Kopsa Otte Salon and Spa Blog

MY DAD WAS WRONG

2012-02-11T09:00:00.001-06:00

Iremember when I was a high school student my dad told me that I had a choice asI selected a career. I could work forthe private sector or I could work for the government. He said that the government workers werepretty much guaranteed that they would not lose their job and they had a reallygood pension plan but that was offset by the fact that they were not paid aswell.

Littledid he know how things would change. Nowthey have job security, a good pension and are paid better.

TheHill.comreports that "the Congressional Budget Office found Monday that federalworkers are compensated 16% more than comparable private-sector workers onaverage. ... For those with only a high-school degree, workers earned 21% moreand were given benefits worth 72% more than in the private sector." For federal workers with a college degree, "wages were about the same butbenefits were 46% better in the government." According to the story,"President Obama's 2013 budget request, due to be sent to Congress on Feb.13, will ask for a 0.5% cost-of-living raise for workers."

To read more of this article: READ MORE

I WON A $55,000 FORD MUSTANG

2012-02-09T09:01:00.000-06:00

Recently I was talking to an acquaintance of mine who’s tax work I am not involved with. I congratulated him on the hole in one that he had and the $55,000 Ford Mustang that went along with the win. He said he talked to his tax guy and he realizes this will be taxable to him.

He said, “Because I won this car, I’m looking for all the deductions I can possibly get.”

I thought about his comment for a second and then I asked him, “Shouldn’t you always be looking for all the deductions you can get?”

He looked at me and said, “You know you’re right.”

The lesson here is the fair market value of the car that he won is going to be taxable to him. This will be ordinary income so if he’s in a 25% tax bracket plus a 7% state bracket, his income tax will be roughly $17,600. In addition to this, he has to buy license plates, pay property tax on the vehicle, plus the insurance. It’s still a good deal but at the same time there are some taxes involved.

But the real lesson to be learned is even if you don’t hit a hole in one and win a vehicle, you still should try to take all the deductions that are allowable.

FOUR TAX TIPS REGARDING TIP INCOME

2012-02-08T09:02:00.000-06:00

If your pay from work involves compensation through tips, then the IRS would like you to be aware of a few facts about tip income. Here are four key points to keep in mind:

1. Tips are taxable Tips are subject to federal income, Social Security and Medicare taxes. The value of non-cash tips, such as tickets, passes or other items of value, is also considered income and subject to tax.

2. Include tips on your tax return You must include in gross income all cash tips you receive directly from customers, tips added to credit cards, and your share of any tips you receive under a tip-splitting arrangement with fellow employees.

3. Report tips to your employer If you receive $20 or more in tips in any one month, you should report all of your tips to your employer. Your employer is required to withhold federal income, Social Security and Medicare taxes.

4. Keep a running daily log of your tip income. You can use IRS Publication 1244, Employee's Daily Record of Tips and Report to Employer, to record your tip income.

For more information see IRS Publication 531, Reporting Tip Income, and Publication
1244 which are available atwww.irs.gov.
Both can be ordered by calling 800-TAX-FORM (800-829-3676).

NEW HSA AMOUNTS FOR 2012

2012-02-07T08:44:00.000-06:00

Here are the new contribution limits for 2012 HSA:

Contribution limit ~ Family: $6,250 Self: $3,100
Catch up if over 55 ~ Family: $1,000 Self: $1,000
Minimum deductible ~ Family: $2,400 Self: $1,200
Max out of pocket ~ Family: $12,000 Self: $6,050

The catch up contribution can only be made by individuals who are at least 55 and are not yet enrolled in Medicare.

Remember that starting in 2011 because of Obama Care over-the-counter medicines may not be reimbursed thru HSA.

DEADLINE COMING UP FOR FLEX PLANS

2012-02-03T12:33:00.003-06:00

Adeadline for many flex plan participants is coming up. The 2011set-asides must be used by March 15 if the plan uses IRS’ 2½-month graceperiod. Any funds left over are forfeited. The deadline for other FSAswas Dec. 31, 2011.

Rememberthat after this year, the ceiling on FSA set-asides will drop to $2,500.

THE IRS WARNS OF REFUND DELAYS

2012-02-02T13:45:00.000-06:00

Lastweek the Internal Revenue Service warned that tax refunds could be delayed aweek this tax season because of new anti-fraud safeguards.

“TheIRS has opened its filing season successfully this month, and refunds have startedgoing out to many taxpayers,” the agency said in an email to tax professionals.“As with the start of any tax season, there are system validations that occurrequiring some fine-tuning of our systems. As part of this, some taxpayers willreceive refunds approximately one week later than initial projections they mayhave received, but these are still in line with historical refund deliverytimes.”

TheIRS noted that the one-week delay is related to the fine-tuning of IRS systemsto adjust for new safeguards that were put in place this tax season to providefor stronger protection against tax refund fraud. The agency has come underheavy criticism for the increasing number of identity theft cases related totax refunds, and it recently added more stringent measures.

TheIRS said it is providing additional screening for fraud this year beforeissuing refunds, but the vast majority of taxpayers can still continue toexpect to receive their refunds in a timely fashion.

TheIRS also noted that the refund time frames provided by the “Where’s My Refund” tool on its Web siteare projected time frames and are subject to revision. “Many different factorscan affect the timing of the refund after the IRS receives the return forprocessing,” said the agency. “The IRS apologizes for any inconvenience causedby the revised refund dates.”

TheIRS promised that the delay only affects some early filers, and taxpayers whosereturns were accepted by the IRS on or after January 26 would not experiencethe delay.

I CAN’T GET A W-2, NOW WHAT DO I DO?

2012-02-01T13:46:00.000-06:00

Q. A company that I worked for is now defunct and I don’t expect to get aW-2. What do I do?

A. The short answer is file your returnwith a Form 4852, Substitute for Form W-2, Wage and Tax Statement.

Here is what is onthe IRS web site dealing with your problem.

If you haven’t received your W-2, the IRSrecommends that you follow these four steps:

1. Contact youremployer If you have not received your W-2, contact your employer to inquire if and whenthe W-2 was mailed. If it was mailed, it may have been returned to theemployer because of an incorrect or incomplete address. After contactingthe employer, allow a reasonable amount of time for them to resend or issue theW-2.

2. Contact the IRS If you do notreceive your W-2 by Feb. 14, contact the IRS for assistance at 800-829-1040.When you call, you must provide your name, address, Social Security number,phone number and have the following information:

• Employer’sname, address and phone number

• Dates ofemployment

• An estimateof the wages you earned, the federal income tax withheld, and when you workedfor that employer during 2011. The estimate should be based on year-to-dateinformation from your final pay stub or leave-and-earnings statement, ifpossible.

3. File yourreturn You still must file your tax return or request an extension to file by April17, 2012, even if you do not receive your Form W-2. If you have not receivedyour Form W-2 in time to file your return by the due date, and have completedsteps 1 and 2, you may use Form 4852, Substitute for Form W-2, Wage andTax Statement. Attach Form 4852 to the return, estimating income andwithholding taxes as accurately as possible. There may be a delay in anyrefund due while the information is verified.

4. File a Form 1040X On occasion,you may receive your missing W-2 after you file your return using Form 4852,and the information may be different from what you reported on your return. Ifthis happens, you must amend your return by filing a Form 1040X, Amended U.S.Individual Income Tax Return.

Form 4852, Form 1040Xand instructions are available on this website or by calling 800-TAX-FORM(800-829-3676).

TIPS FOR RECENTLY MARRIED OR DIVORCED TAXPAYERS WITH A NAME CHANGE

2012-01-30T12:32:00.000-06:00

The IRS just issued a reminder to people with name changes. Processing of your return will be slowed downif you do not properly follow their steps.

FiveTips for Recently Married or Divorced Taxpayers with a Name Change

If you changed your name after a recent marriage or divorce, the IRS remindsyou to take the necessary steps to ensure the name on your tax return matchesthe name registered with the Social Security Administration. A mismatch betweenthe name shown on your tax return and the SSA records can cause problems in theprocessing of your return and may even delay your refund.

Here are five tips from the IRS for recently married or divorced taxpayerswho have a name change.

1. f you took your spouse’s last name -- or if you hyphenated your lastnames, you may run into complications if you don’t notify the SSA. Whennewlyweds file a tax return using their new last names, IRS computers can’tmatch the new name with their Social Security number.

2. If you recently divorced and changed back to your previous last name,you’ll also need to notify the SSA of this name change.

3. Informing the SSA of a name change is easy. Simply file a Form SS-5,Application for a Social Security Card, at your local SSA office or by mail andprovide a recently issued document as proof of your legal name change.

4. Form SS-5 is available on SSA’s website at http://www.socialsecurity.gov/,by calling 800-772-1213 or at local offices. Your new card will have the samenumber as your previous card, but will show your new name.

5. If you adopted your spouse’s children after getting married and theirnames changed, you'll need to update their names with SSA too. For adoptedchildren without SSNs, the parents can apply for an Adoption TaxpayerIdentification Number – or ATIN – by filing Form W-7A, Application for TaxpayerIdentification Number for Pending U.S. Adoptions with the IRS. The ATIN is atemporary number used in place of an SSN on the tax return. Form W-7A isavailable on the IRS.gov website or by calling 800-TAX-FORM (800-829-3676).

I FORGOT TO FILE MY 2010 RETURN. WHAT DO I DO?

2012-01-26T15:50:00.000-06:00

Q. I’m an independent contractor using 1099s. I have one w-2 for a small amount from 2010. I missed the tax deadline and did not file an extension. What kind of advice can you give me? I live in CA but need some general direction.

A. File. That’s my advice in a nutshell.

One of the biggest mistakes that I see in my practice is giving up early. After a mistake or a missed deadline, many taxpayers get a bit overwhelmed and put their head in the sand – or they figure that since they’ve already messed up, they’ll wait and fix it later. Don’t fall into that trap.

Keep in mind that penalties are based on the passage of time. If you fail to file on time, you can be subject to a penalty of 5% of the amount of unpaid taxes for each month (or part of a month) that your tax return is late, not to exceed 25% of your unpaid taxes. If you also fail to pay, you can be subject to a penalty of ½ of 1% (or .005%) of the amount of your taxes due for each month or part of a month after April 15 that the taxes are not paid, also not to exceed 25% of your taxes. So the longer you wait to fix the problem, the more that it’s going to cost you. And don’t forget about interest, which will be charged on top of penalties.

Also keep in mind that the IRS is much happier when you come to them, as opposed to the IRS coming to you. If forms 1099 (or other forms) have been filed on your behalf by the issuer, the IRS knows that you exist. They’re going to be waiting to hear from you.

Filing your taxes late isn’t the end of the world. It’s fixable. But the faster you fix it, the better.

1099K NO WORRIES THIS YEAR

2012-01-26T10:59:00.000-06:00

If you have been following my blog, you know that I have been concerned about the new 1099K compliance form that credit card and debit card companies are required to send out to show the amount of your credit and debit card sales.

This is new for 2011 and there are several issues that I have been concerned with. Items such as cash back, tips, refunds, sales tax etc.

Now we have seen the 2011 forms and there is good news. There is a line on the income form that says "amounts reported on 1099k" but then it goes on to say "for 2011 enter 0." In other word the IRS has not worked out the kinks in the reporting so this is not going to be an issue for the 2011 returns

WHEW!

WHO CAN CLAIM THE CHILD AS A DEPENDENT

2012-01-25T14:18:00.000-06:00

Q. My ex husband claimed our two children as dependents on his return. The kids live with me and I claimed them. Now the IRS sent me a notice. Who gets to claim the kids.

A. I run into this question all the time. Here is the law.

In most cases the child of the custodial parent gets the exemption. This is determined by the "time test." A qualifying child must have the same principal place of abode as the taxpayer for more than one-half of the year. Prior to 1994 the exemption was determined by the divorse decree.

There is a Form 8332 Release of Claim to Exemption for Child of Divorced or Separated Parents. This form is signed by the custodial parent and gives the non custodial parent the right to claim the child. This form needs to be attached every year to the non custoial parents tax return.

BARBER- PAY WHAT YOU CAN

2012-01-24T15:38:00.000-06:00

Struggling Ohio barber tells customers to pay what they can....

CLEVELAND (Reuters) - After more than 20 years of renting chairs from other barbers, Gregory Burnett finally opened his own shop, but the down economy has been hard on the haircut business.

"It is one of the first things that people cut back on," said Burnett, owner of Old School Barber Shop in Canton, Ohio.

So two months ago Burnett put a sign in front of his place to let clients choose how much to pay. "Times are hard," it read. "Pay what you can for a cut."

As Americans have struggled with haircuts of a different kind on the plummeting values of their homes, the idea was to draw in new patrons and help the clients who have been with him for decades, and it seems to be working. "People come in and want to take advantage of the deal," Burnett said.

For the last two years Burnett has charged $12 for a man's haircut, but recently has given one for as little as $5. "I tell people the haircut is free. The charge is for sitting in the chair," he said.

