the long term outweigh the downsides, but it's important to minimize potential problems. An experienced accountant can help. Bliss & Skeen CPAs are ready to assist you no matter what type of side opportunity you want to create. We offer help with everything from setting up a business entity to maintaining the books to filing your taxes. Call today to get started.

Starting a Side Gig? 5 Valuable Things to Know

Thu, 25 Nov 2021 10:11:39 GMT

A second stream of income through a side hustle can be a big benefit to your finances. But it also comes with new challenges. What are some of these challenges? And how can you best meet them and build a successful second income on your own? Discover five things to know.

1. Your Taxes May Get Complicated

When your only source of income is a salaried or wage-earning job, income taxes may be reasonably simple. However, any sort of business or investment income makes things more complicated. You will need to file new forms such as Schedule C to report business income and expenses or Schedule E for rentals. You may also need to manage things like 1099 forms, sales taxes, and capital gains tax.

Most of these reporting requirements are unfamiliar to many Americans. And the consequences of completing them incorrectly - or worse, not fulfilling your tax obligations - can be severe and financially draining. The best plan is to work with experienced tax preparers at least until you are more established.

2. You Should Treat It Like a Business

The tendency for many very small business operators is to run things informally, often mixing personal and business transactions and failing to keep diligent records. These habits can hamper your business and make profit more difficult.

But if your goal is to turn a profit and build on it, learn the right way to keep your books, perhaps using professional software. You'll need to avoid mistakes that can increase personal liability. And you'll want to learn how to thoroughly gauge your profit and make smart choices to increase it.

3. The Type of Business Entity Has Major Effects

Today's entrepreneurs have many choices for business structure. And these choices can have serious effects on their personal liability, their finances, and the growth of the business. While many entrepreneurs start out as a simple sole proprietorship, for instance, this carries with it the most personal financial and legal liability. This can also make growth and investment harder.

Every business entity - from sole proprietorships and LLCs to partnerships, trusts, S corporations, and C corporations - has legal and financial pros and cons. Consult with an accountant and attorney to choose the one that will best serve your goals.

4. Good Business Plans Are Vital

When you start out a small enterprise, creating a full business plan may seem like overkill. But this document helps you work out a good strategy and ensure this is a realistic expectation. A good accountant can help you write a business plan that includes important details like how you will finance your gig, what your market is like, how you'll run the business, and how to forecast income and expenses.

5. Professional Help Makes It Easier

Professional assistance will be a big help in getting your side project up and running and providing a steady income. Everyone who starts a side gig should begin by consulting with a business attorney and an accountant in their state.

An accountant, in particular, will help you set up your books, understand basic accounting, and analyze business opportunities. And because you pursue your hustle alongside your regular career, you may also want to outsource much of the actual bookkeeping and tax work to a professional.

Ready to get started on your side income project? No matter what stage of planning or development you're in - even if you've already begun working - learn more by meeting with Bliss & Skeen Certified Public Accountants . We will help you get on the road to a profitable gig that will help ensure a solid and stable financial future for you and your family. Call today to make an appointment.

An Introduction to the Value of Trusts In Estate Planning

Tue, 26 Oct 2021 08:47:59 GMT

Should you use a trust to protect your assets and your loved ones? While many Americans have heard of trusts, they may have little understanding of how trusts work or what a trust can do for their particular situation. To help you make the right decisions about trusts within your estate plan, here is a short introduction to trusts.

What Is a Trust?

A trust is a legal tool that creates a separate entity from the person who funds it. The grantor sets up the trust, transfers assets into it, and appoints themselves or another person as the trustee to make decisions and carry out legal requirements for the entity. Trusts come in many shapes and sizes, some that are general in nature and others that have very specific purposes (such as providing for a particular child).

How Do Revocable and Irrevocable Trusts Differ?

Trusts are broadly defined as being either revocable or irrevocable. Revocable trusts are more common in most estate planning situations. The terms under which the trust was created (such as how income is distributed or who is the beneficiary) can be revoked or replaced at any time by the grantor.

Irrevocable trusts, on the other hand, do not allow the grantor to change the terms once the trust is set up. This makes them less popular as it takes away more control from the individual. However, the irrevocable status does provide additional financial protection.

Can a Trust Benefit You During Your Life?

Trusts are often thought of as estate planning tools, but they provide benefits while the grantor is alive. Irrevocable trusts, for instance, reduce the person's liability by separating the individual from the asset. This can be very useful for potentially risky income-producing assets or business interests.

A trust also ensures your finances (and other matters under the trust's jurisdiction) continue to be managed even if you're not able to make decisions directly. If you are incapacitated from an illness or injury, your named successor trustee takes over immediately and makes decisions on your behalf. This can also be applied if you travel extensively or are otherwise out of communication for any period.

How Does a Trust Help Your Estate Plan?

Trusts can be helpful when the grantor passes away. Because an irrevocable trust is not treated as part of the person's estate, it allows a large estate to stay below the threshold for estate or inheritance tax. And both revocable and irrevocable trusts avoid probate, which means beneficiaries have access to inherited funds immediately rather than possibly waiting months for probate to end.

Trusts also protect your privacy. While a will is a matter of public record, a trust is a separate and closed document. No one will know what is in your trust, what assets are involved, its value, or who is the beneficiary.

Do You Need a Lot of Assets for a Trust?

Many people think trusts are only for people with a lot of money. But in fact, they serve the same purpose for someone with just one large asset, such as a house, as for someone with ten investment properties. More importantly, they protect your ability to make decisions for yourself and your family. And simple trusts can be very cost-effective and require little maintenance. This makes it so they are accessible to everyone.

Who Can Help Create a Trust?

Want to know more about adding a trust to your estate planning? Start by meeting with the team at Bliss & Skeen, CPAs today. We will work with you to assess your trust goals and needs, build a trust that works best for you, and even help administer it. Call today to make an appointment.

Quarterly Tax Payments - What You Need to Know

Mon, 25 Oct 2021 18:33:02 GMT

Have you been told that you must - or should - file estimated tax payments? Most Americans aren't familiar with the system for doing estimated tax payments, as their employer's withholding system does most of the work for them. But estimated tax payments - often called quarterlies - are an important part of avoiding unnecessary tax bills, penalties, and surprises from the IRS. Here's what you need to know about them.

Why Pay Quarterlies?

Basically, estimated tax payments are due when other means of paying your taxes throughout the year are insufficient to meet your expected tax bill. This is because the U.S. tax system is 'pay as you go' to help ensure that every taxpayer fulfills their annual obligation.

Businesses are generally subject to estimated payments because there is no other mechanism for them to pay taxes in increments. However, individuals may also need to make payments when they get income from less common sources - things like sole proprietorships, royalties, farm income, retirement money, a side gig, or a taxable windfall. This can be required in lieu of employer withholding or in addition to it.

How Are Quarterlies Paid?

Quarterlies are generally paid either by check or through electronic payment options provided by the IRS and state tax agencies. Federal taxpayers may use Form 1040-ES (for individuals) and Form 1120-W (for corporations) to remit funds. Each state with an income tax usually has its own remittance forms as well.

The IRS records payments within the taxpayer's account, where they can be confirmed at any time. When the taxpayer completes their annual income tax forms, the payments are added up and credited to their form. Any remaining amount is due by the tax deadline.

When Are Quarterlies Paid?

As their name suggests, quarterlies are generally due once per quarter (three months). The standard dates are April 15, June 15, September 15, and January 15 of the following year. However, while these are the deadlines for the amount due each period, you may pay this in advance if you wish. For instance, a business might send payments weekly, biweekly, or monthly - as long as it meets the deadline.

How Are Quarterlies Calculated?

The amount necessary for each estimated payment is usually based on two numbers. The first is your tax obligation from the prior year (if applicable). For the IRS, your withholding and estimated payments should cover at least 100 percent of the amount due for federal taxes the prior year.

The second calculation is your current expected tax bill. Withholding and estimated payments (and any other source of payments) should cover at least 90 percent of the current year's bill. And any taxpayer who expects to owe more than $1,000 in April is subject to additional estimated payments.

What If You Don't Do Quarterlies?

Quarterly payments are an inconvenience and an expense. So, why do them? The first reason is to avoid extra fees, interest, and penalties. Taxpayers who owe $1,000 or more when filing their taxes are subject to a penalty. In addition, penalties and interest are added based on how many days late your payments - including those which missed quarterly deadlines - are.

Penalties aren't the only problem. The taxpayer who didn't file quarterlies will find themselves stuck with a large tax bill on April 15. This bill could be hundreds or thousands of dollars, all due immediately. And few taxpayers have that much extra cash lying around. Most are much better off paying their bill in smaller increments as they earn the income.

Where Should You Start?

Want to know more about paying quarterly estimated taxes? Need help figuring them? Start by meeting with the tax professionals at Bliss & Skeen, CPAs . We will work with you to identify your quarterly payment obligations, determine the best route to minimize costs, and help you make your remittances. Call today to get started.

Investing? The Financial Benefits of Setting Up a Business Entity

Tue, 19 Oct 2021 14:19:28 GMT

Do you want to begin investing on a large scale? Whether your plans include alternative investments, investing in one or more private businesses, buying real estate, or investing in something unique, one of the best ways to help protect your finances and keep taxes low is to use a separate business entity. Why? Here's what every serious investor should know about business entities.

What Is a Business Entity?

A business entity is an organization that is recognized by the legal system as its own entity separate from the individuals who are involved in it. The entity has rights and responsibilities, including filing taxes and suing others, just as a person would. Owners, on the other hand, see reduced personal liability and changes in their personal taxation.

A modern investor may choose from a wide variety of legal entities. This includes business entities like limited liability companies (LLCs), S corporations, C corporations, and partnerships. Nonbusiness entities - most commonly a trust - can also be used to hold many types of investments.

What Are the Financial Advantages of a Business Entity?

So, why should you consider using a business entity to hold your investments? Aside from legal protections, the financial reasons are many and varied.

First, it can help reduce your taxes. Corporations and LLCs that operate as a corporation pay income tax on their own profits. Owners only pay taxes on what they actually withdraw and keep. This is the opposite of an investor who operates as an individual and must pay personal income taxes on all profit no matter whether they used it or reinvested it. And in estate planning, a trust can help avoid inheritance and estate taxes.

Many entities can also help with tax deductions and credits. Consider a professional who wants to invest in the purchase of a building rather than lease property from someone else. The formation of a separate entity for this investment building provides a more efficient way to deduct operational expenses while the business continues to pay rent and deduct it from its own taxes. The result can boost your tax planning.

As your investments grow, too, you may want to work with other investors. A landlord, for example, might begin with just one investment property but eventually grow their investments to a point where they want to take on a partner or investor. If everything is owned by the individual, getting capital through investors will be difficult or even impossible. Having a business entity means you can easily take on new capital.

Finally, anyone engaging in any sort of profit-making endeavor should keep their personal and business finances as separate as possible. Failure to do this could result in higher tax bills than necessary, fraudulently-used deductions, and increased personal liability for business debts. The best way to keep your personal and investment books separate is to create a distinct entity through which to funnel business activity.

Where Should You Start?

