How can outsourcing the payroll services can benefit your business?
Several business houses in the US used to outsource their payroll service. But why? What benefits did they get by outsourcing it? Here you will know the reasons for which business outsource their payroll services.
But who can provide payroll services? Generally, it is better to go for certified CPA as they have the proper knowledge on this matter.
As per a recent survey conducted by Financial Executives Research Foundation, nearly 39% of US business used to outsource their payroll process.
The same survey also mentioned that 43% of the business used to outsource their payroll tax responsibility.
Before dig deep into the benefit, it is important to know how do payroll services work?
Payroll is associated with recording the compensation of the employees. It can include the followings such as:
- Wages
- Salaries
- Commissions
- Bonuses
However, it also includes the accounting of the taxes that are withheld. Examples:
- Federal withholding taxes
- State withholding taxes (if applicable)
- Social security taxes
- Medicare taxes
Generally, big business houses used to have their in-house payroll management, but most of the small and medium business are opting for hiring professional payroll services providers.
But what are the reasons for such outsourcing? Here are some of the benefits.
Time saver
A payroll service includes various accounting process as mentioned above. Therefore, it needs a huge dedication and time to do it in detail.
Each time the person responsible for it must type in large amounts of data and double-check any key errors. So, a huge workable time is lost.
On the contrary, when you outsource the payroll services, you get the time to focus on revenue generation and better customer services.
Money Saver
On hearing the term outsourcing, the common question comes to mind is how much payroll services cost?
Here you need to understand that in modern business, time is money. When you are saving your precious working time, it means you can utilize it for constructive works for your business.
Additionally, hiring in-house payroll services will nothing but incur a huge cost and liability. On the contrary, when you are outsourcing the payroll, you don’t have to take any headache.
Security Matter
Undoubtedly payroll services are complex matters. It is related to every single confidential data of the company and its employees. Therefore, trusting a singular employee with it can be a risky decision as there are chances of tampering and theft of data.
Buying the payroll software can be a cheap option, but how can you guarantee the safety of your data? It is possible that after a few years another business house will buy that same software.
Additionally, will the software company be able to guarantee you the safety of your data on their server or network?
On the contrary, hiring professional payroll services is a safer option. You can get the physical access of them at all the time. Being a third party, they always keep your data confidential and safe.
Stay updated with the government policy and regulation
CPA is the best option who can provide payroll services as they remain always updated regarding government policy and regulation. It is not possible for a business owner to focus on all the details of government regulation.
However, missing or misinterpretation can make the business owners held legally responsible. It can lead to even audits and penalties by the IRS.
Related Article: What You Must Know About the Payroll Mistakes?
In 2016 alone, 1.8 million tax returns were audited whose income was between $200,000 and $1 million. 978,564 businesses of all sizes were assessed civil penalties.
By hiring a professional, you surely avoid these problems.
Concluding Words
Therefore, you have seen the benefit of outsourcing your payroll services. However, in case you want to add anything, feel free to comment.
If you are looking for payroll services, get in touch with us.
What You Must Know About the Payroll Mistakes?
Managing the payroll is an important issue, especially if you are the owner of a small business. It is difficult for small businesses to buy any payroll management systems due to the lack of money. In this situation, it is important to get accounting services from experienced accountants.
An experienced accountant will ensure that you will not do any mistakes that will cost you in any way. Therefore, prior to hiring the accountant, here is a list of common mistakes that people used to do during the preparation of payroll.
Setting up incorrect payroll
It has been found that incorrect payroll has been done due to setting it up in the wrong way. You need to deduct the right amount of tax from your employees when it comes to setting up your payroll. To make it right, you need to hire a professional accountant who will be able to guide you to set up it by following the online resources from the federal, state, and local government.
Several other videos on the internet are available also, you only need to check it. However, it is better to hire one for accounting services.
Miscalculation of overtime
Over time works is another area that creates lots of issues during the creation of the proper payroll. The Fair Labor Standards Act (FLSA) ordered that one needs to pay workers a premium for their overtime. However, calculating this overtime often becomes a huge issue for the owners. One must follow the state and federal laws while deciding the overtime.