Burnett said he hoped that a good haircut might mean a new job for one of his clients, and he liked the idea of helping people out. "I understand their troubles because I have their troubles," he said.

Business picked up immediately after Burnett began his new "make-me-an-offer" promotion. "I'm surprised by all the attention this is getting," he said. "You never know. Maybe this is the way I will come out of this rut."

Burnett promises lively conversation and said he loves what he does. He hopes the uptick in business means he can keep his shop.

"I had my first job shining shoes when I was 12 years old. I guess I've always been an entrepreneur. I'm always trying to hustle," he said.

(Writing and reporting by Kim Palmer; Editing by Mary Wisniewski and Cynthia Johnston)

SPENDING

2012-01-19T14:02:00.005-06:00

Please take a moment to watch this video about spending: WATCH ME

TAX PLANNING OPPORTUNITY - 2% PAYROLL TAX WAIVER

2012-01-19T13:28:00.000-06:00

Throughout 2011, as a method of stimulating consumer spending, Congress had reduced the employee share of the Social Security tax, as well as the self-employment tax rate, by 2%. But when it came time to extend this cut for 2012, Congress could not agree on how to pay for a full one-year extension. As a result, the 2% cut is only officially in the law at this point through February 29, 2012.

If Congress does not agree on an extension for the full year, there is a small planning point for those who are employees of their own corporation, or who issue occasional salary checks to family members for their services in the business.

In order to receive the 2% waiver, payroll must be issued in the first two months of 2012. And to maximize the savings, the worker must receive at least $18,350 of compensation in the first two months of the year ($18,350 is 1/6th of the $110,100 maximum amount subject to Social Security tax in 2012). So for those who only draw an occasional paycheck from their business, such as an S corporation or a C corporation, there is a tax savings (albeit under $400) if roughly $18,000 of that payroll is drawn within the first two months of 2012.

But note: If Congress extends the 2% cut for all of 2012, this becomes a moot point.

KEEP LICENSING PROCEDURE FOR COSMETOLOGY/BARBER IN INDIANA

2012-01-19T11:55:00.000-06:00

In a report filed on December 16, 2011, the Regulated Occupations Evaluation Committee made the following recommendation: "Eliminate the Cosmetology and Barber Board in its entirety including each of the 25 license types (including 5 temporary license types) associated with the Cosmetology and Barber Board."

To sign the petition to stop this please CLICK HERE

CREDIT FOR HIRING MILITARY VETERANS

2012-01-18T13:27:00.000-06:00

For many years, the tax system has incented businesses to hire specific categories of disadvantaged workers, such as welfare recipients, retrained workers, and the like. In legislation enacted in late November, Congress has significantly expanded the tax credits available for hiring various categories of military veterans. These credits are generally based on 40% of the wages paid to the new worker, and require at least 120 hours of employment in the first year to gain any portion of the credit, and at least 400 hours to gain the maximum credit. There are five specific categories of veterans that qualify the employer for a tax credit, including several very broad definitions (i.e., those unemployed for as little as 4 weeks in the 12 months preceding hire, a veteran who was a member of a food stamp household, or a veteran unemployed at least 6 months in the preceding year). Each category of eligible veteran has a maximum credit amount, running from a low of $2,400 to a maximum of $9,600.

MINIMUM WAGE UP IN 8 STATES

2012-01-17T14:54:00.001-06:00

Minimum-wage workers in eight states could see their paychecks grow by hundreds of dollars next year, thanks to automatic annual increases in the rates.

Colorado, Montana, Ohio, Washington and Oregon recently announced their 2012 minimum wages, which contain bumps ranging from 28 cents to 37 cents per hour. This translates into annual raises of between $582 and $770 for full-time workers at that end of the pay scale depending on where they live. Washington workers enjoy the highest minimum wage, which will rise to $9.04, a boost of 37 cents per hour and $770 per year.

Arizona, Florida and Vermont are expected to announce the increases in their rates in coming weeks.

These states are taking action because their laws require that their minimum wages adjust annually to keep pace with inflation.

The federal minimum wage stands at $7.25, which is just over $15,000 a year for a full-time worker. The federal rate, which is not indexed for inflation, was last increased in 2009, when it rose by 70 cents. Some 18 states, plus the District of Columbia, have higher minimum wage rates.

MARTIN LUTHER KING DAY

2012-01-16T13:31:00.000-06:00

Be inspired!

Martin Luther King - I HAVE A DREAM

DOES THE IRS OWE YOU MONEY

2012-01-13T14:43:00.000-06:00

The IRS has announced that it has $153.3 million in undelivered tax refund checks because of mailing address errors. There are 99,123 taxpayers who are due refund checks, making the average check a whopping $1,547.

If you think you might be owed some cash, you can check with the IRS by using the online “Where’s My Refund?” tool. You’ll need to provide your Social Security number, filing status as reported on your last return and the amount of your refund. If you don’t have access to the internet (which is curious since you’re reading this), you can also call 1-800-829-1954.Tax forms and other correspondences from the IRS are mailed to the last address clearly and concisely provided by the taxpayer, so be sure to update your address on your tax return. You can also update your address at any time using federal form 8822.

WOW THINGS HAVE CHANGED

2012-01-12T10:53:00.001-06:00

Think about this...

In 2004:
~Twitter was a sound
~The cloud was something in the sky
~4G was a parking place
~LinkedIn was a prison
~Skype was a typo
~Applications were what you sent to a college

What will change in 7 more years?

TIP CREDIT

2012-01-10T14:30:00.000-06:00

Q. I was reading your updates from D.C., good info…was there any discussion on giving salons a tax credit on employees’ tips like restaurants receive?

A. I am sorry to report that there was no discussion at all about a tip credit. I know that PBA has been lobbying for some time for a credit but to no avail. To be honest I am not very optimistic that we ever will see Congress deal with the issue. I am watching and will keep you posted.
It is a pleasure serving you.

FOLLOW UP
Q. I figured as much…I’ve spoken to our congressman’s reps and it goes nowhere.

So, in light of this, what can a salon do? I know salons who likely don’t report any tips because they will ask if you want “cash back” from credit cards, etc and therefore do not record the tips…is that legal?
If it was, would we raise a red flag by dropping our reported tip income all of a sudden? Thanks.

A. As long as you have a signed 4070 (see below) the IRS cannot charge you any penalty or interest if they determine that your staff has committed tax fraud and did not report their tips. You could owe your share of the back tax at 7.65%.

Here is more information from the IRS website. TIP RECORD

COLOR GRIPES

2012-01-10T13:22:00.001-06:00

You probably have SELF magazine sitting in your front lobby but have you read the November issue? There were some great statistics on the Top Color Gripes

56% of those of you who color say, "My hair use to be healthy. Now it's.. not."

44% of readers who color say, "I don't have two hours to spend in a colorist chair!"

45% of colorholics want to quit regular visits but feel trapped by telltale roots.

49% of color virgins don't love their hue but fear major change

49% of readers who don't color avoid it because it's too pricey

DO I NEED TO FILE A TAX RETURN THIS YEAR?

2012-01-05T09:40:00.003-06:00

You are required to file a federal income tax return if your income is above a certain level, which varies depending on your filing status, age and the type of income you receive. However, the Internal Revenue Service reminds taxpayers that some people should file even if they aren't required to because they may get a refund if they had taxes withheld or they may qualify for refundable credits.

To find out if you need to file, check the Individuals section of the IRS website at www.irs.gov or consult the instructions for Form 1040, 1040A or 1040EZ for specific details that may help you determine if you need to file a tax return with the IRS this year. You can also use the Interactive Tax Assistant available on the IRS website. The ITA tool is a tax law resource that takes you through a series of questions and provides you with responses to tax law questions.

Even if you don’t have to file for 2011, here are six reasons why you may want to:

1. Federal Income Tax Withheld: You should file to get money back if your employer withheld federal income tax from your pay, you made estimated tax payments, or had a prior year overpayment applied to this year’s tax.

2. Earned Income Tax Credit: You may qualify for EITC if you worked, but did not earn a lot of money. EITC is a refundable tax credit; which means you could qualify for a tax refund. To get the credit you must file a return and claim it.

3. Additional Child Tax Credit: This refundable credit may be available if you have at least one qualifying child and you did not get the full amount of the Child Tax Credit.

4. American Opportunity Credit Students: in their first four years of postsecondary education may qualify for as much as $2,500 through this credit. Forty percent of the credit is refundable so even those who owe no tax can get up to $1,000 of the credit as cash back for each eligible student.

5. Adoption Credit: You may be able to claim a refundable tax credit for qualified expenses you paid to adopt an eligible child.

6. Health Coverage Tax Credit: Certain individuals who are receiving Trade Adjustment Assistance, Reemployment Trade Adjustment Assistance, Alternative Trade Adjustment Assistance or pension benefit payments from the Pension Benefit Guaranty Corporation, may be eligible for a 2011 Health Coverage Tax Credit.

Eligible individuals can claim a significant portion of their payments made for qualified health insurance premiums.

For more information about filing requirements and your eligibility to receive tax credits give us a call or email today.

IRA CONTRIBUTION AND YOUR AGE

2012-01-03T10:07:00.002-06:00

Q: For someone 60 what is the maximum IRA contribution? What about if you are 50?

A:If you are 50 years of age or older before the end of 2012, the maximum contribution that can be made to a traditional or Roth IRA is the smaller of $6,000 ($5,000 plus $1,000 catch up) or the amount of your taxable compensation. This limit can be split between a traditional and a Roth IRA but the combined limit is $6,000. The maximum contribution to a Roth IRA and the maximum deductible contribution to a traditional IRA may be reduced depending on your modified adjusted gross income. There can be further limitations for individuals who also participate in an employer provided plan.

If you are age 50 or older and have a SIMPLE IRA, the maximum contribution is different. The base amount is 100% of your compensation up to $11,500 and the catch up amount is $2,500, for a maximum contribution of $14,000. There is no phase out.

Of course to complicate matters there are some exceptions. If you are covered by a retirement plan at work here are the phase outs. CLICK HERE

If your spouse is covered by a pension plan then there are some different phase outs. CLICK HERE

CLAIM IT WHILE YOU CAN

2012-01-02T14:45:00.001-06:00

Year-end tax planning: claim the non-business energy property credit while you can...

Of the many energy-saving provisions in the Code, few are more accessible to ordinary taxpayers than the $500 credit for non-business energy property. The credit can apply to relatively inexpensive, easy-to-do (perhaps even do-it-yourself) items—the installation of insulation (e.g., exterior caulking and weather-stripping), doors, and windows—as well as slightly more expensive but standard items such as central air conditioning and heat pumps. However, currently this credit only applies through 2011, and the prospects for an extension are uncertain. As a result, homeowners should consider accelerating energy-saving home improvements into this year if doing so will generate a credit.

Summary of the credit: The non-business energy property credit, as most recently extended, applies only through Dec. 31, 2011. A taxpayer can claim a credit on Form 5695 equal to 10% of the cost of: (1) qualified energy efficiency improvements, and (2) residential energy property expenditures. There is a lifetime credit limit of $500 (with no more than $200 due to windows and skylights) over the total credits allowed to the taxpayer for all earlier tax years ending after 2005. (The expenses must be for property originally placed in service by the taxpayer and made on or in connection with a dwelling unit located in the U.S., and owned and used by taxpayer as his principal residence at the time of installation.

Qualified energy efficiency improvements are energy efficient building envelope components, such as (a) insulation materials or systems specifically and primarily designed to reduce heat loss/gain that meet criteria set by the International Energy Conservation Code (IECC); or (b) exterior windows, skylights or doors, or any metal roof with pigmented coating or asphalt roof with cooling granules specifically designed to reduce heat gain, installed on a dwelling unit that meet Energy Star program requirements. The component must be expected to last for at least five years This requirement is met if the manufacturer offers a two-year warranty to repair or replace at no extra charge.

Residential energy property expenses are expenses for qualified energy property (including labor costs for onsite preparation, assembly, or original installation) that meets specific standards. The credit allowed for energy property expenditures can't exceed:
... $300 for any energy-efficient building property (electric heat pump water heater, electric heat pump; central air conditioner; natural gas, propane or oil water heater; or a stove burning biomass fuel to heat or provide hot water to a taxpayer's residence in the U.S.) that meets specific energy efficiency standards;
... $150 for a qualified natural gas, propane, or oil furnace; or qualified natural gas, propane, or oil hot water boiler; or
... $50 for an advanced main air circulating fan.

HAPPY NEW YEAR

2012-01-01T10:33:00.000-06:00

We wish all of our readers a very happy New Year. We started this blog over two years ago and every month without fail we have ever increasing readership. From just having a couple of comments and questions per month to probably having at least 5 a week, we have enjoyed every day of interacting with the readers. We hope the information has been useful and look forward to providing even more in 2012.

We wish everyone a prosperous New Year and we shall see what surprises 2012 bring.

WHAT'S YOUR BUSINESS NEW YEAR'S RESOLUTION?

2012-01-01T09:35:00.000-06:00

Here are a few helpful end of year steps to help get your 2012 year off to a good start.

