Friday, December 14, 2012

Intuit ties QuickBooks to Demandforce Marketing Software

By Chris KanaracusIDG News ServiceIntuit has integrated the online marketing software gained through its $423.5 million acquisition of Demandforce with its QuickBooks accounting software, giving small businesses a way to make closer connections with customers.  Small companies lack the resources to "market their business, tell their story and keep up regular communications with customers," said Patrick Barry, chief marketing officer for Demandforce. Those tasks have become more complex with the rise of the Internet, social media and mobile devices, he said.  The QuickBooks integration allows Demandforce to load customer and transaction data from QuickBooks into its cloud-based service and use it to create marketing campaigns and other forms of customer outreach.
For instance, Demandforce could send "thank you" emails automatically to customers after QuickBooks completes a transaction. The system can also build campaigns based on QuickBooks data showing which customers came into a business, what they bought, and how much they spent.
Demandforce is known for integrating with many industry-specific back-end systems used by small businesses such as dentist offices, repair shops and spas. But the Quickbooks integration expands DemandForce's reach to potentially millions of additional prospective users who have more general business processes, he said.
Demandforce is now available for the QuickBooks Pro, Premier and Online editions. Pricing information for Demandforce wasn't available, with monthly subscription costs varying according to a customer's size, according to Barry.
EXACT CPA COMMENT: 
Intuit's acquisition of Demandforce may very well give small business owners the boost that they need to grow their businesses.  Small businesses generally struggle both financially and logistically with how to get the word out about their business.  Demandforce looks like it might be just what small business owners need.  Using information that is collected during the ordinary course of business via Quickbook, you can connect with your clients with specific marketing campaigns tailored to meet your specific needs.

The purchase by Intuit was executed earlier this year on April 27th.  While I'm excited about what this could mean for small business owners marketing to their hyperlocal markets, only time will tell on how things will work out as the two companies merge.  
Posted on 5:28 AM | Categories:

ZenCash Boosts Small Business Cash Flow

Peter Cohan, (Forbes):  If you’re a small business, a clog in your cash flow pipeline is fatal. Thanks to Dallas-based ZenCash, those clogs are likely to be cleared out much faster — a vital benefit.   In an October 26 interview with Brandon Cotter, ZenCash CEO, I learned that the company was founded because of the pain that Cotter suffered early in his career in trying to get paid by his customers. He found that his lack of customer cash put him in a tough spot when employees, suppliers, or landlords asked for their money.
Cotter’s start-ups include online retailer, musicforce.com; Internet service provider, createtech, that was sold to Broadcast.com in 1997; wireless software maker, Stick Networks, and search provider, Viewzi. In 2009, Cotter founded Doublewide Partners and acquired online invoicing firm, Blinksale.com, In 2011, Cotter founded ZenCash. While not considered sexy by Silicon Valley standards, the whole receivables management business (which often includes debt collections agencies) makes up a multi-billion dollar business. In 2010, for example, they helped businesses recover $55 billion in debt. And there are about 2 million small businesses in the U.S. that could potentially benefit from the service.   It’s usually quite difficult for businesses to manage unpaid invoices – they get “mired by paperwork, Excel spreadsheets and pencil punching on both ends,” according to Cotter. 
But ZenCash strives to simplify that process. According to Cotter, “Through a combination of an elegant cloud application and offline tools that help small businesses follow up on and prevent non-payment, ZenCash is turning the traditional model on its head and helping small businesses make ends meet in the process.”   ZenCash has made considerable progess since launching in February 2012. Since then it has established eight partnerships with invoicing/accounting companies including Intuit’s (INTU)QuickBooks, Xero and Clio.   And ZenCash has done an impressive job of helping some of its clients collect old debts. For example, the service has gotten money in the door for receivables that were so old that the companies were ready to write them off –  ”from a few months old to in one case, 404 days,” exclaims Cotter.
And if companies need the collections component of ZenCash, it’s offering quite a bargain. While competitors can charge a contingency fee of 40-50%, of the amount they collect for customers, ZenCash’s fee is often half this amount—and “just a single click away for a small business owner,” according to Cotter.   ZenCash has raised about $1.2 million from friends and family, is pursuiing $3 million in venture capital and currently employs 11 people in Dallas, San Francisco, and Europe.
Cotter has big ambitions but seems to have his feet on the ground. As he said, “By 2017 it is very hard to predict what ZenCash will look like. But I would like Microsoft (MSFT) or Intuit to have acquired the company for $1.5 billion so I can be in South America building huts for a valley of needy kids.”

EXACT CPA COMMENT: 
ZenCash in theory seems to be a wonderful way to get your clients to pay their bills, but I'm not so sure if I buy into the idea for the professional services marketplace.  In going to their website, there seem to be options for action prior to the collections process:


  • Send a print version of your invoice
  • Send a printed thank you note
  • Send a thank you note with a $15 iTunes gift card
  • Place a phone call from receivables specialist
I understand that ZenCash looks to alleviate the administrative burden that comes with collecting receivables, but as a professional in the financial services industry, I'm not sure what additional value I'm receiving.

When providing personal financial services like tax and accounting, the relationship with the client is of the utmost importance, in my humble opinion.  I'm not sure how I would feel if I provided my client with a service and then used a third party to try and collect.  I'm also not sure what impression that would leave on my clients.  I would prefer that a client pay me two weeks later after a phone call from me than receiving something from a third party vendor.