Could your investment benefit from the potential tax savings, simplified growth, and accurate bookkeeping provided by making it into its own business entity? If so, start by learning more about the various entities, their pros and cons, and how to set up one for yourself. While it may seem complex from the outside, many entities are relatively easy to start and require only quarterly or annual reporting.

Washington investors can call on the business accounting professionals at Bliss & Skeen CPAs . We will work with you throughout the stages of your entity's life - from its selection and formation through its bookkeeping and operations. We can even help with changing the entity or terminating it when the time comes. Call today to make an appointment.

5 Ways Accountants Help Executors Fulfil Their Responsibilities

Mon, 18 Oct 2021 17:17:03 GMT

How can an accountant help you fulfill your ethical responsibilities as an executor of a loved one's will or estate? Here are just some of the valuable things they can help you with to accomplish your responsibilities as an executor.

1. Understanding Fiduciary Duty

In order to fulfill your ethical duties to the estate, you must first understand them. Few Americans have ever served as a fiduciary for someone else, so they may have little knowledge about what the role means.

A fiduciary for an estate is obligated to act in the best interests of the estate. They have a duty of care and a duty of loyalty. This is a relatively simple concept, but it can be hard to put into practice. How much leeway you have, what is the best interest of the estate, and how you balance financial and moral considerations are not easily answered questions.

An experienced accountant will help you understand fiduciary responsibilities as they relate to estates, heirs, assets, and debts.

2. Making Ethical Decisions

In a well-written estate plan, many of the decisions about estate finances will be dictated by the documents put into place - but not all of them. You may not have to decide if it's ethical to allow one heir to live in the deceased person's house because the will specifies that the house is to be sold. However, you may have to make a lot of decisions about how to sell the home.

This is where a professional can help guide you. An accountant, for instance, may help you decide how to balance the speed of the sale while still getting a good price. They may also work with you to help you understand the tax implications of various choices. If one heir wants to buy out the others, the CPA can help come up with a fair distribution plan.

3. Avoiding Self-Dealing

One of the most tempting dangers of being an executor is treating oneself preferentially. This is often called self-dealing. Consider that house which the deceased ordered to be sold and the value distributed among heirs. As executor, you may be able to ethically sell that home to yourself at a market rate.

However, if you buy it at a discounted rate, you may be self-dealing. An accountant can help you avoid this.

Of course, not all self-dealing scenarios are cut-and-dried. Some, such as how to pay yourself a fee or what are appropriate investments, could be complicated and may require experience to spot and avoid.

4. Providing an Impartial Voice

Certified public accountants (CPAs) are trained to let the numbers do the talking. If you have difficult decisions to make, such as how to divide assets fairly among a generation of heirs, they will work with the hard facts to find the best solutions. From running various scenarios to examining tax consequences, this impartial and objective research will make your decision less emotional, less stressful, and fairer to all.

5. Reassuring Heirs and Family

The executor isn't just answerable to the person whose estate they manage. They are also morally responsible to the heirs and stakeholders, including creditors. Unfortunately, managing these individuals may be just as challenging as managing the actual finances of the estate.

An accountant can help you by providing the written data you need to demonstrate how you are responsibly caring for the estate. For instance, having an accountant involved in the valuation of certain assets reassures heirs that the numbers are reliable and independent. They can help you present financial statements, prepare court documents, and prove all assets and debts are accounted for.

Where to Learn More

Could a CPA help you discharge your responsibility as a fiduciary for your loved one's estate? If so, start by meeting with the professionals at Bliss & Skeen, CPAs . We will help you be the best executor you can be to serve both the estate and its heirs with confidence and pride.

5 Summer Tips for Your Small Business's Accounting Work

Tue, 08 Jun 2021 13:08:23 GMT

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As the summer months roll in, many small businesses enter a slower period in their business cycle. The holiday season is over, employees may be gone more, many clients have their own full schedules, and you may even be looking forward to your own downtime.

Before summer hits, though, take a few steps to ensure that your business books stay in top condition no matter what summer brings and that you use this time wisely. Here are some things any small business can do.

1. Get Vacations in Order

Summer usually means summer vacations. A small business without a lot of employees to fill in gaps can suffer as accounting work is put on hold.

Avoid this problem by working out a calendar for summer days off so you can coordinate them and ensure smooth operation too.

Include in this plan how you, the business owner or manager, can take some time off. Many entrepreneurs don't prioritize their own breaks, but this is important both to ensure you continue to enjoy operating your business and so that the business can work without you.

2. Consider a Project

If your business is slow in the summer, it's the perfect time to take on an accounting project. What have you been putting off or would like to try?

For instance, this is a great time to shift your accounting to an online platform that will facilitate being able to work on the road, have multiple people work on the books, and allow people to better access information. Or it may simply be a great time to reduce liability by purging your old files and documents according to a retention schedule set out by your accountant.

3. Self-Analyze After Taxes

Most small business owners meet with their accountant during tax season. Think about your meetings and how your income taxes went this year. Ask your accountant for suggestions on ways you can improve.

Then, use this slower season to implement improvements. If your accountant spent a lot of time analyzing receipts and chasing down transactions that qualify as deductions, determine what can you do to make things more accurate or easier next year.

4. Keep Up a Schedule

It's easy to become more relaxed during the naturally-relaxed summer months. And while you don't need to be overly strict about everything while the world is having a little downtime, don't let your books become messy or fall behind. Craft a schedule for bookkeeping tasks if you don't already have one.

If the business cycle is slower, do feel free to loosen up on that schedule a bit - perhaps entering invoices twice per week instead of every day during a busy cycle - but don't let it fall by the wayside. Otherwise, you'll find yourself trying to catch up while business ramps up in the fall.

5. Cross-Train Employees

Cross-training is often underutilized at a small business. Each person simply gets on with their assigned work and does it in whatever manner they find most expedient or logical. But this often means that little if any of their work can be done by others in their absence.

Because summer is a time of vacations, you may already be thinking about how to ensure bookkeeping work gets done while people are gone. Take that to the next level and designate time for employees to train backup workers and ensure they practice their newfound skills.

Where to Start

Want more tips for handling the summer months with regard to your small business's books? Then start by meeting with your accountant and learning from their experience. Don't have an accountant yet? The team at Bliss & Skeen can help. We will work with you to make sure your business is financially healthy and successful during the summer and throughout the rest of the year. Call today for an appointment.

Tangible and Intangible Assets - Answers to Your Estate Planning Questions

Fri, 07 May 2021 13:54:30 GMT

When you begin estate planning, one of the first tasks you must accomplish is to value the assets in your future estate. While this may be easy with some assets, it could be very tricky with others. What do you need to know about valuing both the tangible and intangible assets in your estate? Here are a few answers to get you started.

What Are Tangible and Intangible Assets?

Before you can properly account for them in your estate plan, you must first understand what constitutes a tangible or intangible asset. Tangible assets, in simple terms, are those assets you can touch and hold. Your primary home, your vehicles, and your grandmother's jewelry collection are all tangible assets. These are located in one place and are generally under your physical control.

Intangible assets cannot be touched or held. They often consist of only legal rights to something. One common example is a brokerage account. This account is filled with stocks and bonds that exist only virtually. You generally can't go to the brokerage company and request physical assets. Other examples include royalties and copyrights, the goodwill of business brands, and uncompleted contracts.

How Do You Value Tangible Assets?

Valuing a tangible asset is usually done through researching the market for selling the asset. To value your primary or vacation home, for example, you may work with a real estate agent to determine what you could sell it for right now. A vehicle might be valued either by researching its book value or its value if sold on the market today.

How Do You Value Intangible Assets?

Intangible assets could be easy to value or they may be difficult to value. Bank or brokerage accounts, retirement funds, and many insurance policies provide a clear statement of their value as of the current date. All you may need to do is print out the statement and you know what your heir will receive.

Other assets, though, may need research and estimation. Royalties, copyrights, patents, and pensions hold much of their value in the future income expected from the asset rather than its actual value at the moment. And interest in your business or partnership could either be valued in terms of the physical assets of the business or in the potential income or growth expected in the future.

Most people who hold income-producing intangible assets use professional valuators to do the research.

Why Is Good Valuation So Important?

Because a lot may be involved in properly valuing various types of assets, you may wonder why go to all the extra work. First, accurate valuation of both intangible and tangible assets allows you to fairly or equally distribute the value of your estate. If you leave your home to one child but your business stake to the other, only an accurate valuation of both will tell you (and them) if this was an equal distribution.

As you work to find out the true value of your assets and what will be needed for future heirs to access that value, you can also make better decisions and involve heirs. Knowing whether your pension will pay out a lot or a little to your beneficiary will help both you and them make an appropriate plan for their own financial care later on. It eliminates the need to guess at things.

Where Can You Get Help?

Nearly everyone has some type of both tangible and intangible assets to include in their estate. But placing a price tag on these can be very different depending on the item. The best place to begin is to learn more about how to manage your particular assets in your personal estate plan.

Bliss & Skeen CPAs can help. We offer guidance throughout the estate planning process, from identifying assets and valuing them to assisting heirs with their needs. Call today to make an appointment.

4 Income Tax Forms for a Washington Trust or Estate

Thu, 08 Apr 2021 15:17:37 GMT

If you are considering forming a trust or doing estate planning, here's what you need to know about the tax forms Washington residents may encounter when dealing with a trust or estate.

1. Form 1040

IRS Form 1040 is the standard income tax form that most Americans file annually. It comes into play with both estates and trusts in two different ways. First, the income of a revocable trust — where the grantor who set up the trust can change the terms of the trust at will — is taxed on the grantor's Form 1040. Because the trust owner has financial control, the trust is not considered a separate entity.

How does Form 1040 involve estates? After a person passes away, income and assets are divided between what was effectively owned by the deceased and what is part of the estate they left behind. Income deemed as received (by other parties) in respect of a decedent is included on the final Form 1040 of the deceased individual. The rest is dealt with on estate tax forms. This determination is usually made by a tax professional.

2. Form 706

The IRS has a specific form for estates of deceased taxpayers to report income and pay any tax due. Called Form 706 (United States Estate and Generation-Skipping Transfer Tax Return), it is set up similarly to Form 1040. The estate executor and their tax preparer will add up the value of the estate, subtract allowable tax deductions, and report any other applicable taxes paid to come up with any tax due.

Although all estates are subject to taxation, they are granted an exclusion before Form 706 is required. As of 2021, this exclusion applies to the first $11,700,000 of assets in the estate.

3. Form 1041

Irrevocable trusts are those which are no longer considered part of the grantor's personal assets. Although the grantor may still be the trustee, the terms of the trust cannot be revoked or altered by the grantor. Rights of ownership of the assets is given up when the trust is formed.

This lack of control means that the trust is its own entity and pays taxes directly rather than through the grantor. Form 1041 (U.S. Income Tax Return for Estates and Trusts) is how it does this. This form is due when there is more than a minimum of income from trust assets and it is set up similarly to Form 1040.

4. Washington State Estate and Transfer Tax Form

Most states have their own form for reporting and paying any state tax due from an estate. Washington-based estates use the Washington State Estate and Transfer Tax Form. Tax rates range from 10% to 20% after deductions and exclusions.

As is true of the federal estate tax forms, not all Washington estates must file a state tax return. As of 2021, only estates that have more than $2.193 million in assets need to file. However, this threshold is lower than the federal one, so the executor may be required to file a state form whether or not they must file a federal Form 1041.

Where to Start

For most taxpayers and executors, these tax forms are unfamiliar and can be confusing. They generally require the assistance of an experienced tax preparer or accountant versed in the tax rules in the state of residence.

Bliss & Skeen can help. With more than 40 years of experience in all areas of income tax preparation, estate planning, and trust administration, we can guide you through your tax obligations no matter what they may be. Get in touch with us today to make an appointment.

Whom Should You Hire to File Your Taxes? 5 Options

Thu, 11 Mar 2021 04:19:58 GMT

When it comes to filing your income tax forms, you want things done correctly. But many individuals and business owners also need to try to save money where they can. In an effort to achieve both of these goals, you may find yourself wondering whom you should hire to file your taxes. How can you get the right level of service without overpaying or risking your own financial future?

Here's what you need to know about the most common choices for tax preparation and what they can or cannot do for you.

1. Unenrolled Tax Preparer

In many states, including Washington, tax preparers aren't certified as to their competence. This means that just about anyone can offer paid tax preparation services. Known by the IRS as unenrolled tax preparers, these members of the public can sign returns but have very limited status before the IRS. They may not be able to represent any taxpayer or business in audits or meetings.

Most businesses and higher-earning individuals need a more highly skilled tax preparer to ensure they don't overpay on taxes. While unenrolled preparers are the cheapest option, you may get only a little assistance.

2. Bookkeeper

If your small business already works with a bookkeeper, you may want to just have them file the taxes. Unfortunately, a bookkeeper is unlikely to be trained specifically in tax issues. And for all their accounting knowledge, they are an unenrolled preparer and cannot represent you or your company before the IRS.

A bookkeeper could be an important part of your tax team, though. By keeping your books all year long, they help prepare the documents, gather the numbers, and track expenses needed to later prepare the taxes.

3. Enrolled Agent

Most taxpayers haven't heard of an enrolled agent, but they can be a good resource for some people. Enrolled agents pass a three-part IRS exam in order to earn their enrollment and must also complete annual continuing education in tax issues and ethics. Like CPAs, they can represent the taxpayer (business or individual) during much of the IRS' process.

An enrolled agent may be sufficient for some individual taxpayers and small businesses depending on the complexity of their returns. But more complicated questions may be beyond their training. In this case, an enrolled agent may direct a client to a CPA (certified public accountant) when appropriate.

4. Accountant

Did you know that not all accountants are CPAs? Although these two terms are often used interchangeably, accountants can take and pass the CPA licensing exam but are not required to.

So can a non-CPA accountant do your taxes? The answer may be yes. Accountants often work as an employee of a business handling part or all of its finances. As such, they could be very knowledgeable about the business's books. However, this doesn't necessarily mean they are a tax expert and will be able to save your company the money it deserves. And, keep in mind, the IRS classifies them as unenrolled preparers.

5. Certified Public Accountant

Finally, should you hire a CPA to do your taxes? While this is the highest investment you will make in a tax preparer, you also get the most for your money. CPAs, unlike unenrolled preparers, can represent your company before the IRS throughout almost all steps of the process — including audits and face-to-face meetings. And they have a wealth of experience in handling diverse tax matters for many clients.

How to Choose a Preparer

A taxpayer who understands their choices for tax preparation can make the best decision about what level of skill and representation they need. To learn more about tax preparation services and certification by the IRS, meet with the pros at Bliss & Skeen . We offer a wide variety of services to meet your budget and needs. Call today to make an appointment.

Should You Name a Finance Professional as Your Executor?

Mon, 08 Feb 2021 16:19:45 GMT

The executor of your will or successor trustee is an important choice. This person or persons will be responsible for carrying out your final wishes, distributing or managing your assets, and navigating the legal requirements when you can't do it yourself. So, who can you choose as an executor? And what is the value of involving finance professionals in this process? Here are a few answers.

Who Can You Choose as Executor or Trustee?

Most states, including Washington, put few limitations on who can serve as an executor (also called a personal representative) of a will. This person must generally be over 18, of sound mind, and not convicted of a felony (in particular, certain crimes like fraud and theft).

While many people choose a family member, close friend, or spouse to fill this role, others choose an independent third party. This third party is often an attorney or an accountant. It can also be a corporation, although there are additional rules about what type of corporation can be appointed.

Why Should You Choose an Accountant?

Because many people appoint a friend or loved one to this role, the use of a financial or legal professional is sometimes overlooked. But there are a number of advantages to using these.

First, being an executor is a more difficult job than many people realize. It may require major time commitments and the executor must meet unfamiliar legal requirements with the probate court and beyond. Therefore, a friend or spouse may not have the time or the skills to do the job as it needs to be done. It may be an unfair burden, particularly if the estate or trust will last long-term.

Second, an independent executor could forestall family conflict. They have no skin in the game, as it were, and therefore present an impartial perspective. Their sole responsibility is to the interests of your estate — and by extension, you — as their client. A professional is also experienced at reducing conflict and reasoning with all sorts of families.

Finally, an experienced accountant knows the ethics and requirements of estate management. They are more likely to be familiar with things like locating assets and debts for a decedent, filing decedent and estate tax forms (such as Forms 1040, 1041, and 706), and completing final accounting reports for probate court.

What Are the Downsides of Using an Accountant?

Of course, as with any arrangement, there are a few downsides to choosing a financial or legal professional. The primary downside is that you pay an accountant for their services. Your estate would need to be able to support this additional expense, which might be short-term or long-term, or the family may need to pay it themselves.

The family also loses some personal control over the execution of the estate or trust. If decisions must be made that require a person to know the family dynamics or the deceased person, some families may feel it's better or easier to have a loved one in this role.

How Can You Mitigate Concerns?

An easy way to address these concerns — either financial or personal — is to name co-executors or trustees. One person is a paid professional and the other a loved one. You would pay the accountant for less time and work, relying on them only when needed. The family member or loved one can handle many other aspects, including legwork and daily management tasks.

Where Can You Learn More?

Do you want to learn more about using an accountant or other paid professional as your personal representative? Start by meeting with the team at Bliss & Skeen, CPAs . From full-service personal representative or trustee services to individual probate and tax forms, we can help as much or as little as your estate needs. Call today to make an appointment.

Tips for Writing Great Posts That Increase Your Site Traffic

Tue, 12 Jan 2021 20:30:16 GMT

Does your small business use budgeting? Many owners and entrepreneurs must operate on the fly when they first go into business for themselves, meeting challenges as they arise. You often can't forecast what your business will need in the future. But as you grow and stabilize, learning to budget for the company's operations becomes more important.

Why is budgeting so valuable? How can you learn to budget? And why should you not give up? Discover a few answers for any small business.

Why Should You Budget?

Budgeting helps owners and managers put their money where it will do the most good. Rather than guessing what each portion of your operation might cost, you can look at history and compare future expectations to know and plan for the reality.

Armed with a budget, you improve the profit margin by knowing how much manufacturing, sales, or services actually cost the company. As you analyze real costs of an ongoing project, you can make adjustments in real time to avoid cost overruns. And you can put money into new development without running out of funds for everything else.

What Do You Need for Budgeting?

Budgeting, of course, is not an easy project. You'll need information about the past, present, and future of the company.

First, budgets use knowledge of what things have cost and what income you've received in the past. This makes early budgeting attempts for small businesses harder, but it gets easier the longer you're in operation. To develop a shipping budget, for instance, you might look back at how much you spent on packing materials, labor, delivery fees, and warehouse space over the prior 6 or 12 months.

Second, you'll need to know what challenges you face right now. Have the costs of raw materials risen steadily over the last year? If so, you may need to add some buffer on top of what the company has spent on manufacturing. And if the company is in a low part of its cycle, it may spend less on manufacturing now than at other times of the year.

Third, think about what you want to accomplish in the future. Do you want to hire more employees? Then you'll need to allocate more budget to payroll in various departments. Do you need to build up your online presence to compete? Finding the money in your budget for this project yields lasting benefits.

What If Your Budget Isn't Successful?

Because it's such a daunting task, not all attempts at budgeting are successful. If your early efforts haven't been very accurate, don't give up. You can improve your budgeting prowess. How?

First, recognize that budgeting and analysis is not a one-time deal. Every time you get more information, you use it to make the next budget better. If you went over budget on a sales project, analyze the variances. Variances — where actual costs were over or under budgeted costs — help you make a more accurate forecast for the next project. Then, repeat the process. Eventually, you'll become a pro.

Second, seek out professional assistance. Accountants work with budget analysis all the time, and they understand how to make it work. For instance, rather than focusing on minor budget elements (like the cost of office supplies), they help you focus on changes that will get the most bang for your buck (such as avoiding overtime pay). And they provide an independent perspective on plans.

Where Should You Begin?

If you already work with a bookkeeper or accountant, schedule time to consult with them about budgeting. Don't have an accountant? Now is a good time to develop this proactive relationship. The budget analysts at Bliss & Skeen Certified Public Accountants can help. Call today to make an appointment and start improving your budgeting skills.

Tax Basis — What You Need to Know to Minimize Taxes

Mon, 07 Dec 2020 13:39:36 GMT

Do you know the basis of your assets, both personal and business? If not, you may be at risk of paying unnecessary taxes when it comes time to sell them. What is basis? How is basis calculated? And what can you do to ensure that basis is used to minimize income taxes as much as possible? Here's what you need to know.

What Is Asset Basis?

Basis is essentially the cost you have paid for a capital asset and is used to determine the taxes due. In some cases, the tax basis is a simple calculation. If you purchase a stock for $100 and sell it for $150 with no other associated costs, the basis is $100 and your profit is $50. Basis can also be complex, including both the original costs as well as various expenses throughout the life of the asset.

Why Is Basis Important?

Why should you care about basis? It has the largest effect on your income tax obligation when you sell the asset. When you sell that stock for $150, you can deduct the $100 basis and will only be taxed on the difference between sale price and basis. However, if you don't know the basis of that stock, you can't deduct its price and would be liable for taxes on the full amount.

How May Basis Change?

Basis is not always a set number. If you purchased a piece of equipment for your business, its basis is defined by the IRS rules. You would generally be able to deduct the cost of the item, fees, and taxes upon purchase, selling fees, and significant repairs or upgrades to improve it. With these additional expenses included, it is known as an adjusted basis.

However, if you gift stocks to a family member, the tax basis may depend on whether that person sells the stocks at a profit or loss. If sold for a profit, the basis is the same as that of the prior owner. However, if you lose money, you may use the lower if the prior owner's basis or the value of the stock when it was gifted. Similarly, the inherited assets' basis is generally the value of the item when the donor passed away.

Basis can also change over the years due to further expenses related to it. As mentioned, it may be increased by taxes and fees or major repairs. However, minor repairs and maintenance costs do not affect it. And basis could be decreased by insurance reimbursements related to the asset. The most complex basis changes for most individuals is that of their primary residence.

How Should You Track Basis?

Because tax basis can be a moving number, it's important that you track the basis for each asset separately. This would start by keeping original purchase agreements or receipts as well as receipts or invoices for subsequent upgrades. For stocks, your brokerage company may track the basis for stocks and bonds managed by them. However, this is not guaranteed, so you should keep your own records.

Every owner should keep their own records regarding basis and possible adjustments to it rather than relying on outside sources. When you sell the item, go over these records with an accountant to determine how each may or may not be applied toward basis.

Where Can You Learn More?

Do you want to know more about a specific asset you own or expect to receive? Start by meeting with an experienced tax service as soon as possible. Because tax basis may need to be tracked for many years, creating the right recordkeeping from the beginning is vital. Bliss & Skeen can help. Call today to make an appointment.

First Time Filing Small Business Taxes? Avoid These Tax Deduction Mistakes

Thu, 05 Nov 2020 13:50:22 GMT

Taxes are used to fund government activities and projects, but they can financially affect businesses. For example, they reduce a firm's profits, and sometimes even cost the business more in the form of fines and interests. As a result, most small businesses take every tax deduction available to reduce their taxable income. When you're filing your business taxes for the first time, it's crucial to understand how to execute tax deductions properly.

Some mistakes can attract fines or even trigger an IRS audit. Others deny you the opportunity of fully enjoying the benefits of these deductions and realizing savings. With this in mind, here are the top mistakes to note and avoid when calculating tax deductions.

Deducting All Start-Up Expenses at Once

Business owners spend a lot of money to set up an enterprise. Typical expenses include costs for planning, research, borrowing, technology and equipment, marketing, and employees. In a bid to lower the taxable income in the first year, some business owners claim all these expenses against their taxable income.

The IRS considers start-up costs as capital expenses. Since business capital is usable within a long time, you cannot deduct it all during the first year. Start-up expenses are amortized over 15 years . Additionally, business assets such as vehicles, machinery, and equipment have to be depreciated over the projected lifespan.

If you file the wrong deductions, you will be required to refile the amended taxes.

Failing to Deduct Eligible Expenses

Are you aware of all the deductible expenses your business is entitled to? If not, you may end up paying more than what the IRS demands. There are many deductions that small businesses can take advantage of, and these include the following:

Depreciation of business assets such as vehicles, appliances, and equipment
Employee salaries and benefits
Professional services offered to the business accountants, bookkeepers, IT experts, and staffing agencies
Business insurance, including professional indemnity and workers' compensation
Real estate taxes and loans used to fund business investments

Other deductible expenses include meals and travel costs, business-related education expenses, technology expenses, bank fees, and donations. However, you need to provide receipts and all pertinent evidence to the IRS. Lack of proper documentation will cause the IRS to disallow the deductions.

Breaking Tax Deduction Rules

Filing taxes can be confusing for a first-time business owner. With so many deductions to consider, it is easy to break the rules. If the IRS considers such mistakes criminal or negligent, it can impose huge fines on your business. Therefore, beware of the following mistakes that can prove disastrous to your new enterprise:

Merging business and personal expenses. For example, if you occasionally work from home, you cannot deduct your total internet and phone bill as a business expense.
Calculating deductions incorrectly. For example, when claiming deductions for your vehicle, you can use the IRS standard mileage rate or calculate the actual vehicle expenses. However, you cannot deduct both from your taxes.
Exaggerating meals and travel. Higher-than-normal deductions on business meals and travel costs may attract the attention of the IRS. If you have no proof that these count as business expenses, the IRS may disallow the expenses.
Guessing and estimating deductions. You can round off numbers when deducting expenses. However, round off to the nearest dollar and not a hundred or thousand figure as the latter can bring trouble your way.

Tax deductions are a complex subject for businesses, and the only sure way to avoid these mistakes and dodge the fines and tax audits is to file your taxes correctly.

At Bliss & Skeen CPAs, we understand the importance of getting your deductions and tax returns right the first time. Our tax experts can take away the stress of tax preparation and allow you to focus on core management duties. Contact us today for a consultation.

4 Risks When a Family Member Does the Books

Thu, 08 Oct 2020 13:57:25 GMT

As a small business owner, you probably find yourself attempting to handle as much as possible on your own or with the help of your spouse and family members. When it comes to the bookkeeping, many family businesses just starting out may not have the budget to hire someone else to do all the bookwork. A family member may be all you can afford right now. But this carries its own risks.

Minimize the risks and maximize the benefits of using family for daily bookkeeping work by understanding the inherent hazards and how to conquer each. Here are a few of the most common concerns and how to mitigate them.

1. The Family Member May Not Know Accounting

Most people who volunteer for or are asked to do the bookkeeping for a family business aren't accounting professionals. This presents the most immediate problem in that they must figure out how to do the job — learning usually done through trial-and-error on the job.

Even if the person doing the books has some experience, arrange for them to get some training by an experienced accountant. This professional will set up the company books the right way and establish good practices. You may also want to schedule professional assistance learning the software, such as from a Quickbooks ProAdvisor, so your family member can learn the entire system rather than just parts of it.

2. The Family Member May Be Personally Liable

Did you know that when you have a person with some stake in the business handle tax remittances, they can be held liable for them? Generally, a person who is deemed a 'responsible person' for the business through ownership and active involvement could see their own assets at risk if they don't properly remit taxes. Defend against this by working with an accountant to oversee all the tax remittance processes.

3. The Family Member May Not Have Time

If the person you use to do the books is doing so in their spare time, they may not always be able to do tasks in the timeliest manner. This is an understandable problem, and you can handle it in a few ways.

One good solution is to work with an outside bookkeeping service to do certain tasks that no one has time for — like daily invoice entry or month-end accruals. You may also contract with the bookkeeping service to do overflow tasks if your family member gets overwhelmed or behind. Finally, another family member might be cross-trained to take on some work when the need arises.

4. The Family Member May Not Be Honest

One of the reasons many small businesses use family members to do accounting is that they trust the person more than a stranger. However, this trust is not always well placed. This close relationship may cause someone to feel freer to skim small amounts from the business or use company funds for personal purchases, for example.

Best practices in accounting always call for checks and balances. One person may receive cash, for instance, while another one counts it. Your accountant can provide some of these checks and balances when they perform audits, have access to your accounting software, or meet regularly to go over financial reports.

Even on a tight budget, your small enterprise can ensure the best management of its accounting. When you recognize some of the obstacles caused when a family member must handle the books, you're able to meet these challenges and overcome them.

Want more help getting things off to the right start? Start by consulting with Bliss & Skeen CPA today. Our accounting team offers an array of services for businesses on any budget and at any point in their growth. Call today to make an appointment.

Federal Payroll Forms: A Guide for New Employers

Wed, 09 Sep 2020 14:08:58 GMT

When you hire your first employee, you enter into a new realm of government agency oversight and responsibilities. Employees often make it possible for a company to even exist, but that also means a trade-off of extra work.

If you're new to being an employer, one of the best ways to avoid trouble with the IRS, state labor boards, and other entities is to understand the paperwork that you now have to provide. Here are four of the most important federal payroll forms you will need to remit.

Form W-2

Forms W-2 are statements of what each employer paid to each employee during a calendar year. You're allowed to use a variety of form styles as long as they adhere to the requirements of the IRS regarding box identification and required wording.

Companies generally start compiling the information for Forms W-2 in early January so they have enough time to ensure that the data is accurate and complete. The company then provides a copy of this form to each employee and to the Social Security Administration. The standard deadline for both is January 31. You generally also must send a copy to your state tax agency, but directions are state-specific.

Form W-3

Form W-3 is the summary page included when remitting to the SSA its copies of Forms W-2. It is designed to help ensure accuracy of the overall forms and provide gross information for reporting purposes.

This summary form includes the total dollar amounts of each box on all forms included. For instance, if the attached Forms W-2 are for three employees who are each paid $1,000 in gross income, the summary page would report $3,000 in the gross income box.

Form 940

This form is one of two primary returns that an employer must provide to the IRS to declare its payroll tax obligation and submit any remaining amount due. Payroll (or employment) taxes are comprised of four basic categories: income tax withholding, Medicare and Social Security contributions, unemployment insurance, and state-mandated taxes (such as disability coverage).

Form 940 reports FUTA (Federal Unemployment Tax) payments made by the company over the year. It's an annual form. The amount due may be offset if you also must pay unemployment taxes to your state, reported as a credit on Form 940.

Form 941

On Form 941, the employer reports both the amount withheld from employee paychecks for their income tax and the amount remitted by the employer for Social Security and Medicare contributions (collectively known as FICA) during each quarter.

The easiest part is to add up what was withheld from employees' pay and match it to the amount remitted to the IRS and the state. These numbers should match. The trickier part is to balance the amount remitted for FICA contributions, which are paid in part by employees and in part by the employer.

On Form 941, you perform the calculations to determine the correct percentage to be paid and then compare it with what was actually withheld and remitted for both halves of the tax. If your numbers do not balance, the company is expected to remit the correct amount anyway. You may owe employees a refund if anything was over-withheld.

If you have a well-managed and accurate payroll system, Form 941 is relatively simple to complete. However, if your numbers don't balance, the company must find the problem and correct it for the future. This can be much more difficult.

Each of these federally-required forms must be completed on time and accurately. This job can be challenging for any employer, big or small. The responsibility for errors falls squarely on the employer, so you risk fines, penalties, and a hefty tax bill. The best way to comply with all your obligations is to work with an experienced bookkeeping service. Bliss & Skeen Certified Public Accountants can help. Call today to talk with a specialist.

The Do's and Don'ts of Accounting for Credit Card Charges

Mon, 17 Aug 2020 14:16:36 GMT

Do you use a business credit card? If so, do you know if you're handling it correctly in your business accounting books? There's a good chance that you're not and that you may make some common mistakes when accounting for credit card charges and payments. To help you understand what to do and not to do with company credit card expenses, use these key do's and don'ts.

Do Post In Advance

Enter credit card statements or charges as an accounts payable item as soon as the paperwork comes in. The sooner you put these expenses into your system, the more information that management will have about what is owed and when. If the business uses this credit card regularly — particularly if charges add up quickly — failure to include them in cash flow projections could leave you with a large surprise bill.

If you aren't set up to enter invoices and charges into the books before they're paid, take the time to work with a bookkeeper to get this in place. As the business grows, this will only become more important.

Don't Post Just a Portion

What if you only plan to pay a portion of the full credit card statement amount? No matter what the business can or cannot pay, include the entire amount of the monthly statement or all individual charges when posting to your accounting software.

What's the reason? If you don't include everything, the company's financial obligation is understated and financial statements will be incorrect. Depending on whether your company uses cash or accrual accounting, you could even be in violation of IRS rules. In addition, the calculation of job costs or project expenses won't be accurate until every charge is included.

Do Use Different Accounts

When you do enter credit card charges, avoid the temptation to take a shortcut by placing everything into one — or just a very few — categories. It takes time to determine what accounts each charge should be placed into, but this is the only way to ensure accurate books. Failure to put charges in the right buckets means inaccurate financials and could even cost your company at tax time.

Don't Misclassify Fees

While you figure out the right categories for charges, keep an eye out for expenses that aren't actually charges. Many business credit cards charge an annual fee, for instance. You may also have to pay interest if the prior balance hasn't been paid in full. You may also have transaction fees or international conversion fees. Charge these to specific accounts after consulting with your accountant.

Including fees and interest in the wrong places risks artificially increasing the cost of goods sold or individual job expenses. This can also camouflage how much the credit card costs the company, rendering it difficult to make the best decisions with your money.

Do Reconcile the Statements

Never assume any charges on a business credit card are correct. Match up receipts with charges on each statement. Research discrepancies. And ensure you know who makes which charges.

Credit card errors can easily include technical problems, double postings, missed refunds, fraudulent use, and even employees misusing card privileges. If you don't stay on top of the statements, errors may never be fixed and problems may compound. Don't have time? Outsource this task to a bookkeeper who can do it properly.

Is your company lacking in any of these important areas of credit card management? If so, start creating a better system today by meeting with an experienced accountant or bookkeeper today. At Bliss & Skeen Certified Public Accountants , our accounting team can help. Call today to make an appointment and go over your particular credit card challenges.

5 Reasons Your Small Business Should Upgrade to Bookkeeping Software

Fri, 10 Jul 2020 14:28:24 GMT

Are you still doing your small business bookkeeping using handwritten ledgers or lists? If so, it may be time to upgrade to accounting software. How can you know if it's time to take this step? Here are a few ways to tell.

1. You're Not Good at Math

Not every business owner is good at crunching numbers. After all, you probably got into the entrepreneurial world because you enjoy providing your goods or services — and not because you're an accounting whiz.

But if you have trouble with the math and detail work necessary to balance columns, track expenses, reconcile bank statements, and record accurate transactions, you'll waste precious time chasing down errors. If math is just not your forte, accounting software takes the work out of it. The software does the math, so all you need to do is enter key pieces of information.

2. The Business Needs to Forecast

A business that relies on physical papers and ledgers is somewhat hamstrung when it comes to doing the higher-level reporting it needs. You can record transactions in various ledgers, but it's very hard to use those transactions to create reports.

To find out what invoices you owe and when they're due when using paper ledgers, you'll need to consult the individual transactions themselves. On the other hand, software can compile the individual pieces of data into a convenient report of your obligations — a report you can sort any way you need.

3. You're Doing Redundant Entry

Bookkeeping can be very time-consuming even when using the latest technology. Businesses that still use pen and paper are likely doing quite a bit of extra work.

For instance, you may find yourself entering expenses into the appropriate expense account ledger as well as the general ledger, and then manually accounting for it on the bank statement. If you enter this cost into software, though, you would enter the numbers once and watch them flow into the general ledger and into the bank reconciliation module for automatic reconciliation later.

4. Tax Preparation Is Costly

A business that uses accounting software properly throughout the year should experience a relatively simple tax preparation appointment. For many small businesses, this process can be as easy as presenting the accountant with financial statements and a general ledger report, which the accountant uses to enter high-level data into income tax forms.

Conversely, if you present your preparer with a pile of receipts, handwritten notes or ledgers, and explanations of various unusual entries, they will spend much more time than necessary preparing your taxes. This costs you money and opens up your business to audit risks.

5. You Need Mobile Access

The 21st-century office is often a mobile one. Small business owners wear many hats and need access to their information wherever they may be. Fortunately, modern bookkeeping technology provides many options — ranging from mobile apps to cloud storage to direct remote accountant access.

But if your documents are all on papers in the main office, you won't be as efficient or as responsive as you can be. You may be missing out on options like mobile invoicing, entering transactions from your phone, sending mobile or text reminders, and downloading transactions from your bank's portal. The more you take advantage of these choices, the less time you'll waste on the books.

Can your small business benefit from help in any of these areas? If so, start by consulting the accounting pros at Bliss & Skeen . Our accounting and bookkeeping team can help you find the right software, learn how to use it, and keep up with everything that accounting technology has to offer. Make an appointment today.

Should You Delegate Bookkeeping? A Financial and Personal Cost Analysis

Fri, 05 Jun 2020 14:33:55 GMT

Most small business owners start out trying to juggle all the various jobs their burgeoning business needs — including the accounting. But as that business grows, they reach a point when it makes more sense to hire others or outsource a particular task. The problem for most people, though, is recognizing when this change happens.

The decision to outsource a business task generally has two components. There is the financial (or business) part of the decision and the personal or emotional part of the decision. To help you determine if now is the time to outsource your accounting work, discover a few ways to quantify these two elements.

The Financial Aspects

When you outsource your bookkeeping and accounting, you generally know what it will cost your company. You might research the cost other similar businesses pay for bookkeeping or accounting staff. If you want to use an outside service, you would find out their rates per hour or per project.

The question you have to answer is whether this costs more or less than you already spend. So, how do you know what you pay to do the work yourself?

Start by assessing the various fees related to your accounting. This might include subscriptions for bookkeeping or payroll software, fees to a payroll service, tax preparation fees, accounting books or classes to learn needed skills, costs of equipment, and penalties or fines for errors you have made.

Then, value your own time. One method is to track the time you spend on everything related to your business as well as the time spent on its major components — such as sales, accounting, production, and administration. Divide your profit by the hours spent for a per-hour number. Another way to value your time is to figure the hourly rate you would spend to hire an employee to do each job.

Within the business portion of your decision would also be the question of whether your business needs you more urgently elsewhere. If sales are lacking, for instance, would you get a better rate of return by focusing on finding new customers rather than entering payable invoices into the computer or printing reminder notices?

The Personal Aspects

Few business decisions have no personal component. Whether the math favors or does not favor outsourcing, the question is how you feel about the work. When you think about having to do the books, how does it make you feel? And how do those feelings bleed over into your other work?

A few indicators can help you figure out where you stand on a personal level. For instance, do you put off working on your accounting each week? Have you fallen behind in daily, weekly, or monthly tasks? Or does the thought of doing the books stress you out?

On the other hand, perhaps you look forward to certain aspects, such as creating billings. Do you find the books to be a respite from other stressful jobs? Are you able to keep up with things like posting transactions as they occur? Do you open all related mail right away and handle it? And what about your accounting work style? A well-organized and tidy system could indicate that you do not mind this part of your job.

If you are unsure if now is the right time to delegate your accounting to someone else, start by learning more about your options. At Bliss & Skeen, CPAs , we can help you figure out the costs and benefits as well as determine what level of outsourcing might be right for your company’s needs. Learn more today by making an appointment.

4 Ways to Plan Business Continuity in the COVID-19 Era

Fri, 15 May 2020 15:09:31 GMT

Even as cities, counties, and states begin to reopen after mandatory closures of nonessential businesses, company managers are realistic about the ongoing effects of the untamed virus. Will customers return? Will employees be safe? Will sales continue to have ups and downs? Will new customer behavior be a permanent change? And will you have to close down again during new outbreaks?

While no one can foretell the future, small businesses must create a strategy to weather this situation in the long term while still keeping the business running. How can you do so? Here are a few key aspects of business continuity planning in the COVID-19 era.

1. Work With a CPA

The first part of your plan is to simply make a plan. Business planning is hard for many small business owners, particularly when they are already busy running daily operations. If you're not sure how to prepare for the next year or two, plan to meet with an experienced CPA (certified public accountant).

CPAs aid businesses with everything from choosing a business structure to planning for tax bills to understanding your legal obligations. A CPA can help you run scenarios, such as projections on how you would fare with the loss of a percentage of business or with a rise in certain costs. In addition, they can help you prioritize the right expenses, manage payroll, and identify the profit margins on products.

2. Boost Cross-Training

If an employee becomes sick — or is suspected to be sick — they may have to stop working for days or weeks. Can your business continue to operate without them? Assess each position and department in your company to determine what critical functions it performs. Make it a goal to train at least one other person (or ideally, several) to perform each critical task in an emergency.

3. Use Off-Site Operations

Many companies have shifted as many employees as possible to a work-from-home plan. Can you do the same? Arrangements for people to work from home has benefits even during good times — something particularly important during hard times. And if you suffer a regression into mandatory stay-at-home orders or your physical location becomes contaminated, business will not be interrupted.

In addition, consider outsourcing some of your other operations. If you opt for a CPA that provides bookkeeping, for instance, you aren't dependent on one single person to keep your accounts in order. If someone critical becomes ill, the CPA firm will be better able to adjust so that you have accurate books to work with.

4. Make the Company Nimble

The faster you can switch gears, the better your business will stay on its feet. Many retail businesses have already experienced the need to quickly shift from commercial sales to residential sales or from in-store sales to online sales. Can your company switch back and forth as customer interest or product availability ebbs and flows? Run test cases to improve before the need arises.

Being nimble may also mean lining up alternative vendors for key inventory as well as transportation. If you have former employees who have retired or industry contacts, talk with them about contracting to be on-call should someone become ill or sales soar. And even if money is not yet tight, work with a business bank to secure a reliable source of credit or funding.

Continuity of operations will be a struggle for many businesses over the next year or two, but you can stay ahead of the curve by planning now. Want to learn more strategies to adopt? Consult with Bliss & Skeen Certified Public Accountants today. Let us help you ensure that your business not only survives but also thrives no matter what you face.

Own or Rent Commercial Property? Consider a Leaseback Arrangement

Thu, 09 Apr 2020 15:17:53 GMT

Does your business entity rent or own a commercial building? Then you may have a golden opportunity to increase your profit margin and take more control over your business affairs. How? By utilizing a strategy known as a leaseback arrangement. What is this legal and financial tool, and should you adopt it for your own business? Here are a few answers.

What Is a Leaseback Arrangement?

Leasing back your building involves two separate entities serving as landlord and lessee of a particular property. Typically, one business entity or individual would buy the property and take on all the normal rights and duties of an owner. The second entity — either owned by all the same parties or by some of the same parties — leases the commercial property and pays monthly rent on it.

A leaseback arrangement is a valid legal tool because the two business entities are separated in the eyes of the law. Both entities should meet the standard requirements of their position — such as reporting rent expense and income on their tax forms — but they have flexibility beyond that.

What Are the Pros and Cons of Leasing Back?

The question that you may have is what is the benefit of taking on this additional investment and effort? There are several key benefits for your business.

Pros

First, rather than paying rent to a separate landlord who reaps the benefits of ownership, your business entity would reap the rewards. The building owner would be able to deduct expenses like depreciation, repairs, maintenance, and landlord-related travel costs. So even though the landlord reports added income, these expenses lower the taxable amount considerably. The building can then be sold for a profit later.

Meanwhile, the lessee continues to deduct rent expense (and related costs) against their income as well. If the lessee business previously owned the building, their balance sheet may also look better.

As the landlord, those who are in control of the two entities can also work together to manage the building. Because the same parties may own the building and be the lessors, you can choose what repairs and maintenance tasks to undertake. This shared interest allows both lessor and lessee to act in the best interests of both when it comes to things like layout and improvements or tax planning and rent adjustments.

Cons

The biggest downside of a leaseback agreement is generally the upfront expense of purchasing the building. Your business entity ties up a lot of cash with this investment and is responsible for its expenses if things take a downturn. As with all capital purchases, your business should be able to absorb these costs and manage them with a healthy buffer.

Keep in mind that you may not feel as free to sell the asset if your own business is using it as a lessee. Similarly, that connection might make the lessee business less apt to move physical locations if things change in their market.

Where Should You Start?

Are you interested in taking advantage of a leaseback arrangement? Many businesses find that this method can help reduce taxable income and make two profitable businesses out of one. And the added control and flexibility may make running your business easier and more efficient.

However, before embarking on something as complex as a leaseback arrangement, consult with experienced professionals. This includes both a qualified CPA (certified public attorney) and a business lawyer. Together, you may need to form an entity for the ownership, craft the contracts, and decide on the tax planning for this new agreement. Bliss & Skeen can help. Make an appointment today to learn more.

What Is an Accounting Ledger? The Basics You Need to Know

Thu, 12 Mar 2020 15:31:43 GMT

Many business owners aren't skilled accountants who know all the ins and outs of bookkeeping and financial statements. The good news is that you don't have to be an expert in order to understand what's going on with your money. One great place to begin is to learn the basics of the accounting ledgers.

What are the ledgers? And how do they affect your money? Here are a few key things to know about the three most common ledgers you'll work with.

What Accounting Ledgers Do

Accounting ledgers are simply a record of business transactions. They used to be kept in specially designed physical ledger books. Today, nearly all businesses record their transactions with software, but the name has stuck.

Each ledger holds a record of certain types of transactions and is useful on its own. Sub-ledgers are the most detailed and record just one part of the business process (like the purchase of goods or the amount of taxes you must remit). These sub-ledgers are then used to create a less specific, but more complete, general ledger that oversees the entire operation.

Accounts Receivable Ledger

Accounts receivable is basically a list of all the people or businesses who owe money to your company. Most businesses create an invoice which is sent to a customer before payment is made. Between when the invoice is drafted and when payment is received, this information is tracked on the accounts receivable ledger.

Accounts receivable ledgers are vital because they enable you to track the money you are owed. This ledger tells you when payments are due, who is overdue, the terms of each sale, and how much you charged for everything. Accounts receivable is an asset, so this information adds to your company's bottom line.

Accounts Payable Ledger

Accounts payable, as its name suggests, is the opposite of receivables. This ledger tracks what you must pay to others. Generally, this information is created when an invoice is received and entered into the system pending payment. Each entry leaves the ledger when the payment is made.

Accounts payable is less fun than accounts receivable, but you need to know what the business owes if you are to make decisions. You can track when items are due, the amount you paid for goods or services, and costs like shipping or taxes. Accounts payable are debts, so they represent financial liabilities for the company.

General Ledger

The general ledger compiles all this information and combines it to give a big picture snapshot of your financial situation. It combines the sub-ledger information on what you owe (payables) and what is owed to you (receivables) with other data, such as how much each owner has at stake and what your assets are worth. The result is a gold mine of information you use to take stock and plan.

While the GL appears to be the most important part of the ledger system, it cannot be made without all the others. If you haven't recorded the month's loan payment for your forklift in accounts payable, for instance, that asset's value and your available cash will be overstated. This may sound like a small adjustment, but imagine it compounded by all the various bills you receive and send out each day.

This overview of the accounting ledger process shows how important the ability to read and understand the various parts of your books is.

Want to learn more? Consult with an experienced CPA today. Bliss & Skeen Certified Public Accountants provide the training and data you need to make the best business decisions and boost your profits. Call today to make an appointment.

4 Reasons to Bring in a CPA During Estate Planning

Wed, 26 Feb 2020 15:36:01 GMT

Are you embarking on estate planning? While most people know that they should engage a good attorney to help ensure that all legal requirements are met in the most expedient and thorough manner, fewer people understand the value of a CPA (certified public accountant) during this process.

Should you work with a CPA long before your estate needs to be distributed or finalized? The answer is generally yes. And here are a few of the most important reasons why.

1. They Will Help Reduce Taxes

Your estate may or may not be subject to taxes upon your passing. While the threshold for owing federal income taxes is high — at least until 2025 — an estate with such features as a business, significant real estate, or other expected inheritances can surpass the taxable minimum. Your CPA can advise how to reduce the chances of owing estate taxes as well as what the tax impact of various choices might be to your heirs.

An accountant is also up-to-date on tax law changes that could affect your estate. With recent tax reform through the TCJA (Tax Cuts and Jobs Act), even existing estate plans — especially those involving spouses — may need to be updated to avoid potential problems later on.

2. They Can Aid in Trust Planning

Do you know how to deploy trusts within your estate plan? Trusts are legal tools you can use for a variety of purposes, including preparing arrangements in case you are incapacitated and cannot make your own financial decisions. Trusts are also used to care for the ongoing care of someone with special needs, minor children, or even adult children who need more structure in their financial assets.

An attorney can help set up trusts, but a CPA will aid you in ensuring you follow the tax rules, understand and file proper tax forms, and use the right type of trust. For instance, the income earned by a grantor trust is often taxable to the grantor (you) if not sufficiently decoupled from your control. These distinctions are important if you want to protect your financial interests.

3. They May Advise Early Actions

Not all estate planning activities happen within your will or trust. Many people also find that making some smart moves now will help everyone down the line.

For instance, if your estate may exceed the tax exemption ( $11,580,000 in 2020 ), the CPA may suggest using the gift tax exclusion to give money annually to heirs in advance. If the fair market value of your business could be the problem, you may diversify ownership or alter the business entity (such as forming a C or S corporation) now in order to reduce the value of your stake in it.

4. They Can Help Your Executor

The intended executor of your estate will have a big job ahead of them. How prepared are they for their responsibilities? Most executors are unfamiliar with what they need to do and will have a lot of responsibilities during a difficult time. If you're proactive about working with them, you increase the likelihood that your wishes will be carried out and that everyone will have a smooth transition.

The CPA will develop a relationship with the executor so that the executor has someone to turn to with questions. And the CPA can provide practical help filing a final tax return, estate Forms 1041, or Schedules K-1.

Clearly, a CPA can be much help during the planning stages for your estate. Want to learn more about what they can do to help in your particular circumstances? Start by making an appointment with the accounting team at Bliss & Skeen Certified Public Accountants today. Our estate planning pros will answer your questions and get started providing a more stable financial future for you and your heirs.

The Complicated World of Deducting Employee-Related Insurance

Mon, 06 Jan 2020 16:14:07 GMT

Employee-related insurance is important to any business. Some policies protect your business while others provide stability and valuable benefits for employees. But not all employer insurance is treated the same on your company's books.

How are insurance payments treated differently, and how can this affect your bottom line as an employer? Here are the two basic categories of differences you will encounter as an employer.

Category 1: How to Handle Prepayments

Many types of insurance policies have at least some form of prepayment. You may put an amount down in advance and pay off another amount over time. You may also be encouraged to pay the premiums for three, six, or twelve months in advance in order to receive a discount or avoid other fees.

Although prepaid insurance can help your business save money and time, it also has a complicated effect on the books. A company that uses the 'cash method' of accounting generally records income and expenses when they actually happen. So prepaying a standard $50,000 annual life insurance policy for employees may be recorded in its totality on the company books when you write the check.

Companies who use the 'accrual method' of accounting, on the other hand, would record this expense in appropriate amounts throughout the coverage period. Usually, this is done by dividing the prepaid premium by the number of months of coverage and posting an equal amount to the books each month.

To further complicate matters, though, how prepaid amounts are handled under each of these accounting methods is not necessarily the same way you will treat it on tax returns. Prepaid insurance for an accrual-based company often cannot be deducted over more than a one- or two-year period for tax purposes. And a cash-based business taxpayer may still need to accrue that life insurance payment.

Category 2: Deductible and Non-Deductible Insurance

The other tricky part of deducting insurance expense is understanding which types of polices may be used to reduce taxes. Most employers wouldn't be surprised to know that their portion of health insurance payments are generally deductible. But would you be be surprised to know that an accident policy covering a working partner may also be deductible whereas loss of earnings coverage may not be?

Many specific types of insurance that are deductible on the company's (or the self-employed person's) tax returns are further subject to certain limits. Life insurance for key staff, for instance, is only deductible if the beneficiary is not the company. And self-employed health insurance may be deductible on Form 1040, but only up to the income earned from the business.

You may not even want to deduct every available type of insurance premium just because you can. If you deduct disability insurance premiums, any benefits received from using that insurance may be taxable income. The potential addition to an employer or employee's taxable income could be a higher risk than the moderate benefit gained by deducting premiums.

Because these expenses are reported differently on the books and on tax forms, your profit or loss may be significantly different than its profit or loss on income tax returns. So the only way to know your true profit margin is to understand how each expense will be handled in both sets of income calculations. This also allows you to do tax and budget planning by determining the necessity and effects of the insurance.

Clearly, the relatively simple act of taking out an insurance policy to aid employees or protect the employer is actually a much more complex subject. Your best source of advice and assistance keeping things straight is a qualified accountant.

At Bliss & Skeen CPAs , our experienced accounting team can help. Call today to discuss your specific insurance policies and their effects on your company's finances.

What Is Amortization? And How Can It Help Your Business?

Mon, 09 Dec 2019 16:20:45 GMT

Strategic and proper use of tax deductions is one of the most powerful ways a small business owner can minimize a tax bill. But while some tax deductions are easy to identify and well-known, others are harder to understand and use.

One of these more challenging deductions is amortization. While amortization affects nearly all businesses, many owners aren't aware of how it affects them and how to use it for the best effect. To help you get the most out of amortization, discover answers to a few pressing questions.

What Is Amortization?

Amortization is the act of spreading out the cost of a large asset as a recurring tax deduction over the course of a number of years. This allows a business to continue to reap some tax benefits over the life of the asset instead of all at once.

What is the benefit of amortizing? If your business purchases a machine, for example, for $10,000, you would normally deduct that $10,000 in the first year. This would lower your taxable income for one year. But, what if that purchase is a patent that then produces extra income over the next 10 years? You would have more taxable income without any expense to counteract it. The answer is to deduct $1,000 each year.

What Items Are Amortized?

Amortization is a lot like depreciation but for different types of assets. While depreciation spreads out the cost of a new machine, a vehicle, or an office building, amortization does so for intangible items like copyrights, licenses, franchises, trademarks, and leases.

Amortization is important for those who acquire an existing business or elements. If you buy a business someone else has built, you often pay not just for tools and equipment but also for its established reputation, client list, the knowledge of the workforce, and contracts. Because these are part of the price, your business deserves to get a tax benefit for paying for them. This is where amortization comes in handy.

You can also amortize expenses incurred in the organization and startup of your new business. Such costs might include legal fees, incorporation expenses, fees to the state, training of employees, certain advertising expenses, and some travel costs for the setup.

How Can Amortization Be Strategic?

Amortization has two basic components. First, you must follow rules as to how to amortize expenses. The costs of a lease are amortized over the life of the lease, for example, while the costs of a patent are generally amortized over a set period. Such amortization rules are spelled out, so you often cannot alter them to benefit the business outside of the norm.

However, you have a few components where you have leeway. For instance, you must determine the useful life of some assets — which affects the amount deducted each year. Each asset may be unique in how long it will benefit the company. Some assets may not have a determinable life, so you may choose to use them as normal expenses.

The IRS also allows businesses to amortize startup costs and organizational costs over a period of 180 months . But you may choose to deduct up to $5,000 of each of these categories in the first year of operations. A business with little first-year income may not want to waste the extra deductions on this year. On the other hand, if you received significant upfront income, this is a valuable way to use the deductions.

Where Should You Start?

Ready to start using amortization to boost your bottom line? Begin by consulting with an experienced certified public attorney (CPA) in your area. At Bliss & Skeen, CPAs, our accounting team is here to help. We can aid you in understanding how to amortize according to the guidelines as well as how you can use it to the best advantage of your company. Call today to make an appointment.

Try Before You Buy — The Benefits of Leasing a Business

Mon, 11 Nov 2019 16:26:01 GMT

For many people, the idea of running their own business is exciting but also nerve-wracking. One great way to dive into being a business owner while minimizing the risk is to lease a business. How does this work? What benefits does it bring? And what should you know before signing a lease agreement? Here are a few answers.

What Is a Business Lease?

A business lease, like a residential or building lease, is an agreement for one party to use the property as their own for a set period of time in return for payments to the owner. The owner maintains overall control of the property and continues being responsible for things like mortgage payments, taxes, and insurance. The owner determines what liberties the lessee can take with the property and what is off limits.

Because a business is a more dynamic asset than a building or piece of land, it does offer more freedoms for the lessee in how to operate things. The lessee effectively takes on most (or all) of the day-to-day choices and operations while the real owner generally becomes in name only.

Why Should You Lease?

If the point of becoming a business owner is to have total control and reap all the rewards, why should you consider leasing instead? The biggest upside is that you don't have to take on a huge expense either to start or buy a business all at once. Leasing an existing operation means you can use the equipment, inventory, and real property already in place. And typically you pay by month rather than in a lump sum.

For anyone concerned with their ability to run a business, leasing offers the benefit of time and experience. The business is already in place, so you can start by generally continuing on the same path already laid out. A new entrepreneur has the chance to learn the ropes in a more stable setting than they would if they started a new business. In addition, you get the experience and skill of those already managing things.

Finally, a lease allows a potential business owner to test drive the company before committing to buy it. You can learn how it operates, what changes you need to make, what the real profit potential is, and how you like running it — all without committing to a long-term arrangement or a large amount of cash.

Where Should You Start?

Do you think that leasing a business might be the right move for you? You'll need to do plenty of homework before jumping into things. Start by consulting with a business attorney and a certified public accountant.

Generally, you will want to treat any potential lease in much the same way as you would a purchase. After you signal your interest, ask for financial statements, and go over them in detail with your accountant. If the business is said to be in good condition, you will want to make sure it is. If it's a troubled business, you will need to know what you have to work with.

You will also be able to negotiate the terms of the lease, so decide what will be your priorities. Do you need the right to use all equipment? Which employees will stay or leave? Do you want the business owner to serve as a consultant? What sort of non-compete agreement will be signed? Can you buy the business at the end of a specified term? And is a purchase mandatory or optional?

Anyone who is thinking about become a business lessee should begin by working with experienced accounting professionals. At  Bliss & Skeen , our certified public accountants are ready to help. Call today to make an appointment.

Tax Deductions Available to Entrepreneurs Starting Small Businesses

Mon, 14 Oct 2019 16:35:13 GMT

The government actively encourages entrepreneurs to start up small businesses, and one way the government does this is by making a variety of tax deductions available to business owners. If you're an entrepreneur and have a new small business, here are some tax deductions that you may be able to take advantage of.

Vehicle Expenses

If you use a vehicle for work-related purposes — and many business owners do — your vehicle expenses often qualify as a tax deduction. You can either take the actual amount you spend on the vehicle, or you can use the government's estimate. For 2019, the estimate is 58 cents per mile for work-related driving.

As an example of how this works, assume you drive an average of 50 miles per week for work. This results in 2,600 miles over the course of the year, and 2,600 miles would net you a deduction of $1,508 (2,600 miles x $0.58 per mile). As a deduction, this amount can be subtracted from your business' revenue.

Even if you don't use a vehicle that much on a weekly basis once your business is established, you probably have some work-related driving expenses as you set up your business. For example, you may need to:

Drive to stores and purchase supplies.
Go to meetings with partners or clients.
Visit different addresses to choose a location.
Attend out-of-state tradeshows or conferences.

So long as an activity is linked to your business and you drive your vehicle there, those miles are deductible. Moreover, the deduction can be taken regardless of whether your business earns a revenue this year. You can show a loss for the year.

Health Insurance Premiums

Although not a business-related expense, business owners who are self-employed and don't have access to an employer-sponsored health insurance plan through someone else can deduct the cost of their health insurance premiums from their personal taxes. Additionally, they can deduct the cost of health insurance for themselves, their spouse, and any dependents.

In these situations, the cost to an individual is the total premium of a health insurance plan less any subsidy that the person receives.

If you'll rely solely on your business revenue for income, won't receive health insurance through the business, and don't have a spouse who receives health insurance from an employer, this deduction can result in a substantial savings.

The average cost of health insurance for just one person is $207 with a federal subsidy . Over the course of 12 months, that results in a $2,484 deduction for the year. The amount would be even higher for married couples and families with children.

Computer and Programs

Businesses today rely on computers even if they aren't in a technology-related sector. From online sales to basic administration operations, computers are pervasive. Also, many businesses use various software programs specifically developed for their industry.

Any computers, accessories, and software programs you purchase to use in your business operations can be deducted as equipment costs. If you rely on a new computer for a combination of business and personal use, a portion of the computer's cost can be deducted as a business expense.

Internet Connection and Phone Service

Similarly, the cost of any internet connection and phone service you use for business purposes can be deducted. If you use an internet connection or phone service for business and personal reasons, a portion can be deducted.

If you work online both at an office and at home, you should be able to deduct the cost of internet at both places. The full cost of internet at your office and some of the cost of your home's internet connection can be subtracted from your taxes.

If you need help with small business tax services , contact Bliss & Skeen Certified Public Accountants.

3 Accounting Challenges to Manage When a Business Partner Dies

Thu, 12 Sep 2019 16:40:25 GMT

When a partner in a business partnership passes away, the business faces a host of unusual legal and financial situations. You will need to make many decisions about how to handle the deceased person's interest and the future of the business.

If your partnership is facing this challenge, here are three accounting issues you will need to address in the immediate aftermath.

1. Normal Distributive Shares

The normal activities of the partnership usually result in a portion of earnings being distributed to each partner and reported annually as income. The deceased partner's estate will be due his or her portion of this normal distribution until the date of their death. Generally, this would be paid to their heir or as stipulated in their estate planning documents.

The business will need to be careful to separate income earned prior to the person's death from that earned after their passing. The type of income is also important to record for tax purposes. Your accountant will be the best resource to help with this division of income.

2. Income in Respect of a Decedent

What happens to money that wasn't yet earned when the partner passed away? This is known as income in respect of a decedent (IRD) and it is paid to and reported to the decedent's heirs. Examples of IRD include guaranteed payments paid after the date of death, their portion of business interest earned after death, or income earned by the partnership between the partner's death and the dissolution of their interest.

Why is it so important to distinguish between a partner's final distributions and that earned after their death? First, the income is reported in different ways for tax purposes. In the case of the former, the estate would generally report earnings for income taxes whereas in the latter case, earnings would be reported by heirs. Second, self-employment taxes are due only for what was earned until the person's death.

3. Buying Out the Partner

Once your business has handled final income distributions and reporting, you will have to deal with the issue of succession. A good partnership agreement usually has already addressed whether the partner's heirs or spouse can simply take over their position in the business or not. If the partner's particular skills or training was unique, for example, it may not be feasible for someone else to take over.

If an heir doesn’t take over, the partnership will need to distribute the partner's portion to liquidate their interest. Normally, there are two methods of doing this. One is for the other partners to personally buy out (and assume) the deceased person's interest. The other is for the business to do so as an entity. The current partners and the partnership agreement will determine the method.

The biggest problem most partnerships face when buying out a deceased person's interest is how to value the company. Some businesses can use the value of assets owned by the business as well as the partner's stake (or basis, in accounting terms) in the enterprise. Service businesses, though, may have a much harder time determining value due to the ephemeral nature of future earnings.

A partnership that needs to property account for these financial matters after a partner's passing should work closely with an experienced accountant. The accountant can help determine the treatment of income, advise of tax year changes, value the partner's interest, and calculate an appropriate buyout amount.

At Bliss & Skeen Certified Public Accountants , we are ready to assist your business during this difficult time for you and your partnership. Call today to make an appointment and learn more about our partnership accounting services.

Becoming a Landlord? What You Should Know About Depreciation Recapture

Tue, 13 Aug 2019 16:44:39 GMT

Have you become a landlord recently? For those with an entrepreneurial spirit and a little extra time on their hands, this industry can turn into a profitable income stream for many years to come. But there are a few business concepts that a new landlord needs to understand in order to keep that profit flowing.

One of these is a little-known tax term: depreciation recapture. What is depreciation recapture? And how can you ensure that it doesn't give you a big tax bite? Here are a few answers.

What Is Deprecation Recapture?

When you purchase a long-term and expensive business asset, you can't simply deduct the entire cost of the purchase as an expense in the year you buy it. What you must do is known as depreciating the asset. Depreciation divides the money you spend on the asset by a certain number of years (often referred to as its useful life) and allows a partial deduction each year.

Deprecation becomes an expense that reduces your taxable income each year. However, when you sell the asset, you then must recapture all those deprecation deductions as a lump sum. Why? You received the tax benefits each year when you deducted depreciation.

For example, suppose you own a $1,000 appliance and it depreciates $100 per year for seven years. When you replace the appliance, you sell the used item for $400. Since your investment (basis) in the item is now $300 ($1,000 minus $700 depreciation), you don't have a $600 loss upon sale. In fact, you would have a $100 gain taxed as ordinary income. This is the lesser of the amount taken as deprecation or the gain on the sale.

How Does Recapture Affect Landlords?

Landlords, like nearly all businesses owners, have at least some normal depreciable assets. This often includes appliances, technology, business vehicles, and large pieces of equipment. Each purchase should be properly depreciated when necessary - rather than taken as an expense - and accounted for when disposed of. The result is often not a taxable gain.

In addition to normal business assets, though, landlords face an additional tricky situation. Unlike these smaller assets, most real estate actually rises in value. So while many assets result in a loss (on paper) when sold, buildings and houses tend to result in gains. As a landlord, you need to know what the taxable result is since it can be surprisingly large.

In addition to facing a tax bill due to appreciated assets, real estate also may be subject to different recapture provisions within the IRS code. Different categories of real property, such as a standard building versus a specialized structure, may see its recapture fall under Section 1245 or Section 1250 of the Internal Revenue Code and therefore be taxed at different rates.

How Can You Minimize Taxes?

So if you must face recapture taxes, how can you make the best of it. There are several legitimate ways. Some landlords can immediately invest in what is known as like kind property and perform an exchange, which may delay taxable income until the new asset is sold. You may also find that selling during a period of low income helps keep your ordinary income and recapture tax rates low.

The key to minimizing any landlord tax bill is to learn how to make the wisest use of expenses and assets. At Bliss & Skeen , our tax professionals can help. Call today to learn more about depreciation, recapture, like kind exchanges, or other potential tax implications of your landlord enterprise.

Consulting in advance of business decisions will help you make the smartest choices and reap the biggest rewards.