1. Examine your Financials - The first step is you must get your financials in order. In order to set new financial goal you must have real life numbers from 2011. Without these it will be impossible to set 2012 bench marks. By analyzing your Profit & Loss Statement you can review your total net sales (revenues), cost of sales, gross profit, profit margin, controllable expenses, as well as fixed expenses. Understand what your numbers are telling you.

2. Review last year's Goals - Don't just jump and begin creating your 2012 goals. Begin this process by reviewing your 2011 goals and compare your financial successes. A key question to ask yourself is "Did your business accomplish what you set out to do?" "Did it meet your 2011 finical goals?" Even though these questions can be painful, these important questions will assist you in creating a new action plan for 2012. Goal’s are a great ‘road map’ to reflect where you’re planning to go, however, if you throw the map in the glove box & drive by the seat of your pants you may or may not end up at the anticipated destination.

3. Planning for the coming year - Now that you have a clear picture of your successes and perhaps areas of opportunities, you can begin to do some business planning for the New Year. Set clearly defined 2012 year's goals. Implement an action plan for each goal and create deadlines for each action step.

With a little planning and organization, your Business New Year's Resolutions for 2012 will be a huge success.

Do you need help on how to make 2012 goals for your business? Isn't this what you want from your Trusted Business Advisor? Email us today and start your year off on the right foot!

WHAT A MESS – PAYROLL TAX DEBATE

2011-12-23T16:32:00.000-06:00

The debate of the month is the extension of the 3% payroll tax extension. Let’s see how that will impact a taxpayer. If you were to make $40,000 per year this means about $46 per paycheck. Supposedly that will help stimulate the economy and create jobs, but don’t forget the money comes out of the Social Security Trust Fund.

But here is the problem. In just a few days you we will writing the first 2012 paychecks and we don’t know how much we are going to withhold. The IRS publications are out without the cut and I am sure that the computer programmers are going to be burning the midnight oil once Congress and the President act. There is also a chance that the extension of the law may occur early in 2012 and be retroactive to January 1, 2012. We hope that this does not happen, but recent history shows there is a good chance of it occurring.

The primary issue for our employers is whether the payroll tax software that they use is timely updated for these changes. If a new law is passed either at the end of the this month or early next month, the software may not get updated for your first payroll. This may cause it to be wrong and changes will need to be performed to get the right amount of pay to your employees and report the right taxes on your form 943 at year-end or form 941 for the first quarter.

We will keep you posted.

CLEAN OUT THE CLOSETS

2011-12-23T14:17:00.000-06:00

AND GET A TAX DEDUCTION

If you itemize deductions (the long form) you not only can deduct your cash contributions but you can also deduct your non cash contributions. What we are talking about here is items given to the Salvation Army and the like. Remember the key is Documentation, Documentation, Documentation!

Here are the rules for non cash contributions:

First, make sure that this is a qualified charity. If in doubt ask to see their 501(c) approval.

Remember, no matter how charitable a contribution to an individual may be, contributions to individuals are not deductible.

If the contribution of goods is less than $250 you should have either a written acknowledgment from the charity of some other reliable list.

If the goods have a value between $250 and $500 then you need a written acknowledgement and, of course a list.

If between $500 and $5,000 then written acknowledgement; your list and a file a Form 8283 with the return.

If over $5,000 all of the above and you must file an appraisal with the return.

SIX YEAR-END TIPS TO REDUCE 2011 TAXES

2011-12-21T11:19:00.001-06:00

The IRS wants to remind all taxpayers that with the New Year fast approaching, there is still time for you to take steps that can lower your 2011 taxes. However, you usually need to take action no later than Dec. 31 in order to claim certain tax benefits.

CLICK HERE to read the 6 tips!

YEAR-END TAX PLANNING MOVES FOR BUSSINESSES & BUSINESS OWNERS

2011-12-21T09:32:00.000-06:00

YEAR-END TAX PLANNING MOVES FOR INDIVIDUALS

2011-12-20T09:31:00.000-06:00

We have compiled a checklist of actions based on current tax rules that may help you save tax dollars if you act before year-end. Not all actions will apply in your particular situation, but you will likely benefit from many of them. We can narrow down the specific actions that you can take once we meet with you to tailor a particular plan. In the meantime, please review the following list and contact us at your earliest convenience so that we can advise you on which tax-saving moves to make.

Year-End Tax Planning Moves for Individuals
□ Increase the amount you set aside for next year in your employer's health flexible spending account (FSA) if you set aside too little for this year. Don't forget that you can no longer set aside amounts to get tax-free reimbursements for over-the-counter drugs, such as aspirin and antacids.

□ If you become eligible to make health savings account (HSA) contributions in December of this year, you can make a full year's worth of deductible HSA contributions for 2011.

□ Realize losses on stock while substantially preserving your investment position. There are several ways this can be done. For example, you can sell the original holding, and then buy back the same securities at least 31 days later. It may be advisable for us to meet to discuss year-end trades you should consider making.

□ Postpone income until 2012 and accelerate deductions into 2011 to lower your 2011 tax bill. This strategy may enable you to claim larger deductions, credits, and other tax breaks for 2011 that are phased out over varying levels of adjusted gross income (AGI). These include child tax credits, higher education tax credits, the above-the-line deduction for higher-education expenses, and deductions for student loan interest. Postponing income also is desirable for those taxpayers who anticipate being in a lower tax bracket next year due to changed financial circumstances. Note, however, that in some cases, it may pay to actually accelerate income into 2011. For example, this may be the case where a person's marginal tax rate is much lower this year than it will be next year.

□ If you believe a Roth IRA is better than a traditional IRA, and want to remain in the market for the long term, consider converting traditional-IRA money invested in beaten-down stocks (or mutual funds) into a Roth IRA if eligible to do so. Keep in mind, however, that such a conversion will increase your AGI for 2011.

□ If you converted assets in a traditional IRA to a Roth IRA earlier in the year, the assets in the Roth IRA account may have declined in value, and if you leave things as-is, you will wind up paying a higher tax than is necessary. You can back out of the transaction by recharacterizing the rollover or conversion, that is, by transferring the converted amount (plus earnings, or minus losses) from the Roth IRA back to a traditional IRA via a trustee-to-trustee transfer. You can later reconvert to a Roth IRA.

□ It may be advantageous to try to arrange with your employer to defer a bonus that may be coming your way until 2012.

□ Consider using a credit card to prepay expenses that can generate deductions for this year.

□ If you expect to owe state and local income taxes when you file your return next year, consider asking your employer to increase withholding of state and local taxes (or pay estimated tax payments of state and local taxes) before year-end to pull the deduction of those taxes into 2011 if doing so won't create an alternative minimum tax (AMT) problem.

□ Take an eligible rollover distribution from a qualified retirement plan before the end of 2011 if you are facing a penalty for underpayment of estimated tax and the increased withholding option is unavailable or won't sufficiently address the problem. Income tax will be withheld from the distribution and will be applied toward the taxes owed for 2011. You can then timely roll over the gross amount of the distribution, as increased by the amount of withheld tax, to a traditional IRA. No part of the distribution will be includible in income for 2011, but the withheld tax will be applied pro rata over the full 2011 tax year to reduce previous underpayments of estimated tax.

□ Estimate the effect of any year-end planning moves on the AMT for 2011, keeping in mind that many tax breaks allowed for purposes of calculating regular taxes are disallowed for AMT purposes. These include the deduction for state property taxes on your residence, state income taxes (or state sales tax if you elect this deduction option), miscellaneous itemized deductions, and personal exemption deductions. Other deductions, such as for medical expenses, are calculated in a more restrictive way for AMT purposes than for regular tax purposes. As a result, in some cases, deductions should not be accelerated.

□ Accelerate big ticket purchases into 2011 in order to assure a deduction for sales taxes on the purchases if you will elect to claim a state and local general sales tax deduction instead of a state and local income tax deduction. Unless Congress acts, this election won't be available after 2011.

□ You may be able to save taxes this year and next by applying a bunching strategy to “miscellaneous” itemized deductions, medical expenses and other itemized deductions.

□ If you are a homeowner, make energy saving improvements to the residence, such as putting in extra insulation or installing energy saving windows, and energy efficient heaters or air conditioners. You may qualify for a tax credit if the assets are installed in your home before 2012.

□ Unless Congress extends it, the up-to-$4,000 above-the-line deduction for qualified higher education expenses will not be available after 2011. Thus, consider prepaying eligible expenses if doing so will increase your deduction for qualified higher education expenses. Generally, the deduction is allowed for qualified education expenses paid in 2011 in connection with enrollment at an institution of higher education during 2011 or for an academic period beginning in 2011 or in the first 3 months of 2012.

□ You may want to settle an insurance or damage claim in order to maximize your casualty loss deduction this year.

□ If you are age 70- 1/2 or older, own IRAs and are thinking of making a charitable gift, consider arranging for the gift to be made directly by the IRA trustee. Such a transfer, if made before year-end, can achieve important tax savings.

□ Take required minimum distributions (RMDs) from your IRA or 401(k) plan (or other employer-sponsored retired plan) if you have reached age 70- 1/2. Failure to take a required withdrawal can result in a penalty of 50% of the amount of the RMD not withdrawn. If you turned age 70- 1/2 in 2011, you can delay the first required distribution to 2012, but if you do, you will have to take a double distribution in 2012—the amount required for 2011 plus the amount required for 2012. Think twice before delaying 2011 distributions to 2012—bunching income into 2012 might push you into a higher tax bracket or have a detrimental impact on various income tax deductions that are reduced at higher income levels. However, it could be beneficial to take both distributions in 2012 if you will be in a substantially lower bracket that year, for example, because you plan to retire late this year.

□ Make gifts sheltered by the annual gift tax exclusion before the end of the year and thereby save gift and estate taxes. You can give $13,000 in 2011 to each of an unlimited number of individuals but you can't carry over unused exclusions from one year to the next. The transfers also may save family income taxes where income-earning property is given to family members in lower income tax brackets who are not subject to the kiddie tax.

Again, by contacting us, we can tailor a particular plan that will work best for you.

1099 FORM LETTER TO YOUR VENDORS

2011-12-16T09:56:00.003-06:00

We thought it might be helpful if you had a ‘form’ letter in which you could send to your vendors. Please feel free to copy and paste this into a word doc and send it out. Click on the link below the letter to obtain the W-9.

Dear Vendor,

IRS regulation requires that we issue 1099 forms to certain companies and individuals. In order to accurately prepare these forms, IRS requires that we obtain and maintain form W-9 for all of our vendors.

Therefore, in order to ensure our reporting accuracy, please complete the enclosed form W-9 and return to us by mail or fax.

Thank you for your immediate attention to this matter.

Sincerely,

W-9 LINK

W-9 WHAT ABOUT SENDING TO….

2011-12-15T10:25:00.000-06:00

Q. I read your business blog and saw the topic on ‘Issuing 1099-MISC’s’: I own an Electrical company and wondered if I need to send a w-9 to our vendors for the Electrical Co. & the Construction Co.? And then send 1099’s to them if required. ~ Thanks for your help.

A. I would advise getting W-9’s from them. This will assure that you were not required to do backup withholding. The IRS has not been penalizing companies that do not have W-9’s but it technically is required. My guess is that someday this will be an issue. You just as well get ahead of the curve.

If they are not a corporation and they are providing services then a 1099 is in order. If they are just your supplier and you buy inventory, hard goods etc. then you do not need to do a 1099. Some taxpayers are unsure of the form of business of the companies that they are dealing with. The W-9 will solve that problem. At the same time if you are not sure there form of business it is okay to send a 1099. There is no penalty for sending to a corp.

IRS OFFERS TIPS FOR YEAR-END GIVING

2011-12-14T09:45:00.000-06:00

If you itemize your deductions (long form), you can deduct charitable contributions. The IRS just published Tips for Year-End Giving that you might want to review.

CLICK HERE

DON’T FORGET YOUR FLEXIBLE SPENDING MONEY

2011-12-12T15:47:00.000-06:00

Check your flexible spending account balance. You must clean it out by Dec. 31 if your employer still has not adopted the 2½-month grace period that IRS now permits. Otherwise, any money remaining in your account is forfeited. When you are deciding how much you should put into your flex plan for 2012, remember that a $2,500 annual cap on FSA payins is set to go into effect in 2013.

WHO MUST ISSUE 1099-MISCs

2011-12-09T15:40:00.001-06:00

Here is some basic information about 1099-MISC:

First of all you just need to do a 1099 for certain business expenses.
o For example, someone paints your personal residence and charges you $1,100 you do not have to give that person a 1099. On the other hand if that person should paint your business property and charged you $1,100 you would give that person a 1099 for $1,100

You just have to issue a 1099 for services, not for tangible business purchases
o If the painter gives you a bill for painting and the bill includes labor and the cost of paint you would still give the painter a 1099 for the whole purchase

You do not need to give a 1099 to a corporation
o Both C corporation and S corporations qualify
o You must give a 1099 to LLC’s and partnerships

You just need to give a 1099 if you pay over $600 during the year
o For example the painter paints your business in January and charges you $400 then later in the year you bring them back and he does another $500 of painting. The total is over $600 so you must give the person a 1099

There is no penalty for sending a 1099 to a corporation so if in doubt play it safe and send. Of course there are more rules but these are the basics ones.

