SET UP AN  “Account” IN YOUR CHART OF ACCOUNTS

• Get to the Chart of Accounts by clicking on “Accounting” in the left menu, then “Chart of Accounts”
• In the top right corner of your Chart of Accounts, click “NEW”.
• Account Type: Expenses
• Detail Type: Bad Debts
• Name:  Bad Debts
• Save and close

SET UP AN  “Item” IN YOUR PRODUCTS/SERVICES

• Get to the Products and Services by clicking on “Sales” in the left menu, then “Products and Services”
• In the top right corner click the green “New” button.
• Choose “Services”
• Name: Bad Debts
• Income account:  Choose the Bad Debts expense account you just created
• Save and close.

CREATE A CREDIT MEMO FOR THE BAD DEBT (in the current period)

• Click on the “Quick Create” button (+NEW) in the upper left corner
• Click on “Credit memo” under CUSTOMERS
• Enter the customer name whose invoice is being written off
• Choose your new item “Bad Debts” as the product / service
• Enter the amount being written off (can be a total of all uncollectible invoices for the same client.)
• Click on save and close

APPLY THE CREDIT TO THE UNCOLLECTIBLE INVOICE (S) (also in the current period)

• Click on the Quick Create (+NEW) again
• Click on “Receive payment” under CUSTOMERS
• Select or enter the name of the customer whose invoice(s) is being written off
• Check the box that corresponds to the invoice(s) being written off
• Check the box for the credit memo you just created
• Scroll up and make sure the dollar amount in bold is zero, if it is not, change the amount received to zero dollars
• Click save and close

And that’s it. If you have any trouble or would like someone to do it for you, please feel free to reach out.

The post Writing off old uncollectible invoices in QBO appeared first on BlancoDev Bookkeeping.

I’m always surprised when I meet a homeowner who never knew they were entitled to a significant reduction on the taxes they pay for the home they live in. I’ve met a few though, and with the May 1st deadline to file drawing near, I thought it might be a good idea to tell the world for anyone who may not be aware.

Property taxes are taxes paid by real property owners (real estate) and are appraised and paid at the local county/city level.  They are the primary source of income for municipalities, and they pay for schools, police and fire departments and other emergency services, libraries, local roads and other local items decided by councils and voters.  The amounts and incremental increases vary by jurisdiction.

You can lower your property taxes by filing for exemptions for which you qualify.  These exemptions lower the taxable value of your home and there are several, both partial and full.  They can be substantial, so you may want to check them out:

Homestead Exemption – This is a reduction in the taxable value of your primary residence, but it isn’t automatic when you buy your home.  You have to file an exemption request form for it and the deadline is May 1^st.  This reduction is worthy of attention, and you shouldn’t let it slide.  It can be up to or more than $25,000 off of your homes taxable value.   You have to have owned and lived in your home as of Jan 1^st to qualify for that year, but once you file, you don’t have to file again.  The exemption remains until you sell the home or change the status from primary to some other form like using it as an income property.

65 OR OLDER OR DISABLED – The owner of the house must be age 65 or older and reside in the home.  If the owner passes away and the spouse if older than 55 and lives in and owns the home, the spouse is eligible for the exemption.

A disabled person who meets the criteria for disability insurance under the Federal Old-Age, Survivors and Disability Insurance Act also qualifies.

MOBILE HOMES AND CO-OP HOUSING – May qualify but there are detailed provisions concerning ownership.

DISABLED VETERANS EXEMPTIONS – The amount of the exemption is determined according to a percentage of service-connected disability.

Other exemptions you may qualify for:

SURVIVING SPOUSE OF A FIRST RESPONDER

CHARITABLE ORGANIZATIONS

COMMUNITY LAND TRUSTS

PRIVATE SCHOOLS

Visit https://comptroller.texas.gov/taxes/property-tax/exemptions for a complete list of exemption options and qualifications.

The post Are you paying too much for your property tax? appeared first on BlancoDev Bookkeeping.

1. Handwritten thank you note.

Email and social media have all but killed the handwritten thank you note. So when you send yours to your top customers, it will really stand out.

2. Promotional items.

Promotional items are frequently handed out at trade shows, but they can be used in other settings too. These are items where your logo is typically imprinted and you purchase them in quantity. Items that are useful and popular include coffee mugs, t-shirts, fidget spinners, screen cleaners, webcam covers, keychains, note pads, calendars, and more.

