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How To Reduce Your Tax Liability

Photo Credit: enciktepstudio/Shutterstock.com

Photo Credit: enciktepstudio/Shutterstock.com

Reducing your tax liability also provides the added benefit of improving your retirement planning. It is time to be proactive in paying less income tax than you are required to pay and putting more money into tax-deferred savings investment accounts or savings plans. This article offers some excellent strategies to help you accomplish this.

1. Increase Your Retirement Contributions In Tax Deferred Accounts

You can deduct more from your taxable income than you may realize because you may not be aware of the maximum annual individual contribution to your 401(k) plan. The allowable deduction is $18,000 for 2015 and 2016. You can also put $5,500 into an IRA. If you are 50 years old or older, you can contribute an additional $5,500 into your 401(k) and $1,000 more into your IRA this year.

You can make contributions now and apply them retroactively to 2015 if you do so by April 15. You will be able to take advantage of compound interest and a larger amount of savings growth by depositing money that would otherwise be taxed. The tax advantage savings plans will get you closer to your retirement goal. If you haven’t started one of these plans, then consider doing so even if you can only deposit a few dollars monthly.

2. Organize Your Accounts For The Best Tax Advantage

You can keep more of your money working for you if you put your money into a plan that offers the maximum tax advantage. This is not to say that tax savings should be your only guide in selecting investments, but once your savings goals are established, you can allocate your funds among accounts that will meet your objectives and minimize your tax obligations. There are different tax implications for equities, bonds, REITs and commodities. Put the investments that have greater tax implications into your tax-advantaged accounts.

3. Practice Tax Smart Investing

Account activities that generate short-term gains are more likely to generate taxable income. This is apt to happen when your investments in mutual funds are frequently traded resulting in a short-term capital gains tax liability and unnecessary commissions. This is a double hit on your investment returns.

Your best chance of reducing your tax liability is investing in passively managed funds such as EFTs or index mutual funds.

4. Seek Professional Help

Our firm has experienced advisers who can help you navigate the complicated taxation waters and save you money by identifying the tax advantages available to you. Every person’s situation is different, but we can assist you maximize your investments and reduces your tax obligation.

8 Benefits of Outsourcing Payroll

Accounting for Your Business

Photo Credit: Accounting for Your Business/Shutterstock.com

Is your business having a hard time with payroll? Are you looking to save money, time and frustration? Here are the 8 benefits of outsourcing payroll:

1. Free Up Time
Manual processing of payroll is a time-consuming process without a value-added benefit. Outsourcing payroll will make staff time available to work on important revenue generating activities or to assist with other important operational processes. Business experts recommend that the number one outsourcing opportunity is payroll.

2. Cost Reduction

The direct labor costs associated with processing the payroll will be significantly reduced by using a payroll provider. Further cost reductions are available by having the payroll provider generate the W2s and a report about the vacation hours available and the time off taken by each employee. The payroll provider can generate many valuable reports.

3. Avoid IRS Penalties

The IRS claims that 40 percent of small businesses pay penalties every year for either incorrect or late filings and payments. Most of the nation-wide payroll services provide a tax guarantee that ensures their customers will not incur any penalty levied by the IRS for incorrect or late filings. IRS problems can be difficult to work with.

4. Alleviate Pain

The manual preparation of the payroll is a pain for most small businesses, and it can be a nightmare for some. The personal pain can be a headache or even ulcers. The frustration can result in the weariness that detracts from the core business.

5. Avoid Outdated Technology Problems

Small business owners need to have the latest payroll software and the latest tax withholding tables. The IRS problems resulting from outdated technology will be troublesome.

6. Direct Deposit Can Be Offered

Outsourcing payroll will make direct deposit easy and without any work on the part of the business. Direct deposit is a benefit for the employees, and it is also a benefit for the business. Direct deposit significantly reduces work for the business, and it also eliminates reconciling the payroll bank account every month.

7. Outside Payroll Expertise Is A Valuable Resource

The outside payroll service will keep abreast of the constantly changing regulations, withholding rates, and state and federal government forms. Outsourcing payroll provides valuable expertise that would be costly to obtain with an in-house employee. A business can acquire a lot of knowledge and a dependable source of help when payroll is outsourced.