ONLY IN AMERICA

2011-12-08T11:16:00.000-06:00

A fugitive who took a Kansas couple hostage in their home is suing them for $235,000. Accused murderer Jesse Dimmick claims Jared and Lindsay Rowley accepted his knifepoint offer of money to hide in their house. But the Rowleys later breached their "oral contract" by escaping as he slept, Dimmick says, "resulting in my being shot in the back by authorities."

Wow only in America!

SALON SOFTWARE REPLACING QUICKBOOKS

2011-12-07T08:58:00.000-06:00

Q. I am thinking about getting rid of my QuickBooks and using my salon software for my P&L, general ledger and accounts payable. My salon software has a great deal on it right now. What do you think about this?

A. It just doesn't work well~ the softwares are for two different purposes. Plus they are a good checks and balance for each other. BUT I believe you still need professional assistance in interperting your financial statements and sometimes your salon reports. I can't count the number of people who have made expenseive mistakes because they did not have good data.

For example, I can buy a Flowbee to cut my hair at home. But I will end up going to a professional for help. The same goes for your accounting - you need a professional. Wouldn't I have better looking haircut if I had seen you first?

Remember you can manage what you can measure and if all you have is garbage, it will pile up quickly.

2012 STANDARD MILEAGE RATES

2011-12-05T15:43:00.000-06:00

The Internal Revenue Service today issued the 2012 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2012, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
• 55.5 cents per mile for business miles driven
• 23 cents per mile driven for medical or moving purposes
• 14 cents per mile driven in service of charitable organizations

The rate for business miles driven is unchanged from the mid-year adjustment that became effective on July 1, 2011. The medical and moving rate has been reduced by 0.5 cents per mile.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs as determined by the same study. Independent contractor Runzheimer International conducted the study.

You do have the option of calculating the actual costs of using your vehicle rather than using the standard mileage rates.

QUESTION FROM A MISCLASSIFIED WORKER

2011-12-03T10:38:00.001-06:00

Q. I am definitely an employee at my job but, my employer did not withhold anything and instead of giving me a W-2 like he should have he gave me a 1099. Last year he gave me a W-2. Now not only do I owe a bunch of tax I also have to pay both halves of the Social Security and Medicare tax. This is not fair. Is there anything I can do?

A. Yes there is something you can do to cut your Social Security and Medicare in half. Since 2007, you are allowed to file a Form 8919M Uncollected Social Security and Medicare Tax on wages instead of filing Schedule SE. The form SE charges you tax at 15.3% versus the 7.65%.

There are some codes on the form that you will need to review and if you meet one of the criteria, walla you qualify.

By the way, this IRS may be visiting your employer. He will at least be getting a bill from the IRS for his 1/2.

HARSH 1099 PENALTIES

2011-12-02T15:53:00.000-06:00

The IRS wants everyone to issue 1099's so that they can spot unreported income. This year the penalty for failure to file a 1099 is $250 per form with an addition $250 per form if you did not act in good faith.

I can guarantee you that one of the first things that the IRS looks at during the audit is 1099's. It is easy money for them if you did not file.

Think about it. If you missed 10 forms for three years the penalty would be $7,500 minimum with it possibly going to $15,000. That is on just 10 missed forms. Do the math. Make sure you issue 1099's.

1099K - PAYPAL & AMAZON

2011-11-30T14:40:00.000-06:00

Q. Hello. I just had a couple of quick questions about the new 1099k form. I read your blog post "1099K NO WORRIES THIS YEAR". Does this mean card companies are not reporting any sales amounts to the IRS this year until they get it figured out? Does this apply to companies such as Paypal and Amazon as well? I haven't seen this news anywhere else and that's what prompted me to email you. Is there a link to read where it says this? The whole process is so confusing. Thank you very much for your time.

A. The best I can tell is that the credit card and debit card companies, including PayPal, will be sending out 1099K's with copies going to the IRS. Apparently the IRS will not be able to match so they are saying put 0 in the box.

As far as a link, I will look. I actually heard this at the Washington Tax Conference.

HIP TO BE SQUARE

2011-11-29T10:39:00.000-06:00

Have you seen the new Square credit card app?

We use it when we are on the road to ring up credit card sales. It is really handy.

Developed by Twitter founder Jack Dorsey, this app allows merchants to accept credit cards via a small, square swiping device that plugs right into an iPhone or Android device. The only charge is a 2.75% transaction fee on every purchase.

In May they launched a new program called Square Register, a free iPad app that acts as a complete point of sale system for businesses It manages inventory and runs sales analytics. I have not used this software.

Here is how the software works. The customer swipes their cards on the Square card-reading device and sign their name directly on the screen of the iPad. They receive an email or text message receipt.

Customers with smart phones can download an app called Square Card Case, which allows them to set up and keep a tab with the merchant. When a customer activates the app and makes a purchase, his or her name appears on the merchant's iPad, and the merchant charges the account. The transaction is done completely over the iPad and the phone.

How long before a young person asks you "what was that stuff called cash that you used to use?"

ACCOUNTANTS IN THE MOVIES

2011-11-29T09:56:00.000-06:00

In Hollywood, accounting can seem like a pretty glamorous profession, or not.

Ben Kingsley played compassionate accountant Itzhak Stern in the Oscar-winning 1993 Steven Spielberg movie, "Schindler's List." Stern was a real-life accountant who worked for German industrialist Oskar Schindler, played by Liam Neeson. The accountant typed and maintained the list of names of his fellow Jews who were hired to work in Schindler's factories, preventing them from being sent to the Nazi death camps. The real Itzhak Stern appeared in the movie, along with the surviving people on Oskar Schindler's real-life list.

HAPPY THANKSGIVING

2011-11-24T08:32:00.000-06:00

Most of All

Thanksgiving Day brings to mind
the blessings in our lives
that usually go unnoticed:
a home that surrounds us
with comfort and protection;
delicious food, for pleasure
in both eating and sharing;
clothes to snuggle up in,
books and good entertainment
to expand our minds;
and freedom to worship our God.
Most of all we are thankful
for our family and friends,
those treasured people
who make our lives extra special.
You are part of that cherished group.
On Thanksgiving, (and every day)
we appreciate you.

Happy Thanksgiving
From Kopsa Otte

NEW ADDITION

2011-11-23T09:38:00.001-06:00

We are excited to announce that
Megan had a beautiful little girl yesterday.

Adelynn Lauren
7lbs 8oz. and 20 inches long

ACCOUNTANTS IN THE MOVIES

2011-11-22T10:48:00.000-06:00

In Hollywood, accounting can seem like a pretty glamorous profession, or not.

Jack Lemmon plays an accountant in the 1954 comedy "Phffft!" who decides to split with wife Judy Holliday after eight years of marriage. He met her while doing her taxes, and even after they break up and start seeing other partners, he continues to keep her as a client. The unusual title is supposed to be the sound of a marriage losing steam. Lemmon also played an accountant in Billy Wilder's 1960 comedy, "The Apartment," in which he lends his apartment to boss Fred MacMurray for assignations with girlfriend Shirley Maclaine. The movie was later the basis of the musical "Promises, Promises."

529 PLAN FOR COLLEGE

2011-11-21T10:40:00.000-06:00

Q. When I was in for my pretax appointment, I mentioned the 529 Plan for college funding. You mentioned that you were not excited about the 529 Plan because of the fees charged and because the only real tax advantage is that the interest is not taxable. Do you have any more information on the plans? Thank you.

A. It was great to visit with you at your pretax appointment. Here is some more information about 529 Plans.

As I mentioned you don't get a federal income tax deduction for the contribution, but the earnings on the account aren't taxed while the funds are in the program. You can change the beneficiary or roll over the funds in the program to another plan for the same or a different beneficiary without income tax consequences.

Distributions from the program are tax-free if they don't exceed the student's qualified higher education expenses. These include tuition, fees, books, supplies, and required equipment. Reasonable room and board is also a qualified expense if the student is enrolled at least half-time.

There is some confusion about computer technology. For 2010 computer technology or equipment, or Internet access or related services, was a qualified expense. They changed that and those costs are not longer eligible.

Distributions in excess of qualified expenses are taxed to the beneficiary to the extent that they represent earnings on the account. A 10% penalty tax will also be imposed.

Eligible schools include colleges, universities, vocational schools, or other postsecondary schools eligible to participate in a student aid program of the Department of Education. This includes nearly all accredited public, nonprofit, and proprietary (for-profit) postsecondary institutions. A school should be able to tell you whether it qualifies.

The contributions you make to the qualified tuition program are treated as gifts to the student, but the contributions qualify for the annual gift tax exclusion, which is $13,000. If your contributions in a year exceed the exclusion amount, you can elect to take the contributions into account ratably over a five-year period starting with the year of the contributions. Thus, assuming you make no other gifts to that beneficiary, you could contribute up to $65,000 per beneficiary in 2011 without gift tax.

Depending on the plan, there may be some state benefits.

Check out the website which provides more information: 529 Plans

FICA TAX ON TIPS

2011-11-19T15:51:00.000-06:00

A new program has been announced by IRS that uses data from employees' Forms 4137, Social Security and Medicare Tax on Unreported Tip Income, to determine the employer's share of FICA taxes on unreported tips.

Employees use Form 4137 to report and pay their share of Social Security and Medicare taxes (FICA taxes) on tips that they did not report to their employer.

The IRS believes that employers in industries where tipping is common know that they must pay the employer's share of FICA taxes on tips that employees report to them. However, IRS feels that many employers do not realize that they may be liable for these taxes on tips employees do not report to them.

Employers are subject to FICA tax on unreported tips. An employer's liability for its share of the FICA taxes on unreported tips does not arise until it receives a Notice and Demand from IRS which instructs the employer to include the FICA taxes shown on the notice and demand on the employer's next Form 941, Employer's Quarterly Federal Tax Return. An employer will not be subject to any interest charges or deposit penalties if it properly reports the taxes as instructed in the notice and demand, and remits the tax due with its Form 941, or if it timely makes a deposit that is required to be made in accordance with the notice instructions.

In the past, IRS issued notice and demands based on tip audits using estimates, including data from Form 8027, Employer's Annual Information Return of Tip Income and Allocated Tips. Under the new initiative, the Notice and Demand will be based on information that IRS collects from employees' Forms 4137.

IRS generally intends to notify an employer at least 30 calendar days in advance of the issuance of a Notice and Demand by issuing a pre-notice. IRS has a designated staff to help resolve any discrepancies that are noted by employers on the pre-notice.

Observation: I have yet to see any of these new notices. If by chance you were unlucky enough to receive one please let me know. I am interested on how the IRS is actually handling this.

WASHINGTON D.C. UPDATE PART #4

2011-11-15T13:05:00.000-06:00

Here are some Social Security facts that you might be interested in:

- If you are under 55 and they made no changes to the law so you can expect to receive 77% of the benefits that you normally would be eligible for; if you are over 55 you should receive 100% of the benefits.

- To fix the program Congress needs to do one of two things, or some combination:
Increase income from payroll taxes by 17%
Reduce current benefits by 14%

- Social Security was never meant to provide 100% of the living expenses for retired individuals.

- 80 million baby boomers will be eligible for Social Security in the next 10 years.

- As a cost cutting measure the Social Security Administration has quit sending out the annual Social Security Statements that you normally received around you birthday. They are going to be providing the information on line, but they can't figure out how they are going to do that. Make sure you keep your last statement.

- Right now if you retire at age 62 versus age 65 you will get 75% of full benefits. The decision depends on your individual circumstances.

- The Social Security system is not a "the more you pay in the more you get." The lower 30% get much more than they pay in and more than the higher 70%.

WASHINGTON D.C. UPDATE PART #3

2011-11-15T11:06:00.000-06:00

The Commissioner of the Small Business and Self Employed division spoke on initiatives that the IRS is taking especially the new requirement to turn over your software files if you are audited.

The IRS now can request backup copies of your software.

This is going to give them access to entries not only to your books but also it will allow the auditor to look at adjustments and changes that were made to your books by looking at the audit trail.

This is concerning. Think about yearend adjustments that are made when cleaning up the books and then when doing tax planning. The auditor is going to see those changes and will be asking questions.

Here is an example: Assume the owner of the business takes money from the business during the year. The bookkeeper classifies this as a loan. After the yearend we are looking at the transactions and determine that this actually should have been a dividend. On March 1st of the subsequent year we either make an entry or reclassify the check. The auditor is going to know about the entry through the audit function and think that we are doing some "hankie pankie" post yearend planning.

Here are some of the questions and answers addressed by the panel from the IRS:
Q. Is this legal?
A. Yes. We have been to court several times and in all cases the judge has ruled that we should have access to the electronic books because they are the books of original entry.

