What Schaumburg bookkeeper can do for your business to THRIVE?

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Success of our business depends on how extensively we help our client THRIVE in their business. We go beyond compliance and suggest ways to help our clients THRIVE.

It’s our responsibility to make a difference not only by providing best client service, maximum tax benefits and personal attention but also by generating unique value for our client’s businesses.

“If you can dream it, you can do it.” Once the idea starts materializing, it can be hard for entrepreneurs to balance those ideas with day-to-day accomplish-able tasks. We help successful entrepreneurs to manage both the “big picture” and the “small picture.”

As a business owner, nothing is more useful in keeping your company efficient and profitable than financial data maintained by experienced professionals. By outsourcing your accounting work to us, you can focus on implementing your business plan to achieve your personal and professional goals.

Each month or quarter we’ll do the following things for you…

* Reconcile your bank account
* Generate financial statements
* Input accounting transactions into your general ledger
* Provide expert consultation
* Prepare Sales and Use Tax Returns

These tasks form the solid foundation of your business accounting system. You can customize the package of services you receive by adding payroll, tax planning, tax preparation, or any of our other services.

Bank Reconciliation
Reconciling your business bank account each month allows us to keep your bank account, accounting, and taxes up-to-date.

Having us reconcile your bank account each month allows you to…

* Identify lost checks, lost deposits and unauthorized wire transactions.
* Detect and prevent excess/unjustified bank charges and ensures transactions are posted correctly by your bank.
* Detect and prevent embezzlement of funds from within your company.
* Know how your business is doing. You can’t know unless all accounts are reconciled and properly accounted for on your financial statements.
* Manage your cash more effectively. Proper management of funds not only saves money, it makes money for you.
* Protect yourself. By timely reconciling and promptly objecting to your bank about any unauthorized, fraudulent or forged checks presented to your bank and paid by that bank, you can relieve your agency of responsibility for the shortfall and transfer the risk to the bank. This reason to reconcile alone should be enough. Crime exists.
* Sleep Better. You will sleep more peacefully at night knowing your bank accounts are reconciled, in balance and that all escrow funds, accounts, checks and disbursed funds are properly accounted for.

Financial Statements

Income Statement
An income statement, otherwise known as a profit and loss statement, basically adds an itemized list of all your revenues and subtracts an itemized list of all your expenses to come up with a profit or loss for the period.

An income statement allows you to…

* Track revenues and expenses so that you can determine the operating performance of your business.
* Determine what areas of your business are over-budget or under-budget.
*
Identify specific items that are causing unexpected expenditures. Like phone, fax, mail, or supply expenses.
*
Track dramatic increases in product returns or cost of goods sold as a percentage of sales.
* Determine your income tax liability.

Balance Sheet
A balance sheet gives you a snapshot of your business’ financial condition at a specific moment in time.

A balance sheet helps you…

* Quickly get a handle on the financial strength and capabilities of your business.
* Identify and analyze trends, particularly in the area of receivables and payables. For example, if your receivables cycle is lengthening, maybe you can collect your receivables more aggressively.
* Determine if your business is in a position to expand.
* Determine if your business can easily handle the normal financial ebbs and flows of revenues and expenses.
* Determine if you need to take immediate steps to bolster cash reserves.
* Determine if your business has been slowing down payable to forestall an inevitable cash shortage.

Balance sheets, along with income statements, are the most basic elements in providing financial reporting to potential lenders such as banks, investors, and vendors who are considering how much credit to grant you.

Maintaining a Clean General Ledger
The general ledger is the core of your company’s financial records. These records constitute the central “books” of your system. Since every transaction flows through the general ledger, a problem with your general ledger throws off all your books.

Having SK Tax Associates review your general ledger system each month allows us to hunt down any discrepancies such as double billings or any unrecorded payments. Then we’ll fix the discrepancies so your books are always accurate and kept in tip top shape.

Schaumburg bookkeeper type and e-mail you a monthly financial statements. A bookkeeper summarizes details and transfers all data to a general ledger with the help of computer and calculator.