Choose an item that is similar to or a reminder of your business or product. An IT consultant might choose a screen cleaner, while an accountant might choose a piggy bank.

3. Coupon bag.

If your business is located in a strip center, shopping mall, or office building with other businesses around, go door to door and ask for coupons that you can put in a coupon bag to give to clients. Clients will be delighted to get a coupon for the dry cleaners, florist, and hair salon in your center no matter what type of business you’re in.

4. Random prize.

If your business has a stream of clients coming in a physical store or a virtual one, you can award prizes randomly to customers. If customers are grouped together as in a classroom or lecture hall, it’s easy – you can hold a drawing for a prize. Or you can select a random number and the customer assigned that number wins a prize.

Choose a prize from one of your services or products, or give something away that’s universal and “hot,” such as an Amazon Echo Dot.

5. Free samples.

The cosmetics industry has been giving away free samples and gifts with certain purchases for decades. Grocery stores often have free samples of food at a little booth staffed by a host at the end of an aisle. You might be able to apply this idea to your business with a little bit of creativity.

Think of how you can “sample” your service or product and package it up in a free gift or sample. If you offer a service, you may have to get extra creative. A consultant can offer a book that’s related to the service offered, a spa can have healthy treats while clients wait, and a divorce attorney can offer stress balls or fidget spinners.

With customer service declining in many businesses, try these five things to wow your customers and set your business apart.

The post Five Fun Customer Perks to Set You Apart in the Marketplace appeared first on BlancoDev Bookkeeping.

In order to claim the home office deduction for 2017, you MUST QUALIFY. To qualify, you are required to meet two tests: 1) regularly used and 2) exclusively used for business.

Regular Use: This test is clear – you use the area on a continuing basis. Occasional or incidental business use does not meet the test.

Exclusive Use: A specific part of a taxpayer’s home is used for business only. There is no requirement that the business portion of a room be physically separated by a wall or partition. But, any personal use of the space, no matter how small, means that it is not exclusive. There are two exceptions: storage space and daycare facility.

You can have several offices. The key issue is to determine your PRINCIPAL PLACE OF BUSINESS.

Your home can qualify as a principal place of business if:

• The office is used regularly and exclusively for administrative or management activities (billing clients, keeping books, ordering supplies, setting appointments, writing reports)
• There is no other fixed location where the taxpayer conducts these activities

A business use of the home deduction is allowed if the taxpayer meets clients in their home. For example, if an attorney works four days a week in his downtown office and 1 day at his home office, he can deduct the home office if he meets with his clients there too. It will qualify for the deduction even though it is not the principal place of business.

The best thing about qualifying your home as the principal place of business is that the miles that you drive from your home to the first business stop are now deductible. If your home is not the principal place of business, your first stop is considered commuting and not deductible.

The easiest way to determine the business percentage is to take the total square footage exclusively and regularly used for business and divide that by the total square footage of your home. Then, you can deduct the following categories on your return for the business percentage:

• Mortgage interest
• Rent
• Property taxes
• Utilities (gas, electricity, garbage)
• House insurance
• Security system
• Home maintenance/repairs
• Depreciation (straight line method over 39 years)

Note: Lawn care/landscaping expenses are not deductible according to the IRS regulations. However, the Tax Court allowed the deduction where the taxpayer’s clients regularly visited the taxpayer’s home office and where the taxpayer was a daycare provider and the children used the lawn as a play area.

If you painted the office area only, that cost would be 100 percent deductible. This is called direct expenses. However, if you paid for garbage for the home, only the business percentage used is deductible which is called indirect expenses.

If your total income is less than your total expenses, your home office deduction for certain expenses will be limited. However, these deductions can carry over the next year. Be aware of that carry over number if this happens in your situation.

If you take depreciation on your home office and you sell your home, you have to “recapture that amount.” What this means is that the amount you deducted for depreciation reduces your ordinary income – this is good. But when you sell your home, that amount will increase your capital gains. The capital gains rate is typically less than your personal income tax bracket.

Years ago, many tax preparers would never take the home office on an LLC, S-Corp or C-Corp return. If they did, it would be a Schedule A deduction as an employee, which is not a great deduction due to the two percent limitations. However, now some preparers are taking the home office for these entities. The only thing I recommend is not to take mortgage interest or real estate taxes. Only take the business portion of rent, utilities and insurance.