Q. Could we turn off the audit function?
A. Yes but that would make us suspicious and would probably extend the audit. What are you trying to hide?

Q. What if the client uses QuickBooks as a checkbook and then the accountant takes the QuickBooks and makes entries. Can they still request?
A. Yes

Q. If the auditor has the books can he look at prior years? If he is looking at prior years he is supposed to open an audit for those years. Will they be looking at those years?
A. We have told the auditors during training not to look at prior years.

Q. HERE WAS MY QUESTION. Many clients have point of sale software that keeps track of transactions and inventory along with accounts receivable but is not downloaded into the general ledger. Is this type of software subject to review?
A. Yes. This is considered part of the books of original entry and is subject to request.

Q. What if the electronic books are kept by the accountant. Can they still be requested or subpoenaed?
A. Yes.

Because of this new initiative by the IRS we are going to have to be more diligent in our recording into QuickBooks and other electronic software and be prepared to answer questions of why entries were made to change or to make journal entries after the end of the business year.

WASHINGTON D.C. UPDATE PART #2

2011-11-15T10:00:00.000-06:00

I spoke with the Commissioner of the Small Business about the frustration that salon owners have with employees going to booth rental. I gave him my card and he said he would check this out and get back to me. I will keep you posted on what I hear back from him.

Independent contractors are on the radar.

There is a new initiative to have owners that are improperly treating workers to come forward and admit their mistake. The cost would be penalty of 10% of the payroll tax due for the prior 12 months. This is an effort by the IRS to allow businesses to get it right before they start a hard clamp down on worker classification.

The IRS is now doing an extensive study sampling worker classification

Estimates are that $64 billion is being lost in payroll taxes by misclassification.

Hard lobbying in Washington to eliminate the Section 530 Relief.

Efforts by the IRS to find employers that are improperly classifying workers:
- Independent research study on the issue
- New IRS specialist to help field auditors with the issue
- More exams
- 1099/W-2 comparisons within individual industries
- Working with the states on classification. States are getting much more active.
- Flagging businesses with more than 5 1099's showing more than $20,000; thus indicating the use of independent contractors and workers.

WASHINGTON D.C. UPDATE PART #1

2011-11-15T09:00:00.001-06:00

I am writing this from the National Tax Conference in Washington D.C. This is a great conference, because we hear from the "insiders" on what is happening, or not happening, with our tax policy. The Commissioner of the IRS even made a presentation. You may have seen his talk live on CSPAN, but come to think of it I would imagine not too many people would find his talk interesting so the ratings from CSPAN probably were not up there with Dancing With the Stars.

I wanted to share with you some highlights. This is really important because future tax policy is going to hit us right in our bank account. With taxes scheduled to increase substantially and with the economy waning the more we know the better we can plan.

Here is Part #1 of this 2 1/2 day conference:

+ Nobody can outguess what Congress is going to do. Even the 'insiders' are concerned about the lack of direction.

+ We are fairly safe in planning for 2012. It is an election year so we won't see a lot of major changes. But in 2013 the Bush/Obama laws will be phased out and it is going to be a battle. If the past is any indication we may not know what the 2013 laws will be until late in the year. This is going to make planning in 2012 very important.

+ In 2011 we can take 100% write-off on certain leasehold improvements. This is scheduled to reduce to 50% in 2012 and then disappear in 2013. With the economy as it is we may see the ability to take 100% continue thru 2012- there is a chance but don't count on it. We are watching this for you.

+ The same is true with the write off of equipment. It reduces from $500,000 this year to $139,000 in 2012. This may also be extended. We are watching for you.

+ Many business owners are planning/hoping that Obama Care will be repealed. One of the Congressmen that spoke said that in his opinion it will not be repealed no matter who wins the White House. The Congressmen’s thinking is that it would take 60 Senators to overturn the bill and that will not happen.

+ The extremely high tax rates for people making over $200,000 are getting closer. With the exit of the Bush/Obama cuts; the Obama proposal to raise taxes on those wealthy people making over $250,000; and Obama Care laws tax increases for Medicare coming in 2014 rates could go as high as 43.4%. Plus we still have Social Security and State taxes ~ Ouch.

+ Everything is now political. It used to be a few years back that the leaders from the two parties would get together to work out solutions to problems. This does not happen anymore.

+ Estate planning is a mess. In 2011 and 2012 you can have an estate of $5 million and no estate tax. Any of the $5 million that you do not use you can pass to your spouse. In addition you can give $5 million. But in 2013 the estate drops to $1 million. Who knows how to plan? It may be time to consider gifting. We are watching for you. If you have an old will you should consider reviewing. It most likely is outdated.

+ We even had a session on the power of Social Media. If you are not using any type of Social Media, you better catch up with the times. People trust testimonials 90% but advertising 14%. Social media creates a testimonial "feeling."

+ Health Savings Accounts are a great way to reduce healthcare costs.

ACCOUNTANTS IN THE MOVIES

2011-11-14T10:04:00.000-06:00

In Hollywood, accounting can seem like a pretty glamorous profession, or not.

Danny Glover played bow-tied accountant Henry Sherman in Wes Anderson's 2001 comedy, “The Royal Tenenbaums” about an eccentric family of upper-class misfits. Besides doing the accounting, Henry also romances the matriarch of the family, Etheline Tenenbaum, played by Anjelica Huston. Other members of the all-star cast included Gene Hackman, Ben Stiller, Gwyneth Paltrow, Bill Murray, Luke Wilson and Owen Wilson, along with the voice of narrator Alec Baldwin.

FLAT TAX QUESTION

2011-11-12T09:12:00.000-06:00

Q. Hello Larry,
Not sure if you remember me, but I attended York College and had a few of your classes in '03-'05. With all of this "flat tax" talk by Presidential candidates right now, all I could think about was my classes where you would talk about that proposed flat tax that you said if it ever became law, instead of putting you out of business you'd have more business than before because it was so complex. Anyways, I was just curious what you thought about the current suggestions (Cain's 9-9-9 and Perry recent proposal-20% or normal, etc.). Thanks for listening!~ Samuel

A. Sam, sure I remember you. I hope all is going well. Looks like a nice accounting firm that you are with.

Regarding the 9-9-9 and Perry’s 20% Alternative I don’t see any way that those plans are anything other than campaign rhetoric. To start with, tax laws must originate in the House Ways and Means Committee not with the President. The last major tax legislation was in 1986 and that took over 2 years to get through Congress. And even with that, as people start studying the plans they realize that there is not enough money in the plan to make it work.

Oh yea… I forgot … “you can take away all the deductions but don’t take away my ________________ (fill in the blank -depreciation/charitable/tax exempt interest/child tax credit/medical expense etc.)

And don’t forget what I said in class, “people want fair and simple, but in reality that does not exist. Something can be simple but usually it is not fair so to make it fair we have to make it more complex.” Law of the universe.

Keep in touch.

11.11.11

2011-11-11T10:52:00.000-06:00

CHARITABLE CONTRIBUTIONS FROM IRAS

2011-11-10T16:33:00.000-06:00

Year-end planning Tip: Individuals age 70 1/2 or older should consider making charitable contributions from IRAs

This year may well be the last chance for taxpayers age 70 1/2 or older to take advantage of an up-to-$100,000 annual exclusion from gross income for otherwise taxable individual retirement account (IRA) distributions that are qualified charitable distributions. Such distributions aren't subject to the charitable contribution percentage limits and aren't includible in gross income. This tax advantage will not be available for distributions made in tax years beginning after Dec. 31, 2011.

This is a great opportunity for taxpayers that do not have enough itemized deductions to file the “long form.” For married couples over age 65 the standard deduction is $13,900 and for singles it is $7,250.

Where this becomes a great planning tool is when the taxpayer is in the zone where they are paying tax of Social Security Benefits and making charitable contributions that they effectively can’t deduct because they are taking the standard deduction.

For example:
Bonnie and Clyde are both over age 70 ½. They have interest and other income of $20,000 and are taking $10,000 per year from their IRA. In addition they have Social Security benefits of $20,000. Bonnie and Clyde got religion after they retired from the banking business and annually make charitable contributions of $7,500.

If they draw money from their IRA and put it in their checking account and then make a charitable contribution their total federal and state tax is $1,703.

On the other hand if they direct their IRA administrator to take the IRA money of $7,500 and give it to their charity their tax drops to $176.

There is a saving so $1,527. Pretty cool… easier than robbing a bank.

If you need any more information on this let me know. Remember, unless Congress renews this tax strategy 2011 is your last chance. You might want to think about doing your 2012 contribution in 2011 to beat the expiration deadline.

SCHOOL UNIFORMS

2011-11-09T11:05:00.000-06:00

Q. As a mom, I love school uniforms. They’re easy and predictable. What they aren’t is cheap. They’re also not in great demand for wear outside of school which means that they serve one purpose only. So that feels like an expense that should be deductible, right?

A. Sorry, nondeductible. The IRS does not allow deductions for school uniforms, even if required, for public, parochial or private schools.

The rules are a bit different at military school. If you are a student at an armed forces academy, you cannot deduct the cost of your uniforms – that’s consistent with the rules for public, parochial and private schools. However, you do get something of a break at military school in that you can deduct the cost of insignia, shoulder boards, and related items.

ACCOUNTANTS IN THE MOVIES

2011-11-09T10:56:00.000-06:00

In Hollywood, accounting can seem like a pretty glamorous profession, or not.

Joe Pesci plays accountant Leo Getz, who is protected by cops Danny Glover and Mel Gibson after he become a witness against his money-laundering clients in three of the four "Lethal Weapon" action-comedy movies. Leo continually gets his bodyguards in trouble, but he seems to be having a lot more fun than doing the books. By the final movie, he went through a career change and became a private detective.

NOTIFY THE IRS IF YOU MOVE

2011-11-08T11:12:00.000-06:00

The IRS has explained how taxpayers must inform, the IRS of a change of address, effective immediately. The IRS uses a taxpayer's address of record for the various notices or documents that are required to be sent to a taxpayer's “last known address.”

The key point is that a notice or document sent to a taxpayer's “last known address” is legally effective even if the taxpayer never receives it.

U.S. SOCIAL SECURITY GOES "CASH NEGATIVE"

2011-11-04T15:33:00.000-05:00

Social Security will add $46 billion to the U.S. budget problem this year, a figure that would increase to $267 billion if Congress adopts President Barack Obama's proposal to expand this year's tax break into 2012, according to the system's trustees. Congressional leaders of both parties are avoiding the issue, fearful of angering senior citizens and their advocates.

TANNING SALONS – THE TAX MAN COMETH

2011-11-02T15:24:00.000-05:00

Indoor tanning salons will receive more audit scrutiny from the IRS. Far fewer salons than anticipated are filing excise tax returns reporting collection of the 10% excise tax that took effect last year, and the revenue intake is lower than projected, according to Treasury inspectors. So look for the Revenue Service to begin a special set of examinations of tanning businesses in the near future.

ACCOUNTANTS IN THE MOVIES

2011-11-02T11:12:00.000-05:00

In Hollywood, accounting can seem like a pretty glamorous profession, or not.

The opening sequence in the 1983 comedy, "Monty Python's The Meaning of Life," is a short movie called "The Crimson Permanent Assurance," in which a group of beleaguered British chartered accountants decides to fight their corporate overlords by turning into pirates and sailing off on the high seas of accountancy. "It's fun to charter an accountant and sail the wide accountant-sea," the pirates sing.

SOCIAL SECURITY BENEFIT INCREASE FOR 2012

2011-11-01T15:23:00.000-05:00

Social Security benefits will go up 3.6% in 2012...the first hike in two years. The earnings limits will be heading up, too. Individuals who turn 66 in 2012 will not lose any benefits if they earn $38,880 or less before they reach that age. Individuals between ages 62 and 66 by the end of 2012 can make up to $14,640 before they lose any benefits. There is no earnings cap once a beneficiary turns 66.

For more information on Social Security: Click Here

REVOKED WORK CLOTHING DEDUCTIONS

2011-10-31T11:20:00.000-05:00

IRS pulls ruling that OK'd employer-provided clothing as exempt de minimis fringe

As I am sure you are aware, work clothes are not deductible unless it is a uniform. Furthermore, clothes that are suitable for wear on the street are not deductible. Therefore, for example, even though you are required to wear black at work, since the clothes are acceptable in public they are not deductible.

Earlier this year, I thought maybe the IRS was going to give us a break. They ruled that a city could provide one set of clothes for their street workers. Their rational was that this was a "de minimus" fringe. What that means in general is that the cost was minimal and therefore the cost to track would not be worth the effort. An example of de minimus would be coffee and rolls that you provide for staff.

I thought that if this works for city why it wouldn’t work for salons and spas.

Bad news- the IRS changed their mind.

Without much by way of explanation, IRS has revoked the earlier ruling which allowed employees to exclude the value of employer-provided clothing and related accessories from their taxable income as a de minimis fringe benefit.

So if you heard from me or others that you might have a new deduction the IRS has pulled it back.