Now I must admit that the legal and collection services look like a valuable resource.  If you have become sure that a client is not going to pay you for services rendered, ZenCash looks like the folks to call.  Their contingency fee is much less than other receivables management firms in the market.  In addition, if your account qualifies and you decide you want to escalate the process and take legal action, ZenCash assists you with that process.

Overall, I'm not sure that their receivables management offering would be right for folks in the professional services business, however their collections management and legal action services might prove to be invaluable for small businesses.
Posted on 5:27 AM | Categories:

QuickBooks Mobile Now Optimized for Android Tablets

Small business Android fans now have the freedom to complete financial management tasks wherever, whenever, on their favorite Android tablets. Design updates to QuickBooks Mobile for Android optimize the app for tablets, and make it easier to navigate and use on any mobile device. The app is available to download for QuickBooks Online subscribers onGoogle Play at no additional cost.  As the most comprehensive companion app of its kind, QuickBooks Mobile enables small businesses to access customer information, create, send and review estimates and invoices, and record payments from Appleand Android mobile devices.
QuickBooks Mobile offers Android tablet users the same functionality provided to Android phone users, but with a native tablet experience. The app serves a burgeoning market of small businesses that want to accomplish more work on mobile devices. Industry analysts say the trend is on the fast track, with Android claiming a significant share:
  • 32.5 percent of small businesses currently own tablets, and 31.6 percent plan to purchase tablets in the next 12 months, according to an IDC report published in October.
  • 31.9 percent of small businesses purchased or planned to purchase tablets in 2012 to substitute laptops, according to an iGR study released in March.
  • The number of global tablet and smartphone users will surpass the number of PC users by July 2013, based on projections from KPCB partner Mary Meeker in a November presentation. She also noted that Android adoption is growing six times faster than that of iPhones.
“Small business owners want to get more done everyday, so mobile apps afford them a fantastic way to stay organized and productive from either their computers or mobile devices,” said Dan Wernikoff, senior vice president and general manager of Intuit’s Financial Management Solutions division. “In the past year, we’ve seen our QuickBooks Mobile users triple, and adoption amongst Android phone users outpace iPhone users.
“With tablets becoming pervasive, we’re creating QuickBooks Mobile experiences that take full advantage of the devices’ unique capabilities to help small businesses save time managing their finances. Today we’re giving customers what they want – a native tablet experience for our fast-growing population of Android users.”

EXACT CPA COMMENT: Mobile business is the wave of the future.  More business relationships move to the cloud giving more flexibility for clients and vendors to do business from anywhere they can get an internet connection.  As more people are using their tablets in lieu of their laptops and desktops for their daily personal activities, being able to do business from a tablet is a natural extension.  I believe in the near future more and more business will be done virtually with the aid of various technology resources.  This will mean your office can be anywhere you are allowing for more financial freedom (goodbye office rent!) and more leverage in being able to serve your clients more efficiently from anywhere.  I think we have only seen the tip of the iceberg in what technology is going to do for business in both the near and long-term.  This is relevant not only in the United States market, but also on a global scale where mobile technology is already much more prevalent.


Read more here: http://www.heraldonline.com/2012/11/28/4444653/quickbooks-mobile-now-optimized.html#storylink=cpy


Read more here: http://www.heraldonline.com/2012/11/28/4444653/quickbooks-mobile-now-optimized.html#storylink=cpy
Posted on 5:27 AM | Categories:

Open Mobile Payment Platforms are the Future

Greg McAllister is co-founder and CEO of PushPoint, a mobile marketing software company who guest blogged for Forbes:  This year, global mobile payment transactions will top $171 billion, according to Gartner, in 1.1 billion transactions. By 2016, In-State projects, the number of global mobile payment transactions will reach 9.9 billion, almost 10x this year’s level.
Where many experts believe mobile payments will have the biggest impact is with small-to-mid-sized businesses, by democratizing access to tools that have historically been above their pay grade. Already, thousands of businesses are offering mobile payment options via the likes of Google Wallet and Square. But as this adoption increases, so should the debate between open and closed platforms for mobile payments.
Similar to the value proposition of open platforms in other areas of technology, open payment platforms are being touted as having the potential to level the playing field. But confusion persists about what’s open, what’s closed, and why it even matters.
The History
As electronic payment processing first emerged, only closed, proprietary platforms existed. Few of the required technologies could easily talk to each other. Only large merchants could afford to integrate their systems to support communication. The benefits of electronic payment processing were restricted to the “big guys.”
The Internet began to even things out a bit, and the payment landscape became less about being able to integrate the hardware and more about online access to the right software for functions like inventory and accounting.
Along with the explosion in mobile technology to support commerce, startups like LevelUp have begun disrupting the payments market by offering free payment processing in return for paid loyalty and marketing services, showing that we are quickly moving into an age where the value of payment data exceeds the value of transaction fees. The original payment processing revenue model is officially dead.
However, while these new players are certainly “opening up” the amount of services merchants can leverage via their mobile payment platform, they remain closed. In a mobile payment landscape, which is changing literally every month, is another wave of disruption coming via open platforms?
Why Open Platforms Matter
Companies like LevelUp and Square have seen considerable success in the U.S.; in fact, Square claims more than 2 million Americans are using the mobile payment product today.
Yet while these successful platforms are accessible to anyone, they remain closed — and may face similar dangers to the platforms that came before them. While they do offer a ‘one-stop shop’ scenario along with a seamless customer experience, they have also created a monolith that presents the following problems for retailers:
  • The closed platform owns all of the data. These providers are focused on ways to collect consumer purchase data to create more revenue opportunities for themselves, and not necessarily for their merchant clients. Much like we have seen with the unsustainability of the daily deal model, small and mid-size retailers could risk handing their customer’s loyalty to the platform provider, ultimately hurting their business.
  • The closed platform eliminates the choice of other SaaS offerings. Retailers running accounting on Intuit’s Quickbooks, for instance, may find themselves having to switch over to a new accounting system if their payment platform doesn’t integrate with Quickbooks. Retailers could also be forced to use systems for inventory or marketing that are not a good fit for the business, but are part of the closed platform ecosystem.
  • The closed platform offers only fixed fee structures. There’s no room for price negotiation. Retailers will pay whatever fixed cost the platform has determined for its services, as it can be very painful to change all your systems at once.
A Clear Evaluation
The good news is that, for retail IT teams, this flurry of new platforms, both open and closed, makes mobile payments possible for everyone. What used to cost millions of dollars is now available in integrated systems that are meant to play nicely and that will lower overall costs and create efficiencies not seen before outside of large retailers.
This new, dynamic environment also allows retail brands, whether a national food chain or a boutique-clothing store, to evaluate what platform is the best fit to not only process payments, but also drive customers through the door.
For some smaller shops, the ability to connect right into a social network may be the most important factor. Larger organizations will need stronger, closed-loop marketing that is highly scalable but also targeted and personal. All retailers will want to evaluate which platforms plug into the systems that are already being used.
Open Up or Die
The current disruption in the market will continue to unfold, and technologies will continue to offer retail brands many new opportunities.
But in the long run, if history has taught us anything, the case for closed platforms is closed, and open mobile payment platforms are the future.

EXACT CPA COMMENT: This article was an eye - opening look at what could happen if consumers remain in the dark about their choices in mobile payment platforms.  I'll be the first to admit, that until recently that there was such a thing as a closed versus an open mobile payment system.  It looks like that knowledge could literally change the way that a small business owner does business.  If someone incorrectly chooses a closed platform that doesn't work with their accounting system, consumers are faced with the choice of purchasing a new accounting system that works with the closed payment system on finding a new system and losing all their data.  When it comes time to select a mobile payment system , choose carefully.  It will be very interesting where the marketplace for mobile payment services moves in the near term.  As more and more small businesses (and larger businesses for that matter) move to choosing mobile payments to process transactions with their clients, service providers are going to have to find a way to provide services that meet the needs of clients in the way that their clients run their businesses.
Posted on 5:27 AM | Categories:

Wave Accounting Releases U.S. Payroll Product

BY SETH FINEBERG Free online accounting software maker Wave Accounting has released the U.S. edition of Wave Payroll, its cloud-based payroll offering designed for small businesses.  Wave launched the product for the Canadian market in February and it is now available in all 50 states. Signing up for the product is free, however running payroll is $5 or less per employee per month, with no charge until the first payroll is completed. There is also no charge for employees not paid in a given month.   To coincide with the start of the 2013 tax year, Wave will also include an option as of January 2013 to handle tax deposits and tax filings for a flat fee of $25 per employer per month. With Wave Payroll, employers can pay employees via check, or choose direct deposit at no extra charge; manage federal, state and local payroll taxes without ever needing to consult a payroll calculator; handle vacation time, including the option to pay vacation hours on each check, or to accrue the vacation hours worked for another date; assign payroll deductions or benefits to each employee on a one-time or recurring basis; and provide employees with a self-serve portal to maintain their contact information and retrieve their pay stubs and other documents.   "For most small businesses in the U.S., especially those with fewer than 10 employees, traditional payroll solutions just don't make sense; they're too expensive and complicated for a small business owner," said Wave Accounting co-founder and chief executive Kirk Simpson. "With Wave Payroll, we essentially reinvented the payroll process by developing a solution that is quick, affordable and easy to use, while helping to avoid costly non-compliance penalties."

EXACT CPA COMMENT: The landscape of technology tools to assist small and medium sized businesses seems to be changing on a daily basis.  Wave Payroll offers small businesses a solution to meet their needs.  I've seen the great reviews on the free Wave Accounting platform and Wave Payroll, now available in the United States, seems to be receiving more of the same.  The tax deposit and tax filing features being made available in January 2013 will make payroll even easier.  For a small business with 10 employees or less, all your payroll can be completed for less than $100 a month.  My only concern with applications such as this one, is what happens if you outgrow their services and need to change providers......does the data go with you?  I'm happy to see so many small businesses finding ways to help other small businesses be successful.  Wave Accounting is definitely one to keep on the watch list.
Posted on 5:25 AM | Categories:

Year-End Tax Planning Ideas for U.S. Individual Taxpayers, Tax Planners, and Tax Preparers