When you know the rules, there should be no fear around taking a deduction that you qualify for. So…do you qualify? If so, take the deduction, reduce your taxes, and don’t worry about that “red flag” because if you are audited, there will be no change on your return because you know the rules!

Feel free to reach out to us to determine if your specific situation qualifies for a deduction and/or to determine the impact of the new tax law changes for 2018.

The post The Home Office Deduction: Regular Method appeared first on BlancoDev Bookkeeping.

List your sources of revenue

First, determine where your sales are coming from by making a list of all the ways you are currently attracting customers. Here are a few:

• Website via search
• Social media
• Google ads
• Referrals from existing customers
• Ad in local magazine
• Article on Huffington Post
• Board membership on local nonprofit
• Chamber of Commerce membership and participation

Track your expenses by source or method

Once you have your list, it’s time to look to your accounting system. Create accounts or other types of tracking codes in your system to track expenses for each of these marketing methods. If you need our help, please feel free to reach out.

The goal of this step is to be able to get all costs associated with each of these marketing methods so that you have a total cost over time by method. Don’t forget labor: if an employee spends three hours a week updating your social media accounts, this should be included in your costs.

Determine the source of your sales

To the extent you can, match the sales that come in with the marketing source or method. In other words, if a customer knows you from the Chamber and spends $500 with you, match the $500 revenue with the Chamber marketing source. Do this for every sale you can. If you don’t know or can’t attribute the sale to any one method, then code it to an Unknown tracking code or account.

This step can be difficult, depending on your business type, especially if your customers are anonymous, as in retail or restaurant sales. However, every business can do better by asking “how did you find out about us?” to each new client that comes in and recording that answer.

For online sales, you can use tracking apps such as Google Analytics to help you measure digital marketing methods.

Do the best you can on this step, and implement procedures to capture this information as accurately as possible for future sales.

Analyze and adjust

This is the fun part. Once you’ve done all the hard work, you should be able to match sales to costs and determine the volume of sales that are coming in for each marketing method. Let’s say you found out that you are getting no sales from your nonprofit board membership, the Huffington Post article, and social media. You now have some decisions to make.

If you are doing these things solely for the purpose of marketing, you could cut them out and focus on the remaining methods. It could also mean that you need to redo your social media strategy; it’s not working now, but another strategy might. Or just one article in HuffPost is not enough, but three articles could start paying off.

At any rate, you have far more information than you did before you started, and now you can make smarter decisions about your marketing. If we can help you code and crunch all of these numbers, please reach out any time.

The post How to Evaluate Your Marketing Spend appeared first on BlancoDev Bookkeeping.

First—categorize your documents. Examples include past tax returns and supporting documentation, medical information, purchase contracts for large assets, legal matters, employment information, insurance records, property deeds, etc.

Second—determine how you will store your records.  Do you want to archive everything digitally?  Do you prefer to keep paper copies?  When considering how to store your records, think about worst-case scenarios such as fire, burglary, natural disaster, or even something as simple as snooping family members.  Regardless of how you store your records, they should always be easily accessible.

Third—label documents with a “keep until” date.  Refer to the table below for suggested lengths of time to keep your important documents.  Labeling files with a “destroy” date will help ensure that your records will remain organized and current.

Fourth—destroy records that are no longer needed.  To minimize the risk of identity theft, it is very important that you permanently destroy documents.  If the items are paper, shred or incinerate them.  If you have a large amount of shredding, consider taking it to a shredding facility.  Occasionally, community organizations will offer complimentary document shredding on specific dates.  If your documents are stored on a computer, use specialized software to remove files or delete an entire hard drive’s data.  Another option is physically destroying the hard drive if you plan to stop using the computer entirely.

Having a system in place for your record retention will not only make it easier to locate important documents quickly and keep unnecessary documents to a minimum, but it will also give you something priceless—peace of mind.

The post Record Retention…When to Keep, When to Shred appeared first on BlancoDev Bookkeeping.

1. Flex work hours.

Everyone likes regaining control over their workday, and offering flex hours can be one of the lowest cost policies to implement. Flex hours support work-life balance and are especially important for employees who have school-age children who can plan work around their children’s day.

2. Wellness initiatives.

Large companies are able to offer a wellness program, but small companies can take small steps to reach the same result. Find a local gym to partner with for a membership discount. Bring in the occasional yoga teacher. Or hire a nutritionist to speak once a quarter to your employees. All of these small initiatives demonstrate to your employees that you honor a culture of wellness.