A bookkeeper verifies, allocates and posts details of business transactions to subsidiary accounts in journals or computer files from documents. Documents such as sales slips, invoices, receipts, check stubs, and computer printouts. Bookkeeper may compile reports towards statistics, such as cash receipts, expenditures, accounts payable and receivable, profit and loss, and other items pertinent to operation of business.

For more information please visit http://schaumburgcpa.info  and contact us anytime for any query.

Manendra Kothari, CPASchaumburg CPA
SK Tax Associates, CPAs
Schaumburg: 127 S. Roselle Rd Ste # 200 Schaumburg, IL 60193
Ph: 847.524.0001   E-mail: MKothari@SKTaxes.com
www.SKTaxes.com

Are you having problems with the IRS!

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We’re here to help you resolve your tax problems and put an end to the misery that the IRS can put you through. We pride ourselves on being very efficient, affordable, and of course, extremely discrete. The IRS problems will not just go away by themselves; they just keep getting worse with penalties and interest being added each day.

Put us on your side while dealing with IRS, State or Local government agencies. Time is very important while dealing with IRS. If you delay in responding IRS, you will loose most of your rights as a taxpayer. If you receive an IRS letter, call immediately and see how we can protect your case. We can help you at each stage from regular notice to filing offer in compromise, installment agreement or tax court petition, if required.

If you owe the IRS, you have a very serious problem. It may take the IRS several years to catch up to you, but they will be relentless in collecting all the money that is owed, plus interest.

Please take a look through our complete IRS problem resolution services by contacting one of our tax experts.

IRS Problems:

* Have you received an IRS audit notification?
* Haven’t filed your tax returns for years?
* Do you owe Back Taxes?
* Do you have Payroll Tax Problems?
* Has the IRS placed tax liens on your home?
* Is the IRS threatening to seize your bank account and take your money out of the bank.
* Is the IRS threatening to take your paycheck, 401(k), and other retirement accounts?
* Is the IRS threatening to seize your personal property?

IRS Solutions

* Owe the IRS a lot of money? – Settle for pennies on the dollar! Ask us about Offers In Compromise.
* Need more time to pay. Ask us about Payment Plan.
* Like to get out from under your tax burden completely. Ask about Bankruptcy.
* Like to get out of a tax debt caused by misdeeds committed by your spouse? Ask us about Innocent Spouse Relief.
* Like to see what the IRS has on you? Ask us..Ask us.

So what to do? How to proceed?

For more information please visit http://schaumburgcpa.info  and contact us anytime for any query.

Manendra Kothari, CPASchaumburg CPA
SK Tax Associates, CPAs
Schaumburg: 127 S. Roselle Rd Ste # 200 Schaumburg, IL 60193
Ph: 847.524.0001    MKothari@SKTaxes.com
www.SKTaxes.com

Why You Need CPA ??

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Accounting is a very vital part of your organization. Though it does not contribute to your profits, it is the best way to gauge your performance independently as well as how you stack up amongst your peers. Besides, with good accounting, you can always have a tab over your finances allowing you to optimize your growth prospects. Given its importance, it is always better to look for professionals in this field to ensure efficient and correct accounts.

Hiring an accountant means that you don’t have to maintain and look into the accounts, which can be quite taxing, especially if you are managing other aspects of your business too. Besides a professional accountant can also ensure that you are using the latest accounting tools and software that provide you important financial information whenever you need to access it. Given the simplicity of the new accounting software, even you can get trained in some of the financial aspects that would eventually aid you in having a better quality discussion with your accountant. This helps you understand and hence plan better.

There are many types of accounting software that can help you record the business activity. If you have questions about accounting for your business income and expenses now visit: http://schaumburgcpa.info

Whether you prepare your own return or use any tax software, Don’t hesitate to ask us if you have any questions. If you have complex tax situations, have business, involved in a real estate deal, have cross boarder transactions or been audited by IRS you should consult CPA. We believe that in these situations, benefit will be much greater than the cost. 