The rate of overtime can vary from state to state. Therefore, one needs to understand the whole situation by going into depth. However, it is better to go for an experienced accountant who can handle all these situations.
Late running payroll
Paying your employees on time is a real challenge when it comes to deciding payroll. If you forget to process the payroll of the employees, it can lead to unhappiness among the employees. Therefore, you need to be on the toe. However, often the late payroll execution results into a higher amount of payment.
On the contrary, it is also true that being a busy small business owner, it is not possible for you to maintain this all the time. Therefore, hiring someone professional in accounting services is a great idea to implement.
Forget to keep records
It doesn’t matter whether you are a big firm or a small agency, the audit is mandatory for every company. Often during the audit, the company used to lose the records, including the payroll records also. You need to at least submit 3 years of records. Therefore, in case you have misplaced these documents, it can be an issue while you will prepare a new payroll in the next financial year.
Paying tax at the wrong rate
Tax rates used to change significantly every year, and overlooking it causes issues in payroll preparation. If you are not aware of rates of taxes then you will not be able to withhold the amount from your employees’ salary.
In case of paying the wrong amount of tax, it may incur penalties. Therefore, it is better to take the help of a professional who has proper knowledge about all these.
Concluding Words
Therefore, you can see over here the issues that can be happened due to processing the payroll. Therefore, it will be a wise idea to hire an account professionally for all these accounting services related matters.
4 Things You Can Do to Help Your Tax Preparers
Tax preparers always to try to help their clients in their tax preparation process. However, you can help your tax preparers also by doing certain things. One of the very common things is to make your tax preparers updated about your business with all the necessary information.
Often during the tax preparation process following issues come in front.
- Unorganized information
- Pile of receipts
- Incomplete paperwork
- Less communication with Tax preparers
However, the current blog post will let you aware of the ways you can help in tax preparation services.
Updated tax related information
Often it happens that people used to change the addresses of but forget to update that to the tax preparing agent. However, often people take it as a small and petty issue but it is not. The tax preparers cannot be able to communicate with you. Neither, they can update your information to the IRS authority who can contact you in case of an emergency.
It can create a lot of mess and can lead to a crisis. Therefore, by letting your Tax consultant about the updated information, you are ultimately helping your own business. It is not about only the address but you must let your tax consultant know about all the updates.
Pile of Receipts
Often it has been seen that people used to put a pile of receipts in front of their consultants during tax preparation services. It looks great that client has kept all the details. But often the work becomes tiresome when you found the bills of ice-cream, pizza and others in that pile.
Therefore, it is better than before you submit the receipts to the tax preparers, you check it once. Those which are completely personal expenses, keep those aside. However, in case you are not being able to understand or have confusion about any expense, then keep them in another pile. Do not mix all the receipts in one.
Incomplete paperwork
Often small business owners used to send the information not once. Thus, sending the incomplete papers create often confusion for the tax preparers. Additionally, in the case of sending the paper at different times can often lead to the misplacements of the papers. One must understand that a singular misplacement can create a huge issue.
Additionally, often the business owners send the papers at the final time when the process has taken a shape. Changing these phases can be huge issues. It also increases the chance of error.
Less communication with Tax preparers
One of the issues often tax consultants faces during the tax preparation services is the less amount of communication with the clients. Often people used to contact the tax preparers at the final moment. One must understand that often the tax consultants used to have several clients to handle. Thus, getting the work done at the last moment makes it difficult, especially for the small tax consultancy firms.
It is always advised to keep the communication with the consultant throughout the year. One must know that tax preparation is a complicated matter and the more time means, more chances of saving. Therefore, continuous communication will not only let your tax matters updated but also helps in reducing the error.
Final Words
Over here you have seen that way you can help your tax preparers during the tax planning phase. To get the help with your tax matter contact us now.
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How Can You Spot IRS Scams And Report Them?
If you are getting hounded by numerous calls, emails or letters from the IRS, how do you know these are legit? There are some warning signs of scams that you must always lookout for.