THE IOWA PUMPKIN TAX REPEALED

2011-10-31T05:55:00.000-05:00

Here is how stupid taxes can be. It is estimated that more 750 million pumpkins are carved into jack o' lanterns each October. While the practice brings joy to many, it created heartburn for Iowa tax officials four years ago, who were dismayed that so many people were decorating their pumpkins.

You see, Iowa (like most states) taxes retail sales but exempts groceries. Pumpkins used for decoration should have been taxed but were slipping by because they were also food. So they spent taxpayer’s money sending out a bulletin to retailers reminding them to quiz customers on whether they were buying the pumpkin to eat (not taxable) or decorate (taxable):

Pumpkins: Pies and jack-o'-lanterns
The Department recently refined its position on whether pumpkins are subject to Iowa sales tax to more closely match what we believe to be their predominant use.

In the past, pumpkins were exempt from sales tax as a food (edible squash), even if they were to be later made into jack-o'-lanterns or used as decorations.

Our position now is that pumpkins are taxable if:
1. They are advertised to be used as jack-o'-lanterns/decorations, or
2. It is understood that they will be used as jack-o'-lanterns/decorations

Pumpkins are exempt in the following circumstances:
* The buyer completes a sales tax exemption certificate stating they will be used as food, or
* The pumpkins are a specific variety used to make pumpkin pies and are advertised in that way, or
* They are purchased with Food Stamps.

Retailers who sell pumpkins should keep these guidelines in mind and make any necessary changes to their tax treatment of pumpkin sales.
Fortunately this got picked up by the media and then the blogosphere,, which led to local news coverage, and finally Iowa officials rescinded the pumpkin tax a few days later. One less silly tax.

ACCOUNTANTS IN THE MOVIES

2011-10-28T09:39:00.000-05:00

In Hollywood, accounting can seem like a pretty glamorous profession, or not.

Edmund O'Brien plays accountant Frank Bigelow in the fast-paced 1950 film noir crime drama "D.O.A." The movie opens with Bigelow entering a police station to report his own homicide and then in flashback traces how he came to learn that he had been poisoned by a former client who needed him to notarize an incriminating document. The movie was later remade in 1988 with Dennis Quaid playing O'Brien's role, but in the remake Quaid is a college professor. O'Brien is shown here with Laurette Luez, who plays his client's mistress Marla Rakubian.

BRITAIN'S BARBERSHOPS BOOMING

2011-10-27T08:45:00.004-05:00

From The Economist: BEHIND curlicues of cigarette smoke and with the gentle tones of wartime tunes wafting from a tape deck, Alf Biber is back on his feet after the looting of his dinky Tottenham barbershop (above). His eyes twinkle as he praises the properties of witch-hazel and displays a set of antique razors. In his youth Mr Biber could trim up to 80 heads a day; aged 89, he now keeps busy with 20 a week.

Mr Biber’s craft is enjoying a British renaissance. About 10% of the nation’s 35,000-odd hair salons are now barbers; a new association sprang up last year to help them. The number of listed barbers has more than doubled since 2001, with a 32% increase in the past three years alone. Insiders say cheap and burly shearers did well in the recession, as cash-strapped customers cut back on frippery. The no-nonsense Turkish barbers who have popped up in North London point to the profession’s popularity among migrants. (In Britain, unlike in America and much of Europe, barbers do not need a licence.)

The fancy end of the trade is blossoming, too. Josh Gibson, principal of a Vidal Sassoon hairdressing academy in London, says his barbering course is the fastest growing of those on offer. L’Oréal, a big French beauty company, reckons the British market for men’s grooming gear is growing twice as fast as that for women’s. At Taylor of Old Bond Street, a swanky London barber and boutique, sales to other British retailers were up by 72% last year. It offers fragrant salves sporting names such as “Bay Rum”, and swish shaving brushes with bristles of Chinese badger fur.

What lies behind this growth? Caroline Cox, a fashion historian and consultant, puts it down to a return to old-fashioned masculinity in response to economic uncertainty. “If we worry about the future, we take refuge in the past,” she says. If men are indeed trying to regain the quintessence of their sex, then barbershops fit the bill. “It’s a bit of a club atmosphere in here,” says Barry Klein, director of the Taylor boutique.

Barbers have come a long way since the days when they pulled teeth and therapeutically bled their clients—a practice thought to explain the traditional red-and-white striped pole, a reference to bloodied bandages. Barbering bigwigs worry that the lack of compulsory licensing in Britain keeps standards down and gives the craft a bad name. But the broader appetite for government regulation is at a low ebb, and the reputation of barbers seems to be doing fine it in its absence. No need to get in a lather, then.

SOCIAL SECURITY WAGE BASE INCREASES

2011-10-26T08:44:00.000-05:00

Social Security wage base increases to $110,100 for 2012

For those of you that are budgeting, the IRS has released the new base for Social Security tax. If you are at max this will mean an additional $205 tax ($3,300 x .062). For self employed double that.

The Social Security Administration has announced that the wage base for computing the Social Security tax (OASDI) in 2012 increases to $110,100 from $106,800, which was the wage base for 2009 through 2011. The $3,300 increase, which is about 3%, is due to an increase in average total wages.

MONEY OPPORTUNITY - YOU CAN BE THE FIRST

2011-10-25T15:49:00.000-05:00

We all know that Steven Tyler of Aerosmith and American Idol started the “feather” trend that helped salons increase their bottom lines this last summer. Well now he has taken a fall and injured his face (I kind of wonder how you can tell). Anyway since he was the trend setter of the year consider gearing up your salon to create the “Steven Tyler Look.” If this catches on like his feathers you can be way ahead of the competition.

PRISONERS BILK TAXPAYERS OUT OF MILLIONS

2011-10-25T11:47:00.001-05:00

Don't ask me why but I like to study philosophy. Recently I was reading the debate about the purpose of jail. There are a bunch of different philosophies about why jailing a person is supposed to be a good idea though admittedly no consensus. Is it punishment for wrongs? A mechanism to isolate “bad” people? A way to get those who did something wrong to think about what they have done? Some combination of the above?

I’m not sure what I think the real purpose of jail is but I’m pretty sure it’s not supposed to be a forum for committing more crimes. And yet, that’s what’s allegedly happening in jails across the country.

CNN recently reported that an investigation into a scheme into a Key West, Florida has found attempts to cheat the government out of more than $1 million – on your dime. Investigators believe that inmates have been filing false tax forms using bogus Social Security numbers and made up businesses in order to collect refund checks. Instructions explaining how to fill out the forms together with cheat sheets – as well as how to keep refund request relatively low (under $5,000) – were circulated among the prisoners in a far-reaching scheme.

Most commonly, prisoners would fill out a form 4852, a form that you use to report wages when your form W-2 is missing. When the forms, along with tax returns were processed, the prisoners received bogus refunds. The refunds were mailed to family members and sometimes, even directly to the prison. At the prison, the refunds were divided among ringleaders (who kept a portion for themselves) and participants in the scheme. Genius, right?

It may not be as genius as it sounds. The scheme is actually nothing new: it’s been happening for years. The IRS has been notified and across the country, charges have been filed and ringleaders prosecuted. However, officials familiar with these cases say that the fraud is ongoing. At Key West, for example, the prison has been intercepting bogus checks still being issued by the IRS for at least one prisoner.

The IRS, for its part, says that it is aware of what’s happening. They note that it is difficult to attack the problem since being in prison doesn’t bar taxpayers from receiving a genuine refund. Even more challenging? The population of prisons is constantly changing which means that patterns may be difficult to spot.

The issue has been on the radar for years. Five years ago, the IRS flagged false refunds from prisoners as a top concern noting that of 118,000 fraudulent tax returns filed, 18,000 were filed by prisoners – that’s a whopping 15%. Prisoners received more than $14 million in bogus claims, though the IRS points out that they successfully blocked an additional $53 million.

The IRS won’t say what steps they are taking to control the number of bogus claims filed by prisoners but they do know who is to blame: you. Reportedly IRS’ position is to issue refunds and then audit later in response to a bigger problem: taxpayers want their refunds quickly. Increased scrutiny of returns at the processing level (while clearly more efficient) would slow down the refund process. And that wouldn’t be popular for taxpayers who want to see refunds.

WILLA VS WELLA

2011-10-22T11:41:00.000-05:00

Willa vs Wella: start-up wins out-of-court settlement against P&G

Procter & Gamble were all set to take a Connecticut housewife to court over her use of the name Willa for a range of pre-teen skin care products, claiming it sounded too much like its brand Wella. However, the housewife is victorious following an out-of-court settlement. Earlier this year Christy Prunier received a cease and desist letter from P&G, which claimed that the product branding, packaging and name were too similar to a range of products being marketed under its Wella hair care range. P&G lawyers claimed that the similarities would lead to confusion amongst its established customer base for the brand because of the the two ranges could be mistaken for one another on retail shelves.

Product range named after 11-year old daughter.

Prunier had spent three years developing the product, which was named after her own 11-year old daughter, and had obtained trademark approval from the US government at the beginning of the year, allowing her to put the complete range to market. However, in a classic David and Goliath story line, the roll-out of the natural-based product line, which includes skin care products and a lip balm, was stalled as the two companies readied for battle. The two were due to face one another in court in Manhattan, New York City last week, but as the media attention gathered, in turn drumming up a clear sympathy for the ‘little guy’, P&G chose to settle out of court.

NO WONDER WE HAVE A DEFICIT

2011-10-21T11:28:00.001-05:00

In 1969 20% of US Taxpayers Paid Zero or Negative Tax

In 2009 42%

Now 51%

(Tax Foundation) -- The Tax Foundation's Tax Policy Blog reports that from 1969 to 2009, U.S. taxpayers who have a zero or negative tax liability grew from less than 20% of all filers to 42%, according to the IRS. Congress' Joint Committee on Taxation has "found that 51% of American households paid no income taxes." For millions of these non-payers, "the refundable credits more than exceed their payroll tax contributions." The blog also notes that since 2003, the top 1% of taxpayers' share of the tax burden "has well exceeded that of the bottom 90%, even during the recent recession."

MAN AGAINST MACHINES

2011-10-19T11:39:00.000-05:00

It’s technologies fault that we have so much unemployment

A couple of years ago, I was making a presentation to a group of about 250 CPA’s, Certified Public Accountants. Before the talk I was back stage with one of the other presenters. This guy was from one of the big CPA firms and had just returned from working in Europe for one of his tax clients.

During my conversation I asked him about technology in Europe. In his words, “Europe has not embraced technology because it doesn’t do them any good.” It seems that In Europe you can’t lay anybody off so there is no incentive to use computers when they still need to have the people there. I was thinking about that conversation recently as I watched six or seven workers outside my office window tearing up a street and laying new cement. There weren’t many workers walking around with shovels, they were utilizing big machines and technology to build the new road. Anything that needed to be moved was done with a backhoe or a frontend loader. I don’t think I ever saw over ten workers and that was when they were pouring cement. So even “shovel ready” jobs are not going to create a lot of jobs unless they mandate that everything be done by hand.

Actually President Obama was right when he said that ATM’s were part of the employment problem. You don’t need tellers if people are using ATM’s.

Recently I read in Reuters that since 1999 business investment in equipment and software has surged 33% while the total number of people employed by private firms (not the government) has changed very little. The gap between man and machine widened even further in 2008 and 2009 during the recession. You can see why the United States is struggling to bring down employment which is stuck at 9%. I know my clients that went through the 2008 and 2009 recession have not significantly increased their number of employees because they are able to get by with the people they have.

Here is a personal example: I know that in our small accounting office we have 20 to 25 people employed depending on the time of year. I estimate that if we did not have computers and software and two or three monitors on everybody’s desk and internet access, etc. we would need fifty to seventy-five people to do the same amount of work we are doing right now. We used to have one person who worked part-time, just updating our paper tax library. Right now our tax library is out on the cloud and we don’t need that person working part-time. The same is true with our mail room and our filing. Everything is electronically filed.

I guess this is progress and we have to wait for the workforce to get caught up to the progress. I think we can see that it’s more than just the economy that is causing the problem with unemployment.

ACCOUNTANTS IN THE MOVIES

2011-10-19T09:23:00.000-05:00

In Hollywood, accounting can seem like a pretty glamorous profession, or not.

Charles Martin Smith (far right) played accountant Oscar Wallace in the 1987 movie version of "The Untouchables," a popular TV series that ran from 1959-1963. Wallace joins a team organized by Treasury agent Elliot Ness, played by Kevin Costner, to break up Al Capone's mob in Prohibition-era Chicago. They finally put Capone behind bars for tax evasion. Capone was played by Robert De Niro. Other members of Ness's Untouchables included Sean Connery and Andy Garcia. Wallace was based on a real-life accountant named Frank J. Wilson who joined the Treasury Department's Intelligence Unit in 1920 and later helped nab Lindbergh baby kidnapper Bruno Hauptmann by insisting that the serial numbers on the ransom money be properly recorded. Wilson later became chief of the Secret Service.

