• QuickBooks Tips: 5 Ways To Get Your Clients To Pay Your Business More Quickly

    29 September 2014
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    QuickBooks Invoice

    Accounts receivable requires constant monitoring. As satisfying as it can be to dispatch a group of invoices, any business owner knows that it’s going to take some work to bring in payment for at least some of them. It can be a frustrating process, but there are some ways to get your clients to pay their bills more quickly and more easily.

    There are so many reasons why QuickBooks is the standard accounting and invoicing tool of almost all of my clients. It provides easy and reliable record keeping, and it helps us at Dagley & Co. manage the finances of your business with the click of a button (we work with clients all over the world). However, there is still a lot of work to do to collect on those invoices. If I were to ask five of my small business clients to name the top roadblocks they faced in their quest for ongoing profitability, it’s likely that all five would point to slow payments – save for those of your in retail who are paid on the spot (lucky you!).

    By using QuickBooks’ tools and complying with accounting best practices, you’ll be more confident during the invoicing stage that what you’re owed will actually be in your bank account in a reasonable amount of time. Here are five things that we suggest:

    1. Let customers pay invoices electronically.

    Figure 1: You’re likely to get paid faster if you let customers pay electronically when they receive an invoice. Go to Edit | Preferences | Payments | Company Preferences.
    Figure 1: You’re likely to get paid faster if you let customers pay electronically when they receive an invoice. Go to Edit | Preferences | Payments | Company Preferences.

    It’s 2014: people have stopped carrying checkbooks and are accustomed to using their mobile devices to pay for merchandise. It’s as though online and electronic billing are required. Whether or not you know it, you’re probably losing some business if you don’t have a merchant account that supports credit and debit card payments, and possibly e-checks.

    If you have an online storefront, you’ve undoubtedly been accepting plastic for a long time now.

    Not many shoppers want to place an order on a website and hunt for envelopes and stamps and blank checks to complete it. If you invoice customers, it’s just as critical that you allow them to remit payment ASAP.

    Not set up with a merchant account yet? Ask a rep at QuickBooks to help you get started with the Intuit Payment Network.

    2. Keep a close watch on your A/R reports.

    Part of being proactive with your accounts receivable is being vigilant and informed. Create and customize A/R reports regularly. When you customize your A/R Aging Detail report, for example, in addition to the other columns that you include, be sure that Terms, Due Date, Bill Date, Aging and Open Balance are turned on (click Customize Report | Display and click in front of each column label).

    You should also be looking at Open Invoices and Collections Report frequently, or assigning someone else to monitor them closely. QuickBooks can help here by creating more complex financial reports periodically, like Statement of Cash Flows.

    3. Send statements.

    Figure 2: In this window, QuickBooks wants you to create filters to identify customers who should receive statements. Here, everyone with transactions that are more than 30 days old will be included.
    Figure 2: In this window, QuickBooks wants you to create filters to identify customers who should receive statements. Here, everyone with transactions that are more than 30 days old will be included.

    Invoices are generally the preferred way to bill your customers, and you should consider sending statements in addition when customers have outstanding balances past a certain date. QuickBooks sometimes calls these reminder statements. You’re not providing the recipients with any new information; you’re simply sending a kind of report that lists all invoices sent, credit memos and payment received.

    To generate statements, click Customers | Create Statements. You’ll see the window pictured to the left. You can send statements to everyone, a defined group or one customer, and you can define the past-due status that you want to target in addition to other options.

    4. Send accurate invoices the first time.

    This may be obvious, but double check your work! Few things will slow down your accounts receivable more than incorrect invoices. The customer can wait until payment is almost due to dispute the charges, which means that they’ll probably get another 15 or 30 days (or whatever their terms are) to pay the amended bill. Whoever is responsible for creating invoices needs to be checking and re-checking them. If it’s logistically possible depending on your workflow, have them verified by a second employee or ask us at Dagley & Co. to help.

    5. Offer discounts for early payment and assess finance charges.

    Offering discounts is a balancing act. You’ll be getting less money for your sale – even 5 percent multiplied by many customers can add up – but it may make sense financially for you to take a small hit in return for being able to deposit the payment sooner. We can help you do the math here.

    To offer this, you’ll have to set up your discount scenario as a Term option (Lists | Customer & Vendor Profile Lists | Terms List), as seen here in Figure 3:

    Figure 3: This Standard discount term gives customers a 5 percent discount if their invoice is paid within 10 days.
    Figure 3: This Standard discount term gives customers a 5 percent discount if their invoice is paid within 10 days.