Every year you might seem to get numerous calls from scam artists who pretend to be from IRS. Whereas some people can identify the scams, others may not be able to identify and fall for it.
There are many elderly people who fall for such scams, especially widows since they might be a financially or technically less sophisticated.
With every tax season, it seems these scams get more advanced, increasing the chance of odds enticing innocent people into sharing personal information making unrequired payments.
To avoid falling for such traps, ensure you hire accountants.
Lookout for phone calls
It is rare for the IRS to call taxpayers. In fact, the IRS also initiates most contact through regular mail and not by phone. Even when it calls for a taxpayer, it would send many notices by mail. Along with this, the IRS don’t leave urgent time-sensitive calls where you need to immediately pay the tax bills.
There are robo-calls tapping the honest people who wants to do the right thing. When you are told that you owe money, they become really scared and accidentally break the law as they don’t want to get into trouble. They mistakenly follow the instructions to make payments, at times wiring money.
Now, it isn’t always a recorded voice. At some real people give you a call. If they are demanding in any ways, that’s a warning sign you might fall into a trap.
Beware of fake emails
Phishing is the actual term that is used to describe email attempts to get sensitive information appearing to look like it has been coming from a trustworthy organization or person. They might often link to fake websites that might seem real.
Apart from that, they often ask for real information to make refunds, this allows you to steal money out of the accounts.
If you don’t want to fall for such traps, it is better to hire accountants who can guide you and help you avoid such scams. Even by clicking on the links, it allows malware to be installed on the phone or PC, allowing the bad guys in so they can get exact information and capture your activities.
Take note of letters
It is easy for any graphic designer to take the IRS logo and make letterhead appear official. At times, they even create supporting documents that appear really official.
They even use the website’s URL that look quite close to official website address, with one or two letters differing. If you get a letter from the IRS it seems suspicious, you must call the agency to verify if they have contacted you.
Now, if the letter is real, the IRS would confirm it. If not, they would be help you track the latest scams. You can visit https://www.irs.gov/ to know more. If you have doubts, you must always check with a financial planner, an accountant to ensure the request is legitimate.
Finally, you must always stay alert when it comes to receiving any calls or emails from the IRS.
5 Things You Must Check Before Hiring Your Financial Planning Advisor
Finance planning is not at all an easy task as your investment will decide the future of your hard-earned wealth. Finance planning is a tough task which needs deep industry knowledge. Therefore, you cannot take the matter of choosing the financial advisor lightly.
You need to do a double check before you are finalizing your advisor. Remember, choosing a wrong advisor can make your all money a bad investment. Here are a few things that you need to ask your financial planning advisor before handing over all the finance related matter to him.
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Qualification of Financial Advisor
One of the most essential matters that you must ask your financial planner is about the educational qualification. It also includes the license and certification that he has for doing the work of financial advisor. Financial planning is not a small part so one needs the right competency to reach the benchmark level, where he can advise others to invest in the right manner.
Some of the courses are Certified Financial Planner (CFA), Chartered Financial Consultant (ChFC), and Chartered Life Underwriter (CLU).
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Experience of Financial Advisor
It is about the financial matter so you need to select someone who has adequate experience to guide you properly. Therefore, when you are selecting someone as your financial advisor, you must ask about him about the experience in the financial domain.
The more the experience is, the chance of error diminishes. With the increasing number of experiences in years, it is assumed that the advisor gained expertise and capabilities to deal with the financial markets and investment allocations.
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Planning meeting your needs
It is important that both you and your financial advisor must think in a single direction. However, you can judge this by asking certain basic question to your financial advisor. The questions are what the advisor is offering, what type of investment he likes to do such as aggressive or conservative etc. The answers of the advisor will help you to finalize your decision of hiring the right financial planning advisor for you.
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Standard Caring
All the advisors in the financial sector used to follow two standard care procedure, these are suitability standard and the fiduciary standard.