13 THINGS YOUR PODIATRIST WON'T TELL YOU

2011-10-18T11:55:00.000-05:00

As you may know from reading my blogs, I am a avid reader of Reader's Digest.

In their November magazine, Michelle Crouch wrote about 13 Things Your Podiatrist Won't Tell You -- "what does that have to do with me?" is what you are asking, 2 of the 13 involve salons.

#3: Infections from nail salons keep us in business. If you want a pedicure, book the first appointment of the day, when the equipment is cleaner. Those footbaths can be especially germy. Even if the technicians spray the basin between customers, many of the tubs have drains and filters that don't get cleaned.

#10: I don't have a problem with people getting pedicures, but please don't shave right before you go. You might be embarrassed by your stubble, but it will be worse when bacteria and fungus enter the microscopic nicks on your ankle and give you an infection.

Remember that your clients read these articles too.

Raffle Winner

2011-10-17T16:21:00.003-05:00

Q. We were at a local fundraising event and won a raffle. The prize was a trip to Vail, CO. including airfare and lodging for seven nights. The value is estimated at $12,000 to $18,000. Is the prize taxable?

A. You win... and of course the IRS wins. This is taxable and you most likely be receiving a 1099 for this. If the trip is valued at $12,000 at a 40% tax rate, you will be paying about $4,800 in income taxes on your 2011 tax return for this.

Enjoy the trip.

PROTESTS ON WALL STREET

2011-10-14T11:33:00.000-05:00

Maybe this is too political but.... this past summer I read Atlas Shrugged by Ayn Rand. The book explores a dystopian US where leading innovators refuse to to be exploited by society. The protagonist sees society collapse around her as the government asserts control over all industry while the most productive citizens progressively disappear.

As I watch the protests on Wall Street and the ones spreading across the country, I thought of this book and the following statements. If anybody that reads this understands what the protesters are trying to get across would you please email me so that maybe I can understand.

Here are the concepts that I pulled out of my quotes bag.

1. You cannot legislate the poor into prosperity by legislating the wealthy out of prosperity.

2. What one person receives without working for, another person must work for without receiving.

3. The government cannot give to anybody anything that the government does not first take from somebody else.

4. You cannot multiply wealth by dividing it.

5. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that is the beginning of the end of any nation.

TEN TAX TIPS FOR INDIVIDUALS SELLING THEIR HOME

2011-10-13T10:13:00.000-05:00

The Internal Revenue Service has some important information to share with individuals who have sold or are about to sell their home. If you have a gain from the sale of your main home, you may qualify to exclude all or part of that gain from your income. Here are ten tips from the IRS to keep in mind when selling your home.

1. In general, you are eligible to exclude the gain from income if you have owned and used your home as your main home for two years out of the five years prior to the date of its sale.
2. If you have a gain from the sale of your main home, you may be able to exclude up to $250,000 of the gain from your income ($500,000 on a joint return in most cases).
3. You are not eligible for the exclusion if you excluded the gain from the sale of another home during the two-year period prior to the sale of your home.
4. If you can exclude all of the gain, you do not need to report the sale on your tax return.
5. If you have a gain that cannot be excluded, it is taxable. You must report it on Form 1040, Schedule D, Capital Gains and Losses.
6. You cannot deduct a loss from the sale of your main home.
7. Worksheets are included in Publication 523, Selling Your Home, to help you figure the adjusted basis of the home you sold, the gain (or loss) on the sale, and the gain that you can exclude.
8. If you have more than one home, you can exclude a gain only from the sale of your main home. You must pay tax on the gain from selling any other home. If you have two homes and live in both of them, your main home is ordinarily the one you live in most of the time.
9. If you received the first-time homebuyer credit and within 36 months of the date of purchase, the property is no longer used as your principal residence, you are required to repay the credit. Repayment of the full credit is due with the income tax return for the year the home ceased to be your principal residence, using Form 5405, First-Time Homebuyer Credit and Repayment of the Credit. The full amount of the credit is reflected as additional tax on that year’s tax return.
10. When you move, be sure to update your address with the IRS and the U.S. Postal Service to ensure you receive refunds or correspondence from the IRS. Use Form 8822, Change of Address, to notify the IRS of your address change.

ACCOUNTANTS IN THE MOVIES

2011-10-13T09:04:00.000-05:00

In Hollywood, accounting can seem like a pretty glamorous profession, or not.

Will Ferrell plays lonely IRS agent Harold Crick in the 2006 comedy-drama "Stranger Than Fiction." Harold has been assigned to audit Maggie Gyllenhaal, and falls in love with her. However, he keeps hearing a strange British-sounding voice in his head, and he discovers it's author Emma Thompson, whom he tracks down through her tax records. Turns out she has been writing about his life and trying to decide how he will die in her next book.

THE SALON INDUSTRY LOSES A FRIEND

2011-10-12T15:37:00.000-05:00

Ken Cassidy passes away at age 69.

I found out a few hours ago that my good friend Ken Cassidy passed away. Ken had been struggling with some lung issues for the few years. I saw him last in June 18 at the Energizing Summit. He told me he had to use a respirator from time to time but he never let on that it was serious. I will get into his importance to the industry in a bit but before I do that I have to tell you a little bit more about the man.

I will never forget the first time I met Ken. In November 2001, right after the 9/11 tragedy I was speaking at the first Suzie Fields, Your Beauty Network Symposium in San Diego. My program ended right before lunch. They served a box lunch for everyone. By the time I got off the stage and finished answering questions the lunch was over. As I walked over to a booth that they had set up for me over wakes a guy I didn't know and said, "I figured you were going to miss lunch so I saved half my lunch for you."

That was the type of guy Ken was. Over the years he was always trying to advance the industry. He was the guru on booth rental and if clients were trying to get their business cleaned up I would send them to Ken. He had all the contracts and agreements to help.

Several times Ken and I would be speaking at the same conference so I got to know him quite well. He was always introduced me to people in the industry. He had quite a network.

After the Energizing Summit in Los Angeles, we had dinner together. We talked about his son and his investment property but mostly we talked about the salon business. He had such passion about the industry and so much passion about life and helping others. I will miss him, but I can tell you this, I will never forget that guy with the long hair making sure that I had lunch and the impression it had on me. He made a difference because over the last 10 years I have looked for opportunities to help just like Ken.

TAX SAVINGS IN MILLIONAIRE TAX BILL

2011-10-11T10:43:00.002-05:00

The American Jobs Act introduced in the Senate last week (commonly known as the Millionaire Surtax Bill) contains some tax breaks for businesses. Since the chance of this passing is fairly slim, rather than confuse you with the details we will keep an eye on the legislation and let you know what to expect if passed. I really don’t think it would be wise to use the proposal in our yearend tax planning. However, if you would like some of the details that I think impact business let me know and I will summarize for you.

IF YOU HAVE BEEN USING INDEPENDENT CONTRACTORS TAKE NOTE

2011-10-08T11:14:00.000-05:00

IRS Announces New Voluntary Worker Classification settlement Program (VCSP)

The Internal Revenue Service announced a new program that will enable some employers to resolve worker classification issues by voluntarily reclassifying their workers. This new program will allow employers to resolve worker classification disputes by making a minimal payment covering past payroll tax obligations rather than waiting for an IRS audit. Full details, including FAQs, are available on the Employment Tax pages of IRS.gov, and in Announcement 2011-64.

Under the program, eligible employers can obtain relief from federal payroll taxes they may have owed for the past, if they prospectively treat workers as employees. The VCSP is available to businesses, tax-exempt organizations and government entities that are uncertain whether to treat their workers or a class or group of workers as employees or independent contractors, and now want to correctly treat these workers as employees.

To be eligible, an applicant must:
• Consistently have treated the workers in the past as nonemployees;
• Have filed all required Forms 1099 for the workers for the previous three years; and
• Not be under audit by the IRS, the Department of Labor or a state agency concerning the classification of these workers.

Interested employers can apply for the program by filing Form 8952, Application for Voluntary Classification Settlement Program, at least 60 days before they want to begin treating the workers as employees.

Employers accepted into the program will pay an amount effectively equaling just over 1 percent of the wages paid to the reclassified workers for the past year. No interest or penalties will be due, and the employers will not be audited on payroll taxes related to these workers for prior years. Participating employers will, for the first three years under the program, be subject to a special six-year statute of limitations, rather than the usual three years that generally applies to payroll taxes.

FACT-CHECKING WARREN BUFFETT

2011-10-07T09:43:00.000-05:00

Here is an article from the Tax Foundation. They are trying to figure where the Oracle of Omaha get’s his numbers. LRK

Warren Buffett's much-discussed op-ed arguing that high-income earners aren't paying enough taxes makes the following claim:

"Last year my federal tax bill — the income tax I paid, as well as payroll taxes paid by me and on my behalf — was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent."

To me, the effective rates he claims for other workers in his office seem too high to be realistic, and I can't figure out how he calculated them, even if you include all payroll (employee and employer) taxes. Even if you assume the scenario that leads to the highest possible tax burden (single filer, no deductions), a taxpayer would have to make at least $285,388 (in 2010) before his or her effective rate reaches 33 percent. 41 percent is impossible, as far as I can tell: the limit of total taxes over total income, as income approaches infinity, is 37.358%. That's the highest possible effective rate anyone could have paid in 2010, if you include income and all payroll taxes.

To demonstrate this, I've made a little calculator which shows the maximum possible effective rate for any income amount. Try it out on the Tax Foundation website.

ACCOUNTANTS IN THE MOVIES

2011-10-06T14:30:00.000-05:00

In Hollywood, accounting can seem like a pretty glamorous profession, or not.

Kirstie Alley stars as New York accountant Mollie Jensen in the 1989 romantic comedy "Look Who's Talking." She meets cab driver John Travolta when she needs to get to the hospital in a hurry because she's about to have a baby. Travolta helps her bring up the baby, but the real father is her tax client George Segal. The baby's voice also sounds strangely like Bruce Willis. Alley reprised the part of Mollie in the 1990 sequel "Look Who's Talking Too," in which Roseanne Barr joined Willis in providing the voice of another of Mollie's kids. The 1993 threequel "Look Who's Talking Now" added the voices of Diane Keaton and Danny DeVito, but this time as Mollie's dogs.

SILVER TAX LINING FOR EMPLOYEE

2011-10-05T11:01:00.000-05:00

Q. We found out that one of our office workers stole about $500 from petty cash. Can we deduct the loss?

A: Yes. As with personal theft loss, the amount of the loss is generally treated as a deductible casualty and theft loss, reduced by the amount of any insurance reimbursements. But you could run into a problem if the IRS ever challenges your claim. Keep copies of police reports and other supporting documentation.

L’OREAL DENIES LIGHTENING SKIN TONES OF SLUMDOG MILLIONAIRE ACTRESS IN LATEST AD

2011-10-03T13:19:00.000-05:00

(As reported by Cosmetics Design)

Cosmetics giant L’Oreal has categorically denied that any alterations were made to an advert featuring actress, Freida Pinto, amid allegations that the appearance of her skin has been ‘lightened’.

Fueled by speculation from online publications, national newspapers and online communities such as Facebook, L’Oreal came under fire after many accused it of lightening the appearance of Pinto’s skin in the new advert for its L’Oreal Paris Colors Take Flight make up range.

However, according to a company statement, a L’Oreal spokesperson said: “Freida Pinto has been a spokesperson for the L’Oreal Paris brand since 2009. We highly value our relationship with Ms. Pinto.”

‘Categorically untrue’
“It is categorically untrue that L’Oreal Pairs altered Ms. Pinto’s features or skin-tone in the campaign for Project Runway “Colors Take Flight” limited-edition collection.”

There are many possible explanations for the appearance of the image, such as the lighting, or perhaps a photoshop blunder, but despite L’Oreal’s statement many online discussion boards have been filled with consumers questioning the advertisements, with many articles doing the rounds on Facebook.

It is not the first time L’Oreal has come under this kind of scrutiny following accusations they had done the same to an image of Pinto when she signed for the brand as an ambassador back in 2009.

A history of allegations
However, these allegations were proved wrong when it revealed that the image in question at that time came from Pinto’s representatives not the skin care brand, exonerating it of any wrongdoing.

The same questions were also aimed at L’Oreal regarding a 2008 advert for its Feria hair color product in which it was accused of lightening the skin tone of US singer Beyonce Knowles; an allegation that was once again categorically denied.

Earlier this year, L’Oreal did however admit to retouching and digitally enhancing images of Julia Roberts and Christy Turlington for the Lancome and Maybelline brand adverts, which were ultimately removed and banned in the UK.

AM I A WIDOW?

2011-10-01T14:32:00.000-05:00

Q. I had a friend of the family who does tax returns file my 2010 return. My dear husband passed away in 2009. Tony, the guy that did my return, filed me as a widow. I thought that was correct. We were married for 55 wonderful years so I thought I was a widow. I was at coffee with the girls the other day and Mable one of my friends whose husband passed away at the same time said that she was told that she was not a widow and she had to file as single. I have not been able to sleep worrying about the IRS coming to get me. Who is right.
Olive

A. First of all Olive don’t worry too much. My best guess is that you are going to owe some money to the IRS and to the state but they are not going to throw you into jail or get audited. This is a good example of why someone should use a “qualified tax professional.” The key to this is that although you are a widow the actual IRS wording is “qualified widow or widower.” In order to meet that definition you must have a child that lives with you. In addition the qualification is only for two years after the death of the spouse. For the 2010 returns this would mean that the spouse died is 2008 or 2009 and you had a child living with you during those two years.

