Tax Savings Tips for a Home-Based Business

So you have decided to start home-based business. Whatever the reasons might be, a home-based business is a great start for entrepreneurs and there are many factors to be considered. One of the most important is Tax Planning. True tax planning provides concepts and strategies needed to minimize taxes and is one key to financial success in any business venture.

There are many tax savings benefits available for home-based businesses. One of the most important is home office deductions. If you use part of your home for business you may be able to deduct expenses for the business use of your home. This deduction is available to both homeowners and renters and applies to all types of homes. To claim the deduction you must prove that the office space in your home is the principal place of your business and is regularly and exclusively used for business purposes. The deductions can be computed using a simplified method or a regular expense method. The “regular expense method” requires determination of actual expenses for the entire home, including mortgage interest, insurance, utilities, repairs and depreciation. Deductions for a home office are based on the percentage of your home devoted to business use. The “simplified method” is allowed starting 2013 and permits standard deductions of $5 per square foot of home used for business up to a maximum of 300 square feet.

Another important deduction is Automobile expenses for business use. Auto expenses can be claimed using standard mileage rate or actual expense method. For actual expense method, taxpayers must keep track of all expenses related to the automobile including repairs, gas, tolls parking and depreciation. If the automobile is for both business and personal use, only the portion related to business use is deductible. The standard mileage rate method does not require tracking actual expenses but provides standard mileage rate of 56.5 cents per mile (for 2013) in addition to parking and tolls. Taxpayers in this case only need to track mileage driven for the business purposes during the year. I recommend computing both methods to see which produces the most deductions.

Self-employed taxpayers can deduct health insurance premiums on their personal income tax returns instead of itemized deductions which is subject to limitations. Self-employed taxpayers often overlook qualified pension plan contributions which are tax deductible.

Another tax-savings idea is to hire your child for your business. Wages paid to a child are deductible business expenses. Your spouse also can be hired as an employee. Family members can contribute money towards individual retirement accounts, which is another legitimate way to reduce tax burden. It is very important however, to hire family members to fill a business need and not just hire them for tax savings purposes.

Self-employed individuals are subject to estimated tax payments. Probably the most common mistake among self-employed individuals is neglecting to put aside enough money for estimated taxes. Making sure to pay estimated taxes quarterly is as important as running your business.

Incorporating a business (Corporation or LLC) may provide home-based business owners legal protection, so if your business is operated as sole proprietorship, consider incorporating.

Good tax planning begins with getting organized—particularly when it comes to keeping records about the things you spend money on for your business. Keeping track of auto mileage, business income and spending will ensure proper tax treatment of business related income and expense. Whether you decide to follow just one of these tips talk with www.outsourcedbookeeping.com.

How To Record Outsourced Payroll in QuickBooks

The first thing to know about how to record your outsourced payroll is that you should be outsourcing your business's payroll. Trying to do your own  payroll opens you up to a lot of exposure to errors and problems like miscalculating taxes, which can lead to even bigger problems like penalties and interest.

It is important that you record your payroll correctly or you could be over or understating your expense or net income. We find that many clients will just record the net amount that comes out of their checking account. They will debit payroll expense and credit cash. This is not the proper way to do this, and can lead to dangerous irregularities. There are several buckets that payroll falls into:

Salaries: This will be recorded as an expense (or debit). This is your gross wages.

Payroll Tax Expense: This should be recorded as an expense (or debit). This represents the employer's piece of FICA, SUI & FUTA.

Payroll Liabilities: This is basically anything that you deduct from your employees' paychecks. It includes things like 401Ks, health insurance, payroll taxes, and garnishments. These deductions would all be recorded as a credit on your journal entry. When these deductions get paid out, you  will relieve the liability.

Payroll Processing Fee: This is the fee that the payroll company charges you for their service. This would be recorded as an expense (or debit).

Direct Deposit/Live Checks: This represents the net amount of the employees' checks. This would be recorded as a credit to your checking account.

It is important to understand the difference between an expense and a liability so that you can record your entries correctly. Once you have your entry fgured out, I would recommend setting up a memorized transaction so that all you have to do is just change the figures but not the accounts. This way there's less change being made, and therefore a smaller chance for error.

Outsourced Accountants Do Daily Bookkeeping work

If you’re a small business owner with a rapidly growing business and annual revenue in the $1 to $25 million range, you may find yourself overwhelmed with bookkeeping duties. You may be considering Outsourced accountants, but you’re not sure if you’re ready to take that step.

You've probably grown past the stage where you’re doing the bookkeeping and accounting yourself, but as a steady stream of in-house bookkeepers enters and leaves your office, you may find the tasks fall into your lap more often than you’d like.

Even when you’re not managing the books, you’re managing the accounting department, which means hiring, training and overseeing your bookkeeper. This is not what you signed up for as a small to mid-sized business owner.

More and more business owners like you are discovering the answer to bookkeeping success in Outsourced accountants through outsourcedbookeeping.com. The Outsourced accounting department we provide to clients takes care of all the bookkeeping and accounting services businesses need from dedicated, secure home offices. Let’s take a look at some of the daily, weekly and monthly tasks of your Outsourced accounting department.