If you are an employee, landlord, business owner, or farmer and you live in or near Streamwood, Arlington Heights, Hanover Park, Hoffman Estates, Des Plains, Chicago, Illinois or any other city, and looking for CPA please feel free to contact us.

For more information please visit http://schaumburgcpa.info  and contact us anytime for any query.

Manendra Kothari, CPASchaumburg CPA
SK Tax Associates, CPAs
Schaumburg: 127 S. Roselle Rd Ste # 200 Schaumburg, IL 60193
Ph: 847.524.0001    MKothari@SKTaxes.com
www.SKTaxes.com

Web : http://schaumburgcpa.info/

 

DIY Taxes or need CPA?

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The New Year starts the countdown until April 17th, 2012 (i.e. the due date of your 2011 individual income tax return). The best way to make the preparation of your income tax return as painless as possible is to be organized and thorough.  Here are some steps for doing so:

  • Form W-2, Wage and Tax Statement – If you were an employee during 2011, this document must be provided to you by January 31st, 2012.
  • Forms 1099-INT, Interest Income, 1099-DIV, Dividends, 1099-B, Proceeds – You probably won’t receive these documents reporting your 2011 investment income until the middle of February.
  • Form 1099-MISC, Miscellaneous Income – If you were an independent contractor during 2011 or received rents, royalties, etc., this document must be provided to you by January 31st, 2012.
  • Form 1099-R, Distributions from Retirement Plans, IRAs, etc. – This document must be provided to you by January 31st, 2012
  • Form SSA-1099, Social Security Benefit Statement – This document must be mailed to you on or before January 31st, 2012.
  • Form 1098, Mortgage Interest State – This document must be furnished to you by January 31st, 2012.
  • Schedule K-1 – These forms are issued to S Corporation shareholders, beneficiaries of trusts, and partners in partnerships/LLCs.  You could receive these forms anytime from February through October.  It just depends on when the tax return for the S Corporation, partnership, or trust is prepared.  Thus, you may need to extend your individual income tax return if you are waiting on a Schedule K-1.

These steps will help you whether you prepare your own return or provide this information to your CPA.  Don’t hesitate to ask your CPA if you have any questions Please contact us at:

Manendra Kothari, CPASchaumburg CPA
SK Tax Associates, CPAs
Schaumburg: 127 S. Roselle Rd Ste # 200 Schaumburg, IL 60193
Ph: 847.524.0001    MKothari@SKTaxes.com
www.SKTaxes.com

Web : http://schaumburgcpa.info/

 

Independent Contractor or Employee – How to decide?

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“Income tax has made more liars out of the American people than golf.” — Will Rogers, humorist.

It is critical that you, the business owner, correctly determine whether the individuals providing services are employees or independent contractors. Generally, you must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid to an employee. You do not generally have to withhold or pay any taxes on payments to independent contractors. If you are an independent contractor and hire or subcontract work to others, you will want to review the information in this section to determine whether individuals you hire are independent contractors /subcontractors or employees.

Before you can determine how to treat payments you make for services, you must first know the business relationship that exists between you and the person performing the services. The person performing the services may be -

An independent contractor: The general rule is that an individual is an independent contractor if you, the person for whom the services are performed, have the right to control or direct only the result of the work and not the means and methods of accomplishing the result.

An employee: Under common-law rules, anyone who performs services for you is your employee if you can control what will be done and how it will be done.

A statutory employee: If workers are independent contractors under the common law rules, such workers may nevertheless be treated as employees by statute (statutory employees) for certain employment tax purposes if they fall within any one of the four specified categories and meet the three conditions described under Social Security and Medicare taxes.

A statutory nonemployee: There are generally two categories of statutory nonemployees: direct sellers and licensed real estate agents.

In determining whether the person providing service is an employee or an independent contractor, all information that provides evidence of the degree of control and independence must be considered.