8. Avoid The Problems When The Payroll Coordinator Walks Out The Door

A business is vulnerable when the payroll is handled by one employee because they may leave at any time and without notice. Outsourcing payroll will eliminate this risk.

Does Your Company Need a Bookkeeper?

Photo Credit: Syda Productions/Shutterstock.com

Photo Credit: Syda Productions/Shutterstock.com

Every company needs a bookkeeper. A competent bookkeeper using a good bookkeeping or accounting system can enable the owner to concentrate on the company’s core business, and this is one of the most important answers to the question often asked: Does your company need a bookkeeper? There are many other reasons that justify a bookkeeper position in your business. Our company can provide bookkeeping services, and we can also provide part-time bookkeeping services. We can also provide the best systems that will be easy to use, and easy to extract reports from.

A bookkeeper will organize the business transactions to provide the necessary reports on the financial aspects of the business operations. These reports are essential for helping the owner to understand whether their business is making or losing money. Reports can be generated to create inventory turnover ratios and the aging of accounts receivables as well as invoices that are due to be paid. The bookkeeping position will be the one to focus the owner’s attention on areas causing potential financial problems.

A bookkeeper can formalize budgets and report actual performance to the budgets on any frequency the owner needs. Cash forecasts are another essential function that will keep the business from running out of cash, or these will help the owner realize when they need to borrow money for operating expenses.

Keeping track of employee hours worked, preparing the payroll and making the required payments to the governments on the due dates will save the business penalties, fines, interest and a lot of trouble. Maintaining compliance with the state and federal tax reporting requirements is absolutely necessary. However, many businesses without a bookkeeper find this to be a tough task. Preparing year-end payroll forms and reports for the insurance companies is a job for the bookkeeper.

A good bookkeeping system will enable the bookkeeper to record all revenue and expenses properly. Recording these items in the accounts that will be used by the accountant to prepare the tax liability of the business is another way the business can save money. If the accountant does not learn about tax deductible or tax credit items, then these will likely not be used to the advantage of the owner.

Correctly posting financial data to the appropriate accounts will ensure that the accountant and the CPA will be able to get an entirely accurate picture of the financial health of the business. The data posted to the accounts will enable the creation of important financial statements such as a balance sheet and a profit and loss statement. The accountant or the CPA will be able to offer operational changes to improve sales and profits.

Lenders will not view a business in a good light if the business does not have a bookkeeper and an accounting system.

For more information regarding Clark & Company and their services, visit their website or Facebook page!

Why Financial Statements Are Necessary For Your Business

Photo Credit: Igor Marusichenko/Shutterstock.com

Photo Credit: Igor Marusichenko/Shutterstock.com

Financial statements are created to present an accurate picture of the financial condition of your business including the results of your business. The key financial statements are the balance sheet, income statement, and the statement of cash flows. While each of the financial statements are important, the most important statement will depend on your needs, and our expert staff can structure these statements to suit your needs. Here is a closer look at each statement:

Balance Sheet
The balance sheet may be ranked third by some users since it does not report operational results, and some of the data may be historical in nature. However, the balance sheet takes on more importance when used in conjunction with the income statement, because the balance sheet will show the amount of investment required to support the profits. A business owner should always understand the return on their investment. A CPA can use this information to discuss how a business ranks among similar businesses. This statement is one that lenders will want to see.

Income Statement
The majority of business owners will likely consider the income statement to be the most important of the three because it demonstrates the ability of the business to generate a profit. The data provided on the income statement is usually in current dollars which makes it an accurate accounting of your income. This statement does not reveal the assets and liabilities required to generate a profit or that may contribute to a loss. The income statement does not reflect the cash flows either generated or needed by the business. Thus, this statement when used without any other significant statement will be an incomplete picture.

Statements of Cash Flow
Some business owners may consider this statement as being the most important because it focuses solely on positive and negative cash flows. This statement is particularly important for businesses operating on the accrual basis of accounting. This statement presents a more accurate picture of cash flows than the income statement. Understanding cash flows will enable a business to make adjustments in operations or borrow money to support operations.