"Year-end tax planning will be more challenging than normal this year," said Robin Christian, a senior tax analyst for Thomson Reuters. "Unless Congress acts, starting in 2013 individuals will see higher tax rates across the board and a number of popular deductions and credits will be gone."
Additionally, estate and gift tax rates will be higher and a number of popular deductions that expired at the end of 2011 will not be available for 2012.
However, these tax increases are not a certainty, Christian said. Congress could extend the Bush-era tax cuts for some or all taxpayers, revive favorable tax rules that have expired, and extend those that are slated to expire at the end of this year.
"The 2012 federal income tax environment is still quite favorable," she said, "but we may not be able to say that for long. Therefore, tax planning actions taken between now and year-end may be more important than ever.
Christian offers six tax-saving moves for the end of 2012:
1.     Make Charitable Gifts of Appreciated Stock. If a taxpayer has appreciated stock or mutual fund shares that have been held more than a year and the individual plans to make significant charitable contributions before year-end, he or she should consider keeping the cash and donating the stock (or mutual fund shares) instead. The individual will avoid paying tax on the appreciation, but will still be able to deduct the donated property's full value. If a taxpayer wants to maintain a position in the donated securities, he or she can immediately buy back a like number of shares. (This idea works especially well with no load mutual funds because there are no transaction fees involved.)
However, if the stock is now worth less than when it was acquired, the taxpayer may sell the stock, take the loss, and give the cash to a charity. If giving the stock to a charity, the charitable deduction will equal the stock's current depressed value and no capital loss will be available. "However, if you sell the stock at a loss, you have to wait 31 days to buy it back," said Christian. "Otherwise, you will trigger the wash sale rules, which means your loss won't be deductible, but instead will be added to the basis in the new shares."
2.     Don't Lose a Charitable Deduction for Lack of Paperwork. Charitable contributions are only deductible if the taxpayer has proper documentation. For cash contributions of less than $250, this means the individual must obtain either a bank record that supports the donation (such as a cancelled check or credit card receipt) or a written statement from the charity that meets tax-law requirements. For cash donations of $250 or more, a bank record is not enough. The taxpayer must obtain, by the time the tax return is filed, a charity-provided statement that shows the amount of the deduction and lists any significant goods or services received in return for the donation (other than intangible religious benefits) or specifically states that the individual received no goods or services from the charity.
3.     Leverage Standard Deduction by Bunching Deductible Expenditures. If 2012 itemized deductions are likely to be just under, or just over, the standard deduction amount, the taxpayer might want to consider the strategy of bunching together expenditures for itemized deduction items every other year, while claiming the standard deduction in the intervening years. The 2012 standard deduction is $11,900 for married joint filers, $5,950 for single and married filing separate filers, and $8,700 for heads of households.
For instance, the individual might want to consider moving charitable donations that would normally be made in early 2013 to the end of 2012. If temporarily short on cash, a taxpayer can charge the contribution to a credit card-it is deductible in the year charged, not when payment is made on the card. He or she can also accelerate payments of real estate taxes or state income taxes otherwise due in early 2013. But, watch out for the Alternative Minimum Tax (AMT), as these taxes are not deductible for AMT purposes, advised Christian.
Note: If a taxpayer expects to pay a higher tax rate next year, he or she may want to claim the standard deduction this year and bunch itemized deductions into 2013 when they can offset the higher taxed income. This will boost overall tax savings for the two years combined.
4.     Take Another Look at the Medical Expense Deduction. This year, unreimbursed medical expenses are deductible (if deductions are itemized) to the extent they exceed 7.5 percent of adjusted gross income (AGI); however, in 2013, for individuals under age 65, these expenses will be deductible only to the extent they exceed 10 percent of AGI. If there is a chance of exceeding the 7.5 percent floor this year, the individual may want to accelerate into this year discretionary medical expenses, such as prescription glasses and sunglasses, and elective medical or dental procedures not covered by insurance.
5.     Lock in the 0 Percent / 15 Percent Long-term Capital Gains Rate Before It's Gone. The maximum federal income tax rate on long-term capital gains from 2012 sales is 15 percent. Better yet, it is 0 percent to the extent the taxpayer's taxable income (including the gain) falls within the 10 percent or 15 percent regular federal income tax rate brackets. In 2013, the tax rate on long-term gains is scheduled to increase to a minimum of 10 percent (instead of the current 0%) and a maximum of 20 percent (instead of the current 15%). Also, a 3.8 percent Medicare contribution tax on net investment income (including long-term capital gains) may come into play for some high-income taxpayers in 2013. Therefore, the maximum long-term capital gains rate for 2013 could be as high as 23.8 percent. Given this potential increase, taxpayers might want to consider the following moves in 2012, assuming they otherwise make financial sense:
·         If a taxpayer may sell assets that he or she has owned for more than a year and that are likely to yield large gains, such as stock or a vacation home in a desirable resort area, the individual should consider completing the sale before year-end. Ditto for the sale of a main home if the taxpayer expects the gain to substantially exceed the $250,000 home-sale exclusion amount ($500,000 for joint filers).
·         If a taxpayer owns appreciated stock outright (not through a tax-deferred retirement account) that the individual has owned for more than a year and wants to lock in the 0 percent / 15 percent tax rate on the gain, but thinks the stock still has plenty of room to grow, he or she should consider selling the stock and then repurchasing it. The individual may pay a maximum tax of 15 percent on long-term gain from the sale, but will also wind up with a higher cost basis in the repurchased stock.
If capital gain rates go up and a taxpayer sells the repurchased stock down the road at a profit, the total tax on the 2012 sale and the future sale could be lower than if the individual had not sold in 2012 and had only made a single sale in the future. However, given the time-value of money, it might not make sense to pay the tax now (assuming the taxpayer is not eligible for the 0% tax rate) if he or she does not expect to sell the stock in the next several years or plan to hold onto the stock to pass on to heirs. At a 0 percent tax rate, it is hard not to see the benefit of this move, but the transaction costs still need to be considered.
6.     Adjust Federal Income Tax Withholding. If a taxpayer expects to owe income taxes for 2012, the individual may want to consider bumping up the federal income taxes withheld from paychecks now through the end of the year. When filing the return, it will still be necessary to pay any taxes due less the amount paid in. However, as long as the total tax payments (estimated payments plus withholdings) equal at least 90 percent of the 2012 liability or, if smaller, 100 percent of the 2011 liability (110% if 2011 adjusted gross income exceeded $150,000, $75,000 for married individuals who filed separate returns), penalties will be minimized, if not eliminated.
Christian advises caution with year-end tax planning moves, though-Congress could change the ball game before the end of the year. Taxpayers should consult a personal tax advisor before applying these or other tax strategies.