    To make a customer eligible for the discount, open the Customer Center and double-click on a customer, then on Payment Settings | Payment Terms.

    You might also want to be assessing finance charges. The revenue you bring in from finance charges will probably be negligible. Sometimes, just knowing that a late payment will be more costly may prompt your customers to settle up in a timely fashion.

    Whatever approaches you choose to accelerate your receivables, be consistent. If any of your customers should compare notes, you want to be regarded as being firm but fair.

    Images via QuickBooks/Public Domain

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  • Did The IRS Call You? It May Be A Scam.

    24 September 2014
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    Dagley & Co. has worked with and around money for over a decade now, and I believe that the vast majority of Americans are honest, hard-working people. However, it never ceases to amaze me what unscrupulous people in our world will do for a dollar. My industry has its fair share of unethical characters, and some have dominated the news in past years.

    At Dagley & Co, we won’t sell our reputation for a dollar. We have had clients give bad reviews and insult our competence simply because we wouldn’t compromise our ethics in order to get them more money. It stinks, but we believe our long term reputation is worth far more than a little extra business by bending the rules.

    Why do I bring this up? The IRS has issued another warning recently about phone scammers. Highlights from the warning include 90,000 complaints, 1,100 victims, and losses exceeding $5 million. Taxpayers should remember their first contact with the IRS will not be a call from out of the blue, but through official correspondence sent through the mail. A big red flag for these scams is an angry, threatening call from someone who says he or she is from the IRS and urging immediate payment. This is not how the IRS operates. If you receive such a call, you should hang up immediately.

    Additionally, it is important for taxpayers to know that the IRS:

    • Never asks for credit card, debit card, or prepaid card information over the telephone.
    • Never insists that taxpayers use a specific payment method to pay tax obligations.
    • Never requests immediate payment over the telephone.
    • Will not take enforcement action immediately following a phone conversation. Taxpayers usually receive prior written notification of IRS enforcement action involving IRS tax liens or levies.

    Potential phone scam victims may be told that they owe money that must be paid immediately to the IRS; or, on the flip side, that they are entitled to big refunds. When unsuccessful the first time, sometimes phone scammers call back trying a new strategy. Other characteristics of these scams include:

    • Scammers use fake names and IRS badge numbers. They generally use common names and surnames to identify themselves.
    • Scammers may be able to recite the last four digits of a victim’s Social Security number. Make sure you do not provide the rest of the number or your birth date – that is information ID thieves can use to make your life miserable.
    • Scammers spoof the IRS toll-free number on caller ID to make it appear that it’s the IRS calling.
    • Scammers sometimes send bogus IRS e-mails to some victims to support their bogus calls.
    • Victims hear background noise of other calls being conducted to mimic a call site.
    • After threatening victims with jail time or driver’s license revocation, scammers hang up and others soon call back pretending to be from the local police or DMV, and the caller ID supports their claim.

    DON’T GET DECEIVED…it is a scam. If you get a phone call from someone claiming to be from the IRS, DO NOT give the caller any information or money. Instead, you should immediately hang up. Of course the best thing that you can do is hire Dagley & Co. to handle your taxes. When you choose to do business with us, we can assist you with any communications that you have with the IRS. That way, you can simply reach out to us and we can take care of it and you can be assured that you won’t be scammed.

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  • Charity Purchases and Auctions – Do You Get A Bigger Deduction Participating Online?

    19 September 2014
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    Americans are the most generous people in the world. According to Charity Navigator, “during 2013, total giving was more than $335 billion.”

    The internet is changing the landscape of most everything we do. The majority of Dagley & Co. clients come to us online and work with us remotely. That’s how, with an office in Washington, D.C., we have clients from all over the country and on four continents. The same is true for charity auctions. One of the premier online services for charity auctions is BiddingForGood. According to their website, they have raised over $248 million for non-profits and schools as of this writing.

    One thing that does not change – whether you attend one the various philanthropy events in Washington, D.C., in your city, or participate online – is the tax deductibility and documentation requirements.

    When a charity sells or auctions of property or services at a price in excess of value these are referred to as “quid pro quo” contributions or dual payments made that consist partly of a charitable gift and partly of consideration for goods or services provided to the donor.

    Quid pro quo in Latin is “something for something.” When used in the context of charitable contributions, quid pro quo contributions typically include the purchase of tickets for sightseeing tours, all-expense-paid trips, theatrical or concert performances, books or subscriptions to magazines, stationery, candy, and more. They are sold with a generous mark-up that is designed to help the charity in performing its functions. In these cases, the charitable deduction is the excess of the payment over the value received by the purchaser-contributor. For instance, when tickets to a show are purchased from a charity at a price in excess of the normal admission charge, the excess over the latter (plus tax) is a charitable contribution.

