“The great thing about working with ADP is our firm’s ability to capitalize on one of the best payroll systems available while having the control needed to give our client the unparalleled services they have always enjoyed from our firm”. – Fred Daus

Lower Payroll Costs
Since Fredrick James has such a large client base in and around Clearwater, the firm was able to negotiate price and service levels from ADP that would not normally be available to individual business owners. In keeping with the Fredrick James philosophy of “saving you money”, these savings are passed through to clients.

More Payroll Service Options
Fredrick James clients will now be able to choose the Payroll Service Package that fits their business model. ADP has systems that will allow clients to add on their payroll packages as their businesses grow and expand. Services such as Secure Web Control Access, Health Care, Retirement Benefits, Human Resource Management and Pay As You Go Workers Comp can be added as-needed. In addition, clients who choose to use the ADP system will receive the same great service they are accustomed to in the Fredrick James family of Accounting, Tax, Payroll and Consulting services.

Human Resource Options
The Human Resource Feature offers another dimension for our clients that would not be available to small businesses. The Human Resource Feature includes background checks for prospective employees, State and Federal Compliance Database (summary of employment laws), and unlimited access to a team of HR professionals.

Fredrick James is excited to be able to offer clients this opportunity. Visit us at FredrickJames.com. We serve clients throughout the world through our virtual office. Read more about our virtual office. If you have any questions or need assistance with your accounting, payroll or taxes please Contact us Today!

The Internal Revenue Service announced an increase in the optional standard mileage rates for the final six months of 2011. Taxpayers may use the optional standard rates to calculate the deductible costs of operating an automobile for business purposes.

In recognition of recent gasoline price increases, the IRS made this special adjustment for the final months of 2011. The IRS normally updates the mileage rates once a year in the fall for the next calendar year.

The rate will increase to 55.5 cents a mile for all business miles driven from July 1, 2011, through Dec. 31, 2011. This is an increase of 4.5 cents from the 51 cent rate in effect for the first six months of 2011, as set forth in Revenue Procedure 2010-51.

Personal Taxes:

Monday, April 18, 2011 at midnight is the official deadline for the taxes to be postmarked or e-filed since Friday, April 15, 2011 is Emancipation Day a national holiday.

Florida Business Taxes:

If you have not yet filed your Florida Tangible Tax return because you extended the return for 30 days, it will be due on May 1, 2011.  It is very important to file this return timely to make sure that you qualify for the $25,000 Tangible Property Florida Exemption.

Florida Annual Reports are due on May 1, 2011 for Corporations and LLC’s.  It is extremely important that the Florida Annual Report is filed timely to avoid the $400 penalty and the possibility of your corporation being administratively dissolved.

1st Quarter Payroll Taxes are due on April 30, 2011. Florida Business’s need to remit Form 941 to the IRS and Form UCT-6 to the Florida Department of Revenue.

As you can see there are a lot of deadlines over the upcoming days. I wish everybody a happy tax day!

Last week we went over the individual tax payer’s record keeping requirements, this week I want to discuss what business owners should be holding onto and for how long.

Obviously businesses have a more extensive list of record keeping requirements than individual do but it’s an important detail not to be overlooked as it will help you to avoid unpleasant surprises in an audit.

Businesses are all different, but in this case documentary evidence for business deductions, those that are reasonable and ordinary in the course of business, is generally the same for all types of business entities.

One big mistake a lot of smaller businesses make is not having a separate business checking account. This is a big “no-no”. Get your business checking account set up if you don’t have one and use it for all transaction to prove gross income and business expenses.  If faced with an audit, you can bet the auditor will probably reconcile this account and if any personal deposits or disbursements appear, you’d better have the paperwork to back that up.

What to keep for business deductions:

• Receipts
• Canceled checks
• Bills
• Petty cash slips
• Bank statements (bank statements are very important for electronic receipts)

Receipts should list the name and location of vendor, dates, itemized charges, number of people, and written explanation of the expense to prove its business purpose.  For entertainment expenses, you must document the business relationship of those attending.

Canceled checks are very important for proving amounts, but do not necessarily prove business purpose.

Business expenses should be recorded as close as possible to the actual time of the expense.

There are a few exceptions for Travel, Meals and Entertainment where documentation is relaxed:

1. Under an accountable employee reimbursement plan that adopts the per diem method, which is a fixed daily reimbursement amount
2. A travel expense (except for lodging) less than $75
3. A receipt for transportation is not available (e.g. taxi fare)

I would highly recommend NOT making estimates, they are rarely allowed (except in extraordinary situations where records are destroyed). This is especially true for Travel, Meals and Entertainment, and deductions related to listed property (items commonly used for personal use), all of which have very strict deductibility requirements.

