Tax Planning: A Way You Can Reduce Your Burden

Costs can drain the life out of a company. For those who live on a month to month basis with their business, not a lot of effort goes into such things as tax planning. Either those in charge of the business are not well aware of what is required to effectively engage in tax planning or they simply do not prioritize it. The former is somewhat understandable, but the latter is really nothing more than a path to getting into serious fiscal woes. Businesses do need liquidity in order to survive if not thrive. Cash flow and cash in reserve accounts allow a business to immediately access funds. Yes, it is true that a line of credit can do so as well. However, borrowing from a line of credit is exactly that: borrowing. When money is saved in reserve, it contributes to the overall net assets of the business. Also, the funds can be placed in a conservative investment where it can draw interest. Interest, of course, increases the value of the money saved in it.

This is where effective tax planning comes into play. There can be quite a number of misunderstandings about what tax planning entails. On the simplest of levels, tax planning refers to putting the proper effort through the year to be sure the lowest amount of taxes is paid. This is not as easy as some assume. Most do realize that taking deductions will greatly cut down on the amount of taxable income a business presents. A good accountant can definitely maximize the amount of deductions that a business can employ. Being able to do so would be the sign of a truly excellent and helpful accountant. However, there is far more to tax planning which can be done here.

One other effective component of tax planning would be to take advantage of tax credits. Tax credits are simply bonus deductions offered as incentives. One example of a tax credit could be taking a certain percentage of the costs to purchase alternative, green energy systems in an business. In some instances, a business might already have invested in making such purchases but does not take the tax credit because management simply does not know the credits are available. Professional who work in tax planning can invest a huge amount of time in research so they can locate the tax credits which could prove hugely helpful to a business.

There is also a strategy of replanning which a tax consultant can put effort into. For example, a business may be interested in starting down path A, but scores of tax credits could be gained by traveling down path B. Qualified tax planners and accountants just might be able to help devise more logical and business friendly paths for those interested in saving money and doing better with the operation of their business.

Prepare for Rochester Consulting Sessions

One of the best ways to find a Rochester CPA that is perfect for your needs is to talk to several of them. Spend some time compiling a list of possibilities and then check them out online. You need to explore their features offered to make sure they are a good match for your personal or business needs.

Next, you need to find out their rating with the BBB and also what other clients have to say about them. Only select those businesses that have a BBB rating of B+ or higher. This means that they are excelling in their line of work and that works to your advantage. Read the various reviews from clients to find out about the pros and cons of a given business.

For those that seem quite favorable, write down their name and phone number. Then you can get in touch with them for an appointment. Ask about Rochester consulting which should always be free of charge. With the consulting, you need to be prepared for it so that you get all you can out of the session. If you go in and waste time because you don’t know the direction to take all of it, then you will get very little value out of it.

Show up with a list of questions that you have about tax planning, Rochester taxes, and other details. Use this same list of questions at each of the Rochester accounting firms you consult with so that you can compare answers. It is fine to jot down some notes too while you are in that meeting, they won’t mind at all.

It is acceptable to ask questions about their areas of expertise, experience, and their ethical behaviors. You need to know that the Rochester accountant you hire is going to be exceptional in all matters for you. Knowing you can count on them to be honest, efficient, and to be affordable will give you peace of mind.

If you are interested in CFO outsourcing, ask if they offer it. Not all accounting locations do but more of them are including it. If they get asked about it enough, they will consider adding it to keep customers happy and to help them secure new clients. The demand for services is very powerful when it comes to determining what services stay, what goes, and what is added.

You may wish to bring along some documents with you to show the CPA during the consulting session. They can even answer some specific questions about them for you. Communication is important so be open about what you need, what you expect, and don’t leave without answers to your questions.

Of course there will be those entities that talk in circles and don’t give you effective answers. Just mark them off your list because you don’t want to settle for a company that operates in such a manner. Not when there are so many better choices for you in the Rochester area that will do all they can to get your questions answered. They want to help, not make more issues for you.
Make sure you thank them for the time they gave you to talk. Take as much time as you need to make up your mind about who you will work with. When you make that call to move forward, you will already know what you can anticipate from that relationship.

Cash versus Accrual: Let Our Rochester CPA Assist in Your Choice

The qualified Rochester CPA we will assign to your business as an independent accountant possesses the appropriate education, training and work experience in the related fields of bookkeeping, accounting and auditing. As such, he will be able to provide his professional – read: educated and informed - opinions on various matters in this regard.

