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2011 YEAR END TAX CONSIDERATIONS AND PLANNING
FOR YOUR BUSINESS
The Holidays are here and that brings us thoughts of sugarplums and year-end close for your business. Below are some items for you to consider.
PURCHASE OF BUSINESS EQUIPMENT:
Qualifying new property placed in service before December 31 can be written off under 100% bonus depreciation. The bonus rate is scheduled to fall to 50% in 2012.
Section 179 depreciation applies to new or used equipment that can also be written off 100% up to a $500,000 purchase cost. This phases out after $2,000,000 of total qualifying purchases. Section 179 expensing will still be available in 2012, but the limits will be much lower.
As in previous years there are special rules and limits for vehicle purchases, so contact us if you have questions regarding those.
The qualifying equipment can be purchased on credit and expensed in 2011 as long as it is placed in service before year end.
IMPROVEMENTS ON YOUR BUSINESS REAL PROPERTY:
There are a variety of energy–related incentives that are scheduled to expire at the end of 2011. If you have, or are still considering some energy efficient improvements to your commercial building such as lighting, heating, cooling, and hot water systems this could be beneficial. There are certain standards that must be met to qualify.
VEHICLE USE EXPENSE IN YOUR BUSINESS:
A mileage log is required to prove your business-mile percentage if you use the vehicle for personal use or for commuting to work. This is required whether you use the standard mileage rate or actual vehicle expense, (i.e. gas, repair, etc). A value for personal mileage on a business vehicle needs to be calculated and added to your W-2 as an “auto fringe”. Call us for details or to calculate the personal value.
OFFICER WAGES AND HEALTH INSURANCE:
S-Corporation owners MUST pay themselves a reasonable wage and issue a W-2 to themselves. A “reasonable wage” is often described as what you would have to pay someone else to do your job. If you have taken “draws” out of the company this year and no wages, call us to reclassify an amount to wages and calculate payroll taxes on the amount. These payroll taxes must be paid by January 15, 2012 to avoid interest and penalties.
As a business owner, your personal health insurance premiums paid through the business should be added to your W-2 and thus deducted in full on your personal return– if they are not added to your W-2, the deduction is not a business deduction and will be taken on Schedule A- Itemized Deductions subject to the 7.5% medical adjustment. Call us for more information on how to handle this for maximum tax benefit.
HEALTH CARE TAX CREDIT FOR EMPLOYEES
If you pay any portion of health insurance premiums for employees you may be eligible for a credit on your tax return. There are eligibility requirements and the credit is limited to those who have 25 or fewer employees with average income of $50,000 or less. If you think you may qualify for this credit, contact us for more information.
HIRE ACT
The HIRE ACT, passed in 2010, provided credit for employers for each new person hired between February 4, 2010 and December 31, 2010 who had been unemployed for 60 consecutive days prior to hiring. The payroll tax credit was given on payroll taxes paid in 2010, but an additional credit is allowed if this employee was employed by you for the following consecutive 52 weeks. The additional credit is allowed to be taken on the 2011income tax return if this requirement is met. If this applies to your company, be sure to let us know.
PAYROLL
As of January 1, 2012, Arizona minimum wage will increase to $7.65. This amount is higher than the Federal minimum; however, Arizona employers must follow the Arizona statute.
THINGS TO DO:
Start gathering your business receipts, update your mileage logs, and tally up your income and expenses for the year. Remember to note the business reason for any travel, meals, and entertainment expenses on your receipts. If this is an over-whelming task for you, call us for help. We do provide this service at an hourly fee.
If you have employees, make sure you have up-to-date information on them – W-4 and A-4’s for deductions, addresses, name change if married/divorced during the year, and verify you have the correct Social Security number before you issue the W-2’s. If you pay year-end bonuses, be sure to add the amount to the W-2 and calculate and pay the additional payroll tax.
If you paid service providers/subcontractors over $600 during the year, make sure you have current addresses and a business EIN # or Social Security number for them. You must issue a 1099-MISC form to them by January 31. This also includes anyone you paid rent to if the amount is $600 or above. If you need assistance in this area give us a call.