According to the suitability standard, the advisors are permissible to sell the different financial products and related services as per the needs of the clients. It is not that if the products are suitable for you means it will give you the best result for you. Overall, the advisors do not have to act in the best interest of their clients.
In the case of the Fiduciary standards, the advisors must be registered with the Registered Investment Advisory (RIA) firms. Hereby, they must act to make sure of the best interest of their clients like giving the financial advice and recommendation to the client for the best outcome.
So, you can understand by now that whom you need to select to get the best advice.
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Fees
All the financial advisors have their own fees structure. The fees used to vary from one advisor to another. Some of the common ways of fees structure are as follows:
- Hourly pay
- Fixed rate for consultation
- A percentage charge based on the total value of an investment
- Commission
It is recommended to hire fee-based advisors. In most of the cases, it has been seen that commission-based advisors used to sell wrong financial products to get a better commission.
Final Selection
By now, as you have gone through the whole post, you got the necessary information about selecting the right financial planning advisor. Contact the experienced financial planners of Jarrar CPA to know more about it.
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5 Bookkeeping Mistakes That Can Cost Your Business A Lot
Bookkeeping for many is a kind of necessary evil but taking the evil lightly can cost you and your business a lot. Hereby one must take time to read this post to identify the mistakes that commonly happens during the bookkeeping process.
While doing the bookkeeping process, one must make sure that all the transactions should be recorded in a proper manner. One can use the software such as Quickbooks bookkeeping services. The current post is focused on some of the common bookkeeping errors which one must look out for.
Don’t mix Personal and Business Expenses
Suppose you are traveling and spend a certain amount of money. At the end of the year, you found that you are not being able to match the balance sheet as probably you forgot that you spend the money on a leisure trip and not on a business trip. But you mistakenly added it up in the business expense.
This is a small error but errors like this can cost you a lot in the long run. Therefore, when you are doing the bookkeeping, try to keep a vigilant eye on your expenses and entry the record in a proper way to avoid any foul of IRS.
Keep the Receipts intact
You have probably bought groceries for the office purpose and throw the receipt in the bin. After a few months when you will probably forget this incident a day will find that you are not being able to balance the accounts.
Thus, you can see that keeping small documents are also important. A small displacement of the receipts can create a huge issue for you. If you have a habit of ditching the receipts then you must keep them in place.
Not having different Bank Accounts
It is important that one must have separate bank accounts for both personal and professional matters. It helps you to keep the spending separate. Thus, when at the end of the year you will sit to calculate all the expenditure you do not have to look to different accounts and tally them one by one.
Additionally, it minimizes the margin of errors. Using QuickBooks bookkeeping services software can be helpful also.
Neglection of the sales tax
Often the small business owners used to avoid the matter of sales tax. Not addition the sales tax is one of the common bookkeeping issues. If you do not collect or report the sales tax properly you can be penalized or can be fined for the same.
However, a wrong entry can also increase the sales tax negatively.
No schedule Work
The bookkeeping task is a never-ending task. Expenses and transaction will run continuously. You may need to work weekly, monthly. Therefore, a bookkeeper must keep a vigilant eye on the transaction all the time and must record them. You can take the help of QuickBooks bookkeeping services.
Final Words
Therefore, you can see the most common mistakes that can happen during the bookkeeping. However, in case you are not being able to do bookkeeping by own, please feel free to contact us.
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Critical Financial Challenges Faced By The Business Owners
A successful business venture may not always result in successful wealth creation. Often due to several challenges, owners found it difficult to convert the business into a wealth creation machine for own. However, a senior CPA mentioned that conversion of the business into a wealth enhancement machine requires some systematic approach.
Before that, we must figure out the financial challenges that business owners usually face. Here is a list of challenges which one must overcome.
How to Overcome Financial Challenges – Finalizing Strategies to lower the tax levels
The biggest challenge business owners used to face is to lower the tax amount by following all the government norms. If you can reduce the tax amount, it will help you to save more wealth for your business and personally. Here are some common things that help in tax management.
Business Entity: It is about the structure of the business that determines the tax. Like if your business is S corporation then you can show the losses to the personal tax filing. It will lower your overall tax value. But you will not get this benefit in C corporation.
