Entrepreneurs and small business owners are often focused exclusively on getting a business up and running. They work hard to put the people, processes, and policies in place that will get the business off the ground and keep it running for the foreseeable future. It’s critical to the company’s success to have the right players on the management team. That includes an accountant who understands the business and knows how to navigate the swirl of tax issues that come with any new startup.
When it’s time to find an accountant, how do you go about it? To get you going in the right direction, here are a few tips from the pros at Adams Accounting Solutions. They’re the experts when it comes to small business taxes and accounting. Following these tips will increase the likelihood of finding someone you can trust who will become an integral part of your management team.
One of the best ways to find a reputable accountant is to ask others you do business with. Word of mouth and personal experience often lead to the best choice, and bankers, investment professionals, and attorneys frequently work with accountants. Start here for referrals to the accountants they know and like the most.
If you have connections with other business owners, they’re also a good source of referrals. Ask who they use. If their accountant does a good job, they’ll be happy to tell you about it. The reverse is also true. If they’ve had a bad experience, you’ll hear about that, too.
Anyone who graduates college with an accounting degree can hang a shingle with their name on it. For your new business, you’ll want to look for a Certified Public Accountant (CPA). The CPA designation means the accountant has gone through additional training — a rigorous, two-day standardized test — to prove their knowledge and capability. Many CPA programs also require an advanced degree. You’ll want this level of expertise and professionalism on your side.
The next step is to conduct interviews with your top choices. This doesn’t have to be a formal meeting, although it may be a good idea to visit their office to see what it looks and feels like. You can also talk to potential candidates over the phone. Ask questions about their background, how they work with clients, and the types of accounting they specialize in. Compare that to your needs. Once you’ve completed this step, you’ll probably have a good idea of who you want to work with.
If you’re looking for an accountant you can trust with your startup business, give us a call at Adams Accounting Solutions. We specialize in helping small businesses keep the money they work so hard to bring in. Contact us to schedule a consultation to learn more about our services or get your questions answered. We look forward to joining the team!
Creating an exit strategy is something that should be done when a business is first started. Having a plan for how to exit the business in the future gives you a long-range goal to work toward as you meet the short-term goals of monthly sales and revenue.
Selling the business is often a good exit strategy for small business owners. If they’ve run a successful, healthy business over the years, they may have something worth selling.
Selling the business may seem fairly straightforward, especially if the company has remained in the small-business category. But even the smallest business sale can get complicated if you’re not paying attention to details and don’t bring in the right consultants. This is where your accountant comes in.
Here are a few ways your accountant can help out during a merger or acquisition situation.
Preliminary valuation. Before you enter into discussions with a potential buyer, you need to know what the business is worth. If you’ve been closely involved in the financial side of the business, you may already have a good guess. But your accountant can give you an objective valuation, helping you determine your material assets and liabilities so you can figure out what should be included in the sale.
Structuring the deal. There are many ways to structure a business sale. It may be a merger between similar partners or an acquisition of a smaller entity by a larger one. It may even include creating a new company. The business may be sold in its entirety, or you may only sell off the company’s assets, such as equipment and machinery, intellectual property, or customer database.
Many factors go into structuring such a deal, and your accountant can guide you as you work through them. Most accountants are adept at translating financial matters into terms that non-finance people can understand. Having your accountant on board throughout the process helps ensure that you’re not on the hook for something unexpected once the deal is done.
Tax expertise. Your accountant is an expert when it comes to tax preparation. But they’re probably also well-versed in figuring the tax implications from the sale of a business. The buyer will need a lot of financial data, and your accountant can help you pull together relevant documents. They can also calculate what the after-tax impacts will be once the sale is complete. How much will you pocket from the deal? And how much will you owe in taxes as a result? It’s good to know that up-front.
Plan for a new life. An accountant can also help you develop a vision of what life could be like after the sale. In conjunction with a trusted financial advisor, you can run scenarios on a new life or lifestyle. Will you retire? Will you start a new business? Maybe you’ll become an industry consultant. Your accountant can talk through some of the options with you and present the anticipated tax impacts of those options.
At Adams Accounting Solutions, small businesses are our specialty. We’ve worked with numerous companies as they’ve gone through the M&A process, guiding them through the pitfalls and helping them over the hurdles. If your exit strategy involves selling the business, we’d love to talk with you. Give us a call at 913-888-9100 to schedule an appointment. We’ll help make sure you’re getting the best deal possible!
