Now that you’ve issued 1099s and W2s, what’s next?
I’m sure by now, that your business has issued all of its 1099s and W2s by the February 2nd deadline, right? Well, the fun isn’t over. You also have to send copies of these forms along with a summary or transmittal sheet to the Social Security Administration and the IRS. To do this you’ll be using forms W-3 and 1096.
What is form W-3?
Commonly known as “Transmittal of wage and tax statements”, this form summarizes the total amounts reported on forms W2 issued to employees. It includes wages, federal and state taxes, Medicare, and other miscellaneous payments made to employees. You have the option of filing this form electronically or mailing it directly to the Social Security Administration. If you choose to mail the form, you need to include Copy A of the W2 statement for each employee that it was issued for. When filing electronically, you need only to send form W3. The deadline for filing this form is March 2, 2009
What is form 1096?
Commonly known as “Annual Summary and Transmittal of U.S. Information Returns”, this form summarizes various types of miscellaneous payments from forms 1098, 1099, W2-G, & 5498. You are required to file form W-3 electronically if you have more than 250 returns of any one type. If mailing the form, you need to include copies of all submitted 1099, 1098, W2-G & 5498. The deadline for filing this form is March 2, 2009 with forms 1098, 1099 & W2-G, or June 1, 2009 with form 5498.
In addition to federal submittal forms, each state has its own requirements for submission of employee and contractor statements. You must check with your local state taxing authority for specified instructions, or notify a bookkeeper for assistance.
Partnering for your success
Jacqueline E. Williams
Financial Strategist
TAXES DON’T HAVE TO BE SO TAXING
Tax season is here. Most believe that it only occurs once a year, but actually the season lasts all year. Whether for businesses or individual, events continually occur all year long that represent potential tax benefits or blunders, depending upon how they are handled. Although the major events occur from January through April, the remainder of the year should be utilized as the planning phase or preparation phase for the next filing period.
Just recently I had a discussion with a colleague about performing tax services. She proceeded to tell me what I should do during the busy season from January to April, in order to file taxes properly for clients. First she talked about how unfair the tax code is to the average citizen, and then she proceeded to explain how necessary it is to receive a refund. She viewed it as some sort of payback from the government for taking her hard earned money all year. She also talked about maximizing deductions, tax credits, and exemptions. As I listened intently, I waited patiently for her to come to the part about her role as a taxpayer and what she was willing to do to educate herself on the process. As the conversation concluded, I expressed my frustration with trying to educate individuals, who were only concerned with the size of their refund instead of overall planning. My colleague finally admitted that she fell into that category, and that her only concern was that she wanted a refund, the bigger the better. Anything that occurred outside of that reason was to be challenged. In conclusion, we both determined that we want to have the best experience possible. I want clients to be properly prepared throughout the year, and she wants to have a better overall financial experience. At this point I realized to achieve this will take a great coordination of efforts.
There appears to be a great divide that exists between tax preparers and tax clients. Why? For many reasons. The average tax client feels challenged by the complexity of the US tax code, and therefore has created a barrier of distrust concerning this system. They believe the majority who pay into the system are low to mid level wage earners, while the wealthy take advantage of laws written in their favor.
The tax preparers goal is to complete the tax form as accurately as possible, which allows the client to take advantage of all deductions and credits to their benefit. The tax preparer is committed to portraying the information based on the requirements of the US tax code.
How can we collaborate efforts so that everyone comes out on top?
The first course of action should be to clear our minds of what previously existed by way of action plans. It’s clear that what has happened has not worked very well for either of side. A shift in our mindset must occur. Change only comes from within.
Secondly we must take on new habits of behavior. The ultimate goal is to have each person financially solvent and to minimize their tax liability, while taking advantage of any credits or deductions. One must remember that every financial event that happens in our life has a potential direct impact on our tax situation. Start with educating yourself on simple processes like properly filing your W-4.