3. Maternity and adoptive leave.

Do you have a policy about time off for new parents? And more importantly, you’ll need a process to re-integrate the employees into the business when they return.

4. Child care support.

Even if you can’t afford to provide onsite child care, you might be able to partner with a local child care facility to provide reduced or subsidized rates.

5. Gender hiring goals and metrics.

Do you have an equal number of men and women in your workplace? If not, do you have goals in place to adjust the ratios when possible? If you have a disproportionate number of one gender making all of the hiring decisions, you may want to consider the effects of implicit bias on your hiring processes.

6. Mentoring.

One way to speed the growth of employees is to provide mentoring. All employees will benefit from strong role models.

7. Opportunities for promotion.

Both men and women will perform better when there is a clear path to promotion as well as leaders in current positions who demonstrate leadership.

8. Dress for your day.

One of employees’ favorite perks is to be able to dress casually when no customer meetings are scheduled.

9. Paid time off.

Paid time off, which used to be called sick pay, is a favorite. But now, with most employers, you don’t necessarily have to be sick or explain your reason for wanting to take a personal day from work.

10. Gender-neutral company events.

Many companies create events for employees and sometimes customers to enjoy and mingle. This can include the company Christmas party, lunches, and happy hours. It can also include sports events such as golfing and attending baseball games.

These benefits are a great start to attracting top talent, boosting employee morale, and maintaining a happier workforce in your business.

The post Is Your Workplace Family Friendly? appeared first on BlancoDev Bookkeeping.

Jane owned a consulting business. She had two teenage sons that legitimately did work for the business. Some of the tasks they did included vacuuming the offices, emptying trash cans weekly, taking care of recycle and shredding documents, filing receipts, stuffing envelopes and doing yard work outside the office. Jane plans to pay her sons $5,000 each for the year. She was able to shift $10,000 from her higher tax rate to her son’s ZERO tax rate, which saved thousands.  She plans to use this $10,000 to teach her kids about budgeting.

Also, this income shift helped with her personal cash flow because she has the kids help pay for groceries and set aside the money for college. Another thing she plans to do is to put money aside in a Roth IRA for the kids. While the company will need to pay some payroll taxes, the savings far outweigh the cost. Another benefit is that her sons will learn basic knowledge of how she runs her business.  What a GREAT tax deduction for her business – and it was EASY!

Here are some facts and tips around income shifting:

• Your kids can be any age
• They need to keep a time card for work done – documentation is key
• The work needs to be appropriate for the age and skill level
• Depending on the situation, your child may not have to file a tax return
• Consider helping parents or grandchildren who might be in lower income brackets

Depending on your business entity, you can also reduce self-employment taxes with this strategy. For corporations, it is a great way to reduce the taxable income. If you are a sole proprietor, there are some taxes the kids don’t have to pay in their paycheck. And, the IRS allows this, but they don’t volunteer the information to you.

Don’t get this strategy confused with gifting money to your child.  When gifting, there is no work involved.  Also, don’t get this shifting of income mixed up when parents move investment income (interest, dividends and capital gains) to their children.  That is called the “kiddie tax.”

Income shifting works well under specific situations, and not everyone can meet the requirements.  Depending on your situation, you may be able to take advantage of the income shifting opportunity, so feel free to reach out to us if you want to discuss your options.

The post Income Shifting: SAVE Thousands in Taxes appeared first on BlancoDev Bookkeeping.

1. Have patience.

Practicing patience will go a long way when you’re dealing with taxes. Keep in mind that for tax professionals, the months of January through April are as crowded and hectic as a shopping mall in December. Parking is scarce, the sales clerks are doing the best they can, and customers are all trying to shop for presents, party items, and decorations in a very compressed time period.

Be patient with yourself as well. You have the skills to manage your business and do well at your career, but it may not be at organizing paperwork or dealing with numbers. That’s where we can help.

2. The tax stack.

Set aside a permanent place on your desk to be the tax stack. When you receive something in the mail that is tax-related, place it in the tax stack. You’ll save valuable time later not having to look for documents you need.

Similarly, create a folder on your computer for tax items. Under Documents, create a folder called Taxes. Within that folder, create a folder for the tax year, such as 2017 for the year just ended. Move all of your tax-related computer documents into that file.