EXACT CPA COMMENT: This article by Robin Christian provides some excellent strategies for tax payers preparing for the year-end.  They seem to, however, be geared more toward an ordinary year-end rather than the current situation of the fiscal looming large.  I would argue that with the exception of #5 related to recognition of capital gain, these are better suited for a more ordinary year-end.  Tax planning for 2012 has proved to be quite challenging with the upcoming fiscal cliff consequences looming large.  Careful planning will be necessary to avoid the pitfalls of whatever outcome Congress presents prior to year-end.
Posted on 5:23 AM | Categories:

Defy Logic and Save on Taxes

Steve Parrish, Contributor for Forbes“It’s a tax idea; it doesn’t have to make sense!” This is what I told a business owner recently when he challenged the logic of a tax strategy I suggested. There are all kinds of tax related rules that, to the untrained ear, sound like sheer foolishness. In the right context, however, these ideas make good planning logic for business owners. Below are three examples. Please note: before you embrace the bizarre, be sure to talk to your own tax advisor to see if, indeed, the nonsensical makes sense in your particular situation.
Sure you can defer the tax, but better to pay it now
There are several ways to defer income tax. In the current tax environment, it may make sense to go ahead and pay the tax now, even though you could defer it later. For example, many real estate investors are selling appreciated property and recognizing the income at the time of sale, rather than deferring the gain through a 1031 “like kind exchange.” The rational is that capital gains this year are 15%, while capital gains next year are likely to be 23.8%. We see this with other ideas such as employee stock ownership plans (ESOP). In some cases, a business owner can sell the company stock to the company’s own qualified plan (an ESOP), and defer the gain in the process. It’s not uncommon to see cases where the business owner ignores the deferral opportunity in order to pay the tax at the lower current rate and be done with it.
Tax diversification can trump tax deductible
I don’t think I’ve ever heard a business owner say he or she doesn’t want to reduce taxes. That’s a given. The question, however, is often asked in the form of “but, is it tax deductible?” Income tax rules, in particular, are well defined and there are only so many tax deductions allowed which don’t involve shackles and jail time. Fortunately, immediate tax deductions aren’t the only way to win in the tax savings game.
Most investors subscribe to the idea of “diversification of assets.” An equally sound principle is “diversification of taxes.” Immediate deductions are great, but there are often strings attached. For example, qualified plans are typically tax deductible to the company and  tax-deferred to the employee. The challenge is that eventually the employee has to pay ordinary income tax on that pension income, and the tax basis of a qualified plan portfolio doesn’t step up at death. A good strategy for retirement income savings is to mix the portfolio with qualified plans and other, after-tax vehicles.  Spreading out the tax events allows for significant diversification from a cash flow standpoint.
Take, for example, cash value life insurance. Some business owners are supplementing their future retirement income, and protecting their families, by placing after-tax dollars into cash value life insurance policies on their lives. The cash values builds up tax-deferred, and, one way or another, the proceeds can effectively come out tax-free. The less pleasant way is to have the insurance paid out as a death benefit upon the owner’s death. The preferable way is not to die, and instead, start accessing the cash values at retirement.  If properly structured, the owner can first recover the tax basis of the life insurance tax-free, and then switch to internal policy loans, which are also not currently taxable. Essentially the owner is borrowing against his or her death benefit to reap a tax-free retirement income.
Give the asset away, but keep paying tax on it
Mitt Romney has moved a huge amount of stock to his future heirs in a way that avoids a significant amount of gift and estate tax. A popular technique for wealthy individuals has been to use what is commonly referred to as a “defective grantor” trust. The idea is to gift company stock to an irrevocable trust. Under the current law, you would receive significant discounts in the stock valuation due to minority interests and lack of marketability if discounts are warranted by a certified appraiser. This reduces gift tax exposure. Then, using carefully drafted language, the trust can be structured to be outside the grantor’s estate for federal estate tax purposes, yet have the income from the trust still taxable to the grantor. Why would anyone want to do that? Simply because this technique makes for one more way to avoid gift taxes; in essence, the grantor pays the trust’s taxes, just another “gift” to the beneficiary.
Take the example of Mitt Romney. Even though a trust now owns the stock he gifted, he pays the income tax on income generated by the trust’s assets. Romney’s reported tax rate in 2010 was less than 15%, and that rate is very likely lower than the trust’s tax rate. Further, every dollar of tax that Mr. Romney pays is one less dollar the trust pays; therefore, more money going to the heirs. Finally, every dollar he pays towards income tax is one less dollar that will be subjected to federal estate tax when he dies. The bottom line is that someone — or some entity — has to pay the income tax. It might as well be the wealthy grantor; that way the income isn’t taxed twice — once as income and then as an estate asset.

