Kimberly Buziak asked:


                When opening a small or large business it is a difficult task to choose the right accountant for with you and your company.  Many businesses decide to go use a Certified Public Accountant, which means they had passed the Uniform CPA Examination.  The benefits in using a CPA are that person possesses integrity, professionalism, and is certified by the state.  If you want an accountant that is the most qualified choose a CPA.  When picking a CPA it can mean the difference between success and failure.  A company’s financial records are what make or break your business.

 

There are many places to look when trying to find prospective CPAs.  The first would be to get suggestions from friends, business associates, or even your attorney.  Ask owners of local businesses you frequent to see if they have any suggestions.  Another way is to look in the Yellow Pages or online at .  The last recommendation is to ask your local Chamber of Commerce for names of CPAs who are members.

 

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                When you have inquired a list of qualified CPAs and are ready to interview there are specific questions that you need to ask to make sure you are choosing the correct CPA.  Questions could include: What kind of business advice will you offer me?  What type of services they will offer for clients, including what computer programs they prefer to use?  How much experience they have in the accounting practice?  How do they calculate your fees? (Make sure they will guarantee not to exceed an amount agreed upon up front).  The final question to be asked is what are the benefits of choosing them over another CPA?  Make sure before the interview is over to ask for references and don’t forget to ask to see their CPA certificate.  You should be very thorough, interview several candidates, try to establish a common ground with similar values, and check out their listening skills.  Also, make sure the candidate specializes in corporate accounting and can meet all of your specific accounting needs.

 

                Once you have chosen the right CPA you must be certain on what their duties are and how they can benefit your company.  There are various services performed by CPAs, such as taxes, bookkeeping, setting up businesses to be able to keep track of records, auditing, which is when a CPA comes in and reviews how you are conducting your business, or lastly consulting, which includes advice from keeping the business alive to expanding your business.  Their main abilities should be to analyze data, record, interpret, and compare it to make important business and personal decisions.  Accounting involves the ability to reason, solve, and propose new ideas.

 

                When deciding where you want to go with your company your CPA should be able to tell u how to get there.  The CPA shouldn’t just show you the financial paths of where you have been, but where you will be in the future.   Certain qualities and characteristics are needed to be the right CPA.  They include: maintaining good relationships with clients to obtain good service, the ability to recognize needs of their clients to develop personalized strategies and consider the aspects of the client’s financial life, becoming well-experienced in the areas you need, being a good communicator, doing what they promise to do, and having a good network of associates.  A perk should also be having an office location in close proximity to where your business is.

 

By being well educated in finding and choosing the right Certified Public Accountant it can help provide you with the necessary requirements in opening a new business.   All theses tips can help with allowing your business to run smoothly and efficiently.



ANTWAN

Shay asked:


Do you charge by the number of W-2 forms you process or the time you spend working on the forms or both? Thanks!

HEATH

Joseph J. Dadich, CPA, Esq., LLM asked:


Many individuals see their family physician when there is some kind of persistent pain or discomfort. And at this time there are limited options and treatments available to treat the symptoms. With estate planning, there is very little one can do after the loved one has passed away or becomes incapacitated.

One such area of planning is referred to as IRA Planning. Typically, there is special attention required as a result of the immense complexities under the law. There are millions of baby boomer’s retiring over the next 10 to 20 years. If you don’t have the proper plan in place, all of your hard efforts to protect your assets for loved ones will be lost.

As stated in our title, up to 70% of one’s IRA can be wasted by Federal and State Estate Tax (approx. 50% depending on your State of domicile), and Income Tax (approx. 21 %) to the ultimate beneficiaries. Many individuals have attended seminars and read literature attempting to explain the concept of ‘Stretching-Out” one’s IRA. What you aren’t told is that there is a proper way of setting up your estate plan (including the beneficiary designation forms) to ensure this happens.

This is critical, and this is where your team of financial advisors, estate planning attorney and CPA’s/Accountants should be advising as to the need for IRA assets to be titled in a manner consistent with your intentions and goals. Many family’s and their financial advisors, believe that merely naming the children as IRA beneficiaries is sufficient to assure the stretch-out.

STOP READING AND FIND YOUR BENEFICIARY FORMS THAT YOU SIGNED WHEN YOU SET UP YOUR IRA’S. CALL OUR FIRM TO SET-UP AN APPOINTMENT BEFORE IT’S TOO LATE. . . CONTACT US AT WWW.DADICHLAW.COM IMMEDIATELY!!!!



If there was a way for you to ensure that your IRA’s, when properly inherited by your beneficiaries, were protected from a child’s divorce or mismanagement, wouldn’t you want to know about it? And what if there was a method to allow flexibility in your estate plan to allow your trustee to create additional protections, even after something unfortunate has happened, while allowing your children to have access for health, education, maintenance and/or support?