Many individual taxpayers look with trepidation toward the tax filing deadline of April 15 each year. Once they get their taxes in order and get them filed, they breathe a sigh of relief, knowing that most of the tax work is done until the next year.
But for small business owners and the self-employed, there are other tax filing deadlines to look forward to (aka worry about). If you missed the original filing deadline and filed an extension instead, you’ll want to make sure you have your taxes in order now. Tax filing deadlines are looming on the horizon.
Here’s a quick run-down of the upcoming tax extension filing deadlines for small businesses and the self-employed, including independent contractors. If any of these apply to you and you’re not ready to file, give us a call at Adams Accounting Solutions. We’ll be glad to help you out!
September 15: If your business is classified as an S-corporation or a partnership and you filed a six-month extension back in March, your taxes are due on September 15, just a few days away. If you miss this date, interest and penalties will apply.
October 15: If your business is classified as a C-corporation or an LLC and you filed a six-month extension back in April, you have until October 15 to get your taxes prepared and filed. If you miss it, you’ll be required to pay penalties, interest, and any remaining taxes not paid in April when you filed the extension.
October 15: If you’re self-employed and classified as a sole proprietorship, you have until October 15 to get your taxes filed if you requested an extension back in April. Again, penalties and interest will accrue if you miss this deadline.
There are a couple of other deadlines that small business owners might want to keep in mind. If you’re a sole proprietor, LLC member, partner, or independent contractor, you’re required to pay estimated quarterly taxes. The payment deadline for third quarter estimated tax payments is September 15.
The Q4 payment deadline for C-corporations only is December 15. For all other business entities, the Q4 payment isn’t due until January 18, 2022.
If all these dates and deadlines make your head spin, give us a call at Adams Accounting Solutions, Our job is to keep track of all this for you and help ensure that your taxes are filed on time, every time. We specialize in small business tax preparation. We’ll help you work through the confusion when it comes to tax planning and preparation. Give us a call at 913-888-9100 to schedule an appointment today!
Small business owners often live in fear of the day they get audited. They make smart business decisions, following the rules and doing what they can to keep from triggering one. But sometimes, despite all that, the dreaded letter arrives from the IRS.
Many people assume they’re being audited because they did something wrong on their taxes. This isn’t necessarily the case. While there are trigger factors that make an audit more likely, the IRS also pulls random tax returns for audits. It’s like being called for jury duty. Sometimes it’s just your turn.
Having your financial records audited by the IRS takes time away from running the business. If you’re being audited, there are a few steps you can take to get through the process in as little time as possible.
Here are a few tips for surviving an audit from the professionals at Adams Accounting Solutions. Follow these, and you’ll soon be moving forward again with your full attention on meeting your business goals.
Tip #1. Notify your accountant as soon as you receive the audit letter from the IRS. This gives them plenty of time to pull your tax returns and get them organized for the audit team. Many accountants go through the audit with their clients, answering questions about how the tax returns were prepared and pointing auditors to supporting documentation. This is a big help for those being audited for the first time.
Tip #2. Gather all your tax documents together as soon as possible. Don’t wait until the day before the audit to start this task, and don’t miss any deadlines. If a document is missing, you need to know sooner rather than later, so you can find it before the auditor arrives.
Tip #3. Be professional. When the auditor shows up, be professional and courteous. Try not to get defensive when they ask questions. Remember that this isn’t personal; they’re just doing their job. The more you cooperate, the more smoothly the audit will go, and the sooner it will be over.
Tip #4. Stay calm. Many people talk too much when they get nervous. Auditors are trained to listen well and watch body language. Stay calm and answer questions fully but briefly. Don’t muddy the water with information they don’t ask for. It may end up extending the audit.
Tip #5. Don’t lie about anything. This may seem like a no-brainer, but people do strange things under pressure. Remain calm so that you can think clearly. Answer every question as honestly as you can.
Tip #6. Don’t file or amend any returns during the process. Continuing to file extensions or amend returns during the audit process will only give the auditors more to comb through. Save all that until the audit is complete.
At Adams Accounting Solutions, we like to think of ourselves as partners with our clients. When we prepare tax returns, we stand behind our work. If our clients get audited, we go through the process with them, helping them pull the required documents together, meeting the auditors, and guiding them through the process.
