QUICKBOOKS 2009 DISCONTINUATION

We just received the following note from QuickBooks. If you are using QuickBooks 2009 take note, they are discontinuing the payroll service take notice. 

NOTIFICATION FROM QUICKBOOKS:

We know that your clients rely on QuickBooks and we want to be sure that we keep you informed of any changes that will affect your clients. Since early March, we have informed our payroll customers that as of May 31, 2012, payroll service for QuickBooks 2009 would be discontinued.

In order to provide customers with additional time to upgrade their QuickBooks software, we have extended the date of the payroll service discontinuation to June 30, 2012.

After that date, QuickBooks 2009 will no longer automatically calculate correct payroll taxes or provide payroll tax forms. Payroll subscriptions for customers with QuickBooks 2009 will be inactivated on July 1, 2012.

We are encouraging customers to upgrade their QuickBooks software as soon as possible to minimize disruption to their businesses.

COMPANY PAID HEALTH INSURANCE

Q:  I am the owner of a business and I am going to start paying health insurance for my employees.  Does it make a difference who's name the policy is under?

A:  You did not tell me what form of business you are using so here is the chart:

Sole Proprietorship = Individuals name

Single Member LLC = Individuals name

Partnership = Partner or company

LLC = Partner or company

One worker S corporation = Shareholder of company

Two or more worker S Corporation = Company

C corporation = Company

SOCIAL SECURITY FACES UNFUNDED LIABILITY

Last fall I attended the National Tax Conference in Washington DC. A expert on Social Security was one of the speakers. He said that Social Security could avoid bankruptcy by making a few simple changes. The changes would not impact anybody that was 55 or older and would receive 87% of their benefits. Unfortunately the government does not have the guts to address the problem. Take a look at what CNSNews.com is reporting.

 (CNSNews) -- CNSNews.com reports, "Social Security faces an unfunded liability of $8.6 trillion, according to the 2012 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds." According to the story, "the $8.6 trillion in unfunded benefits Social Security is expected to pay over the next 75 years equals $73,167.83 for each of the 117,538,000 households the Census Bureau said were in the United States in 2010."

To read more of this article: CLICK HERE

BEWARE OF THE $494 BILLION TAX HIKE COMING SOON

The Heritage Foundation is a conservative think tank but I found their recent column quite true.  I have been trying to warn people that if Congress and the President don’t act taxes are going to increase dramatically.  While the President and Congress appear content to put off ’til the 11th hour what they can and should do today, those who will have to pay the higher tax burden are waiting to see what the future holds. It appears that many businesses are waiting to see what will happen and this may be slowing job creation.

If you want to know how the upcoming tax increases will impact you let us know and we can do some projections for you.

In their analysis, they write "Brace yourself.  In (less than 270) days, you and your fellow Americans will be hit with a tax hike the likes of which this country has never seen," if Congress does nothing by year's end.  "The Washington Post aptly called the unprecedented $494 billion tax hike 'Taxmageddon.'"  According to the analysis, "almost 34% of the tax increase" is from the expiration of the 2001 and 2003 Bush tax cuts, while "another 25% of Taxmageddon comes from the expiration of the once-temporary payroll tax cut."  The expiration of the patch on the Alternative Minimum Tax accounts for 24% of the total potential 2013 tax increase.  The rest of the tax increase "comes in part from new taxes under Obamacare, the expiration of tax cuts in the 2009 stimulus, the expiration of a group of policies known as 'tax extenders,' changes in the current policy on the death tax (in 2013, it will rise from 35% today to 55% and the exemption will fall from $5 million to $3.5 million), and the expiration of businesses' ability to fully expense new capital investments."

NEW START UP

Q: I am going to start up a salon and I need your help. Can you tell me how to get started?

A: I would suggest that you go to Barnes and Nobel and purchase a book on business start up. I think there may even be one on the beauty industry. Sit down and read… no study that book.

We can help you with the numbers portion but there is a fee. If I were you I would want to know several things before I go any further:

· Who is my competition

· Where am I going to get workers

· What is the current pricing in my area

· What will I have to pay the workers

· How am I going to get clients to come to me

· What is my marketing plan

· Calendar of tasks to do before startup

· City codes/zoning requirements

· Construction costs

· Financing

· Lease versus purchase of equipment

· Knowledge of employee laws

· Preparation of employee manual

· Signage

· Payroll tax requirements

· Job duties

· Who is doing payroll

    · Monthly cash flow for working capital needs

    · Breakeven point.. How many clients to I need to see just to keep the doors open

    · Computer software choices

    · Grand opening planning

· Choice of products

    · Initial orders

This is not a full list but things off the top of my head. You have to know these things of you are headed for failure. You have to have the knowledge or you have to buy the knowledge.