Assume the following facts: Mom is age 65 and has a $250k IRA, which includes money rolled over from her deceased spouse or from her own company retirement plan. We will assume that over time she enjoy an 8% annual growth of the account. At age 70 ½ the account would be worth $396,000. If she starts taking her RMD’s (Required Minimum Distributions) the IRA will continue to grow based on the tables as calculated by the IRS assumming that she only has to take out 4% (compared to the growth rate we’ve assumed at 8%).

If she passes away at 80, the inherited IRA is approximately $541,000. If the child continues taking his/her RMD’s (based on his/her life expectancy, by the time they are 80 they would have taken out a $2.9 million and will still have over $700,000 remaining to pass down to their children.

What if there was no planning done for our above example? (what if this was you or a loved one?) What if the 45 year old cashed-in his IRA and spent it on various needless costs? (new car, boat etc.) Or worse yet what if your child goes through a divorce? Do you want your child’s share to potentially go to an ex-in-law.

The IRS rules make it difficult to qualify a standard Revocable Living Trust (which is what most clients discusst when they meet with their estate and financial advisors) for the stretch-out provisions and added asset protection (as indicated earlier with the divorce of a child).

There are many advantages that a stand alone IRA trust has over the Revocable Living Trust. The provisions regarding the IRA distributions may be overlooked by the trustee when it is placed in the middle of a long document. More important, the terms of the IRA trust may be different and conflicting with that of the Revocable Trust as it may be more appropriate to have different instructions regarding distributions from the IRA then from the Trust.

It is critical that each document contain the provisions that are relevant to the distribution of the assets of the estate and the assets in the IRA. The Revocable Trust is not a mechanism for reducing the taxable estate, however, the IRA trust has significant tax advantages to both the parent, the child and the grandchildren.

Call our firm to find out what the 4 critical steps are to transfer your IRA assets to your loved ones. Don’t delay, you could be saving your family hundreds of thousands of dollars. CONTACT US AT WWW.DADICHLAW.COM OR CALL 248.358.6965.

Dadich & Associates, PLLC specializes in helping families transfer IRA’s to their loved ones. A family with concerns about their IRA should seek a qualified estate planning attorney to complement their other advisers. A professional who understands the tax ramifications along with estate and asset protection issues. Mr. Dadich has all of these qualifications, with his background as both an attorney, a CPA, and LLM in Tax..

His firm also specializes in Contested Probate litigation. Don’t let your estate end up in probate court as you have witnesses in many celebrity cases. Anna Nicole Smith did not have proper tax or estate planning and her estate will be substantially reduced in value over time as a result of unnecessary tax liabilities and immense legal fees. All of which could have been avoided with proper estate and tax planning. Do not let this happen to you. See us first.



ART

Stephen L. Nelson, CPA asked:


Starting a new business? You’ve got all sorts of ways you can complicate your accounting and your taxes. But if you want to keep your small business finances clean, lean, and low-cost, follow these five tips:

Accounting Tip #1: Don’t Incorporate

Yes, incorporation may reduce your taxes (in same cases). And, true, incorporation typically reduces your legal liability. But unless you really need a standard, old-style corporation, you should keep your accounting and your taxes simple and more straightforward by staying “un-incorporated.”

Here’s why: Incorporation means annual corporate income tax. And even if you’re the only person working in the business, incorporation means annual and quarterly payroll tax returns. That’s just too much paperwork for your new business.

By the way, if you are concerned about your legal liability, know that you have another great option for protecting yourself. You can set up a limited liability company. You should get the same legal protection. And if you’re a one-owner LLC, you’ll be able to treat your business just like any other sole proprietorship, which means no corporate income tax returns and maybe no payroll tax returns.

Accounting Tip #2: Setup a Simple Accounting System

If you own and operate a business, you really do need a simple accounting system. Don’t fool yourself. Invest the time (an hour?) and the money (about $100?) to get a simple accounting system like Quicken Home & Business or Microsoft Money Home & Business.

You’ll need an accounting system to track your profits anyway. That’s actually the law. Furthermore, by starting out with a good accounting system, you’ll much more effortlessly capture tax deductions that will later save you money.

Accounting Tip #3: Use a Separate Bank Account for Your Business

You don’t want to co-mingle your personal and business accounting. Get your business its own business bank account. Use that account for your business’s deposits and for your business’s payments.

Only bad things happen, accounting-wise, when you pay personal expenses out of your business account and business expenses out of your personal account. For example, you’ll miss tax deductions. You’ll inappropriately count personal expenditures as business expenses. And you’ll lose your ability to precisely measure how much money you’re making or losing.