If you’re looking for an accounting firm that goes above and beyond for its clients, call Adams Accounting Solutions today!
More people than ever before have caught onto the fact that real estate can be a good investment. Especially when the market is strong — as it is now — the purchase of an investment property can pay off in the long run, especially if you’re able to defer some of the costs associated with owning or selling the property.
Some investors have discovered the benefits of tax deferment through a 1031 exchange, swapping one investment property for another and deferring the resulting capital gains tax. However, IRS Code 1031 (for which the process is named) is quite complicated. If you’re a real estate investor contemplating this tactic, you need to be aware of the nuances, and consult with a tax professional before moving forward with a property swap.
In a nutshell, a 1031 exchange is when a real estate investor exchanges one property for another like-kind property (according to the IRS’s definition of like-kind). In essence, you’re changing the form of the investment without cashing out or recognizing a capital gain. Even though most swaps are taxable as sales, if the deal meets the requirements for a 1031 exchange, you’ll either have no tax liability or limited tax due at the time of the exchange.
Sounds good, right? But here are a few things to be aware of when considering a 1031 exchange.
Engaging in a 1031 exchange can be tricky because of timing. It’s challenging to find the exact type of property you want to buy at the same time another property owner is looking for the exact type of property you have. For that reason, many 1031 swaps take place through an intermediary. This is where the timing gets tricky. The IRS has specified timelines regarding the designation of the replacement property and the timeframe in which you close on the deal. Talk to your accountant or real estate broker for more information.
You may have tax implications if you have cash left over after buying the new property. This cash may be taxed as a capital gain. You may also get in trouble if you don’t understand and take into account any mortgage loans associated with the properties being swapped. This is why it’s crucial to have a certified accountant on your team, one who can explain the tax implications of what you’re doing.
If you’re considering a 1031 exchange, talk with us first at Adams Accounting Solutions. We’re experts when it comes to determining the tax implications of real estate deals, including 1031 exchanges. We’re happy to answer questions and help guide you through this process. Give us a call at 913-888-9100 today to schedule an appointment.
Taxpayers with children may have recently noticed an increase in their checking accounts. This is likely due to a bonus from the government. The first child tax credit payments went out earlier this month. They’re yet one more form of supplemental income implemented to help families recover from the pandemic. Many eligible families just received their first payment with others to follow throughout the rest of the year.
Some families happily accept the money and move on. Others are a little skeptical. Do they have reason to be? Here’s what you need to know.
Advance child tax credit payments are part of an expanded program implemented by the government. It pays families one-half the credit they would typically claim per child on their income taxes, but it pays this half in installments beginning in July and running through December. Rather than waiting to claim the deduction for children on taxes next April, taxpayers are receiving that money now through these payments.
For many eligible families in tax year 2021, this advance credit may be as much as $3,600 for each child under the age of 6 (up to $300 monthly) and up to $3,000 for each child 6-17 years old (up to $250 monthly). Many struggling families are grateful for this cash infusion. But as with other stimulus-related payments from the government, there are aspects that could trip you up at tax time if you’re not paying attention.
Here are a few things to be aware of if you’re receiving these supplemental payments.
If you’re uncertain of how all this will impact you at tax time next year, talk with your accountant. They can help you determine the full impact of these advance child tax credit payments on your tax liability for 2021.
If these payments will put you in a bind, there is a way to opt out of them. To do so, visit the Child Tax Credit Update Portal and follow the directions for opting out of receiving these payments. The deadline for opting out of the August payment is August 2. If you hurry, you can still make it!
We know how confusing all this can be. We’re here to help. If you have questions about how the advance child tax credit payments work, give us a call. We’ll review your specific situation and offer advice to put you in the best possible position come tax time. Give us a call at 913-888-9100 today!
When it comes to starting and running a business, entrepreneurs quickly learn that there’s a lot more to it than just churning out a product or service. You have to sell your goods, too, which means you have to learn sales tactics and terminology. And selling is easier when you pave the way with a few good marketing tactics aimed at your ideal target audience. Therefore, it’s also beneficial to learn basic marketing skills.
There’s a lot to running a business on the back end, as well. Small business owners have to know a little bit about finance, bookkeeping, and accounting. While you don’t need to be an expert in these fields, it’s advisable to know enough to keep your business out of trouble and maintain a grasp on whether it’s making money — or not.