Fred’s Fast Tax Tip: Records for business assets should be retained through the statute of limitations for the tax year in which the assets are disposed of. This is important for audits that investigate depreciation expense.

Employment records must be retained for 4 years after the tax is due or paid, whichever is later.

As important as proper record keeping is for successfully responding to tax audits, record keeping is just as important for effectively managing a business (small or large) in terms of cash flow, short-term working capital needs, and profitability over the long-run.

Record keeping and analysis of accounting reports ultimately reveal where a business needs improvement and where growth opportunities exist. So, you’ve got even more good reasons to keep on top of your business record-keeping! If it all gets to be too much, and you’re losing the battle then I would recommend you find a qualified bookkeeper to help you whip your books in shape. Then kick back, put your feet up on the desk and give yourself some much deserved praise for being such a savvy business owner!

Waiting until tax time to hire your accountant / bookkeper / accounting firm is is akin to waiting until labor begins to choose the doctor who’s going to deliver your baby!

When starting a new business there are many decisions you’ll make that will set the scene for success. One of the most important choices, one that is often left to the last moment (tax time), is hiring your accountant. This is akin to waiting until labor begins to choose a doctor to deliver your baby—not  exactly a good time to be making informed, level-headed choices! And, like pediatric doctors, all accountants are not created equal; they have different specialties, ways of doing business, fees, overall knowledge levels, etc. 

There are the good accountants and the bad accountants just like any other profession. So how do you pick one?

Well, a good place to start is understanding the different types of accountants that are available to you and what they do. Here is a list of the 5 most commonly found styles of accounting:

Family, friend or someone who does it on the side (Moonlighter). Their fee structure is generally free or a very low cost. We all know this type of accountant in one way or another. This type of accountant generally has a very big heart, the best intentions and wants to help in any way they can. While the moonlighting accountant can generally perform the basics of accounting and taxes, depending on their experience, this accountant generally lacks the qualifications on the performance side of the job.

Pros: Little to no cost.

Cons: You get what you pay for. If you are not paying anything or you are not paying much at all there tends to be less of an incentive to finish the project or get you the reports you need on a timely basis when it’s late at night or the weekend and the moonlighting accountant has other obligations. This type of accountant, while having a big heart and some good advice, more than likely could end up costing your business 5-10 times in tax and other consequences than the investment that you would have made in a Qualified and Reputable Accounting Firm.

Bookkeeping Services. Bookkeeping by definition is the practice or profession of recording the accounts and transactions of a person, business or entity. The process of bookkeeping is mechanical in nature and is generally performed by a person who possesses knowledge of the Income Statement and general knowledge pertaining to the Accounts Receivable and Accounts Payable portion of the Balance Sheet. Sometimes this type of service may boast the term ‘full-charge bookkeeping’ which includes the compiling of the transactions into the accounts and preparing financial reports.

Pros: The fee structure is very low and bookkeepers can be very helpful and insightful in determining the profitability of your company.

Cons: A bookkeeping service is generally very limited in the scope of accounting and payroll and often does not have an in depth knowledge of tax preparation or tax law.  While the price point of this service is relatively low, the need for a tax accountant is a must for a business choosing to go with a bookkeeping service.

The small accounting practice who generally comprises of a single accountant who hires help on a seasonal basis or has an assistant (One Person Office).

Pros: The fee structure is often low since the owner/accountant produces most of the services for the client. The smaller firm practitioner generally specializes in small business and is knowledgeable, to some extent, in your particular type of business. They are familiar with the local regulations and taxes, they offer in house bookkeeping and payroll, and they also have tax knowledge to help you grow your business in a manner that will help you avoid over taxation of your business.  The small accounting practice can be a good starting point for personal taxes, a home business or a small family business.

Cons: While the price point of this option can also be low, the one person office generally has inconsistent office hours, client service and performance due to the majority of work being done by the busy owner-accountant or seasonal/part time staff.  The small accounting practice is not recommended for growing business’s that will need additional services that the accountant does not offer in the years to come because changing accounting relationships midstream can often have disastrous consequences for a growing business.

The qualified and reputable accounting firm (Accounting Firm) generally has several full time staff comprising of administrative professionals, accounting professionals ranging from tax accountants, public accountants, CPA’s, EA’s and business consultants that offer a range of expertise from information technology, finance, international business to marketing and advertising advisory services.

