After the Fiscal Cliff

by Phoebe Frankeberger-Vausher, CPA, MST

When President Barack Obama signs the Taxpayer Relief Act of 2012, passed by Congress Jan. 1, it will bring an end to the “fiscal cliff” tax negotiations in Washington. The bill makes significant changes to individual taxation and estate and gift taxes and extends some business tax provisions. Highlights of the new law include the following:  

Individual Income Tax Changes for 2013

• The highest rate will increase from 35 percent to 39.6 percent on income in excess of $450,000 for married taxpayers ($400,000 for individuals). The rates for all other individual taxpayers will remain unchanged and have been made permanent.
• The rate on capital gains and qualified dividends will increase from 15 percent to 20 percent for individuals subject to the 39.6 percent tax rates.
• Phase‐outs of personal exemptions and itemized deductions will apply to married individuals with adjusted gross income in excess of $300,000 ($250,000 for individuals).
• The election to deduct state and local sales taxes in lieu of state and local income taxes expired after the 2011 tax year. The legislation makes the election available for the 2012 and 2013 tax years. This is a significant item for taxpayers residing in states such as Florida, Tennessee, and Texas, which do not impose individual income taxes.
• The bill provides a permanent increase in the alternative minimum tax exemption. This change applies retroactively to the 2012 tax year. 
• The 2 percent payroll tax cut expired on Dec. 31, 2012, and was not renewed.

Business Tax Provisions

• The research credit expired on Dec. 31, 2011. The bill extends the credit from Jan. 1, 2012, through Dec. 31, 2013. The extension also modifies certain computational elements of the credit calculation.

• The $500,000 limitation on Section 179 expense expired after the 2011 tax year. The $500,000 threshold is retained retroactively for the 2012 tax year and extended to the 2013 tax year.
• A bonus depreciation of 50 percent is retained through 2013. The bill also retains favorable depreciation methods for qualifying leasehold improvements, retail improvements, and restaurant buildings.
• The new markets tax credit expired on Dec. 31, 2011. The bill extends the credit from Jan. 1, 2012, through Dec. 31, 2013.
• The work opportunity tax credit expired on Dec. 31, 2011. The bill extends the credit from Jan. 1, 2012, through Dec. 31, 2013.

Estate and Gift Tax Provisions

The maximum estate and gift tax rate will rise from 35 percent to 40 percent. The lifetime exclusion will remain at its current level ($5.12 million for 2013) and be indexed annually for inflation.

Please call Phoebe Vausher‐Frankeberger, CPA MST and NAWBO‐IE Treasurer, if you have any questions or concerns regarding the new Tax Laws.

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Phoebe Vausher-Frankeberger has a Masters in Taxation and has over thirty years of accounting and tax experience. She has diversified business experience including retail, manufacturing, dealerships, cost segregation, restaurants and various medical & service organizations.  Frankeberger Vausher + Company is a Certified Public Accounting firm which specializes in Tax, Forensics, Valuation, and Litigation Support.

3 Steps to Get Control of Your Bookkeeping

LaVonne Shields, President, Bookkeeping on Steroids

It’s around this time of year that most business owners realize that they haven’t reconciled their bank statements in months and that there are statements, receipts and other financial records piled on their desks or stuffed in drawers.  It’s an overwhelming feeling.  You promised last year that you would get this under control, but it just seemed like too much work! But now you wish you had taken the time to do it.

Here are 3 simple steps that will really help you get control and maintain control of your bookkeeping.

1.)    Use a computerized accounting system: Having an automated system is the key. Manually tracking your financial ins and outs is tiring and not inspiring.  It’s time-consuming and no one wants to do (even if you pay them, speaking as a professional bookkeeper).  So step #1 is to get and implement a system.
a.       QuickBooks (the recommended system) – this program is used by most small businesses; it’s simple to use and integrates with several other systems that are part of your operations.
b.      Back office system attached to CRM – a lot of online systems or industry specific software have an accounting system attached to them. They allow you to enter your expenses as well as track your sales.
c.       Excel – the oldie but goodie; many banks and other systems allow you to export your transactions into Excel (or other spreadsheet software) which allow you to sort and subtotal your information.

2.)    Organize records into 13 files: There is a place for everything.  When items roam around your desk they become mental distractions that begin to create clutter in your mind.  Below are the files you should have:
a.       12 monthly folders: You should have 1 file for each month of the year. At the end of the year those files are pulled and placed in a local or remote server along with your year-end financial statements and tax return.
b.      1 financial To Do file: You will place in this folder your current outstanding bills, and all receipts that have not been entered into your new automated system.  Once you’ve paid the bills and recorded the receipts you then place these items in their monthly folder.

3.)    Schedule the time to manage your finances: Many times that feeling of being overwhelmed comes from not knowing what is going on with your finances; you feel as though you are reacting to every financial situation by scheduling (actually calendaring) time to review your finances. You remain in front of all situations and can better plan how to manage your business. Think about it, you schedule when to follow up with prospects, when you meet with clients, and when you will attend networking events. As a result of these activities, you see the growth in your business. So it makes sense to schedule time to review your finances. You should block out 2 hours every 2 weeks, around the 1^st and the 15th. This is just enough time to make sure all your accounts are up to date and be able to respond to anything that is off. During this time make sure all your accounts are up to date and the balances are accurate and then pay your bills (based on due date and priority). Be sure to schedule any automatic payments or deposits around the same time period.

 

Are your books ready for 2013?

If your accounts haven’t been reconciled
If you haven’t seen a Profit & Loss Statement in months

Then the answer is NO! 

I can help!!

Call NOW for a FREE consultation (866)380-0745

or send an email to lavonne@bookkeepingonsteriods.com

 

Not your stereotypical bookkeeper. LaVonne Shields—the fun financial professional!
“I don’t just help you with your numbers. I help your numbers to help you build your business,”
Armed with a bachelor’s degree in accounting and more than 12 years of professional experience, LaVonne goes beyond maintaining the books. She educates clients on interpreting financial language and helps them to employ business strategies that make good business sense. As a certified QuickBooks specialist, she has mastered the software and knows its nuances and how to maximize its features. In fact, she uses QuickBooks as the basis of her Bookkeeping on Steroids service.