    Determining and documenting the amount of the purchase that represents the charitable portion is the key to being able to take a charitable tax deduction for quid pro quo purchases. Tax law requires charitable organizations that receive a quid pro quo contribution in excess of $75 to provide a written statement, in connection with soliciting or receiving the contribution, that informs the donor that the amount of the contribution that is deductible for federal income tax purposes is limited to the amount of the purchase that is in excess of the value of the property or service purchased and a good-faith estimate of the value of the goods or services purchased.

    How much should you get written off your taxes in exchange for an online or in-person donation? 

    • Example #1A taxpayer purchases a cookbook from a charity for $100. The charity provides the taxpayer with a good faith estimate of $20 for the value of the book in a written disclosure statement. Thus, the taxpayer’s charitable deduction is $80 ($100 minus the $20 value of the book).
    • Example #2A taxpayer attends a charity auction. The charity provides a catalog of the items for auction and a good-faith estimate of the value of each item. The taxpayer is the successful bidder for a vase valued at $100 in the catalog, for which the taxpayer bid and paid $500. The taxpayer’s charitable deduction is $400 ($500 minus the good-faith valuation of $100).
    • Example #3A taxpayer pays $40 to see a special showing of a movie for the benefit of a qualified charity. The ticket reads “Contribution $40.” If the regular price for the movie is $10, the contribution would be $30 ($40 minus the regular $10 ticket price).

    In short, the value of your donation and its good-faith estimate has an affect on your deduction, not your online vs. in-person participation. So don’t forget to keep good records and the required documentation when you give to your favorite charity and causes close to your heart and provide them to Dagley & Co. so that we can maximize your deductions and minimize your taxes. And if you can’t make it to your favorite charity auction and participate this year, consider going online so that you too can make a difference and still get the tax deduction.

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  • What To Do If You Can’t Afford To Pay Your Taxes

    17 September 2014
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    It’s a common mistake many new entrepreneurs make: The checks from clients come in, tax withholding is put off, and then all of the sudden, taxes are due. The good news is this problem has several solutions.

    After completing your tax paperwork, you may be overwhelmed seeing the amount you owe. Though you may be overwhelmed, you still have to pay it. We recommend meeting with a CPA like Dan Dagley to discuss deductions to get that number down.

    If the bill is still too much after deductions are made, then pay what you can, and have Dagley help you file a Form 9465 to set up a payment plan.

    Dagley will also work with you to make sure it does not happen again. By setting up quarterly payments, or re-structuring your payment system to automatically withdraw payments, you’ll see a little bit taken out each pay period without being hit with a big bill at the end of the year. With modern technology, Dagley & Co. can use “the cloud” to work with you, no matter where your business is located.

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  • You filed for an extension on your tax return. Now what?

    15 September 2014
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    Over 15 million people and businesses filed for a tax extension in 2014. If you’re one of them, your deadline – October 15th, 2014 – is quickly approaching.

    It’s not that uncommon to extend taxes. Whether it’s a new business owner filing for the first time, or receipts for deductions were delayed, to just plain old procrastination, there are many reasons why that first deadline may not have been met. However, if you’re one of those people who is still having trouble wrapping up those obligations for 2014, it might be time to hire Dagley & Co. to ensure a smooth tax return for yourself, your business and your family.

    Hiring a CPA, or a Certified Public Accountant, is an ideal route to take if you’re feeling overwhelmed with the thought of diving back into that tax paper work. CPAs go through a rigorous education track and must pass an exam to become certified. Since 1896, by law a CPA candidate must sit for and pass the Uniform Certified Public Accountant Examination (Uniform CPA Exam), which is set by the American Institute of Certified Public Accountants (AICPA) and administered by the National Association of State Boards of Accountancy (NASBA). Just to sit down and take the exam, a CPA candidate must clock what’s known as the “150 hour rule”, which usually requires an additional year past a regular four-year college degree, or a master’s degree. For example, Dan Dagley got his MBA in accounting from the George Washington University in Washington, D.C.

    Picking a CPA can be tricky. However, if you are a small- to medium-sized business, you’ve come to the right place. Dagley & Co. specializes in the unique needs of small businesses, and can work with anyone from anywhere thanks to today’s technology. Our team is well equipped to handle a tax extension for any business or individual that has “waited until the last minute.”

    For added peace of mind, read any of the glowing reviews on Dagley’s TurboTax page.