Common Law Rules

Facts that provide evidence of the degree of control and independence fall into three categories:

Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job? The behavioral control factors fall into the categories of:

  • Type of instructions given
  • Degree of instruction
  • Evaluation systems
  • Training

Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.) The financial control factors fall into the categories of:

  • Significant investment
  • Unreimbursed expenses
  • Opportunity for profit or loss
  • Services available to the market
  • Method of payment

Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business? The factors, for the type of relationship between two parties, generally fall into the categories of:

  • Written contracts
  • Employee benefits
  • Permanency of the relationship
  • Services provided as key activity of the business

Businesses must weigh all these factors when determining whether a worker is an employee or independent contractor. Some factors may indicate that the worker is an employee, while other factors indicate that the worker is an independent contractor. There is no “magic” or set number of factors that “makes” the worker an employee or an independent contractor, and no one factor stands alone in making this determination. Also, factors which are relevant in one situation may not be relevant in another.

The keys are to look at the entire relationship, consider the degree or extent of the right to direct and control, and finally, to document each of the factors used in coming up with the determination.

Form SS-8

If, after reviewing the three categories of evidence, it is still unclear whether a worker is an employee or an independent contractor, Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding can be filed with the IRS. The form may be filed by either the business or the worker. The IRS will review the facts and circumstances and officially determine the worker’s status.

Be aware that it can take at least six months to get a determination, but a business that continually hires the same types of workers to perform particular services may want to consider filing the Form SS-8.

Employment Tax Obligations

Once a determination is made (whether by the business or by the IRS), the next step is filing the appropriate forms and paying the associated taxes.

Misclassification of Employees

Consequences of Treating an Employee as an Independent Contractor
If you classify an employee as an independent contractor and you have no reasonable basis for doing so, you may be held liable for employment taxes for that worker (the relief provisions, discussed below, will not apply). See Internal Revenue Code section 3509 for more information.

Relief Provisions
If you have a reasonable basis for not treating a worker as an employee, you may be relieved from having to pay employment taxes for that worker. To get this relief, you must file all required federal information returns on a basis consistent with your treatment of the worker. You (or your predecessor) must not have treated any worker holding a substantially similar position as an employee for any periods beginning after 1977. See Publication 1976, Section 530 Employment Tax Relief Requirements for more information.

Misclassified Workers Can File Social Security Tax Form

Workers who believe they have been improperly classified as independent contractors by an employer can use Form 8919, Uncollected Social Security and Medicare Tax on Wages to figure and report the employee’s share of uncollected Social Security and Medicare taxes due on their compensation. See the full article Misclassified Workers to File New Social Security Tax Form for more information.

On September 21, 2011, IRS announced new Voluntary Worker Classification Settlement Program (VCSP). Please contact us if you have any questions for workers classification.

Manendra Kothari, CPASchaumburg CPA
SK Tax Associates, CPAs
Schaumburg: 127 S. Roselle Rd Ste # 200 Schaumburg, IL 60193
Ph: 847.524.0001    MKothari@SKTaxes.com
www.SKTaxes.com

Web : http://schaumburgcpa.info/

Know Your Rights as a Taxpayer

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Whether you file a Form 1040EZ or a complicated corporate return, you will benefit from knowing your rights as a taxpayer and being familiar with the IRS’ obligations to protect them. You have certain rights as a taxpayer when dealing with the IRS. Seven of most important rights as a taxpayer are listed below.

I. Protection of Your Rights:

IRS employees should explain and protect your rights as a taxpayer throughout your contact with IRS.

II. Privacy and Confidentiality:

The IRS can not disclose to anyone the information you give to them, except as authorized to them by law. You have the right to know why IRS is asking you for information, how IRS will use it, and what happens if you do not provide requested information.

III. Professional and Courteous Service:

If you believe that an IRS employee has not treated you in a professional, fair, and courteous manner, you should tell that employee’s supervisor. If the supervisor’s response is not satisfactory, you / your representative can write to the IRS director for your area or the center where you file your return.