Tax deductibles: You can buy a property on your own and can then lease or rent it to the business. It will benefit you in two ways. You can show the depreciation in the personal tax and can show the rented property in your business expenditure.
You need to adjust your financial goals to and plan the strategies to get the best benefit out of it.
How to protect the business against the loss of a key person?
It is difficult to fulfill the loss on a personal level but you can manage the revenue loss if you plan strategically. It is true that most of the small business used to stay on some key people. So, plan it in prior in the following way:
An owner must also make sure that in case of his absence or demise his family must get the due benefit from the business.
Protecting the business and property against liability
Legal aspects are crucial in managing the business. However, it is important to protect your business against legal liabilities. A legal entity can play a crucial role in this. It may not be able to protect the business assets but can help you to protect the personal properties. You must do the following:
- A periodic review of all the documents
- Make sure that all the employees are working in the designated sphere
- Make a review of the unutilized cash or asset to avoid the depreciation
- Review the taxation matters
- Incorporation filing
- Business licencing
- Policies and procedure
- System implementation
- Tracking expenses
- Financial planning
You know that failing to pay the proper tax can create several issues. However, you must know the ways to save taxes to protect your business against any liability.
Final words
Therefore, you can see that it is not very difficult to overcome the challenges. However, what is needed is to plan strategically to stop the challenges to become detriments for your business.
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Where Does The Accounting Services Fit The Start-Ups?
Every business owner dream of getting on well with their start-ups, but the real question is how well do they manage the accounting services. In reality, most business owners fail to perform the accounting task all by themselves since they lack proper skill and knowledge.
This is exactly when you need to hire accountants to perform the business accounting services. here are some of the highlights.
What are the services start-ups needs from their accountants?
• 71% cash plan and forecasting
• 71% tax planning
• 61% bookkeeping
• 61% business strategy and planning
Do all start-ups have accountants?
• 20% requires, but meets one a year or less
• 48% doesn’t have accountants
• 185 doesn’t outsource, but have one staff
• 14% meets the accountant every month
The start-ups always continue to be on the edge when it comes to hiring accounting services for financial support. One of the ways, you can do is by managing it on your own.
However, hiring efficient accounting services is probably the best way. It is mainly because they have all the necessary skill needed to offer you excellent accounting services.
When Should You Hire Accountant For Start-Ups?
Are you wondering when should you hire an accountant? With so many options, the answer is it depends. There are numerous reasons for contacting an accountant on an early stage.
Here are the golden rules of thumb. You need to avail accounting services if;
You have increased funding- if you have increased the series A, or a large convertible debt, it is high time that you must engage by hiring business accounting services.
Your expenses are soaring high-when you have increased the expenses to keep record of as well as have hired some employees, you need proper financial reporting. When the business grows, it is important to understand the cashflow, thereby hiring accountants is the right way.
What does start-up accountants do?
An accountant that you have hired needs to provide you several services to take your business to a new height. In fact, this is essential since you have a start-up. Here is a list of the services accounting services include:
For start-ups:
Now, these are some of the services that business accounting service includes. There are numerous other services as well. It depends on your requirement.
Accountants help in growing your business as well. Afterall, you don’t want to remain a start-up always, right?
• Finance forecasting
• Analyzing cash flow
• Pricing
• Audit preparation and support
• Creating budget
Finally, business accounting services are important irrespective of the business size. However, if you are a start-up, you need more assistance than established businesses.
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Why does your startup need a bookkeeping service?
A startup is a transformation of an idea into a core reality. Several things an entrepreneur needs to take into consideration. Most of the entrepreneurs love to do work on own, but at some point, you may need to include outside people.
Especially, when it comes to managing the accounts, it is important that a knowledgeable person handle this matter. In most of the cases, the founders often do not come from the finance background.
However, a firm providing bookkeeping services in Santa Monica pointed out that small transactional miscalculation can create turbulence for your startup. Here are a few more reasons to hire a bookkeeping service.