What should you do? I would recommend that you hire a qualified professional to amend your 2010 federal and, don’t forget your state return. I would also ask them to look at your 2009 return. Even though your husband died in 2009 you can still file a joint return. Make sure that a joint return was filed.

It is a pleasure serving you.

FOLLOWUP

Thank you so much. I am now sleeping better. How much would you charge to fix my problem?
Olive

I would be happy to help. Amending your federal and state returns would cost $225. This includes looking at your 2008 and 2009 returns to see if there are any other errors.

Let me know.

ACCOUNTANTS IN THE MOVIES

2011-09-30T14:10:00.000-05:00

In Hollywood, accounting can seem like a retty glamorous profession, or not.

Rick Moranis played Sigourney Weaver's accountant neighbor and admirer Louis Tully in the 1984 comedy classic "Ghostbusters." Possessed by a demonic ghost, Louis is transformed from a mild-mannered accountant into the "Keymaster" and needs the help of Bill Murray, Dan Aykroyd, Harold Ramis, Ernie Hudson and the rest of the ghost-busting crew (along with their Proton Packs). Moranis reprised the role in the 1989 sequel "Ghostbusters II" and hopefully will come out of retirement to appear in "Ghostbusters III," which is set to be released next year.

D-DAY FOR BRAZILIAN BLOWOUT

2011-09-29T13:29:00.001-05:00

Following a letter sent to parent company GIB, September 13 was judgment day for Brazilian Blowout to respond to a letter sent from the FDA, which questioned the safety of the products and threatened legal action if demands were not met.

The FDA is asking Brazilian Blowout to reduce the level of formaldehyde from its products and change the misleading labels and advertising, which state that the products are formaldehyde-free.

In a letter to Mike Brady, CEO GIB, the FDA gave its first official warning, giving the company until September 12 to comply with the FDA’s directives, otherwise the products could be taken off US shelves and further injunctions could be filed against the company.

In tests, conducted by both the FDA and the Occupational Safety and Health Administration dangerous levels of the liquid form of formaldehyde, ranging from 8.7% to 10.4%, were found.

Industry debate
Formaldehyde is commonly found in a number of “Brazilian style” keratin-based hair straighteners, and has been listed as a carcinogen by the FDA, although Brazilian Blowout denies unsafe levels in its products.

Michael Roosevelt, acting director in the FDA’s Office of Compliance states in the letter to the company: “Brazilian Blowout is an adulterated cosmetic because it bears or contains a deleterious substance that may render it injurious to users under the conditions of use prescribed in your labeling.”

He continued: “Brazilian Blowout contains the liquid form of formaldehyde, methylene glycol; however, the product label declares that the product contains ‘No Formaldehyde’ of is ‘Formaldehyde Free.’ This declaration renders your product misbranded because it is a false and misleading statement.”
In a string of controversy lasting over a year, the FDA has been urged to recall Brazilian Blowout and similar products.

However, the FDA can only issue a “voluntary recall,” meaning that the government cannot mandate the removal of dangerous products from the market. These regulations are under scrutiny, and are being rectified in the Safe Cosmetics Act of 2011, which is currently being debated in Congress.

Brazilian Blowout’s plant-derived cousin

Meanwhile Brazilian Blowout has launched its latest hair straightening product, the Zero smoothing treatment which it states is a plant-derived Kerasafe bonding system which contains no formaldehyde.

It is applied in the same way as the original Brazilian Blowout treatment and the company claims the result is exactly the same.

When questioned on whether this launch means the original treatment will be discontinued or whether it questions the safety or integrity of this treatment, the company states it is 100% confident of the original treatment and is backed by its worldwide popularity, and will remain on shelves.

However, according to the FDA letter, GIB will only be able to keep selling the product if the ingredients list is specifically modified to exclude any form of formaldehyde. Failure to do so could result in the seizure of Brazilian Blowout products, and legal proceedings against the company.

LONGTIME PARTNER

2011-09-28T13:23:00.004-05:00

I have to take a few minutes and pay tribute to Bob Sylvester CPA who died September 23, 2011.

Bob Sylvester was a former partner of mine and a close friend. Bob had been ill for some time and he was in hospice for the past few weeks. Bob and I go way back. In 1972, Bob gave me a chance and hired me as new junior accountant with the firm of Lindell, Sylvester Lindell. He was my mentor and taught me a lot about business. Eventually we became partners to form Kopsa, Swanson & Sylvester accounting firm. In 1999, Bob became sick and retired to enjoy his family. Much of the success that I have had is attributable to valuable lessons from Bob. He will be missed.

To read more about Bob's life: Robert Sylvester

YOU MAY WANT TO UNWIND YOUR ROTH CONVERSION

2011-09-28T11:48:00.000-05:00

Many taxpayers elected in 2010 to convert their regular IRA to a Roth and either pay the tax in 2010 or spread it out over 2011 and 2012. If you converted your Roth as long as you timely filed your income tax return or got an extension to October 15, 2011, you have until October 17th “unwind” the conversion and treat it as if it never happened.

The primary reason for considering this is the drop in stock prices from 2010 until now. By unwinding the conversion, you may be able to then redo the conversion and save substantial tax this year.

For example, let’s assume a taxpayer had $500,000 in his IRA on June 1, 2010 when he converted it into a ROTH. Now, let’s assume the value of the ROTH is only $300,000. By unwinding the ROTH conversion, the taxpayer does not pay tax on the difference between the $500,000 last June and the $300,000 value now. At the highest tax bracket including applicable state income taxes, the total tax savings could approach $100,000.

Remember, you only have until October 17, 2011 to unwind this conversion

BRAZILIAN BLOWOUT BEING SUED FOR $5M OVER BEAUTICIAN CLAIMS

2011-09-24T11:34:00.000-05:00

Hair care company Brazilian Blowout is being sued in Manhattan Federal Court for $5m by a beautician who is claiming she was sickened by using one of its hair care products, although the company has denied the allegations.

According to the article in The New York Post, Dana Lulgjuraj says she suffered ‘physical injuries’ while defrizzing hair with the Brazilian Blowout product last year at a salon in the Flatiron District in New York.

It is not the first time the hair care products have come under scrutiny, following concerns raised last year over the levels of formaldehyde omitted through use of the products. (Formaldehyde is a colorless, flammable, strong-smelling chemical that is commonly used as a preservative in some consumer products including hair care products.)

It was thought those that were most at risk of irritation were those who worked closely with the substance for long periods of time such as salon workers, and earlier this year the US government listed the substance as a carcinogen, although not in direct relation to just hair care products.

Lulgjuraj has not detailed what her ‘physical injuries’ were, and the California-based manufacturer GIB has denied the allegations. GIB was in the spotlight last year for the formaldehyde omitted from its products which it says were due to confusion between the substance and methylene glycol. However, experts from the Cosmetic Ingredient Review panel say that the two exist in equilibrium and that adding methylene glycol to water will create formaldehyde and vice versa.

Formaldehyde was then put under review by the specialist industry panel, and the US government made its announcement in June this year. At the same time GIB also filed a lawsuit against the Oregon Occupational Safety and Health Administration for damages against the company due to the claims being made, but this was later dropped.

ACCOUNTANTS IN THE MOVIES

2011-09-22T14:01:00.000-05:00

In Hollywood, accounting can seem like a pretty glamorous profession, or not.

Charles Grodin plays Jonathan "The Duke" Mardukas, an accountant for the Mob who gets nabbed by bounty hunter Jack Walsh, played by Robert De Niro in the 1988 comedy-action hit "Midnight Run." To collect the $100,000 bounty on the Duke's head, De Niro needs to get him from New York to LA, but the Mafia and the FBI are both on their tails. Grodin made a bit of a mini-career out of playing accountants. In the 1993 flick "Dave," he appeared as CPA Murray Blum. In one scene, Murray the accountant helped President Dave Kovic, played by Kevin Kline, find an extra $650 million in the federal budget to open homeless shelters. We could use him in Washington now.

GOOD ADVICE

2011-09-22T11:08:00.002-05:00

In the September issue of American Salon, my good friend Julie Shepperly of Milady Direct Professional Services gave the following advice. She is right on. I know from experience that those salons that are taking these steps have a great culture and are successful. If you are not taking these steps you need to consider working this into your business plan.

By the way, Julie is a great speaker. If you ever get a chance to sit in on one of her programs I recommend that you take advantage of the opportunity.

Raising the Bar
Every beauty organization, whether it’s got a staff of 30 or a team of three, needs to conduct career and performance reviews. “They are critical to the overall success and retention of employees,” says Milady Direct of Professional services Julie Shepperly. “Deep down, nearly everyone has a desire to succeed, as well as do what pleases our boss, family and friends.” Here, Shepperly sheds light on the key steps of the all-important review process.

Weekly Huddles: Conduct 15-minute meetings with the staff to discuss goals, promotions, challenges and successes.

Monthly Plan and Reviews: Each month, sit down with employees for a 30-minute mini-review to discuss their progress toward meeting quarterly and annual goals. “It’s an opportunity to receive feedback from team members on how they feel the business is progressing, as well as to toot one’s own horn on how well they are doing when it comes to accomplishing goals,” Shepperly says.

Quarterly Performance Reviews: These 60-minute in-depth reviews analyze statistics that measure success as well as those that determine whether or not a team member is eligible for a price increase and/or a salary raise.

Annual Planning Sessions: Conducted individually or as a team, this meeting is all about celebrating the successes of the previous year and making plans for growth in the upcoming year.

Finally, Shepperly suggests implementing only those steps that you can manage consistently. Once meetings are scheduled, it’s important to prepare. “Most reviews get off track and turn into complaint sessions because expectations weren’t clearly established and/or because there are breakdowns in communication,” Shepperly says. “Having clear communication and letting others know you care is key.”- K.D.

TALKING APPLE LINGO

2011-09-21T15:12:00.000-05:00

Apple Store employees are trained to say things a certain way.

• "That's stupid" or "That wasn't smart."
They say: "That's not recommended."

• "Do you have any questions?"
They say: "What questions do you have?"

• "Unfortunately."
They say: "As it turns out...."

We say GREAT customer service training!!!

HAIRSTYLIST TAKES ON A BEAR

2011-09-20T13:26:00.000-05:00

When Brooke Collins of Juneau, Alaska, heard her pet dachshund, Fudge, barking frantically in the backyard, she ran outside to see the dog in the firm grip of a black bear. Without thinking, she ran, screaming, up to the bear and punched it in the snout. The shocked bruin dropped the dog and eventually ambled off.

“It was all so fast. All I could think about was my dog was going to die,” said Collins, 22, a hairdresser. “I know you’re not supposed to do that, but I didn’t want my dog to be killed.”

The message… don’t mess with a hairstylist.

FEDERAL BUDGET VS. HOUSEHOLD BUDGET

2011-09-17T15:31:00.000-05:00

This information has been running around the Internet. I thought it explains our predicament really well.

The Federal Budget

1) U.S. Tax revenue: $2,170,000,000,000
2) Fed budget $3,820,000,000,000
3) New Debt: $1,650,000,000,000
4) National debt: $14,271,000,000,000
5) Recent Budget cut: $38,500,000,000

Now remove 8 zeros and pretend it is a....

Household Budget:

1) Annual family income: $21,700
2) Money family spent: $38,200
3) New dept on credit card: $16,500
4) Outstanding balance on credit card: $142,710
5) Total budget cuts: $385

The family is not going to make it.

Now those are some numbers I can relate to!

LABOR BOARD ISSUES RULE REQUIRING EMPLOYERS TO POST NOTICES ON UNION RIGHTS

2011-09-15T09:17:00.000-05:00

The National Labor Relations Board (NLRB) in Washington, D.C., has just issued an advance copy of its final rule requiring nearly every U.S. employer to post a notice in the workplace about the right to organize a union. The rule will take effect in 75 days, or on November 14th. For a fact sheet, visit: http://www.nlrb.gov/

I am on the Nebraska Chamber of Commerce board of directors and earlier this year, the Nebraska Chamber of Commerce & Industry signed onto comments regarding NLRB's proposed rule, arguing, among other things, that the notice requirement is unnecessary, biased and beyond the authority of the NLRB. It appears the NLRB did make some modest changes to its February draft. For example, it dropped the requirement that employers must "distribute the posting by e-mail, Twitter or other electronic means." NLRB member, Brian Hayes (R) voted against the final rule, while Chair Wilma Liebman (D) and members, Mark Pearce (D) and Craig Becker (D) voted to approve. With NLRB Chair Liebman's term expiring soon, some analysts believe that the NLRB may issue a flurry of decisions over the next few weeks.