Pros: The fee structure is moderate and is usually based on the different levels of services provided. An accounting firm generally has an experienced owner or partners who are motivated and has grown the accounting business over the years, has earned a good reputation in their community and are committed to client service. The owner or partners manage their book of business and their primary job is client service, overseeing their staff, reviewing staff work, consulting, networking in the community and other management duties in the firm. This type of firm often offers a broad range of services from personal, business and not for profit tax, accounting, bookkeeping, payroll, forecasts, projections, audit/review, attestation services, loan packaging, budgeting, personal financial services and various high end consulting services.  The accounting firm also tends to have reputable professional affiliates that it can refer its clients to when needed.  The accounting firm has a lot to offer for personal and small/medium business clients and is thought of as the best value for the money paid.

Cons: Many times this type of firm does not have experts in all areas of business and the use of outside consultants may be necessary in some circumstances.  Also, the business may not have the resources needed to perform larger projects that big business’s demand such as audits and various consulting engagements.

The larger qualified and reputable accounting firm (Regional and National CPA Firms) generally has hundreds to thousands of full time staff comprising of administrative professionals, accounting professionals; tax accountants, public accountants, CPA’s, EA’s and business consultants that range in areas of expertise from information technology, finance, international business to marketing and advertising advisory services.

Pros: The partners manage their book of business and their primary job is client service, overseeing their management staff, reviewing management staff work as well as other partners work, consulting, networking in the community and other management duties in the firm. This type of firm often offers a very broad range of services from personal, business and not for profit tax, accounting, bookkeeping, payroll, forecasts, projections, audit/review, attestation services, loan packaging, budgeting, personal financial services, high end consulting services and very specialized niche services. The regional and national CPA firms have a lot to offer to any person or business who requires a firm with extensive knowledge capital and deep resources.

Cons: The fee structure is generally the most expensive of all your choices, due to their national and international recognition and because they are subject to peer reviews, additional insurance costs, capital outlays and other costs.

There is a lot to choose from out there in your search for an accounting professional and, as you can see, knowing what you need from your accountant is the first step in the process. One size does not fit all.

Next week I’ll follow up with a few more suggestions for things to consider that might help you find the right accountancy service for your business.

Have you ever had a bad, or a stellar, experience with an accountant, firm or bookkeeping service? Share your story in our comments section and help other readers learn what to look for.

Unfortunately, you are looking at self preservation at this point and a line needs to be drawn. So, your first step will be putting your client’s account on hold until payment is received. You may want to offer to allow a prepaid account for future services and invoices so you know current services are covered while they are paying off their past invoices.

When you make this difficult call to request payment, remember to keep it professional and polite but firm. You may get the “we didn’t receive your invoice” excuse, which can be a legitimate reason for a missed payment in some cases. This one is easy enough to resolve; email them the invoice while still on the phone and ask for confirmation of receipt. If they still don’t receive it, you’ll need to print the invoice and send by registered mail. Document the call, the email and registered mail.

You’ve played nice and kept it professional, you’ve given your client a reprieve and offered an easy out but they still haven’t sent payment as promised. Now you will need to make another call and speak directly to the owner of the business to let them know the check never arrived and suggest you will stop by personally to pick up the payment. If your client happens to be out of State, send a courier to pick it up.

Maybe your client is really having a tough time and tells you they just can’t make the payment they originally promised. It’s understandable, you don’t want to be unreasonable, so work with them. Offer to accept a smaller payment (something is better than nothing!), then set up a more attainable payment plan. Again, document every conversation and communication.

So now you’ve gone through these steps and you still haven’t received a payment. It’s time to step up your game a bit, still keeping in mind it’s best to be professional no matter how annoyed you are at this point. This is when you’ll need to start calling your client every day, at varying times, and visiting them on a regular basis, making sure to document every interaction. Usually clients who have been giving you a hard time will find this a bit disconcerting and because you’re not a nameless/faceless collection agency, you’re not as easy to ignore. As a result it will usually result in receipt of payment.

Next week we’ll look into what steps need to follow these efforts if you still haven’t received payment.

_{Fred Daus is the Chief Executive Officer and founder of Fredrick James Accounting, Tax & Consulting. He is a member of National Society of Accountants and the National Society of Tax Professionals and has been helping clients save money and grow their income since 2001. Fredrick James is an innovative, full service accounting firm in Clearwater, Florida with a focus on providing outstanding service, tax savings and financial growth to clients in the Tampa Bay area, Nationwide and around the world. Visit our website www.FredrickJames.com or call 727-230-0716 for more information.}

Because we are a progressive accounting firm that believes in utilizing the latest tools and technology to help us educate our clients and improve their lives, it was a natural fit to settle in here.

Now that the stress of Tax Day is behind you, join us this next year as we bring you information, updates and news on the latest tax laws, tips for saving money, investing wisely and more.

We want to help ensure that next Tax Season is something you won’t need to anticipate with trepidation!