Ownership is not easy and to be quite honest not profitable at first. Trust me. I get to deal with salons that are 12 to 18 months old that did not have a clear understanding of what they were getting into and many times by then it is ”too late to save the patient.

Read the book… no study the book and after you have studied if you would like contact me we can talk.

DO YOU PAY TOO MUCH TAX?

If you’re like most salons and spas, you probably think you pay too much tax. And you’re probably right! So perhaps you’re considering a new tax pro this year.

Most tax professionals do a fine job putting the “right” numbers in the “right” boxes on the “right” forms. But then they call it a day.

It doesn’t matter how good your tax preparer is with a stack of receipts on April 15. The real secret to reducing your tax bill is planning.

At Kopsa Otte, we’re different. We don’t just record history. We help you write it, with a complete lineup of court-tested, IRS-approved concepts and strategies to give you the savings you really want.

This year, don’t settle for just “filing” your return. Call us today at (800) 975-4829 for your FREE Tax Analysis. We’ll find the mistakes and missed opportunities that may be costing you thousands, and show you how proactive planning can save those dollars. We guarantee you’ll leave with new information, or we’ll donate $50 to your favorite charity. So contact Amanda today at ahaumont@kopsaotte.com to start your savings!

CHANGING MY BUSINESS NAME

Q: What is the process I would need to go through if I want to change the name of the business?

A: Thank you for your question.  Since you are a sole proprietorship currently, the IRS requires a signed letter informing them of the name change.  The address you would mail it to is this:

Internal Revenue Service

PO Box 802502

Cincinnati OH 45280-2502 

You are not required to get a new EIN.  You should, however, call your bank and credit card company to change the name on the accounts.  Also, consider the costs of new business cards, stationery, redoing the website and/or Facebook, as well as signage both inside and outside the salon.  Will you lose your identity with current customers?  You may want to ask your staff and some clients for feedback before making the final decision.

If you are considering changing the ownership in any way, for instance bringing on a partner, please let us know so we can help you! 

LOCATION, LOCATION, LOCATION

Q: My husband and I have decided to start our own salon.  We have heard it said over and over again "location, location, location."  Do you have any advice for us?

A: First and foremost, read and re-read the lease then let your attorney read the lease so you make sure you understand the terms.  I can tell you story after story of owners that were shocked to find out what was in their lease.

• Consider an agent to help you.  Make sure that they are experienced in lease negotiations and site selection.  Also an agent can help you with city codes and laws.
• If you are going to have to build-out the site, make sure that you have a contractor review the site to make sure that it fits your needs.  I had a client move into a wonderful and beautiful site but had fuses blow all the time because the electricity was not adequate.
• You mentioned location, how true.  Many times clients do not want to travel long distances so this is where you are can be important.  Also I have found that clients are not too comfortable with a salon that is next to a crack house.
• Is parking close and adequate?
• What is the competition like in the area?  You want to be in a traffic area but not too close the the competition.
• Check out the demographics.  You want to be close to the right income levels and age groups that you are trying to attract.
• Size is important.  Many salons start out in too big of a space which makes the rent unaffordable.  Most new salons do not start out needing a real large space.
• Retail, retail, retail.  Make sure there is room for adequate retail display.
• Consider an existing salon or a space that has been a salon.  This can save of build-out.  But, if this was an existing salon make sure that you know why the business failed.

Good luck.

TAX FACTS

Here are some statistics to put the nation’s income tax system in perspective:

     ► 143 million tax returns were filed with the IRS in 2010, some of which represent households and married couples. 

     ► Only 85 million actually paid taxes out of the 143 million filers.  In other words, 58 million, or 41%, were non-payers.  96% of these non-payers made less than $50,000.

     ► The IRS paid out $105 billion in refundable credits to filers who paid no income tax.

     ► The effective tax rate for those making less than $50,000 was 3.5%, and their share of taxes paid was 6.7%.

     ► The effective tax rate for those making more than $50,000 was 14.1%, and their share of taxes paid was 93.3%.

     ► The effective tax rate for those making more than $250,000 was 23.4%, and their share of taxes paid was 45.7%.

     ► The IRS estimates that it takes more than 7 billion hours to comply with the tax code each year.

     ► The tax code is now 3.8 million words long.

ILLEGAL IMMIGRANTS RECEIVED BILLIONS FROM THE IRS

Q: Does the IRS pay billions in tax refunds to workers who are in the U.S. illegally?

A: Yes. The Treasury Department’s Inspector General determined that $4.2 billion was paid in 2010, up from less than $1 billion in 2005. Leading Democrats are resisting a bill that would stop future payments.