• Stay out from what you don’t know
Most of the entrepreneurs are not aware of the intricacies of accounts and financial issues. Therefore, it is difficult for them to keep track of all the accounts related information. It will be a better idea to let these things to be handled by a knowledgeable person of this field.
It will diminish the chances of mistakes, which ultimately can save a good number of Dollars. A single missing bill can cost your business a lot.
• See your business from another view
It is difficult to find faults in your own works. Probably you are thinking that your business is running well but what is the harm in running it better?
A bookkeeper will bring forth all the transactional details in front of you. You can be able to see the fund sourcing and the expenses. Based on this, you can be able to calculate that do your efforts are really paying well or not.
• Pay the necessary bills on time
An entrepreneur needs to focus on the different aspects of the business. It is difficult to remember all the scheduled dates for the bill payments. However, if you hire a professional bookkeeper, it will be much easier to remember those things.
A bookkeeper will keep these little things in mind. Therefore, you don’t you need to take any extra burden on your shoulder.
• Correct filing of taxes
An audit or a tax claim can be a nightmare for a startup. It not only gives you a headache but also put a black mark on the business, which is not at all a good sign.
However, this generally happens if you forget to pay the quarterly taxes. You may need to file different taxes such as business tax payments, corporate tax payments, self-employment tax of 15.3%, 1099-MISC etc. Tax laws always get updated with each new year.
A bookkeeper can solve all these problems.
Final words
An entrepreneur needs to look after all the things of the business. Hardly they get time to be with their family. An extra burden of accounts can take that little too.
Hiring professional bookkeeping services in Santa Monica can give you some extra time to be with your family, while your works will be done in a scheduled manner.
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How to Save Taxes for The Small Business Applying These 5 Techniques?
Tax saving is an important matter for all types of business. However, the small business owner faces several difficulties due to the restricted amount of capital for the business. A CPA for tax preparation for years mentioned the importance of knowing the tricks and way to lower the taxes. An experienced CPA can help a lot in saving taxes.
In this current post, we will discuss some of the ways to save taxes for small businesses:
You must look for adjusted gross income (AGI)
One can adjust several tax breaks limitations through the AGI or Modifies Adjusted Gross Income (MAGI). You can avoid 0.9% Medicare tax over the earned income by not exceeding your AGI $200,000 in case of being single. However, if you are married it is more $5000.
Never to look over the carryover
Some limitations on the deduction and credits are there, which you cannot use in the same year. However, you have permission to carry some of them over to the next financial year. Therefore, it is important to keep track of those carryovers. You can use them in the next year.
However, if you will hire a CPA for tax preparation, they will automatically include this during preparing the tax preparation. Some of the examples of such carryovers are as follows:
• Capital losses
• Charitable contribution deductions
• General business credits
• Home office deduction
• Net operating losses
Related Article: Role of CPA’s For Business
Leave the Property rather than selling it
If you find a particular property has no value, it is better to leave it in the way instead of selling the property for a less amount. Remember that amount that you will get by selling the property will come under taxable income.
On the contrary, leaving the property as it is will be countable as a loss to the company, which is deductible.
You can classify the property under Section 1231. It allows you to show it as capital or ordinary loss.
Look out for tax-free ways to generate income
Salary, bonus, share distribution all come under the taxable income of the business. However, certain ways are there which do not come under taxable income. Your accountant can help you with the following matters:
• Medical Plans
• Retirement Plans
• No-interest or lower interest loans
Use the fringe benefits for employees
Giving fringe benefits to the employees can lower the amount of taxes for your business. in IRS Publication 15-B (2017), Employer’s Tax Guide to Fringe Benefits, you can find the details of the fringe benefits. Increasing the wages of the employee can increase the tax but give fringe benefits can be a smart way to avoid tax. Following things, you can consider in this regard:
• Health benefits
• Long-term care insurance
• Group term life insurance
• Disability insurance
• Educational assistance
Therefore, you can see several ways are there to save a good amount of tax. However, hiring a CPA for tax preparation can help you more to save the taxes for your business.
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