Accounting Tip #4: Make Quarterly Estimated Tax Payments

One of the responsibilities you shoulder when you become self-employed is paying quarterly tax payments using the 1040ES form (both form and instructions are available from www.irs.gov). But this makes sense.

Someone who is an employee doesn’t have to worry about paying income taxes on their wages. Their employer automatically deducts taxes from their payroll checks and then remits that money to the Internal Revenue Service.

But you need to pay the income taxes on your business profit. And you should do so in quarterly chunks as the year progresses: one-quarter of your tax bill on April 15, another quarter on June 15, another quarter on September 15, and, finally in the next year, the last quarter on January 15.

In general, you’ll owe a combined tax of about 20% to 25% of what your business makes.  So you want to use your accounting system to regularly estimate your profits and then you want to set aside 20% to 25% of that profit in a savings account for later paying your income taxes.

If you make $80,000, for example, you’ll owe $16,000 to $20,000 in tax. And you would pay $4,000 to $5,000 a quarter in estimated taxes.

By the way, the big crisis you want to avoid here is not a penalty. That’s the least of your troubles, in a sense, if you don’t make quarterly payments.

The big crisis is having April 15th roll around and then finding you need to pay a surprise $16,000 or $20,000 tax bill. Ouch.

Accounting Tip #5: Don’t Put Personal Assets into the Business

And a final tip for keeping your accounting clean, simple and low-cost: Don’t put personal assets like cars or home computers into your business and then think or try to write off the purchase.

The accounting rules for expensing these kinds of “easily-used-for-personal-stuff” assets are cumbersome. You’ll find the rules hard to follow and easy to break. And if your accountant charges for the extra work he or she needs to go to on your tax return, the money you save is embarrassingly modest.



THOMAS

James Trippon asked:


A tax CPA in Houston discusses various solutions that Attorneys and law firms can use. Law firms and solo practice attorneys are a specialty area of corporate and partnership tax. Law firms will typically operate on a cash basis of tax accounting, which means that they report income when they collect their fees from clients or resolution of a court proceeding. Fees are normally charged either on an hourly basis or on a contingency fee basis, although some firms also use a hybrid of hourly and contingency billing methods.

Corporate tax accounting for law firms requires skill in identifying when income becomes taxable. This can be a challenge due to the use of trust accounts for fees, and litigation settlements, as well as the requirement of court approval of fees in some matters.

Equally challenging can be the determination of what expense can be deducted during the case and when.

As a tax CPA in Houston who has worked with all types of law firms, solo practitioners, multi office large firms, and even practicing judges I know the ins and outs of law firm accounting. Here are 3 typical trouble spots we address:

Constructive receipt - your fees are subject to corporate tax when you can access them, even if you leave them on deposit in your law firm IOLTA account.

Advance expense payment - this is a huge issue for plaintiff attorneys working on contingency. Often a successful case means a huge corporate tax liability. We can moderate that liability by pre-paying law office expenses within certain IRS guidelines.

Employee benefit plans- corporate tax can be reduced by employee benefit plan expenses. This includes pensions, healthcare plans, tuition reimbursement, and others. But be careful! Corporate tax will not be reduced if you violate any of the anti discrimination rules, or affiliated group rules, the IRS places on benefit plans.

At Trippon & Company CPAs we use our 20+ years of experience in law firm corporate tax to minimize your Federal tax liability. Call us at 713-661-1040 and put our experience at work for you!



ERICH

Kris Koonar asked:


CPA(Certified Public Accountant) is a designation, which is offered to qualified accountants who apparently clear the Uniform Certified Public Accountant Examination conducted by the United States. These accountants have to posses the mandatory state educational prerequisite as well as know-how. Those who clear the exam are given the CPA license. This exam protects the general public from incompetent accountants who execute shoddy work. In 1896 the New York State Law passed the first Law of Accountancy. Accounting evolved as a profession after this law was passed and was tagged under the licensing necessities. These professionals have to follow strict professional ethics and certain working standards.

This lead was followed by many states and in due course fifty-four jurisdictions accepted the public law accounting legislation. The Board of Accountancy solely has the licensing authority, in compliance with the state laws. Most of the US practicing accountants holds the CPA license and those working without it are generally proscribed. As a result in most of the cases the CPA designation cannot be used outside the state until the person professionally acquires a license or a certificate of that picky state.

CPAs have broad vision and knowledge about the tax implications levied on estates. They can help an individual in achieving his or her goals as well as help him or her in minimizing the taxes and simultaneously increase the estate portion that can be easily passed on to heirs.

With today’s unstable financial market fluctuations, the market has become less accommodating to accumulate, preserve or dispose wealth easily. Estate and financial planning helps you preserve your hard earned estates. Planning for disposition while you are alive as well as after death is very important. With effective tax planning you can eliminate all your tax burdens and relax by knowing that your beneficiaries will get everything instead of it going into the government coffers.