This is a rare case of an Internet rumor with some substance to it. In fact, it’s shaping up as a major dogfight in Congress. At issue here are the federal child tax credits that can be claimed by persons with dependent children under age 17. Some Democrats are already defending these child tax credit payments that have gone to those without a valid Social Security number, accusing Republicans who want to end them of a heartless attack on children.

Several different versions of this viral email all cite a recent investigative story by an Indianapolis television station, but WTHR-TV is far from the first to notice. The Washington Post and others reported on this last year when the Treasury Department’s inspector general for tax administration issued a report on July 7, 2011. The title of the report summed up the IG’s finding: Individuals Who Are Not Authorized to Work in the United States Were Paid $4.2 Billion in Refundable Credits.

The credits currently amount to $1,000 per child, and they are “refundable,” meaning that parents may receive refunds even when they do not owe any tax.

The IG report stated that more than 2.3 million persons who did not have Social Security numbers valid for working in the U.S. got an average of roughly $1,800 each in 2010 in child tax credit refunds. That included 9,000 illegal immigrants who each got a total of $10,000 or more by retroactively claiming credits for tax years prior to 2010.

This from www.factcheck.org

100% BONUS DEPRECIAITON

Q.  What are the odds for reinstating 100% bonus depreciation?

A.  The chances are getting lower as the year goes on. Some in Congress wanted to tie this provision to the extension of the two-percentage-point reduction in the employees’ share of Social Security tax, but it was stripped from the final package. On the good side I would imagine that other provisions that lapsed after 2011will be reinstated retroactively in a lame-duck session, including direct payouts from IRAs to charity, higher AMT exemptions and the write-off for state sales taxes.  Who knows what they will do in Washington.

THE DIFFERENCE BETWEEN TAX PREPARERS AND TAX PLANNERS

In a recent magazine there was an article about taxes, asking which tax preparer gives you the best return. One of the things we at Kopsa Otte pride ourselves in is that we are more that just tax preparers... we are tax planners. As tax planners we use our knowledge, education and creativity to help people minimize their income tax bill. Preparers, on the other hand, just fill out forms.

In the article, Author Jennifer Pellet shadowed "Scott," a freelance photographer, and his wife "Zoe," a government lawyer, as they prepared their taxes with "The Cheap, Do-It-Yourself Time Sucker" (TurboTax), "The Dependable Chain" (H&R Block), and "The Pricey, Fast, Confidence-Inspiring Firm" (Amper, Politziner & Mattia, CPAs). (Click here for the full article.)

Here was the magazine's bottom line:
TurboTax: 6.5 hours and $114 price to calculate a $2,466 refund. Cheap and private, but with "annoyingly chirpy" pop up windows pushing other Intuit offerings.
Block: 2.5 hours and $395 to calculate a $2,442 refund. Fast, predictable, and convenient, but no privacy.
The CPA: 2 hours and $1,000 to calculate a $3,620 refund. Staffers who exude confidence and a closed-door setting that "feels right when you're sharing such private information" -- albeit at a price. Also, the winner!

Why was the client so much happier with the CPA? She took a proactive look at Scott and Zoe's return, writing off the difference between what they were deducting in health insurance as a couple and what they should have deducted for the self-employed husband. That one move dropped their taxable income, and even dropped their AGI low enough to qualify their Roth IRA contributions for the 10% Saver's Credit.

"Sure, her fee was $605 more than Block's, but her value to the client was $1,178 more. So where is the value?"

If you have not done so you should consider our Income Tax Second Opinion package. In this package we review your past tax returns and then talk to you about your tax situation and make recommendations on strategies to minimize the amounts going to the IRS. Why not put a tax planner and a specialist in the industry to work for you? The price is normally $250 but for the first 10 people that contact us we will do the second opinion for a measily $150. Contact Amanda at 800.975.4829 to sign up.

QUICKBOOKS BLOCKING

Q: I have several people who have access to my QuickBooks to input data, reconcile etc. I don’t really want them knowing all my income. Is there a way to block them out?

A: Yes there is a way to block certain people out of different functions within QuickBooks. It is beyond the scope of this response to give you the exact details but you can limit people to just the cash disbursements or just the deposits. If you need some detailed information on this, contact us or your QuickBooks representative.

WHERE THE HECK IS MY REFUND?

If you’ve done everything right and your refund feels slow, you can check on the status with the IRS. You’ll need to wait at least 72 hours after you e-file or three weeks after you mail your paper return before you can make an inquiry.

The fastest and best way to get the info is using the “Where’s My Refund?” tool on IRS.gov .