EXACT CPA COMMENT: This article by Steven Parrish is another commentary geared towards business and high net worth individuals engaging in year-end tax planning.
Posted on 5:22 AM | Categories:

Strategies: Good Guesses Can Aid Year-End Tax Planning

Rhonda Abrams, USA TODAYEach year at this time, I offer my year-end tax strategies to help small businesses lower their taxes.  A few easy steps now — before Dec. 31 — can reduce your tax bill significantly when it comes time to pay Uncle Sam.  However, this year with the impending fiscal cliff and the likelihood of tax-code changes, I would need a crystal ball to offer exact advice on lowering your tax bill. Unfortunately, I can't see into Congress members' minds — who can? — and you can't wait.  Nevertheless, to help you in year-end tax planning, I'm going to make some educated guesses about what's going to happen tax-wise that would affect small business:

1. Bush-era tax cuts are set to expire, and income tax rates are scheduled to rise for all Americans.
I don't think Congress will let that happen, and income-tax rates won't go up on those making less than $200,000 or 250,000 a year.
2. I do think tax rates will rise for those making more than $250,000 to $500,000 in taxable income — profits after all expenses and deductions.
3. Payroll taxes on the self-employed and employees will rise. A self-employed business owner will pay 12.4% instead of 10.4% into Social Security.
4. Tax benefits for buying equipment will be reduced. The current bonus 50% depreciation on qualified business equipment purchases will expire and not be renewed.
The $125,000 expensing allowance may go down.
5. The capital gains tax rate and the estate tax may increase slightly.
If I'm right, what does that mean for your small-business tax strategy right now?
First, remember the most important rule of tax planning: always make decisions based on what's good for your business, not just because of taxes.
Yes, you may get a tax deduction for buying an expensive piece of equipment now. But if you don't need the equipment, it's still an unnecessary expense and ties up your cash.
So what should you do now in December to reduce your taxes given the likelihood of changes in 2013:
• Accelerate income. In normal years, the typical advice is to delay income and increase expenses at year's end.
But you might want to turn this upside down this year. If you're doing very well, you'll likely pay higher taxes on income in 2013.
If you're self-employed, you'll pay higher Social Security taxes. But if you make less than $200,000 and do not pay Social Security taxes, you should do what you can to lower your income and increase expenses in this calendar year.
• Purchase any necessary new equipment. This year, you can expense or write off, instead of depreciate, up to $125,000 of qualified business equipment.
Moreover, you get an extra 50% bonus depreciation for buying new, rather than used, equipment. This includes qualified business vehicles, such as trucks and vans. It's unlikely you'll have such generous benefits in 2013. You have to place the equipment in service by Dec. 31, so check this out fast.
• Set up a qualified retirement account if you don't already have one. Increase your contribution if you do.
Many entrepreneurs neglect to put money away for retirement, relying on their businesses to take care of them in their golden years. Whether you're 30 or 50, it's important to have a retirement account, and you'll save on taxes.
Many plans have to be set up by Dec. 31 even though you don't have to put money in them until April 15.
• Make charitable contributions. Others need your help, and you can use the tax deduction.
Congress may reduce the tax benefits of charitable giving, so 2012 is a good time to give.
My recommendations assume the following:
  1. You run your business on a pass-through basis. Profits or losses pass through the company to your personal tax return if your company is organized as an "S" corporation or a limited liability company, better known as an LLC.
  2. You operate on a cash basis, rather than an accrual basis. So your income and expenses are tax events as they happen.
  3. Your fiscal year is the calendar year.
With all the changes, it's particularly important to consult your accountant this year and discuss what's right for your business.
But don't delay. Dec. 31 is right around the corner.
Rhonda Abrams is president of The Planning Shop and publisher of books for entrepreneurs. Her most recent book is Entrepreneurship: A Real-World Approach. Register for Rhonda's free newsletter at PlanningShop.comSee an index of Abrams' columns here. Twitter:@RhondaAbrams. Facebook:facebook.com/RhondaAbramsSmallBusiness. Copyright Rhonda Abrams 2012.

EXACT CPA COMMENT: Rhonda Abrams year-end tax planning strategies article is a good overview of things both individuals and small business can do in light of the impending changes to the Bush era tax cuts.  She emphasizes the fact that the strategies are only educated guesses, but advises people to plan accordingly. 
Posted on 5:21 AM | Categories:

Grant Thornton Offers Year-End Tax Planning Advice

BY MICHAEL COHN in Accounting today:  Grant Thornton is offer some year-end tax planning tips for both individuals and businesses, and their accountants, facing the expiration of the Bush tax cuts.  The Bush-era tax cuts enacted in 2001 and 2003 are scheduled to expire in 2013, the firm noted, and new Medicare taxes are scheduled to take effect. Without congressional action, tax rates will rise to as high as 39.6 percent on ordinary income and 23.8 percent on capital gains.
“Taxpayers should be paying special attention to their year-end tax planning in 2012,” said Mel Schwarz, a partner in Grant Thornton’s Washington National Tax Office, in a statement. “This year, flexibility is the name of the game. Until Congress acts, both businesses and individuals are facing a slew of tax increases in 2013 that will turn traditional tax planning on its head. This year, successful tax planning means preparing to react to the last minute success or failure of Congress to avoid these tax increases.”
Many businesses and individuals are wondering whether this is the year to reverse their tax strategy and accelerate income and defer deductions so they can pay tax before rates go up.
Other changes in the tax law must also be considered in preparing for 2013. Grant Thornton’s Year End Tax Guide for 2012 discusses all the issues taxpayers should be thinking about right now.
Here are some of the most important 2012 tax planning considerations for businesses:
1. Understand new reporting requirements. This year, for the first time, employers will be required to provide the IRS and employees with the total cost of 2012 group health coverage. This information must be reported on the Form W-2, which is used to report employee wages and withholding and is due Jan. 31, 2013.
2. Consider the timing of business investments. The rules for deducting investments in your business have changed. Last year, 100 percent bonus depreciation allowed businesses to fully deduct the cost of eligible equipment placed in service. Property placed in service in 2012 is only eligible for 50 percent bonus depreciation—meaning you can deduct half the cost of eligible equipment placed in service this year, while the other half will be depreciated using normal rules. Property placed in service in 2013 is will not be eligible for bonus depreciation at all. To qualify for bonus depreciation, the property you place in service must be new and generally have a useful life of 20 years or less under the modified accelerated cost recovery system, or MACRS.
3. Consider ‘S’ corporation status. Even if individual tax rates increase, the single level of taxation available for S corporations is such a significant benefit that any privately held company should at least consider the advantages of converting or organizing as such. A conversion is made with a simple election for tax purposes and doesn’t affect the liability protection of a corporation. But there are many things to consider first. You must satisfy many requirements to qualify for S corporation status, including number of shareholders.
4. Prepare for possible tax increases in 2013. If Congress does not act to prevent it, the new Medicare tax and the scheduled expiration of the 2001 and 2003 tax cuts will raise tax rates for individuals on many types of income. Pass-through businesses whose profits are taxed at the individual level may want to consider reversing normal tax strategy and accelerating income into 2012 and deferring deductions into 2013 to avoid the rate increases. There are strategies for deferring deductions and recognizing income, but the key is to be flexible. It may not make sense to accelerate tax. We don’t know what will happen legislatively yet. You want to prepare your strategies but delay executing them until the situation in Congress becomes clearer.
5. Help employees prepare for possible tax increases. Corporate employers can help their employees prepare for possible tax increases by facilitating flexibility with respect to the payment of bonuses and deferred compensation. For example, many accrual basis corporations declare bonuses before year end but pay them shortly after the new year. The corporation deducts the bonus in the year paid, but the employee does not have to include the bonus in income until the year it is paid. If it appears Congress will not act and rates will increase in 2013, it may benefit the employee to pay the bonus at the end of December, allowing it to be taxed under the current rates. But, make sure this will not force the employee into a higher bracket, and do not give the employee the option of when to receive the bonus. The IRS will treat this as constructive receipt and require the employee to include the bonus in 2012 income, whether the option is accepted or not.
Here are some of the most important 2012 tax planning considerations for individuals:
1. Give a lifetime supply of gifts. With transfer taxes at historic lows and ideal economic conditions, now is a great time to think about transferring assets. The $5.12 million gift tax exemption and the 35 percent rate are the most favorable in decades, and they aren’t scheduled to last. Without congressional action, the top estate and gift tax rate will be 55 percent in 2013 with an exemption of $1 million. Now is the time to act, especially while historically low interest rates enhance many of the best gifting strategies.
2. Make up a tax shortfall with increased withholding. Don’t forget that taxes are due throughout the year. Check your withholding and estimated tax payments now while you have time to fix a problem. If you’re in danger of an underpayment penalty, try to make up the shortfall through increased withholding on your salary or bonuses. A bigger estimated tax payment can still leave you exposed to penalties for previous quarters, while withholding is considered to have been paid ratably throughout the year. To avoid any penalties, the best action plan is to make sure you pay estimated taxes equal to 110 percent of your estimated tax liability.
3. Consider flipping your tax strategy to avoid tax increase. You generally want to accelerate deductions and defer income—why pay tax today when you can put it off until tomorrow? But if tax rates increase next year, it may be wise to reverse this strategy. Paying tax now at a lower rate may save you taxes in the long run. There are plenty of income items and expenses you may be able to control. Consider accelerating bonuses, consulting income or self-employment income. On the deduction side, you may be able to defer state and local income taxes, interest payments and real estate taxes. But be careful, because there are many things that could make tax acceleration a bad idea, including the alternative minimum tax, estate and gift tax implications, legislation, and even the time value of money. Also, stay flexible. If rates do not increase traditional tax strategies will still be best.
4. Consider selling assets. If your capital gains rate will increase in 2013, you can consider selling assets now to take advantage of today’s low rates. Stock and other securities can be sold and bought back immediately allowing the payment of tax without changing position. This gives you an increased basis in the asset for future sale but it may make more sense to take advantage of today’s low rates to diversify a concentrated position. If much of your portfolio is tied up in one stock or asset because you’re deferring the tax bill on a large gain, keep in mind that rates only have one way to go from here. But be careful because the time value of money still often makes deferral a better strategy and there are many other factors to consider, including whether your tax rate actually increases.
5. Leverage retirement account tax savings. It’s not too late to maximize contributions to a retirement account. Traditional retirement accounts like 401(k)s and IRAs still offer some of the best tax savings in the tax code. Contributions reduce taxable income at the time you make them, and you don’t pay taxes until you take the money out at retirement. The 2012 contribution limits are $17,000 for a 401(k) and $5,000 for an IRA (not including catch-up contributions for those 50 and older). Remember that 2012 contributions to your IRA can be made as late as April 15, 2013.
EXACT CPA COMMENT: The fiscal cliff has been the hot topic in both political and financial circles for the last few months.  With the year end rapidly approaching, practitioners and clients alike are anxiously awaiting the outcome from Congress on the fiscal cliff discussion.  Will the Bush era tax cuts be extended, kicking the can down the road for some period of time?  Will they expire, raising the tax rates of millions of Americans or will there be some combination of policies instituted?