At your leisure, scan in or take a cell phone picture of the paper documents in the tax stack and place the digital file in the Tax folder. Now you’ll have everything in one place and you’ll be so organized that your tax accountant will be surprised!

3. Catch up.

If your books or records are behind for 2017, get them caught up now to beat the rush. If you wait until the first week of April, you’ll probably need to file an extension. Keep in mind that an extension only grants a paperwork extension; it doesn’t delay any tax payments that are due. If you wait too late, you’ll have the stress of waiting until the last minute, the stress of paying estimated taxes, and the stress of waiting until your return is finally filed.

4. Early bird.

Connect with us or your tax professional early to agree on what services will be offered and to get your documents turned in as soon as you receive them. Getting your things in early will mean less waiting time for preparation and filing. Wouldn’t it be great to be able to say that you’re done with your taxes in February? Your stress will be less, and your energy can be redirected to new projects.

5. Avoid a large tax payment.

The worst thing about tax time might just be writing a big check, possibly with penalties, to the government in April. Instead, plan ahead and spread out your payments for next year by adjusting your payroll withholding or making quarterly estimated tax payments. Spreading your tax payment throughout the year will have you writing a smaller check, if any, in April.

Try these five tips for tax time, and you’ll have more energy for other, more important things in your business.

The post Five Tips to Make Tax Time Painless appeared first on BlancoDev Bookkeeping.

1. Do you have an ordinary and necessary business reason for the entertainment?
2. Did you have a quiet business discussion before, during or after the event? No discussion, no deduction! You’ll need to explain why the entertainment would benefit your business in the future.
3. The discussion must be conducted in a business setting that allows an active business discussion. This could be a restaurant, for example. If the main entertainment is done in a non-business setting such as a bar with loud music or a cocktail party, you must speak about business before or after the event in a business setting.
4. Do you have proof? Keep documentation of who, what, where, why and how much. This documentation must be written within one week of the meeting.

Reasonable, Lavish, and Extravagant: So does the entertainment need to be reasonable? Can you get in trouble if the entertainment is lavish and extravagant? Actually, no. The only rule is that it is must be an ordinary and necessary expense. There are no parameters on how much you can or cannot spend. In fact, a self-employed business person spent over $60,000 on entertainment (rock concerts). His entertainment expense was disallowed – not because of the amount – but because he did not have documentation to support the deduction.

The IRS looks at how much business was generated as a result of the entertainment. There is no rule regarding the number of times you may entertain a potential client, but a wise business person would limit the frequency within reason. But then again, what is reasonable? Taking your spouse out on a date once a month would not qualify. However, you could consider taking your mother out if she is a potential client/customer who will buy services or products from you – nothing wrong with that!

50 percent vs. 100 percent Deductible: Almost all entertainment is deductible at 50 percent, meaning that if you spend $500, you receive only a $250 deduction. Here’s the good news – any entertainment that revolves around a sporting event is fully deductible; that includes any ticket or sports event, only if:

• It is organized for the primary purpose of benefiting a 501(c)3 charity
• It donates all the net proceeds to a 501(c)3 charity
• It uses volunteers to put on the event

So a PGA tour event would be fully deductible because they donate the net proceeds to charity, but a ticket to a college or high school sports event does not qualify since that usually goes toward the coaches’ pay. Other events that may qualify for a 100 percent deduction are tennis, skeet shoots, ski tournaments and fishing tournaments, just to name a few.

Another thing to keep in mind is that generally, you will get a better deduction if you list an expense to a sporting event as a business deduction rather than a charitable donation. For the contribution to a charity, you can deduct only the amount that exceeds the benefit you received from the item (the value of the entertainment).

Additional fully deductible entertainment expenses are employee holiday parties, annual picnics or summer outings. For example, a service corporation rented a powerboat and was able to deduct 100 percent of the $41,000 expense since it did not discriminate between the owners and employees and it was deemed ordinary and necessary.

*Note: Create two accounts in your accounting system’s chart of accounts – one for 50 percent and the other for 100 percent deductible entertainment.

Be strategic: Plan a business meeting for a substantial amount of time (say two hours) and then go skiing. You cannot deduct your personal skiing with your family (unless your spouse is active in the business), but you can deduct the entertainment with people who you plan to do business with. After skiing, resume your meeting for another two hours and one minute.

The post Entertainment Deductions: Half the Fun? appeared first on BlancoDev Bookkeeping.