One of the best payoffs for any entrepreneur often comes in the form of hired professional help. Smart business owners know their strengths and weak-nesses, and they aren’t afraid to hire people to help where their skills are lacking.
Adams Accounting Solutions can fill the gap if your accounting skills are a little shaky. We specialize in all aspects of small business accounting, including tax preparation, operations consulting, and internal control evaluation. Our goal is to help make your business as profitable as it can be.
We also like to educate our clients so they can become better business people. Here are a few basic accounting terms that every business owner should understand and be familiar with.
Balance sheet: A balance sheet is a snapshot of the assets and liabilities of a company at a specific point in time. It may also include shareholders’ equity and business capital.
Income statement: Sometimes called the P&L or profit and loss, it shows revenues, expenses, and profits over a given period. This financial statement provides a snapshot of the overall health of the business.
Accounts payable: Accounts payable refers to expenses incurred but not paid yet. In other words, it’s money the business owes to others. Accounts payable show on the balance sheet as a liability.
Accounts receivable: Accounts receivable is the opposite of accounts payable. It refers to all the money others owe your business for services rendered or products sold. Accounts receivable are shown on the balance sheet as an asset.
Cost of goods sold (COGS): COGS refer to costs directly related to creating whatever the business sells. For instance, materials and labor fall into this category. COGS does not include expenses incurred to run the business, such as sales and marketing or overhead.
Net income: Net income is the amount of money you have left after sub-tracting total expenses from total sales for a certain period. Net income is also known as net profit.
Gross profit: Gross profit is the amount of money left after subtracting COGS from total revenue for the same period. Gross profit does not take into account overhead expenses such as rent and utilities.
There are many more accounting terms that apply to small businesses. We don’t have enough room to discuss them all here. But we’re happy to talk you through everything in our office. Give us a call at 913-888-9100 to schedule an appointment.
A couple of weeks ago, we published a post called Keeping Track of Rental Property Expenses, which talked about the importance of tracking and documenting rental property-related expenses. It also gave pointers on how to do this consistently. It occurred to us, though, that perhaps not everyone knows what deductions are allowed when it comes to rental property ownership and, therefore, which expenses to track and document.
Here’s a quick primer on some of the most common tax deductions associated with rental properties. If you’re not aware of these, you may be missing out on some of the benefits of property ownership.
Interest and other fees. Most rental property owners take out a mortgage to purchase the property, just as they do for their home. The interest paid on that mortgage will be one of your most significant deductions come tax time. Loan origination fees and points associated with the loan are also deductible. Credit card interest is deductible for any purchases made exclusively for the rental property during the tax filing year.
Insurance. It would be folly to own a rental property without having it adequately insured. In many cases, you can’t get a mortgage for this type of property without having rental property insurance in place. Because this is a necessary expense, insurance premiums are tax-deductible.
Property tax. Property taxes are a necessity in nearly every state. These taxes can be deducted at tax time. A licensed CPA will help you determine what amount is deductible. You may also have state licensing requirements or occupancy fees, depending on the location of your rental property. These fees are also deductible.
Depreciation. Just as your car depreciates when you drive it off the lot, the same thing happens with rental property. Depreciation is generally deducted over a several-year period. Depreciation on items used to help run the rental business, such as computers and vehicles, is also deductible, as are improvements you make to the property, like a new roof.
Maintenance and repairs. While maintenance and repair costs don’t increase the property’s value, they are necessary to keep the place in rentable condition. These costs are deductible.
Utilities. If you pay for utilities rather than having a tenant pay them, you can deduct this expense at tax time.
Travel. The mileage to and from your rental property is also deductible. Make sure you keep a mileage log and remember to track every trip that’s related to your rental property.
Legal and professional fees. Legal and professional fees related to the maintenance of the rental property are deductible in most cases. Examples include legal fees for the creation of a rental contract or fees paid to a CPA for tax preparation. Business consultation fees may also be deductible. Talk to your accountant to clarify these deductions before claiming them.
Office space. Office space is also deductible, whether it’s a co-working space or a spare bedroom. Office supplies and machinery are also deductible, as is your time spent managing your rental property. Keep a good record of your time; it’s one of the deductions most likely to flag an audit.
Adams Accounting Solutions is well-versed in all aspects of rental property ownership. We’ll help you figure out which expenses are deductible and which aren’t so that you get the full benefits of property ownership at tax time. Make an appointment for a consultation today!
