quickbooks top 5 tips for effective bookkeeping / top 5 tax tips - bryant, spiegel
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QuickBooks Top 5 Tipsfor Effective Bookkeeping
Our QuickBooks Team can provide you with customized training, support, tips & more
Tammy Bryant & Julie Spiegel785-537-2202www.varney.com
Profit & Loss Setup
• Setup income accounts based on tax reporting
• Use sub-accounts if you want more details
Profit & Loss Setup
• Setup expense accounts based on tax reporting
• Use sub-accounts if you want more details
1099 Tracking
• Setup of vendors using proper names
• Enter addresses
• Check the box if you know they are eligible for 1099
• Obtain W-9s & enter Tax IDs
1099 Tracking• Use 1099 Wizard –
Vendors – Print/e-file 1099s
• Vendors should already be selected from previous setup
• Warnings of missing vendor information
• Map vendor payment accounts
Structure of Loans
• Create Liability Accounts for each lender
• Create sub-accounts for each loan per lender
• Break out principal payments vs interest
• Separate mortgage interest from other interest
Segregate Personal Items
• Use Other Income and Other Expense Account Type
• Setup accounts for itemized deductions for Sch A reporting
Reconcile, Reconcile, Reconcile
• Bank Accounts
• Credit Cards
• Loans
Reconcile, Reconcile, Reconcile
• Pay attention to outstanding items – might be duplicates, errors, things that need voiding, etc.
• Difference should always be zero when done
Thank You!
Contact us today to explore options on cleaning up your QuickBooks. We look forward to working with you!
Tammy Bryant & Julie Spiegel785-537-2202www.varney.com
Top 5 Tax Tips
Do you have the RIGHT financial partner for your farming, ranching or agribusiness operation –someone who understands the agricultural industry?
Julie Spiegel & Tammy Bryant785-537-2202www.varney.com
Depreciation
• Section 179 - $500,000 (2016)/$510,000 (2017) new and used with 15-year life or less (permanent – indexed for inflation)
• 50% Bonus – unlimited on new assets with 20-year life or less (2016 and 2017). Percentage declines in 2018-19; gone after 2019
(NOTE: Machine sheds qualify)
• Asset lives:
Depreciation (continued)
HRA
• An HRA is a Health Reimbursement Arrangement
• Two examples:• Farmer employs spouse as only employee: Rather than taking
deduction of health insurance premiums on front page of tax return (limited to farm net income), allowed to deduct health insurance and out-of-pocket medical expenses on Schedule F –lowers net income and reduces self-employment tax
• Farm businesses with multiple employees: Offers employee attractive benefit package. Tax free benefit to employee and tax deductible expense to business
Classification of Livestock
How you account for livestock makes a difference!
• Raised livestock• Example: Calf sales• Report on Schedule F – ordinary income
• Breeding livestock• Raised breeding livestock held at least 24 months is eligible for
more favorable capital gains tax treatment (0% or 15% typically)
• Purchased breeding livestock has been depreciated and is subject to depreciation recapture and taxed at ordinary gain rates
• Report on Form 4797 – capital and ordinary gains
Repair Regulations
• New guidelines issued in 2014 – taxpayer friendly
• In 2014 and 2015, a de minimis safe harbor was created to expense amounts below $500
• In 2016, IRS increased the $500 de minimis safe harbor threshold to $2,500 per unit of property.
• Applies per invoice or per item
• Must be substantiated by invoice
• Election must be made annually on the filed tax return
De Minimis Safe Harbor
Repair Regulations
• Safe Harbor - less than $200 can be expensed
• Incidental (Not Inventory and consumed in 12 months or less)
Materials & Supplies
Repairs• Taxpayer can deduct amounts paid for repairs and maintenance to
tangible property as long as not required to capitalize as an improvement.
• Recurring activities expected to keep a Unit of Property (UOP) in ordinary operating condition
• Cleaning, inspection, testing, replacing parts
• (i.e. annual maintenance on tractor or combine)
Repair Regulations
• Betterment• Corrects a material condition or defect• Makes it materially more efficient or productive• (i.e. modify farm equipment to do same thing better)
• Restoration• Makes an asset like new again after the end of its class life• Replace major component or substantial structure• (i.e. 15-year old tractor – restore engine)
• Adaptation• Adapts tangible property to a new or different use• (i.e. convert old barn to office space)
Improvements
Cash versus Accrual accounting
• Cash basis – report income when received and expenses when paid• Most farmers report cash basis accounting on tax return• Examples: Prepaids can be expensed; contract grain and
insurance claim proceeds can be deferred to a future tax year; credit card charges are considered expensed when charged (not when paid); fixed assets are based on when placed in service (not when paid).
• Accrual basis – report income when earned and expenses when incurred• Benefit: Better management reporting and overall picture of
operations
Thank You!
Contact us today to explore options on becoming financial partners. We look forward to working with you!
Julie Spiegel & Tammy Bryant785-537-2202www.varney.com