We hope that this year was a prosperous one for your business. Call us before year-end at 928-778-0079 if you need an updated estimate of tax liability and to discuss any tax planning considerations.
Remember the filing deadline for Corporations and S-Corporations is March 15 – personal and Partnership returns is April 15.
This tip brought to you by Schutte & Hilgendorf, CPA’s, a Prescott firm serving the greater Yavapai County, providing audit, accounting, bookkeeping, tax preparation and planning, Quickbooks accounting and setup to individuals and small businesses.
Contact us for a free initial consultation 928-778-0079
For December 2011
Customer Refunds: Are You Doing Them Right?
Refunds. You probably wince at the word. Some – like customer refunds for returns – are fairly uncomplicated, thanks to QuickBooks’ tools. Others, not so much. You may find yourself unable to balance your accounts receivable.
There are numerous scenarios that necessitate the use of credit memos, including overpayment, order cancellations and bad debt write-off. It’s critical that these are entered correctly. If they aren’t, you may lose a lot of the time that QuickBooks helped you save as you try to chase down a few dollars.
Click here for the Dec 2011 QuickBooks Tip
This tip brought to you by Schutte & Hilgendorf, CPAs, a Prescott CPA firm serving the greater Yavapai County, provides auditing, accounting, bookkeeping, tax preparation and planning, and QuickBooks consulting and setup to individuals and small busienesses. Contact us for a free initial consultation at 928-778-0079
Schutte & Hilgendorf wishes you a Happy Holiday Season! Some things to consider as the 2011 TAX YEAR comes to an end:
FEDERAL – There are no major tax changes for this year – most of the “Bush tax breaks” were extended at the end of 2010 to run through 2012. However, there are a couple of items that may affect some of you that are expiring at the end of 2011 and will not be available in 2012:
The option to deduct state sales taxes in lieu of income taxes.
The opportunity for those age 70 1/2 and older to transfer up to $100,000 tax free from their IRAs to a public charity.
The non-business energy credit for qualified energy efficiency improvements and residential energy property expenditures. If you are considering window, furnace, or insulation replacement, 2011 is the last year to be able to obtain a tax credit for these items.
OTHER TAX RELATED ISSUES TO KEEP IN MIND BEFORE THE YEAR ENDS:
If you use a personal vehicle for business purposes you must have a mileage log to document the deductible business use.
If you have a business “home office” there are certain deductions you can use as business expenses. There are limitations and the space you use must be used exclusively for the purpose of the business office.
ARIZONA – Arizona still has three tax credits available for 2011:
• Public School credit – $400 Married; $200 Single
• Working Poor Credit – $400 Married; $200 Single
• School Tuition Foundations – $1,000 Married; $500 Single – this credit can be made up to April 15, 2012 for credit on the 2011 return.
For those of you who file a Schedule C business reporting and you have employees, the minimum wage has been raised to $7.65 beginning January 1, 2012.
If you have any questions regarding these items or other individual tax concerns, please contact us to do a quick review or clarification. We post current and updated information on our website www.prescottaccountants.com. We encourage you to check our site often.
As in prior years, we will be sending out your tax “Organizer” with your prior year tax information on it and in the upper right hand corner will be a pre-set appointment time (if you had an appointment last year). Please notify us with any scheduling conflicts.
Thanks for your time in reviewing this, have a Happy Holiday Season.
This tip brought to you by Schutte & Hilgendorf CPA’s, a Prescott firm serving the greater Yavapai County, providing audit, accounting, bookkeeping, tax preparation and planning, QuickBooks accounting and setup to individuals and small businesses.
Contact us for a free initial consultation 928-778-0079
The attached article was written by John E. McEnroe, Jr. and was such a great summary of steps that every Non-Profit should follow, we thought we’d give John credit here and share the article on our website. We found the article when searching for information on the little-mentioned topic of Non-Profit Arizona Registration with the Arizona Secretary of State.
We have observed that many of our non-profit charitable clients are not aware of the registration requirement with the AZ Secretary of State before accepting any charitable donations. Many Non-Profits feel that receiving the IRS determination letter for a 501(c)(3), incorporating through the AZ Corporate Commission, and registering with the AZ Department of Revenue satisfies all setup requirements. Apparently, not so. This doesn’t seem to be widely enforced by the Secretary. An annual renewal is also required every September. Although free, if filed late, there is a $25 fee.