IV. Representation:

You may either represent yourself or, with proper written authorization, have someone else represent you in your place. Your representative must be a person allowed to practice before the IRS, such as an attorney, CPA, or enrolled agent. If you are in an interview and ask to consult such a person, then IRS must stop and reschedule the interview in most cases. You can have someone accompany you at an interview. You may make sound recordings of any meetings with examination, appeal, or collection personnel, provided you tell them in writing 10 days before the meeting.

V. Payment of Only the Correct Amount of Tax:

You are responsible for paying only the correct amount of tax due under the law—no more, no less. If you cannot pay all of your tax when it is due, you may be able to make monthly installment payments. Please ask us about Installment arrangements with IRS.

VI. Appeals and Judicial Review:

If you disagree with IRS about the amount of your tax liability or certain collection actions, you have the right to ask the Appeals Office to review your case. You may also ask a court to review your case.

VII. Relief From Certain Penalties and Interest:

The IRS will waive penalties when allowed by law if you can show you acted reasonably and in good faith or
relied on the incorrect advice of an IRS employee. IRS will waive interest that is the result of certain errors or delays caused by an IRS employee.

Please consult us to know your other rights during examination, appeal or collection.

Manendra Kothari, CPASchaumburg CPA
SK Tax Associates, CPAs
Schaumburg: 127 S. Roselle Rd Ste # 200 Schaumburg, IL 60193
Ph: 847.524.0001    MKothari@SKTaxes.com
www.SKTaxes.com

Web : http://schaumburgcpa.info/

Are Gambling Winnings Always Taxable Income

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Gambling winnings are fully taxable and must be reported on your tax return. Here are the top seven facts we want you to know about gambling winnings.

1. Gambling income includes – but is not limited to – winnings from lotteries, raffles, horse and dog races and casinos, as well as the fair market value of prizes such as cars, houses, trips or other noncash prizes.

2. Depending on the type and amount of your winnings, the payer might provide you with a Form W-2G and may have withheld federal income taxes from the payment.

3. The full amount of your gambling winnings for the year must be reported on line 21 of IRS Form 1040. You may not use Form 1040A or 1040EZ. This rule applies regardless of the amount and regardless of whether you receive a Form W-2G or any other reporting form.

4. If you itemize deductions, you can deduct your gambling losses for the year on line 28 of Schedule A, Form 1040.

5. You cannot deduct gambling losses that are more than your winnings.

6. It is important to keep an accurate diary or similar record of your gambling winnings and losses.

7. To deduct your losses, you must be able to provide receipts, tickets, statements or other records that show the amount of both your winnings and losses.

You can also get more information in IRS Publication 529, Miscellaneous Deductions, or Publication 525, Taxable and Nontaxable Income or feel free to contact us.

Manendra Kothari, CPASchaumburg CPA
SK Tax Associates, CPAs
Schaumburg: 127 S. Roselle Rd Ste # 200 Schaumburg, IL 60193
Ph: 847.524.0001    MKothari@SKTaxes.com
www.SKTaxes.com

Web : http://schaumburgcpa.info/

Ten Facts to Know about Taking Early Distributions from Retirement Plans

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Some taxpayers may have needed to take an early distribution from their retirement plan last year. If you took an early distribution you should know that there can be a tax impact to tapping your retirement fund. Here are ten facts about early distributions.

1. Payments you receive from your Individual Retirement Arrangement before you reach age 59 ½ are generally considered early or premature distributions.

2. Early distributions are usually subject to an additional 10 percent tax penalty.

3. Early distributions must also be reported to the IRS.

4. Distributions you rollover to another IRA or qualified retirement plan are not subject to the additional 10 percent tax. You must complete the rollover within 60 days after the day you received the distribution.

5. The amount you roll over is generally taxed when the new plan makes a distribution to you or your beneficiary.

6. If you made nondeductible contributions to an IRA and later take early distributions from your IRA, the portion of the distribution attributable to those nondeductible contributions is not taxed.

7. If you received an early distribution from a Roth IRA, the distribution attributable to your prior contributions is not taxed.

8. If you received a distribution from any other qualified retirement plan, generally the entire distribution is taxable unless you made after-tax employee contributions to the plan.