Estate planning importance

You spend your youth slogging and planning to ensure that you have good assets to pass on to your heirs. If you are lucky then you may also have some investments as well as a business, so that life becomes much easier for your family to cope without you. So appoint a CPA so that your affairs are managed well and ensure that the financial burden does not give you sleepless nights. Estate planning is very important and should be well managed.

The help of a CPA does not cease with your death; they also help out in filing the income tax return after your death. They also handle your estate tax returns and income tax of the estate. There are chances that a CPA might get involved into the process of estate valuation and simultaneously work with attorney or the executor relating to tax savings following your death. The final goal behind all this is to maximize your estate portion that can be passed on to your heirs

CPAs also involve themselves in the IRS audits as well as in estate administration. Highly specialized knowledge is required for financial and estate planning. Certified Public Accountants remain in close contact with the clients by handling personal income taxes and personal financial affairs. They can also help the clients in taking important decisions and also in the overall coordination.



CORY

Dan L asked:


How many hour do accountants typically work in a public firm? a corporate firm? a private firm? and other companies?

SANTIAGO

Stephen L. Nelson, CPA asked:


Have you gotten tired yet of paying the five, ten or twenty thousand dollars a year that you’re currently paying your financial planner?

You should think about taking a do-it-yourself approach to financial planning. By following a handful of steps, you can actually plan and manage your personal finances yourself. And as long as you’re thoughtful and careful, the job you do will beat the performance of about 99% of financial planners and registered investment advisors.

Seriously, firing your financial planner is easier than you think. You simply need to follow five steps:

Step #1: Learn to Invest Passively Using Index Funds

The first step in firing your financial planner or investment advisor is learning how and why passive investing works–and then committing to using passive investing as the foundation of your wealth-building.

If you don’t use a financial planner or investment advisor to pick your investments or make investment recommendations, you’ll need to come up with your investments. And passive investing provides an easy, powerful way to do this.

In a nutshell, with passive investing, you don’t try to pick the best investments. Rather, you buy all the possible investments. And, the weird thing is, you actually do better using passive investing because the cost of making bad investment choices is less than the fees a financial planner charges.

You can begin your research into passive investing by reading about index funds on various investment web sites. But you should also take the time to read one or both of a couple of books, The Random Walk Guide To Investing by Burton G. Malkiel, an economics professor at Princeton University and The Little Book of Common Sense Investing by John Bogle, the founder of the Vanguard Group, a mutual fund company powerhouse.

Step #2: Get Serious About Retirement Saving

After you learn how passive investing works–and why you’ll always use an index fund if you have the choice–you need to get serious about your retirement saving.

Specifically, if you work someplace where your employer provides a 401(k) or similar retirement savings option, you need to participate. At a minimum, you want to participate at a level that means you get any “free matching money” the employer provides. And if you can save more money, even better.

If you work someplace where your employer doesn’t provide something like a 401(k), you need to use (and ideally maximize contributions to) an individual retirement account.

Almost always, people who use 401(k)s and individual retirement accounts to invest in a small handful of index funds build wealth much faster and with much less risk than people who use financial planners.

Step #3: Play Worst-case Scenario with your Finances

Here’s a third step you should take. Grab a pencil and pad of paper and list your family’s financial worst-case scenarios. You’re going to include scenarios like “loss of income due to death of the breadwinner,” “catastrophic medical expenses,” “disability of breadwinner,” and so forth.

To the extent that it’s practical, you want to buy cheap insurance to mitigate these worst-case scenario risks. For example, you want to buy cheap renewable term life insurance for the family’s breadwinner(s). You want to buy major medical insurance for family members. And, if possible, you want to acquire long-term disability for the family’s breadwinner(s).

Cheap insurance–which insurance agents often don’t like to sell–provides an effective way to minimize your biggest financial risks.

Step #4: Keep Your Finances Simple

A fourth quick step: Work to keep your financial affairs simple. Don’t put money into complicated investments. Don’t buy complex financial products. Don’t let your finances get disorganized.

Complexity doesn’t save you money. Complexity costs money. Furthermore, complexity leads to mistakes.

Step #5: Make Sure You’ll Pay Off Your Mortgage Before Retirement

A fifth final tip or step: Make sure you’ll have your mortgage fully repaid before you retire–and preferably well before you retire.

Related to this point, if you receive a windfall–perhaps an inheritance or an unusually large bonus from an employer–use part of the after-tax proceeds to accelerate your mortgage pay down.

Paying off your mortgage well before retirement should mean that you’re in good shape to retire when the time comes. And “siphoning off” a portion of any windfalls for accelerated mortgage repayment will mean that at least some part of any financial windfalls you receive get used for wealth-building.



WESTON