Click on the link below for a copy of the very informative Non-Profit Registration and Reporting Requirements article:
NPO Registration and Reporting_2010
Click here for a link to the Registration Form for the AZ Secretary of State:
SOS Reg Form
Please call Schutte & Hilgendorf, CPAs with any questions related to this article or any non-profit related audit, accounting or tax question. Schutte & Hilgendorf is a Prescott CPA firm specializing in providing audit, tax and accounting services to non-profits, for-profits, and homeowners associations. We also provide tax planning and preparation, bookkeeping, and QuickBooks consulting to individuals and small businesses. We service the greater Yavapai County and Northern Arizona Region. Call us at 928-778-0079 with any of your accounting, auditing or tax needs. Check the rest of our website for constant updates at www. prescottaccountants.com
For November
QuickBooks Tips And Tricks: Make it Yours
No matter which version of QuickBooks you’re using, there are always ways to make your workday easier. As with any software, we tend to learn the features we need and not much more. But small changes in the way you operate can add up to significant time savings and more accurate files. If you jumped into QuickBooks without a thorough introduction, consider these tips.
Click here for the November 2011 QuickBooks Tip
This tip brought to you by Schutte & Hilgendorf, CPAs, a Prescott firm serving the greater Yavapai County, provides auditing, accounting, bookkeeping, tax preparation and planning, and QuickBooks consulting and setup to individuals and small busienesses. Contact us for a free initial consultation at 928-778-0079 begin_of_the_skype_highlighting 928-778-0079
The Industrial Commission of Arizona has just announced the state’s hourly minimum wage in increasing to $7.65 on January 1, 2012.
This is a 30 cent increase from 2011. The commission said it based its decision on the percent increase in the federal Consumer Price Index.
The Federal minimum wage is currently $7.25, but employers in Arizona MUST use the higher state hourly minimum wage for any employees you are paying the minimum wage.
The Federal Unemployment Tax (FUTA) rate was reduced from 6.2% to 6.0% effective July 1, 2011. This makes all employers who are subject to Arizona unemployment insurance tax also subject to the .10% Arizona Job Training Tax (JTT) on taxable wages paid after June 30, 2011.
Consequently, the above-mentioned JTT exemptions for certain tax-rated employers expired on July 1, 2011, so those exemptions are no longer in effect with respect to taxable wages that are paid after June 30, 2011. Therefore, ALL tax-rated employers, regardless of their UI Tax rate and whether they are “new employers” or experience-rated, are subject to JTT on taxable wages they pay after June 30, 2011.
Employers who were exempt from JTT in the first and second quarters of 2011 continue to be exempt from JTT on taxable wages they paid in those quarters. In other words, for 2011: (1) if such an employer did not meet the $7,000 taxable wage base of an employee in the first or second quarter, the employer is subject to JTT only on taxable wages paid to that employee in the third and fourth quarter; (2) if the employer did meet the taxable wage base of an employee in the first or second quarter, the employer is not subject to JTT on wages paid to that employee in the third or fourth quarter. Reimbursement employers continue to be exempt from JTT after June 30, 2011.
From Arizona Department of Economic Security Change in FUTA Rate and Job Training Tax Exemptions
If you need more information about the article above, contact Schutte & Hilgendorf, CPAs serving all of Yavapai County with accounting, tax preparation and planning, auditing, bookkeeping, payroll, and QuickBooks consulting.
Exempt Organizations Annual Reporting Requirements – Annual Electronic Notice (Form 990-N) for Small Organizations: Information Reported
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The e-Postcard is easy to complete. All you need is the following information:
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Organization’s legal name –
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Any other names your organization uses – If the organization is known by or uses other names to refer to the organization as a whole (and not to its programs and activities), commonly referred to as Doing-Business-As (DBA) names, they should be listed.
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Organization’s mailing address – The mailing address is the current mailing address used by the organization.
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Organization’s website address (if you have one).
