Tag Archives: bookkeeping

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.

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