3 Factors to Help Your Company Decide on Capital Investments

Tue, 23 Jul 2019 16:48:31 GMT

Capital expenditures are a necessary part of all businesses. But they often represent a large investment in a budget that already has many competing priorities. How can you ensure that your company spends the right money on the right capital projects? The best way to start is to do a proper capital analysis focusing on three key criteria.

Finances

Capital projects are usually some of the most expensive undertaken by a company. And, unless you have a nearly unlimited budget to work with, you must determine how to use capital funds wisely. This is where your accountant will become a real asset during the planning and budget process.

If you plan to replace or update an existing asset, such as an office building, first determine the financial value of the asset in hand. In accounting terms, find out what its remaining 'useful life' is. Has it been fully depreciated, resulting in no further deductions against income? If it is disposed of, how much value will it have and can that be added to the budget for a replacement?

Next, you will need to determine the actual cost of the new project. Seek out reliable and appropriate estimates from legitimate sources. In the case of a single large asset, like a piece of equipment, this may be as simple as getting a market value. The design and construction of an office building will be harder to estimate, and you may have to rely on a range of costs.

The third major component of capital budgeting is the return on your investment. A growing construction company, for example, that spends a lot of money on hired cranes may feel that investing in their own hydraulic cranes will increase profit or allow larger jobs. Work with your accountant to determine how much increased income you may get and how the asset will affect future expenses.

Risk

Consider the financial or strategic risk if you don't complete the project. If you put off repairs to your plant's plumbing system, could a serious rupture cost more to fix and replace? Could it close operations? If so, what is your output or income each day you'd be closed? And how big is the risk that something will actually occur? Will you lose out on tax credits, local improvement grants, or other financial assistance?

There may also be opportunity loss if you do choose to buy a capital asset. An opportunity loss is when you will miss an opportunity by investing the money elsewhere. If you replace the plumbing system and stop future ruptures, that's still money you can't spend on an updated manufacturing process, a piece of heavy equipment, or an investment in new intellectual property. Is the investment you’re considering more important than other choices?

Goals

Finally, remember that capital expenditures are long-term assets. They should, therefore, fit into the company's long-term plans. A business that wants to expand its products may need a new building to house the coming growth. If you expect to move to a new location in the next five to ten years, though, would it be better to put your capital budget into fixing the old pipe system so that you can get more money when you sell?

Not all strategic investment choices are about practicalities. How would the new asset fit into your company's image, marketing, brand building, or reputation? How will it affect your workforce? Are employees trained to operate the new asset, or if not, are they willing to learn? And how will your customers view your investment?

Certainly, creating a plan for capital expenses is a complicated subject. At Bliss & Skeen CPAs , we can help. We provide assistance with all steps in capital budgeting — from cost research and bookkeeping to analyzing both company and project budgets — so you can make the best decisions with your money. Call today to make an appointment.

Want to Appeal an IRS Finding? Where to Find Support

Tue, 25 Jun 2019 16:54:01 GMT

Has the IRS examined your income tax return and disallowed certain elements? This is always a challenging time for a taxpayer, but it's even more so when you feel that your position is in the right.

What should you do to prove that the position you and your accountant have taken on a tax questions is legitimate? Here are two places you can find proof to use in order to appeal the finding with the IRS.

Primary Sources

The greatest authority in U.S. tax law are called "primary sources". Three basic sources are the basis for all tax law. They include the following:

Internal Revenue Code of 1986. You can find the actual tax code in Title 26 of the United States Code. You and your CPA will find sections relevant to your tax situation and applicable for the year which you are disputing. Generally, the tax code is taken literally, but ambiguous language may require further research sources to clarify.
Treaties. Tax treaties aren't something that most taxpayers know about, but they provide basis for certain tax items, such as how to handle foreign income or a foreign taxpayer.
Committee Reports. When Congress sets a tax law, a committee does the work to write and define it. So, if an item is ambiguous in the tax code, committee reports may help shed light on Congress' intent about how it should be used.

Consult with a professional for help navigating these sources.

Secondary Sources

In addition to the three "primary" sources of tax law, you can use a number of secondary places as evidence to support your position. These are generally broken into a few main categories — regulations, revenue rulings, and revenue procedures.

Regulations

Regulations issued by the IRS itself are broken into several categories, which each carry a different weight and purpose. Each regulation goes through the same stages from proposed regulations to temporary ones to final regulations.

Legislative regulations have the greatest weight, as these are issued with specific authority by Congress. Interpretive regulations have much less weight, but these are designed to interpret statutes written by Congress into meaningful applications. You will likely need to consult procedural regulations only if your case involves filing requirements, your responsibilities, or obligations of the taxing authority.

Revenue Rulings

Revenue rulings interpret revenue laws when applied to a specific set of circumstances. They are used to try to create uniform application of the law. Although they do not carry the force of law, revenue rulings are often considered as precedent and have useful authority.

Revenue Procedures

Finally, a revenue procedure is similar to a procedural ruling, defining how to do administrative tasks and follow procedures for filing taxes correctly. As with revenue rulings, though, these are not as heavily-weighted as regulations.

Your Research Process

Now that you know what types of places you may find support for your cause, where should you start researching? All taxpayers have access to the full Internal Revenue Code through the IRS.

Most of the secondary sources of tax law, including final regulations and IRS positions, can be accessed through the Internal Revenue Bulletin online.

If you are serious about pursuing an appeal of a decision after an IRS examination, you should work with a qualified CPA (certified public accountant). The level of tax law contained in the above sources is often confusing for laypersons and difficult even for professionals to interpret in practical ways.

At Bliss & Skeen CPAs , our experienced tax professionals are ready to help you build and present the best argument for your case before the IRS. Make an appointment today to learn more about taking the next step to appeal your findings.

4 Individuals Who Can Help When the IRS Has Questions

Thu, 30 May 2019 16:59:58 GMT

Do you need help researching or handling a problem with your income taxes? Getting assistance from a professional is vital to best protect yourself and your finances. But who should you use to help find and correct matters or to aid you in dealing with the IRS? You have a world of options, but you must choose wisely.

Here are a few people who can help you with various needs before and during an IRS audit.

1. A Family Member

The first place many taxpayers turn when they are notified about any problems with their income taxes is a knowledgeable individual within their circle of friends or family. And a friend or family member can be of great assistance in the beginning.

Why? They're a more objective third party who isn't as emotionally invested in your tax return as you are. If nothing else, sharing your worries with a trusted friend can help you feel more confident.

2. A Representative

What if you need more practical help rather than moral support? Then you may ask someone to help you research the problem and examine your tax returns.

The IRS doesn't allow just anyone to look at your tax returns, but you can authorize another individual to view your returns as well as to receive copies of notices from the IRS. This limited representation doesn't allow the person to change your taxes without you, but instead just gives them access to view things. You use Form 8821 (Tax Information Authorization or TIA) to designate such a person.

When would a TIA be useful? If you just need to look into past tax forms or have lost your own copies, this allows a person to do this research. It would also allow a business partner or spouse to view your tax information — preventing disputes or conflicts.

If you're very uncomfortable contacting the IRS or have difficulty understanding what you need to do, Form 8821 is a good tool to facilitate others helping you.

3. An Enrolled Agent or CPA

What if you need to go beyond simple research? If you must amend prior returns or respond to an IRS inquiry (or audit), having experienced assistance is recommended. You can work with someone approved to practice before the IRS or give them Power of Attorney to represent you and make adjustments as needed.

The IRS designates those who are qualified to practice before the agency and represent taxpayers in serious matters. These include Enrolled Agents and CPAs. An Enrolled Agent has passed a three-part exam and completes continuing education requirements annually. A CPA (Certified Public Accountant) has a degree and additional experience and training in accounting matters.

Non-approved individuals, such as un-enrolled tax preparers, are limited in what they can do before the IRS, leaving you to do much of the work as well.

4. A Tax Attorney

If your situation may end up with serious charges, such as tax fraud or identity theft, you should also have a tax attorney on your team. Just as with any court, an attorney is the one to represent you in legal matters. Even having a fully executed Power of Attorney (Form 2848) filed with the IRS will not allow others to represent you before an administrative judge.

Getting the right type of assistance is part of successfully handling any issues with your income taxes. Even if you start out with personal help from friends or family, knowing when to hire more experienced individuals is the smart thing to do. The result will be a better outcome and reduced stress.

Bliss & Skeen Certified Public Accountants can help with all levels of tax matters both business and personal. Make an appointment today to find the best route for your particular circumstances.

4 Tools You Can Use to Give Money to Grandchildren

Mon, 29 Apr 2019 17:04:24 GMT

If you have children and grandchildren, estate planning in some form is essential for making sure your family is taken care of. But most estate planning for family member is focused on children and spouses. Grandchildren, though, can and should play an important part in your planning process.

What can you do to provide for grandchildren fairly and sufficiently? Here are four tools to make use of.

1. Direct Gifts

Taxpayers who give money directly to other individuals fall subject to the gift tax even if they're not always aware of it.

Fortunately, the IRS allows an exemption to the gift tax that allows each taxpayer (and each spouse) to give up to $15,000 annually (as of 2019) to any individual. That means you and your spouse together can gift $30,000 per year to grandchildren without incurring any tax liability - whether or not you file together.

Directly gifting money to adult grandchildren is an excellent way to help them out over the long term and to see them benefit from your gifts. It also helps keep your overall estate under the potential estate tax threshold should you pass away.

2. Educational and Medical Expenses

Another exemption to the annual gift-giving limits is to directly pay certain types of expenses for the grandchild. You are allowed to directly pay tuition or medical bills to the institution or provider (not to the grandchild or their parent) without affecting any gift tax exemptions. And there is generally no dollar limit over your or their lifetime.

Some grandparents use this exemption in conjunction with the annual gift tax exemption to make the most of their dollars. You could pay college tuition directly to the school, for instance, and then give the student $15,000 (or $30,000 for spouses) for living expenses and books while they're at school.

3. Trusts

Trusts are increasing in popularity for a variety of reasons. First, they are a way to give money to minors, who legally cannot inherit money until they reach the age of majority. If you have young grandchildren, this is an excellent way to care for their needs as they grow. It's also an excellent choice if you feel that the grandchildren's parents may not be the best choice to handle the child's money.

Secondly, trusts avoid the delays and complications of the probate process when you pass away. That makes them easier and more immediate ways to set aside money necessary for the care of smaller children and any grandchildren who have special, ongoing needs.

4. Lifetime Exclusion

In addition to the annual gift tax exemption, each taxpayer also has granted to them a lifetime exclusion. In 2019, this exclusion is $11.4 million and includes all the gifts you've excluded over the course of your lifetime. You must file a form with the IRS that designates gifts as counting toward this exclusion when you make them.

To properly use the tax exclusion, you will need to create a strategy for using your lifetime amount where it will do the most good. If you have appreciating assets (such as stocks or houses), designating them toward the lifetime exclusion could prevent heirs from getting stuck with a much larger tax bill down the road.

What types of gifting tools are right for your family situation? It depends on many factors, including ages and personalities as well as your own goals. At Bliss & Skeen CPAs, we specialize in estate planning in all its forms. Make an appointment today to start designing the right plan to care for your grandchildren so you can rest easy and enjoy their company.