One of the most important aspects of his work is providing guidance on the best accounting method to use – cash versus accrual. All other aspects of bookkeeping, accounting and auditing as well as compliance with business laws will be affected or influenced by your final decision on it. Let’s take a closer look at the pros and cons of both accounting methods, which our Rochester accounting firm can be of valuable assistance.
Basics of the Methods

Keep in mind that the Rochester CPA assigned to your business has comprehensive knowledge of both types of accounting methods. Don’t hesitate to ask questions because the more you know about the methods, the more effective you will be able to use it in your business. Let’s start with the basics.

In cash accounting, cash outflow and cash inflows are recognized as recordable transactions as soon as the money changes hands (i.e., from your business to the supplier or from the customer to your business). As such, sales made without cash payments (accounts receivables) are not considered as income in the same way that expenses made without cash payments (accounts payable) are not recorded as expenses on the books of accounts.
In accrual accounting, the transaction including receipt of income and payment of expenses are counted regardless of whether cash and other assets actually exchanged hands. Income is recognized when sales are made and expenses are recorded when these are also made. Your assigned Rochester CPA will usually recommend this method for compliance with existing laws, rules and regulations on the United States including its tax laws.

Impact on Tax Planning

Your choice between cash and accrual method of accounting will affect your declaration of taxes. Keep in mind that you want to minimize your declared income and/or maximize your declared expenses in the year when your estimates point to the highest income. The result: You will pay lower taxes without being slapped with an IRS complaint.

Tips that the Rochester CPA may provide on this matter:

• For cash accounting - Ask your customers to pay their accounts during the year when you plant to take in the highest income. Pay your bills during the year when your estimates point to the highest income, thus, allowing for higher deductible expenses and lower taxes for the year.

• For accrual accounting - Send out the bills for your customers’ account receivables before the end of the present fiscal year or after the beginning of the succeeding fiscal year; decide the year when the income should be recorded. Ask the vendors to send you their bills for your accounts payable in the year when your financial plan demands the highest expenses.

Are you confused by now? Don’t be. That’s where you can turn to our Rochester CPA in particular or our Rochester accounting firm for professional assistance. for more inquiries please click here

Your Accountant Can Do More than Taxes and Crunching Numbers

When most people walk into any Rochester accounting firm, they are only interested in having their books done. This can be just basic bookkeeping, or tracking assets for several companies. In some cases, the Rochester accountant may even be hired to do a simple audit for a company.

But there is so much more that this professional can do for you. You might not realize this, but beyond your basic finances and tax planning, this professional will be able to help you with more areas of your business.

Most professionals working in a Rochester accounting firm will have a great deal of knowledge and expertise in the world of business. Since the industry standard is a Master’s in Business Management Accounting, they are going to know more than just how to run the book. In fact, the time that they have spent in colleges learning this information usually gives them a good eye that can help you through some of the other situations your business is going through.

In fact, business plans and even a business succession plan can be handled by your Rochester accountant. They can even help you to go through the process of forming partnerships, trusts, estates and other legal elements that you might not be able to do on your own. Thanks to their understanding of business and tax law, you can have some peace of mind in knowing this is being done properly.

Even when your company is face is a bankruptcy, this team of professionals is going to be able to guide you through the steps, to ensure that your best interests are kept and that your company is left with options that could result in it eventually being saved. This comes from understanding and deciphering the details of the local and federal laws and knowing what your options are. While you could do this on your own, the accountant is going to end up being your best choice.

No matter what Rochester accounting firm you choose to handle your tax planning, audits or even business assistance, it will be important that you do ensure that they are certified to help you. An example would be a Rochester CPA, as they have the right knowledge and tools available to them, to help ensure that they are giving you the best guidance possible.

Remember, this is your business and your life that is going to be impacted. Make sure you take a moment to ensure that you are hiring the best. What you will find is that the area offers a variety of professionals who have different levels of experience you can choose from. It is important you choose the most qualified individual that you feel comfortable around as there is a good chance you will be seeing a lot of each other.

Inherent Characteristics of A SIMPLE IRA Plan

Tax planning is a long drawn process. However, this does not mean that it has to run throughout the year. In fact, in order to avail most tax benefits, a business needs to ensure that it has everything pertinent in place well in advance. This is exactly what we, as your chosen Rochester CPA, look to do for your business. There are various instruments that we try to use to get you the maximum Rochester taxes benefits. However, which ones fit your business depends entirely on the key nature of your business.