December is ordinarily a fairly busy time for tax practitioners as they engage in year-end planning strategies for their clients.  This year will prove to be especially intense as practitioners will essentially need to create a plan A and a plan B for clients and then await the outcome of the fiscal cliff discussion.  While on the surface this might seem to be an easy exercise, it will in practice be anything but simple.  If practitioners recommend that clients accelerate income or defer deductions if the Bush era tax cuts expire, they have to ensure that they do not introduce any new issues into the equation.  Will additional tax payments be necessary?  Will this cause cash flow issues for the individual or small business?  Will there be an alternative minimum tax issue that rears its ugly head?  All of these issues and many more should be considered as 2012 draws to a close.  Good luck and happy planning!
Posted on 5:20 AM | Categories:

InfoStreet Unveils Your Cloud 2.0 Suite

 In response to market demand for a simpler, less expensive way to manage Cloud apps, InfoStreet, Inc. has announced their Cloud 2.0 Suite: SkyDesktop, a free Cloud-based desktop where all your apps and files live; SkyAppMarket, a marketplace dedicated to the best of breed, affordable Cloud apps; and SkySingleSignOn, a login management system that frees users from having to manage multiple logins and passwords.
With SkyDesktop, users will have a familiar environment (similar to the computer at their desk) yet fully managed completely in the Cloud and accessible from anywhere, at anytime, using any device.
SkyAppMarket is a Cloud app marketplace where small businesses can find the Cloud apps best suited for their organization. All apps are paid in one monthly bill, and businesses have full control of which apps are available to what employees.
All of the apps offered in SkyAppMarket are integrated with SkySingleSignOn, allowing users to access every app they have just by logging in to their SkyDesktop.
InfoStreet simultaneously announced that every SkyDesktop will come pre-populated with free apps including Calendar; Address Book; Employee Directory; Free Conference Calling; Kashoo, an Online Accounting solution; and Meeting Burner, a screen sharing and online meeting and webinar solution.
"With so many ways to access the Internet, it is no longer relevant how you reach the Internet," explains Siamak Farah, CEO of InfoStreet. "What really matters are the files and apps you need to access in order to get the job done. Users also want to have the same efficient experience regardless of how they reach their apps. This is precisely why we are proud to unveil our Cloud 2.0 Suite, providing users with all the benefits of the Cloud in one centralized location."
As part of InfoStreet's Cloud 2.0-focused rollout, several Cloud apps are being offered in the SkyAppMarket at launch, a complete list of which can be seen at https://www.InfoStreet.com/SkyAppMarket . Additional apps are in line to be released to SkyAppMarket each month. InfoStreet has provided a sneak preview of those Cloud apps at https://www.InfoStreet.com/coming-soon . Every app in the SkyAppMarket will be supported by InfoStreet's staff and equipped with SkySingleSignOn, giving users the pure Cloud 2.0 experience they have been longing for.
"Imagine one location for all your files, one trusted source to find Cloud apps, one bill to pay, and only one support contact," said Farah. "Now, this has become a reality. SkyDesktop brings you all that at no extra cost".
ABOUT INFOSTREET InfoStreet is a Cloud app provider that offers SkyDesktop, a free patent-pending Cloud Desktop; SkyAppMarket, an app marketplace where a business can choose from the best Cloud apps in the market; and SkySingleSignOn, a federated login solution and network management tool. Together they provide all the files and applications a company needs to run their business in the Cloud.
Try SkyDesktop and SkyAppMarket by visiting https://www.skydesktop.com or by calling 1-866-956-5051 for more information.

Is this the beginning of the end for traditional laptop and desktop computers?  Cloud 2.0 Suite looks like it might be an alternative for the future of cloud computing.  Rather than purchasing software packages that are downloaded onto your laptop or desktop and then are only available wherever you have access to the machine that holds the software, you can access your applications from virtually anywhere.  I recently lived through Hurricane Sandy and was without power for nearly a week.  If all of our office applications were in the cloud, I would have easily been able to transition to an alternative workspace.  

I have just a couple of reservations with moving everything entirely to the cloud.  The first is the location of the servers hosting the programs.  If something happens making those servers inaccessible, I'm in big trouble.  The second is the ownership  and portability of my data.  If it is necessary to change providers, how do I transition my data?  Other than these minor hesitations, I think cloud applications is the way to go.  The benefits far outweigh the risks.  I look forward to the capabilities of access within the cloud.  What are your thoughts? 
Posted on 5:20 AM | Categories: