Sending Quickbooks
Our preference is that you send an Accountants Copy with a closing date of 1-3-12. After you have sent the file you will be unable to make any changes prior to that date. A convenient way to send us the file to include it as an e-mail attachment, but sending us a CD or Flash Drive is also acceptable.
After we have reviewed your data, prepared the appropriate adjustments and prepared the tax return, we will post our adjustments to the Accountants Copy and return it to you. To make your QuickBooks reports accurate, it is very important that you import these changes into your working copy.
Mileage Reimbursement Rates
The 2012 Mileage Reimbursement rates are:
Business Mileage: $.555 It has been this rate since 7-1-11
Medical Mileage: $.23
Charitable Mileage: $.14
Moving Mileage: $.23
Health Insurance for the “S” Corporation Owner
Health Insurance premiums paid in behalf of a shareholder having 2% or more of the ownership are taxable as wages and reported on form W-2 but are not subject to FICA. This includes premiums paid to HSA’s and MSA’s. For you to deduct for Health Insurance, the premiums must be paid directly by the S corporation or reimbursed to the employee on proof of payment. Idea: If the spouse is a legitimate employee, the owner can pay the premium for the non-owner spouse and the spouse can include the owner as part of Family coverage.
Corporate Minutes
Corporations including LLC’s must conduct shareholder meetings and maintain corporate minutes documenting shareholder discussions. ATS can assist in preparing the corporate minutes.
The shareholder meeting should address the following:
-
Quorum present or waiver of quorum
-
Acceptance of prior meeting’s minutes
-
Election of officers and Board of Directors
-
Officers’ review of corporate results for the year
-
Ratification of significant officer actions for the prior year
-
Listing of officers’ salaries for next year
-
Approval and accrual of officers’ bonuses
-
Approval of loan’s (and terms) from/to employees and shareholders
QuickBooks Training
There are numerous locations in the area where you can get Quickbooks training. I believe that the best trainer, and least expensive, is our own Alison. Call her at 770-338-0551 if you need help.
Cancellation of Business Debt
We are seeing an increase in the number of businesses that are seeking and obtaining debt forgiveness. This is normally associated with business use of Credit Cards that are personally guaranteed by the owner. If a credit card company, or other lender, cancels all or part of a debt, Cancellation of Debt income is created and the credit card company will issue Form 1099-C. This income offsets the tax deduction that was taken when the Credit Card purchase was made. IT IS TAXABLE INCOME.
Office in Home Expenses
The biggest benefit of having an office in your home is the ability to deduct for business mileage as soon as you leave the driveway. (You do not have a commute.) But if you have an Office in the Home, remember to deduct for: Pest Control, Security System, Internet access and a % of Rent, Gas and Electric. The cost of having more than one land line and the extra phone charges for Caller ID, Call Waiting and of course business long distance charges (including taxes), may also be deductable.
Independent Contractor vs Employee
This has become a hot issue for the IRS because Independent Contractors often do not pay taxes on all of their income. Independents often do not have an easy mechanism for withholding taxes so they often owe a lot when they file their tax return. The rules for determining proper worker classification are complex, at times inconsistently applied and unpredictable. Failure to use the proper classification can be costly. If you are concerned about the proper classification we can provide you with a list of factors that the Government uses to make a determination. The most important factors seem to be:
- Control over Detail- the degree of control exercised over the detail of the work
- Investments – Which party invests in the facilities used in the work?
- Profit/Loss – The opportunity for the worker to generate a profit or loss.
- Right to Discharge – Does the principal have the right to discharge the worker?
- Regular Business – Is the worker part of the principal’s regular business
- Permanency – The permanency of the relationship
- Intent – The relationship that the principal and worker intend to create.
The Independent Contractor being Incorporated does not override these other factors but the employers past practice and industry practice are significant factors.
As an inducement for employers to reclassify their Independent Contractors to Employees the have created a Voluntary Classification Settlement Program (VCSP). This program offers the eligible employer the ability to minimize his liability for past misclassifications. One of the requirements to apply for the program is that the employer must prospectively treat the class of workers as employees for future tax periods. Idea – Do not enter into this program without a lot of thought. We can provide you with some insight into how IRS might rule, but as I said earlier “The rules for determining proper worker classification are complex, at times inconsistently applied and unpredictable”.
Per Diem
The term “per diem allowance” refers to a reimbursement paid with respect to ordinary and necessary business expenses incurred by an employee for lodging, meal and incidental expenses for travel away from home in connection with the performance of services as an employee. Lodging expenses can not be paid to a shareholder owning more that 10% of the shares. The 2012 Meals & Incidental (M&I) rates for all but transportation workers are: High Cost Area $65 / Low Cost Area $52 (same as 2011). For Transportation workers the rates are: Within CONUS $59 / Outside CONUS $65 (same as 2011).
Georgia Unemployment Tax Rate
I saw a recent news reports that stated that the Georgia Unemployment Rate has doubled because of the need for the State to repay Washington for the monies borrowed to pay for the unemployment benefits. (Employers, not taxpayers, pay for unemployment benefits). In fact the rate increased by only $21 per year per employee and will be an increase to the Federal Unemployment Tax (FUTA). That increase will be in effect until at least 2015 when the loans are expected to be repaid.
Unfortunately, a lot larger increase will affect those employers that had a lot of unemployment claims filed against them because of layoffs.
If you are a current payroll client of ours, you are NOT notified of a rate increase. Indeed, because we now file the U/E reports on line, we will usually not become aware of the rates until we process the 1Q12 reports. Our payroll software does calculate an amount but the first quarter reports may be wrong.
If you use QuickBooks to process your payroll, you have a different situation. QB does not do retroactive adjustments. If you change the rate in April 2012 only the payrolls processed after the change will reflect the new rate. I suggest that you contact the Ga. Dept of Revenue before you process your first 2012 payroll and find out what the rate will be.