One of the instruments that we recommend for businesses looking for tax planning is the SIMPLE IRA plan. Here are some key characteristics of the SIMPLE IRA plan that should be of use to you.

1. Size of the business matters:

The first thing you need to know about the SIMPLE IRA plan if you are in the midst of tax planning is what any Rochester CPA would tell you. This is that the SIMPLE IRA is only limited to those companies whose employee strength does not exceed 100. This means that you can only avail the SIMPLE IRA plan if your business employs 100 or less than 100 employees.

2. Adopting the SIMPLE IRA plan:

If you know that your business meets the prerequisites then all you need to do is contact a Rochester CPA like us and ask them to set everything up for you.

We would ensure that you get the Rochester taxes benefits by choosing whether a Form 5304-SIMPLE, 5305-SIMPLE or a SIMPLE IRA prototype suits your organization the best. Subsequently, we would help you establish it.

3. Two forms of contributions:

There are two ways through which you can contribute in a SIMPLE IRA plan. You should note, however, that your benefits in terms of Rochester taxes would remain the same, regardless of your choice. Your choices would be between a matching contribution of up to 3 percent of the employee’s salary and a 2 percent contribution for each employee which would be non elective.

4. Mandatory exclusivity:

Establishing a SIMPLE IRA plan means, however, that you cannot partake in any other retirement plan. Effectively, this is something that needs to be assessed. This is also a stage of tax planning where you need our help as your Rochester CPA.

Basically, in our capacity as your Rochester CPA, we would assess whether the Rochester taxes benefits you would get from a SIMPLE IRA plan would be enough for your organization by themselves or not.
If we find during the tax planning procedure that you need more Rochester taxes deductions and exemptions then we would not recommend the SIMPLE IRA for you. In either case, expert guidance from an experienced Rochester CPA is something you should look for.




 

Your Rochester Accountant and You During Your Retirement Years

Many articles have been written about retirement especially on the front end – planning for retirement – and on the back end – transferring assets at the twilight of one’s life. This is not one of those articles. Instead, we will be discussing the middle years of retirement when your living expenses are sourced almost solely from your retirement fund as well as the roles of your Rochester accountant at this time of your life.


Budgeting Your Assets

Building a good professional relationship with the most trusted Rochester CPA before your retirement years is a must. This is because the management of cash flow during retirement can spell the difference between living well and living not so well from 65 years old and onward. Keep in mind that you will most likely be withdrawing from your retirement fund instead of adding to it through full-time and part-time employment so budgeting is of utmost importance.

Cash flow during retirement is affected by changes in taxes (cash outflow) and salaries, interest income and dividend income (cash inflow). You must discuss with your accountant the best ways to budget your retirement assets, both in the present and future, so that you can, indeed, live well. Your Rochester accountant will also discuss the effects of your retirement fund withdrawals on your tax burden. With his expert guidance, you can plan the withdrawals over a number of years and then plan for the tax burdens so that the latter are not so onerous.


Making Housing Decisions

Housing decisions have tax implications so it is important to consult with atrusted Rochester CPA before deciding on your relocation plans. For example, if you have a mortgage on your home, your accountant will recommend payment of the monthly amortization as is. Paying off your mortgage from your tax-deferred funds and retirement accounts is inadvisable because of the burdensome tax implications. But each individual’s circumstances upon retirement is unique so whatever works best for your friends may not necessarily work in your favor. Your consultations with your Rochester accountant come in handy.


Protecting Your Assets

This is probably the most important aspect of retirement that your accountant can provide expert advice on. Asset protection – your assets, to be exact – is a must if and when you want to enjoy your retirement years since without your assets (i.e., cash in bank and on hand, marketable securities, real estate property) to live on, you will have no resources to cash in on. Plus, there’s also the matter of choosing the best options for your retirement-age investments. Your Rochester accountant will outline your options such as annuities, certificates of deposits, and marketable securities, present the numbers, and then assist in making the actual investments.


Looking Out for Healthcare

This may seem like a long shot for accountants to get involved in but you should consult with your accountant on this matter, too. Your healthcare premiums as well as costs for regular medical visits and hospitalizations will affect your short-term and long-term budgets, aspects of retirement that your accountant will be able to help, too.

Indeed, your retirement years will be better if and when you can work well with your Rochester accountant. Do so now!