To check on your refund, you’ll need to have your tax return handy. You’ll need to enter:

• Your Social Security Number
• Your filing status

• The amount of your refund as shown on your tax return

Here’s a quick caveat about dates: if you’ve amended your return using a form 1040X, all bets are off. It may take 8 to 12 weeks or longer to process the return. If 8 weeks have passed after you’ve filed a form 1040X and you have not received your refund, call the IRS at (800) 829-1040. Be prepared to wait (and wait).

Finally, if your check is supposed to be in your mailbox and it’s not because it was lost, stolen, or destroyed, you can file an online claim for a replacement check. You can make the claim if it’s been more than 28 days from the date that the IRS says it mailed your refund. Head over to the “Where’s My Refund?” tool on IRS.gov for details.

L’OREAL HEIRESS STEPS DOWN

All of you that use or are associated with L’Oreal, Kerastase, Matrix, Maybelline, Mizain, Redken, Purology and a swarm of other manufacturers and distributors might be interested to know that Liliane Bettencourt, 89, the richest woman in France has ended her tenure as Board Director and will be replaced by her grandson.

She has been in the news lately following a disagreement with her daughter over expensive gifts that she supposedly gave to a friend.  There have also been allegations of illegal political donations and tax evasion but as of now this has just been made public by the press and has not been proven.

Don’t worry about her retirement.  I would imagine she has enough money to live out her years.

AMERICANS PAYING MORE IN TAXES THAN FOR FOOD, CLOTHING, AND SHELTER

In 2012, Americans will pay approximately $4.041 trillion in taxes, which is $152 billion, or 3.9%, more than they will spend on housing, food, and clothing combined, according to our new study by Adjunct Scholar Kevin Duncan. In addition, an increasing proportion of government benefits now go to pay for those same basic expenses of low-income Americans.

Examining the trends of tax collections and expenditures on housing, food, and clothing for the past several decades, the study shows that an ever-increasing amount of taxpayer money has gone into government programs that subsidize or pay for essential household goods. Cash and voucher benefits now pay for over a third of basic household expenses, up from less than 1% in 1929 and less than 20% in the early 1970s.

NEW SALON START UP HELP

Q: I am going to start up a salon and I need your help. Can you tell me how to get started?

A: I would suggest that you go to Barnes and Noble and purchase a book on business start up.  I think there may even be one on the beauty industry.  Sit down and read… no study that book. 

We can help you with the numbers portion but there is a fee.  If I were you I would want to know several things before I go any further:

·         Who is my competition

·         Where am I going to get workers

·         What is the current pricing in my area

·         What will I have to pay the workers

·         How am I going to get clients to come to me

·         What is my marketing plan

·         Calendar of tasks to do before startup

·         City codes/zoning requirements

·         Construction costs

·         Financing

·          Lease versus purchase of equipment

·         Knowledge of employee laws

·         Preparation of employee manual

·         Signage

·         Payroll tax requirements

·         Job duties

·         Who is doing payroll

·         Monthly cash flow for working capital needs

·         Breakeven point.. how many clients do I need to see just to keep the doors open

·         Computer software choices

·         Grand opening planning

·         Choice of products

·         Initial orders

This is not a full list but things off the top of my head.  You have to know these things or you are headed for failure.  You have to have the knowledge or you have to buy the knowledge. 

Ownership is not easy and to be quite honest not profitable at first.  Trust me.  I get to deal with salons that are 12 to 18 months old that did not have a clear understanding of what they were getting into and many times by then it is ”too late to save the patient.”

Read the book… no study the book and after you have studied, if you would like, contact me and we can talk. 

IRS AUDITS CASH INTENSIVE BUSINESSES

Do you want to know what the IRS is going to be looking at if you are audited?  We can tell you.  The IRS posts their audit guides on their website.  You have to dig around to find them but they are out there.  If you know what they are looking for you can be prepared. 

Now the IRS has posted an Audit Techniques Guide (ATG) to provide guidance to its agents on how to examine income in a cash intensive business. While the ATG is not an official pronouncement of the law or IRS's position and cannot be used, cited, or relied upon as such, it does provide valuable information on how IRS audits cash intensive businesses including specific types of cash businesses.

If you would like a copy or a link to the IRS website showing the guide let me know and I will send to you.

GIVE ME ONE OF THOSE STEM CELL BURGERS

Using the stem cells from an adult cow, a Dutch physiologist has grown a sliver of edible artificial "meat."  He claimed this could offer a better way than traditional animal farming to satisfy the world's booming taste for meat. 

According to researchers within the next 50 years meat production will have to double worldwide to meet the demands of a growing population.  This method could help avoid the cost of using precious farmland.

But you might not want to order a stem cell burger just yet.  The first patty, promised for later this year will cost $300,000.