Third, we must take the necessary steps to plan in advance. Planning alleviates the stress of having to figure out important information months after it occurred. One procedure I’ve trained myself to do is to make a folder at the beginning of each year labeled “Tax File 200_”. As items occur throughout the year, such as donating clothes to Goodwill, or attending tax deductible fund raising events, I keep a copy of the notice or receipt, or whatever evidence is provided, as documentation of the possible deduction. I also make small notations or notes about what occurred and for what purpose. At the end of the year I just refer back to my folder and categorize all the information based on the type of expenditure. This process has helped numerous clients be better prepared for reporting special tax events. But still the trick here is you have to do it yourself.
Once we all make the decision to join efforts, we can all have a better tax experience!
Jacqueline E. Williams
Financial Strategist
Top 10 Reasons to Use a Virtual Bookkeeper
How much is your time worth?
Having a virtual bookkeeper is fast becoming an essential need for the busy entrepreneur, small business owner and person on the run. With the advent of new technologies and ways of doing business, the VB is here to help you along your way. Below are ten reasons to hire a Virtual Bookkeeper.
1. Focus on the business of making money.
Having a VB allows you the freedom to create more profitability for your company by allowing you to concentrate solely on your business, not the mundane tasks that are inherent in business. Making money is what business people do and the more time they have to concentrate on their business, the more money and opportunity they will create.
2. Saves you money.
Why invest in payroll, benefits, insurance, etc., when you could be delegating that money to building your business. Why worry about personnel calling in sick or taking vacations? There is no need to hire in-house personnel when a Vb can be there when you need them to perform the duties that you need in running your business.
3. Freedom to pursue pleasurable activities.
Having a VB work with you frees you up to pursue the activities that help keep your creative juices flowing. When you are bogged down wondering if the bills are paid, you are not thinking about new and exciting ways in which your business could be growing.
4. One-stop shopping.
A VB can perform duties that range from QuickBooks support & training, complete data entry & journal entries, accounts receivables/payables, reconciliations, financial statements, complete payroll, taxes, notary services, & sales & use tax reporting. There is no records management duty that a VB cannot perform or would be willing to learn.
5. Tailored to fit your needs.
Whether you need in-house training & support or would like to outsource completely, a VB can perform these duties. They are structured to fit each individual client’s needs. Fees are arranged for monthly pricing packages to hourly consultant rates. Whatever your needs are, the VB and you create your own individual working partnership.
6. Freedom to work from any location.
Whether you are in your office, your home or on vacation in Tahiti, a VB is always accessible to you. Contact is maintained through telephone, fax, E-mail, and online messaging.
7. Delegate time-consuming responsibilities.
Let a VB take care of those responsibilities so that you may pursue (worry-free) the business of living your life and running your business.
8. Highly trained personnel.
VBs are professionals that have training in the corporate, small business and professional world and have tailored their skills to meet with the needs of the modern day business professional. They have found that every professional has varying needs and offer their expertise in caring for these needs.
9. Individual service provided.
For the entrepreneur, freelancer or small business, it is important that your particular needs are seen as unique. A VB is the person who will oversee your records management system. They can train & develop your staff, maintain your general ledger, pay your vendors, invoice your clients, pay employees & payroll taxes, generate periodic reports for management review, or reconcile your accounts monthly. They act as your partner in caring for those tasks personally.
10. Let their strengths be your strength.
Why waste time on tasks that are not your primary objective? Being a successful business owner entails hiring the right people for the right job. By hiring a VB, you are partnering with the professional that has the knowledge of the inner workings of the financial and corporate fields.
JANUARY SPECIAL: Save 20% on bookkeeping services. Contact us today for details!
Jacqueline Williams
Financial Strategist
HEAD THE WARNING SIGNS OF A PERSONAL FINANCIAL CRISIS
Not too many people want to admit the hidden truth about their finances. To openly discuss this can be very painful for some. If we are to move forward and create a better financial image for ourselves and our families, we must be honest about the behavior patterns that have gotten us to where we are today. These sneaky sometimes often hidden agendas have only proven to be self serving. Remember, what’s done in the dark, does come to light at some point. Wouldn’t you rather it happen now than later? For those who do, we will marinate on the points below. For those that don’t, you will also marinate on the points made below.
WARNING 1: Having more than one credit card.