9. There are several exceptions to the additional 10 percent early distribution tax, such as when the distributions are used for the purchase of a first home, for certain medical or educational expenses, or if you are disabled.

10. For more information about early distributions from retirement plans, the additional 10 percent tax and all the exceptions see IRS Publication 575, Pension and Annuity Income and Publication 590, Individual Retirement Arrangements (IRAs).

Manendra Kothari, CPASchaumburg CPA
SK Tax Associates, CPAs
Schaumburg: 127 S. Roselle Rd Ste # 200 Schaumburg, IL 60193
Ph: 847.524.0001    MKothari@SKTaxes.com
www.SKTaxes.com

Web : http://schaumburgcpa.info/

Business Use of Home Deductions

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Whether you are self-employed or are an employee, you may be able to deduct certain expenses for the part of your home you use for business despite the general denial of business expense deductions for the home.

To deduct expenses for business use of the home, part of your home must be used regularly and exclusively as one of the following:

  1. The principal place of business for your trade or business
  2. The place where you meet and deal with your patients, clients, or customers in the normal course of your trade or business; or
  3. In connection with your trade or business, if you use a separate structure that is not attached to your home

Where the exclusive use requirement applies, you cannot deduct business expenses for any part of your home that you use for both personal and business purposes. For example, if you are an attorney and use the den of your home to write legal briefs and also for personal purposes, you may not deduct any business-use-of-your-home expenses. Further, under the principal-place-of-business test, you must determine that your home is the principal place of your trade or business after considering where your most important activities are performed and most of your time is spent, in order to deduct expenses for the business use of your home. Additionally, a portion of your home may qualify as your principal place of business if you use it for the administrative or management activities of your trade or business and you have no other fixed location for that trade or business where you conduct substantial administrative and management activities.

Deductions also may be taken for regular use of a residence for the provision of day care services or for business storage purposes; exclusive use is not required in these cases. You also may take deductions if you rent out your residence.

Deductible expenses for business use of your home include the business portion of real estate taxes, deductible mortgage interest, rent, casualty losses, utilities, insurance, depreciation, maintenance and repairs. You may not deduct expenses for lawn care in general or for painting a room not used for business.

When figuring the amount you can deduct for the business use of your home, you can use the entire amount of expenses attributable solely to the portion of the home used in your business. The amount you can deduct for expenses attributable to the whole house depends on the percentage of your home used for business. To figure this percentage, you may divide the number of square feet used for business by the total square feet in your home. Or, if the rooms are approximately the same size, divide the number of rooms used for business by the total number of rooms in your home. You figure the business portion of your expenses by applying this percentage to the total of each expense. If you are a qualified day-care provider who does not use any area exclusively for day care, your business portion is further limited by the ratio of the number of hours the area is used exclusively for business to the total number of hours the portion was available for any use.

If your gross income from the business use of your home is less than your total business expenses, your deduction for certain expenses for the business use of your home, other than mortgage interest, taxes, casualty losses, and the like is limited. However, those business expenses that can not be deducted because of the gross income limitation can be carried forward to the next year but will be subject to the deduction limit for that year.

If you are in the business of farming or are an employee, you can use the worksheet in Publication 587 , Business Use of Your Home, (including use by daycare providers) to figure your deduction. As an employee, you must itemize deductions on Form 1040, Schedule A to claim expenses for the business use of your home. Farmers claim their expenses on Form 1040, Schedule F. If you are self-employed, use Form 8829 to figure your business-use-of-the-home deductions and report those deductions on Form 1040, Schedule C.

Publication 587 has detailed information on rules for the business use of your home, including how to determine if your home office qualifies as your principal place of business. If you have any further questions, feel free to contact us.

Manendra Kothari, CPASchaumburg CPA
SK Tax Associates, CPAs
Schaumburg: 127 S. Roselle Rd Ste # 200 Schaumburg, IL 60193
Ph: 847.524.0001    MKothari@SKTaxes.com
www.SKTaxes.com

Web : http://schaumburgcpa.info/