Financial statements are important tools to help management make sound decisions. Lenders, partners, potential buyers and other interested parties will get a good picture of your business. Our experienced staff will work closely with your key personnel to develop accurate, timely and useful financial statements. The statements that our staff prepares are designed to help a business maximize profit and avoid the pitfalls of losses and cash shortages. We also will determine if the rate of return on investment is adequate or if other actions should be taken.

For more information regarding Clark & Company and their services, visit their website or Facebook page!

Top 10 Ways To Prepare For Retirement

Photo Credit: David Franklin/Shutterstock.com

Photo Credit: David Franklin/Shutterstock.com

The average retiree in America will live 20 years after they retire. Many experts believe that you will need a monthly income equal to 70 percent of your current take-home pay. It is never too early or too late to begin saving money for your retirement years. Keep in mind that today’s dollar will be worth a lot less when you retire, so you might want to get an inflation estimate chart and determine how much money you will need. For example, assuming inflation is 3% annually over the next 20 years one dollar will be worth 60 cents in today’s purchasing power. This will give you an idea about the funds you will need if you plan to retire in 20 years. Charts are available on the internet to help you make other calculations. Here is a list of 10 ways to prepare for retirement:

#1: Start A Savings Plan and Stick To It
Develop a plan that will enable you to save the amount of money you will need by the time you retire. Obviously, this may be difficult at first, but continue to strive toward your goal.

#2: Determine Your Retirement Income Requirement
Keep in mind any unusual medical expenses you may have and any travel plans you might want to make. Try to anticipate your lifestyle expenses as best you can.

#3: Contribute To Your Employer’s Retirement Plan
If your employer offers a retirement savings plan, then sign up and contribute all you can. You will not pay income taxes on the money you contribute. Therefore, your money will grow faster.

#4: Study Your Employer Provided Pension Plan
If your employer provides such a plan, then learn all you can about it and determine how its benefits will fit into your overall goal.

#5: Start Your Own Individual Retirement Account
You can contribute up to $5,500 a year into an IRA, and you can contribute even more if you are over 50. You may receive favorable tax treatment depending on the type of plan you choose.

#6: Find Out what Your Social Security Benefits Will Be
You can use an online estimator provided by the Social Security Administration’s website to estimate your benefits.

#7: Consider Investment Strategies
It is important to save, and it is more important to invest some or even all of your savings in secure investments. Don’t hesitate to seek professional advice.

#8: Don’t Touch Your Retirement Savings
Avoid the temptation to withdraw money from your retirement savings. You will lose more in the long term than you withdrew.

#9: Consider The Magic Of Compounding
If you invested $5,000 a year at 7% annually, you would have $316,245 in 25 years. You can do even better with the right investment advice.

#10: Find A Financial Adviser
You will be much farther ahead if you don’t try to plan for your retirement all by yourself. Seek professional help and don’t hesitate to ask questions.

For more information regarding Clark & Company and their services, visit their website or Facebook page!

How To Choose The Right Business Entity

Photo Credit: Rawpixel.com/Shutterstock.com

Photo Credit: Rawpixel.com/Shutterstock.com

Choosing the right business entity allows you to achieve maximum protection for your personal assets, and you can avoid the multiple layers of taxation by the state and federal governments. Equally important is the ability to attract investors, and financing is largely determined by the type of business entity you choose. It will also determine whether your business can continue to operate after your death. How to choose the right business entity depends on your assessment of how these considerations relate to your objectives for building a successful business with the least amount of potential personal liability. The entity choices available include the following categories:

A Sole Proprietorship
This is a business owned by one person, and it has no legal distinction from the owner, and it requires no government filings other than a statement about the owner who is operating the business. This is an inexpensive way to start a business. All income and expenses are reported on the owner’s personal tax filing. The drawbacks are 1) No personal liability protection and 2) No automatic transfer of ownership upon the death of the owner.

Corporations
Corporations are legal entities and are separate from its owners. These entities require the creation of more legal documents, and the ownership is vested in more than one person. Management includes a board of directors, and owners include shareholders who elect the directors. The board of directors approves the appointment of officers who run the business.

Business corporations can be formed by using one of the several types of corporation structures which differ in the way each functions. The C and S Corporations have advantages and the LLC also has distinct advantages. The C and S Corporations are taxed differently, and this is one of the primary considerations in selecting one of these entities. One or more owners can create an LLC or a Limited Liability Company. An LLC offers greater flexibility in the management of the business. A board of directors is not required. Each of these entities provides personal protection for the owners and shareholders. The multiple benefits and disadvantages of each corporate entity should be discussed with an experienced business and tax consultant.

Partnerships
A business entity can also be selected from the two primary types of partnerships. The two types are the general partnership and the limited partnership. A general partnership is the easiest entity to create second only to the sole proprietorship. Since this entity involves two or more people, it is essential that the duties of each partner be stated in writing as well as the benefits due to each. Each partner is subject to personal liability. The profits and losses are reported on each partner’s personal income tax as outlined in the partnership agreement.

The limited partnership is a more formal entity requiring that the partnership agreement is filed with the state. Limited partners are not personally liable for the debts, but they cannot be involved in the daily management of the business. This is a good method to interest investors.

For more information regarding Clark & Company and their services, visit their website or Facebook page!

Why Estate & Trust Tax Preparation Is Necessary

Photo Credit: arka38/Shutterstock.com

Photo Credit: arka38/Shutterstock.com

You may ask why is estate & trust tax preparation necessary? The answer is estate matters affect you and your heirs. By taking steps now you will ease the burden of your family during a difficult time. Your family will realize that you cared enough to take care of what could have become complex legal issues, and could cause your spouse to be without an easy access to funds. You can ensue a smooth transition of your estate to your heirs. You will also ensure that your assets are distributed according to your wishes. Without an estate plan, the state will be all too happy to decide who will receive your assets and how they will receive them.

You can remain in control of your assets even after your death by making arrangements with an estate plan or a trust to distribute your assets when and how you wish them to be distributed. You can appoint an administrator or a trustee to oversee the management and the distribution of your assets. We can structure and supervise a regular accounting of the estate or the trust to ensure your heirs that their money is being handled according to their best interest and according to your wishes.

We will work with your attorney to make sure that your estate is not taxed or that the estate taxes are the minimum required. A poorly planned estate can be taxed high and much more than it need be. We have many years of experience working with large and small estates to prevent over-taxation. Often, we advise clients about how their estate can legally avoid estate taxes. The state and federal estate tax laws are complicated, but we completely understand them. We know that you probably worked hard to earn your living and to build up your assets, so we understand the need to preserve every dollar.

An estate plan or a trust can be modified any time for any reason. If people die or fall out of favor, then your attorney can make the changes necessary. We can review the tax implications, if any, and make the appropriate recommendations. Often, the assets of the estate will be converted to another form, and we can advise you on how this affects the estate’s tax position. We also make sure that your assets are placed in the best possible position before you die to minimize taxes while you are living.

For more information regarding Clark & Company and their services, visit their website or Facebook page!

3 Key Benefits Of Financial Statements

Photo Credit: Igor Marusichenko/Shutterstock.com

Photo Credit: Igor Marusichenko/Shutterstock.com

Financial statements are an important tool for management to have when making business decisions. The quality of the financial statements are critical for obvious reasons, but not so obvious is the process that must be used to develop accurate financial statements. We understand the process for developing these statements, and our staff is highly experienced in this work. We understand the importance of these statements to you. While there are numerous benefits of having accurate and timely financial statements, we have identified below the 3 key benefits of financial statements.

1. Understanding The Financial Status of Your Business

The complete financial status of your business can be presented in a quality financial statement that is prepared by our staff working closely with your staff. The three mainfinancial statements are the balance sheet, the income statement and the cash flow statement. The balance sheet reflects the owner’s equity after the liabilities are subtracted from the assets. The income statement which is also known as the profit and loss statement, shows the profit derived from income over a defined period of time. The cash flow statement is a valuable tool for showing if there is enough cash coming in to pay for the operations of the business. A cash flow can be projected out over several months.