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Every tax-exempt organization must have an EIN, sometimes referred to as a Taxpayer Identification Number (TIN), even if it does not have employees. The EIN is a unique number that identifies the organization to the Internal Revenue Service. Your organization would have acquired an EIN by filing a Form SS-4 prior to requesting tax-exemption. The EIN is a 9-digit number and the format of the number is NN-NNNNNNN (for example: 00-1234567).
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If you do not know your EIN, you may be able to find it on the organization’s bank statement, application for Federal tax-exempt status, or prior year return.
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Please note that the EIN is not your tax-exempt number. That term generally refers to a number assigned by a state agency that identifies organizations as exempt from state sales and use taxes.
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If you do not have an EIN, see the Instructions for Form SS-4 for different ways to apply for an EIN. DO NOT use the EIN of a parent or other organization.
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Name and address of a principal officer of your organization –
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Usually president, vice president, secretary, or treasurer – often specified in the organization’s by-laws.
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Organization’s annual tax year –
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Like any taxpayer, exempt organizations must keep books and reports and file returns based on an annual accounting period called a tax year. A tax year is usually 12 consecutive months that can be either calendar year or fiscal year and is often specified in the organization’s by-laws.
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Answers to the following questions:
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Page Last Reviewed or Updated: September 21, 2011 |
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Schutte & Hilgendorf, CPAs, a Prescott accounting firm, specializes in auditing, accounting and tax preparation and planning for non-profit Organizations throughout Yavapai County and Northern Ariziona. Should you need assistance with filing a non-profit information return (990) or notecard, please call us at 928-778-0079. We can e-file 990-e postcards (990-N) for you from our office for a nominal fee. Call us today!
September 2011 QuickBooks Tip:
Classes or Types? When To Use Them
QuickBooks’ standard reports are critical to understanding your company’s past, present, and future. But the program also offers innovative tools that can make them significantly more insightful and comprehensive.
QuickBooks offers two simple conventions that let you identify related data: classes and types. Classes are used in transactions. Types are assigned to individual customers, vendors, and jobs.
click on the link below for more detailed information on this topic:
Sept 2011
This tip brought to you by Schutte & Hilgendorf, CPAs, a Prescott firm serving the greater Yavapai County, provides auditing, accounting, bookkeeping, tax preparation and planning, and QuickBooks consulting and setup to individuals and small busienesses. Contact us for a free initial consultation at 928-778-0079
How does an employer know whether to make Arizona withholding payments on a quarterly basis or more frequently?
QUARTERLY BASIS PAYMENTS: An employer must make its Arizona withholding payments on a quarterly basis if the average amount of Arizona income taxes withheld during the preceding four calendar quarters does not exceed $1,500.
MORE FREQUENT PAYMENTS: An employer must make its Arizona withholding tax payments at the same time as its federal withholding deposits if the average amount of Arizona income taxes withheld during the preceding four calendar quarters exceeds $1,500.
WHY DOES THE EMPLOYER MAKE THIS COMPUTATION? Arizona law requires an employer, at the beginning of each new quarter, to compute its average Arizona withholding tax liability for the preceding four calendar quarters. This calculation is performed to determine the correct Arizona withholding payment schedule.
HOW DOES THE EMPLOYER MAKE THIS COMPUTATION? An employer that has four full consecutive calendar quarters of Arizona withholding liability historical data must use the regular withholding payment schedule computation. An employer that does not have four full consecutive calendar quarters of Arizona withholding liability historical data must use the alternate withholding payment schedule computation. Refer to the “Arizona Withholding Liability/Payment Schedule” section of the Form A1QRT instructions for further information
Per the State of Arizona – Department of Revenue – Arizona Withholding FAQ’s
Should you have questions regarding this post or any other tax needs, contact us at Schutte & Hilgendorf, PLLC, Prescott accountants serving the greater Yavapai County with tax, accounting, auditing, and QuickBooks consulting expertise.
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We Are The Piece That Fits.
Schutte & Hilgendorf PLLC
3140 Stillwater Drive
Prescott AZ 86305
Phone: 928.778.0079
Fax: 928-778-0261
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