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  • September 2014 Business Tax Due Dates

    2 September 2014
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    tax deadlines Sept 2014

    Below are some of the necessary tax deadlines for business owners. If you are worried that you may have missed these deadlines, contact us, Dagley & Co., for help. (Find our phone number at the bottom of this webpage.)

    September 15 – Corporations

    File a 2013 calendar year income tax return (Form 1120 or 1120-A) and pay any tax, interest, and penalties due. This due date applies only if you requested an automatic 6-month extension.

    September 15- S Corporations

    File a 2013 calendar year income tax return (Form 1120S) and pay any tax due. This due date applies only if you requested an automatic 6-month extension.

    September 15- Corporations

    Deposit the third installment of estimated income tax for 2014 for calendar year corporations.

    September 15 – Social Security, Medicare and Withheld Income Tax

    If the monthly deposit rule applies, deposit the tax for payments in August.

    September 15 – Nonpayroll Withholding

    If the monthly deposit rule applies, deposit the tax for payments in August.

    September 15 – Partnerships

    File a 2013 calendar year return (Form 1065). This due date applies only if you were given an additional 5-month extension. Provide each partner with a copy of K-1 (Form 1065) or a substitute Schedule K-1.

    September 15 – Fiduciaries of Estates and Trusts

    File a 2013 calendar year return (Form 1041). This due date applies only if you were given an additional 5-month extension. If applicable, provide each beneficiary with a copy of K-1 (Form 1041) or a substitute Schedule K-1.

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  • September 2014 Individual Tax Due Dates

    2 September 2014
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    Individual tax due dates

    September 10 – Report Tips to Employer

    If you are an employee who works for tips and received more than $20 in tips during August, you are required to report them to your employer on IRS Form 4070 no later than September 10. Your employer is required to withhold FICA taxes and income tax withholding for these tips from your regular wages. If your regular wages are insufficient to cover the FICA and tax withholding, the employer will report the amount of the uncollected withholding in box 12 of your W-2 for the year. You will be required to pay the uncollected withholding when your return for the year is filed.

    September 15 – Estimated Tax Payment Due

    The third installment of 2014 individual estimated taxes is due. Our tax system is a “pay-as-you-go” system. To facilitate that concept, the government has provided several means of assisting taxpayers in meeting the “pay-as-you-go” requirement. These include:

    • Payroll withholding for employees;
    • Pension withholding for retirees; and
    • Estimated tax payments for self-employed individuals and those with other sources of income not covered by withholding.

    When a taxpayer fails to prepay a safe harbor (minimum) amount, they can be subject to the underpayment penalty. This penalty is equal to the federal short-term rate plus 3 percentage points, and the penalty is computed on a quarter-by-quarter basis.

    Federal tax law does provide ways to avoid the underpayment penalty. If the underpayment is less than the $1,000 de-minimis amount, no penalty is assessed. In addition, the law provides “safe harbor” prepayments. There are two safe harbors:

    • The first safe harbor is based on the tax owed in the current year. If your payments equal or exceed 90% of what is owed in the current year, you can escape a penalty.

    • The second safe harbor is based on the tax owed in the immediately preceding tax year. This safe harbor is generally 100% of the prior year’s tax liability. However, for higher-income taxpayers whose AGI exceeds $150,000 ($75,000 for married taxpayers filing separately), the prior year’s safe harbor is 110%.

    Example: Suppose your tax for the year is $10,000 and your prepayments total $5,600. The result is that you owe an additional $4,400 on your tax return. To find out if you owe a penalty, see if you meet the first safe harbor exception. Since 90% of $10,000 is $9,000, your prepayments fell short of the mark. You can’t avoid the penalty under this exception.

    However, in the above example, the safe harbor may still apply. Assume your prior year’s tax was $5,000. Since you prepaid $5,600, which is greater than the 110% of the prior year’s tax (110% = $5,500), you qualify for this safe harbor and can escape the penalty.

    This example underscores the importance of making sure your prepayments are adequate, especially if you have a large increase in income. This is common when there is a large gain from the sale of stocks, sale of property, when large bonuses are paid, when a taxpayer retires, etc. Timely payment of each required estimated tax installment is also a requirement to meet the safe harbor exception to the penalty. If you have questions regarding your safe harbor estimates, please call us, Dagley & Co., as soon as possible. Find our phone number at the bottom of this webpage.

    CAUTION: Some state de-minimis amounts and safe harbor estimate rules are different than those for the Federal estimates. Please call us, Dagley & Co., for particular state safe harbor rules. Find our phone number at the bottom of this webpage.

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