2. Lenders Will Want To Review Your Financial Statements

Lenders will be able to assess the financial health of your business by examining the financial statements. Lenders will be looking for inventory turnover and the aging of receivables among other indicators. The percentage of profit on sales is an important piece of information for a lender. Lenders will be looking at the financial trends of your business, so it is important that this information be accurate for you and lenders. They will also be looking at the growth in your equity.

3. Financial Statements Will Help Prepare A Budget And Make Financial Decisions

Preparing a budget requires a good understanding of the financial picture for prior years. This is obtained by referring to the historical financial statements. Combined with a revenue forecast, the prior year’s expenses will help you prepare a budget. The financial statements will also help determine the important ratios that will reflect the health of the business and show the opportunities for improvement. The debt-to-equity ratio is important as is the inventory turnover ratio. The return on sales ratio and the sales to assets ratio are valuable tools.

For more information regarding Clark & Company and their services, visit their website or Facebook page!

Business Consulting Service

Photo Credit:  ImageFlow/Shutterstock.com

Photo Credit: ImageFlow/Shutterstock.com

We are available to help you deal with any business problem or opportunity. As a true business partner, we are ready to provide business-consulting services to help your business thrive in a competitive market with increased profitability. A business in the economy of today requires a lot more than knowledge of the core business and organizing a staff. The following are just a few of the many ways that our staff can help you grow your business while increasing profit.

Identifying the strengths and weaknesses of your business is helpful in achieving growth by obtaining a greater market share and developing new products and services that will attract new customers and clients. We have the staff that can examine the details of your business and make valuable suggestions about building on the strengths and eliminating the weaknesses.

It is essential to have a well-planned strategy to minimize risk and reduce the possibilities of losses. Our economy has not completely recovered from the recession, so it is vital that every aspect of your business be able to withstand a downturn by implementing practices that will minimize or preclude any risk of decline in revenue.

An accounting system that delivers real time reports on expenses and revenues compared to budget is essential. Closely monitoring receivables is vital for business stability. Developing cash flow projections will help you maintain the cash balances you need to operate. Inventory planning is another important part of a successful business plan. You need to have readily available data on market performance and the performance of your competitors.

Knowing how and when to make vital decisions is part of our expertise. Our staff has a comprehensive view of the economy and the business world operating within it, and we are able to help you make the right decisions for the future of your business. Decisions about expanding, restructuring or selling your business is within the realm of our business acumen and analytical capabilities. We can help you develop a complete business plan that will set the course for the future of your business.

For more information regarding Clark & Company and their services, visit their website or Facebook page!

IRS Representation

Photo Credit: Lane V. Erickson/Shutterstock.com

Photo Credit: Lane V. Erickson/Shutterstock.com

If you receive a letter or a notice from the IRS, you should not assume that it is unimportant. The IRS does not send out letters and notices that do not have a follow-up action planned. Our staff of highly qualified experts in tax matters have years of experience in dealing with IRS regulations and procedures, and we can advise you on the best course of action that will protect your interests. The IRS has many trained agents who know the tax laws and the regulations far better than a person who is busy managing a business.

This is when we can be of service, because we make it our business to know the IRS methods and we can effectively work to ensure that you are not the victim of an aggressive IRS agent. The IRS is not always right in its assessment of tax issues, but our staff knows when they are wrong. Our IRS representation will make a difference.

One important service we provide is properly representing you in an IRS audit. Facing an IRS audit can be an intimidating and complex process, but more importantly, it can be a costly process if the IRS believes your tax filing contains errors. Our experts will put their years of training and experience in IRS representation to work for you. You should never go into an audit meeting without IRS representation because you need an expert who knows when the audit agent is wrong or is overreaching.

Our familiarity with the IRS audit procedures enables us to ensure that they do not use improper guidelines in determining whether certain deductions are allowed or the tax credits you claimed are properly supported. Business income taxes can be very complex and there is often a chance for misinterpretation.

We can also represent you in tax issues with other tax authorities. Our staff can prepare your next tax filing to minimize the chance of an audit and to ensure complete accuracy. We can also review your accounting system to ensure that every deduction and credit is properly recorded. This will be significant in helping to prepare your next tax filing.

For more information regarding Clark & Company and their services, visit their website or Facebook page!