Alas, things don’t always go as planned. We loved the new office we moved into back in January. But due to unforeseen circumstances, we’ve had to move again.
Now, you’ll find Adams Accounting Solutions in an exciting new space in Overland Park:
10821 West 87th Street, Suite 101
Overland Park, KS 66214
Don’t worry. Nothing else has changed. We still specialize in helping small businesses pick their way through the maze of paperwork associated with running a business. We’ll help you figure out which documents you need to keep, what taxes you need to pay, and how to maximize the deductions you’re eligible for. Our small business tax services also include one-on-one consultations in case you need help determining the next best step for your business.
Adams Accounting Solutions also helps keep businesses on track with tax filing deadlines for the following:
Also, our certified CPAs still help with the following tasks:
We want to partner with you to make your business as successful as possible.
Our location is the only thing that has changed. We still offer all the accounting, tax preparation, and financial planning services we’ve always provided our customers. We stay up-to-date on the latest tax laws, regulations, and changes – including stimulus checks, PPP loan and forgiveness processes, and other pandemic-related topics. We’re here to answer questions and partner with you for financial success.
Although our address has changed, our phone number remains the same. Give us a call at 913-888-9100 to schedule an appointment or get answers to your accounting or tax-related questions. And if you’re in the neighborhood, stop in and check out our new place. We’d love to show it off!
Savvy business people know that rental properties can be a good investment if they’re purchased at the right time and managed well. Not only are they a good source of steady income, but they also provide tax deductions, which many business owners find appealing. To take advantage of those tax deductions, however, property owners need to have their paperwork in order, with rental income and expenses organized and documented before tax time. Otherwise, they may miss out on the benefits they were hoping to gain by purchasing the property in the first place.
Tracking rental property expenses can be tedious, but it’s critical for any rental property owner. According to an article in U.S. News & World Report, unusually large business deductions fall into the top nine audit triggers for the IRS. If you’re going to claim deductions on your rental property, you need to maintain good records.
So what’s the best way to keep track of all the expenses—and income—that come with owning a rental property? Here are a few tips from Adams Accounting Solutions. These tips will help you stay organized throughout the year, making the tax preparation process that much easier. Taking these steps will also help ensure that if you are audited, you have plenty of documentation to back up your claims.
The first step is to create a filing system to help yourself stay organized each month. This system can be as simple as an accordion file set up by month or individual file folders labeled for each type of deduction. The important point is to have a place to file all your receipts, whether they’re for your mortgage payments on the property (the interest is tax-deductible) or receipts for the payment of such items as utilities, repairs, or professional services associated with the property.
Once you’re in the habit of collecting and organizing your receipts, you need to start tracking cash outlays and inflows. Many property owners do this with a simple Excel spreadsheet, which can be sent to their accountant when preparing taxes.
There are also software systems that help property owners stay on top of these expenses. Some software, such as Buildium, enables you to manage the property from a marketing and leasing perspective and also handles back-end accounting. QuickBooks Online is another software program designed to handle the general accounting needs of small businesses and rental property owners. Electronic systems like these allow you to log expenses and income and then generate revenue and profit and loss statements with the push of a button.
It doesn’t matter how great the filing system is or how robust the software if you keep forgetting to use it. Once you decide on a tracking system and get it set up, make a pledge to yourself to use it regularly. This is often best accomplished in baby steps. Set aside an hour a week to collect receipts and file them away or enter them into your software. Once you’ve done this for a few months, you may discover that you don’t need to do it every week. Maybe once a month will suffice.
Some rental property owners find it easier to hire an independent bookkeeper to manage all this for them. That’s also a great option. The important thing is to be consistent, whatever method you choose. And if you hire a bookkeeper, make sure it’s someone you trust.
Tracking the expenses associated with owning rental property can be challenging. At Adams Accounting Solutions, we’re specialists when it comes to all this. We’re QuickBooks certified and are happy to help you set up QuickBooks Online and show you how to use it to track rental property expenses and income. We’ll also educate you on the types of documents and receipts you need to keep to back up your deductible expenses.
Make sure you’re getting the full benefits of rental property ownership. Call Adams Accounting Solutions at 913-888-9100 today to schedule an appointment!
Richard Adams is a graduate of Benedictine College in Atchison, Kansas, with dual majors in Accounting and Business Administration. He is also a graduate of Wentworth Military Academy in Lexington, Missouri.