Daily Bookkeeping Processes

On a daily basis, Outsourced accountants provide GAAP-compliant, accrual basis bookkeeping. This includes:

- Accounts Payable

- Accounts Receivable

- Banking

- Payroll

- Financial reporting

Because outsourcedbookeeping bookkeepers work the same hours you do, in your time zone, they are typically available via instant messenger or email if you  have questions or need timely information.

Your Outsourced Accounting Department

When you contract with Outsourcedbookeeping.com, you get even more than just daily bookkeeping services. Our trademarked "Processes in Place" procedures includes a Client Procedures Manual that outlines your expectations and the services and information our Outsourced accountants will deliver to you on a schedule we set together.

Our Accounting Grader tool helps you see your organization’s strengths and weaknesses in your bookkeeping and accounting processes, so you can work with outsourcedbookeeping.com to improve processes and procedures for maximum productivity and profitability.

Outsourced Accountants and Financial Controller Services

In addition to your full-charge bookkeeper, your Outsourced accounting department includes a financial controller. This person oversees your bookkeeper and reviews your company’s financial data with you, so you can understand what all the financial statements really mean. Think of this person as your trusted business adviser, a service you’re not likely to find in an in-house bookkeeper.

What Outsourced Accountants Won’t Do

So you’re unhappy with your experiences with in-house bookkeepers and you’re contemplating Outsourced accountants. It’s important to understand the benefits, but also to know what Outsourced accountants won’t do for your company.

Your Outsourced accountant and financial controller won’t attempt to take control of your company. Your financial controller will provide advice, but the final decisions are always up to you.

Outsourced accountants won’t gossip about your company. They live hours away and have nothing to gain and everything to lose by airing information about your company. If this has been a concern, in the past, with in-house bookkeepers, you can rest easy.

Finally (and we hope this isn't a deal breaker), Outsourced accountants won’t answer the phones in your office when the administrative assistant goes on break, make coffee or greet clients. It’s just not practical.

But if you’re looking for someone who will keep your books up to date and provide accurate financial reporting, you’re in the right place at outsourcedbookeeping.com.

Outsourcing Of Accounting And Bookkeeping Responsibility: Ten Points To Keep In Mind

While it may seem like a mammoth step for the uninitiated, many claim that accounting outsourcing is not only an effective but also a smart solution. If you choose the right BPO partner, you get great benefits in managing day to day accounts and finance tasks in the most secure, efficient and reliable manner ever. However, before you do that, you must know what the essential qualities of accounts and finance outsourcing are.

1. Accounting outsourcing proves to be a right decision only when you have a bulk of non-core accounting tasks that takes up most of your time. It can also cover tricky accounting tasks that you and your staff are unable to do. Small businesses hire talented account and finance professionals so that they can gain insight from them and get their routine or tricky accounting jobs done.

2. Many companies hire the services of accounts professionals only during the year end or when they have heavy influx of work. It is the best way to save money as you only pay when your company needs the service the most. However, if you have a steady flow of heavy work, it would be advisable to make a long-term contract at a discounted price.

3. You can hire accounting staff of all levels from CFO to a specialist for accounts payable and receivable. This flexibility allows you to pay for what you need.

4. Always ensure you get proper closing procedures at the end of the month and get the accounts double checked by a QA (Quality Analyst). With a proper quality control system in place, you can check for discrepancies and ensure you get reliable and accurate financial reports. This way, you are not in for surprises when your company is audited.

5. You must know how to allocate tasks and duties to the outsourcing partner and your staff. If you have a clear job description, there will be less hassles and shirking of duties in future.

6. Outsourcing is a great way to increase accountability and transparency in organizations. If you suspect that your in-house staff is not giving the true picture of your accounts and finance, it may be just the time to think about outsourcing.

7. The best part about accounts outsourcing is that you are hiring field experts that have sound knowledge of regulatory compliance.

8. Another benefit of outsourcing is you can inculcate finance best practices in your organization with the help of their expertise and guidance. This can improve your accounts maintenance and reporting functions. However, most companies fail to make use of this greatest benefit and sadly neglect it.

9. When you outsource your tasks, remember you do not outsource your responsibilities. Make regular checks and ensure there are no errors. This way you are better prepared for audits.

10. Most importantly, choose a genuine, authorized outsourcing service provider that can deal with any accounting challenges, is equipped to handle the pressure during emergencies, adjusts to the size of your organizations and turns in work on a regular basis.

With more and more business responsibilities and functions being outsourced, why should finance and accounting be ignored? Accounting outsourcing is one of the business functions that can safely be outsourced to a third party.

We understand that choosing to outsource is an important business decision. It is a question of not only earning money by cost cutting but the integrity and bottom line of your company is at stake. So, you need a business partner who values as much your customers as you do. Please be assured that our skilled teams, who are minimum commerce graduates, have sufficient exposure and experience of handling the outsourced bookkeeping and tax return preparation assignments.

Outsourced Bookkeeping can help you to take the benefit of saving your costs by outsource to us.