Credit should be used only for important unpredictable circumstances, like emergency plumbing. Unfortunately it’s used today as our own personal paycheck. Whenever the urge arises we charge it! Bad move on our parts. If you have more than 1 credit card, do yourself a favor and cut them up now. Out of sight, definitely out of mind.
WARNING 2: Hiding financial information
Do you feel the need to keep your purchases a secret from your partner? Do you buy major items on impulse? Do you make important financial decisions without consulting your partner? Have you ever “bet the farm” on some risky venture? Answering yes to any of these questions reveals that you are headed to some serious trouble. If you have to hide your information, you either have trust issues, which means you are with the wrong person, or you are ashamed of your behavior. Either way, get yourself some professional help!
WARNING 3: Denial
It’s not my fault! Stop playing the role of the victim. You got where you are by your own doing, not coincidence. No one held a gun to your head forcing you to make the decisions you made. Do a reality check on everything you’ve spent money on in the past month. Was it really necessary? Did it add to your physical, mental, or spiritual well being? If not, well, you know what to do with it.
TAKE THE STEPS TO CHANGING YOUR BEHAVIOR
Do more research when it comes to major purchases. Don’t only look at the price, also look at its functionality, the quality, and most importantly, will it add value to your existing condition.
Relationship issues can be your financial issues. If you are having marital problems or problems in your current relationship, often times this affects your spending habits. Research shows that impulse buying is directly related to lack of fulfillment or depression. Whether the relationship issues are with yourself or your significant other, either way, you must analyze the situation and prepare to take steps to reverse it.
Accelerate payments on your credit accounts. The experts tell you to make larger payments on higher interest loans. I say make larger payments on the loan that’s the longest. The longer a loan is outstanding, the larter the total interest will be over time. You can cut this in half by accelerating your payments .
Is bankruptcy really the solution? Only as a last resort. Don’t use bankruptcy as a bail out from your financial responsibilities. You created the problem; it’s your responsibility to erase it. It does take time. Remember you didn’t get into trouble over night.
Hard times call for harsh measures. We are in tough economic times, and it’s important that we all contribute by tightening the belts in our own financial households.
Jacqueline Ford
Financial Strategist
THE INS AND OUTS OF OUTSOURCING BOOKKEEPING
Outsourcing can be one of the most strategic management decisions that a small business could make. Daily struggles with trying to maintain operations can be overwhelming for most, and tragic for some. Trying to keep it all together will definitely take its toll on a small operation. A person can only handle but so much before reaching their breaking point. Besides, why would you want to put your business under such unnecessary stress, when you can outsource to alleviate the burdens of having to do it all?
In-House Bookkeeping
Although many small businesses believe it’s necessary to handle their own bookkeeping in order to cut cost, the downside is that managing your books in-house will minimize your ability to focus on the promotion and development of your business. Actually, in the long run, you will end up spending more. The time spent figuring out your debits and credits can be used more wisely and efficiently by allowing a skilled professional to handle the task. They are better equipped to work faster, which saves you money and time, and allows you to spend more time focusing on revenue building activity.
Out-of-House (Outsourcing) Bookkeeping
I can’t stress enough how cost effective this method is, but I will. Not only will you reduce operating costs such as payroll, employee benefits, and employment taxes, the cost savings can be shifted to areas that will promote business development, which in turn will increase revenues. Also, consider not having to spend time recruiting, training and maintaining staff. No more trouble with managing your staff’s behavior and personal issues. Besides, a professional working off site will be less subject to distractions from your office environment.
Outsourcing Abroad
With the rise in conducting business on a global scale, many companies are outsourcing internationally. Countries such as India, Canada, and Mexico, are becoming big contributors to the labor pools of American companies. As international governments relax their regulations and implement educational programs geared towards computer science and technology, the markets have become more competitive. Of course, the decision is very personal in nature and can be controversial. To remain loyal to your local economy versus profit by any means by outsourcing your labor pool to cheaper economies has been a heated debate for quite some time . If you decide to outsource to another country, keep in mind several factors which could affect your relationship, such as, language barriers, potential military conflicts, government regulations, time difference, and cultural differences.
Partnering for your success!
Jacqueline Ford
Financial Strategist