Financial Plans for Increased Profitability in 2013

Anyone can run a small business these days with all the internet startups and home based business concepts which exist. The downside is most of us are not accountants. Business tax planning is a lot different than your individual taxes. In your personal life grabbing onto Turbo Tax might be an option, especially if you live a simple life. When you have a simple home business, you still need a Rochester accountant. Tax deductions, liability, and laws change often. You have probably heard about the tax hikes which were being proposed for 2013 and other tax related news. Issues like this are what accountants are paid to keep up with. They know what can and cannot be deducted, which translates into better financial planning for you. To prepare for a better business with more profits it is time to seek Rochester consulting.

With the right Rochester CPA you can start putting money away for your personal retirement, as well as getting your business in a better financial position to grow. There are eight things you can do to ensure you have a proper financial plan. The first is creating a financial plan in terms of the expected revenue you will bring in each month and project what your possible expenses are going to be. Chances are you have been in business for a year or two already, so you should have an idea of what you bring in each month and what the constant expenses are.

Every month you need to review your plan. Did your projections on revenue and expenses meet or exceed your outline? What happened if you lost profits? Lost profits are not something you can recover, so ensuring you do not lose anymore is important. If there are losses it is up to you to make adjustments as soon as possible to reduce the loss for the next month.
A Rochester CPA can help you with this by bringing it to your attention when one month or quarter has not earned as it should have or as per your plan. They may be able to suggest some of the areas you need to improve on. Perhaps you are spending too much on entertainment/dining to try and win new clients. Mileage or fuel expenses can also be high, but something you might be able to reduce. Overhead costs might have increased for some reason, thus you may find ways to reduce them again.

Before you spend any money in your business think about it. Do you need to make this business expense? Is it truly going to help increase your profits? Sometimes you can delay expenses as a means of increasing profits.

For financial planning you cannot be afraid of hiring the help you need like Rochester consulting. A consultant can help direct you towards better expenditures and profits.

Tax Planning Is for Everybody

Not everybody considers taxes as something to be planned for - either you pay it in full, pay it less than what you owe the government, or skip it altogether and face the consequences later. Tax planning then seems like a waste of time and hiring the best Rochester accountant for it seems like a waste of good money.

The reality, however, is significantly different than the above mentioned unplanned payment of taxes. Every taxpayer from individuals to for-profit and non-profit organizations must engage in effective planning for taxation purposes. The reasons are many including:

• Taxes are expenses that lessen the net income earned by individuals and businesses. Planning to minimize the amount of taxes paid will maximize the net income earned; for example, you will defer income declaration for the next year in order to lessen your tax burden in the current year.

• Non-payment of taxes has surcharges and penalties that, more often than not, exceed the amount of taxes that should have been paid in the first place. The possible sanctions also make it necessary - nay, crucial - to engage in effective tax planning to avoid these regulatory penalties.

• Tax credits should be taken advantage of every year. These represent substantial savings since the items are non-taxable. Businesses use tax credits to their advantage such as the case with the Marriott Hotel with its alternative fuel plants and Bank of America with its affordable housing tax credits.

Tax planning is not just a one-time, year-end deal, far from it. The best Rochester accountant will strongly encourage his clients to engage in planning for taxation purposes on a year-round basis. This is to ensure that any new legislation, policy and rules affecting the remittance of taxes can be considered and changes can be made. For example, the so-called Obamacare - a health care reform law under the Obama administration - will increase taxes in the coming years. Your company should take these changes into account in, say, planning your employee benefits program.

Again, it must be emphasized that the main purpose of tax planning is to maximize income and minimize expenses. It must then be an integral part of the overall planning process for your business (i.e., marketing plan, sales plan, and business strategy plan). Taxes, after all, affect every facet of your operation from the sales taxes to the investment taxes.

It must also be noted that tax planning should be undertaken under the guidance of an experienced Rochester accountant. Said professional has the right set of knowledge, skills and aptitude to undertake the complex processes and papers involved. Think of the money paid for his professional fees as money well spent in order to gain greater amounts of tax savings. There is also the fact that there is no one-size-fits-all taxation plan since every business is unique in every way. Hiring an experienced accountant for the job means a tailored taxation plan that will, indeed, answer the goals of tax savings for the entity - yours, for example.

So, don't wait for the tax season before starting on the first steps of tax planning. Do it now! Read more about tax planning click here.