Xero Plans for 2014

We read out of Australia Northern Business Consultants writes: We can officially put the rumours to sleep. As part of the festivities of Xerocon 2013, Xero has announced their plans for the coming year. Whilst no formal release has been made to the public, our NBC representatives couldn’t wait to share the news!
Keep an eye for for these fantastic new developments in 2014…

LITE STOCK MODULES:

Proving once again that Xero is the platform for the people, due to popular demand, Xero is introducing a lite stock module in 2014. This component will perform stock monitoring for accounting purposes in terms of hosting stock listings and providing stocktake figures. Whilst this stock module does not track your stock movements with regard to the particular phase or stage your stock is at, Xero has a range of Add-on partners which can provide you a more comprehensive analysis.

QUOTING FUNCTIONALITY:

Xero’s upcoming Quoting functionality will be built into the front end of the sales module. Xero users will be able to create and send a quote to their clients electronically. Each quote will contain an option to either approve or decline the offer. The instant a quote is approved, a notification is sent to the issuer prompting the next action in the process. Each stage is mapped and monitored automatically by Xero, reducing the time and hassle expensed chasing up non-responsive clients. To make life even easier, Xero is streamlining the transition from quote to invoice to occur with a simple push of a button.

PURCHASE ORDERS:

Purchase Orders in Xero will operate in a similar fashion to quoting. Xero’s Purchase Orders component will interact directly with your suppliers and will track the status of your order, phase by phase to assist you in effectively managing your stock levels.

DOCUMENT STORAGE:

Xero is working on redeveloping its existing document storage system. At present this function is only available for payables and expense claims. Moving forward, document storage will be available at every input point. This means your accountant and/or professional advisor, will be able to access any supporting documentation to assist them in providing you with a more comprehensive service. Xero users will be able choose between single or multiple document uploads and allocate them to their relevant transactions. Additionally a ‘documents’ tab will be added to the Settings toolbar in which every uploaded file will be archived.

BANKING STAGE 2:

 For Banking Stage 2, Xero needs your help. Xero is asking all of its users to put pressure on their banks to provide direct feeds to Xero, as opposed to involving a 3rd party aggregate like Yodlee. Xero’s vision is to gain authorisation to integrate bankfeeds from your net banking platform. This connection will provide instant updates to Xero rather than having to contend with a 10 day turn around. Furthermore, should this direct link be authorised, Xero will be looking to harness the increased functionality in order to make payments at the click of the button. Imagine one platform that could do it all – recognise bills, allocate expenditure and pay your supplier without having to jump between screens or platforms! An advancement this significant could revolutionise the way we do business.

PAYROLL:

Next year we can expect big things from Xero’s Payroll package. Xero is currently working on building a Payroll system for the US market, making Xero the first accounting software in the States to introduce an accounting and payroll package rolled into one! When the new and improved payroll package hits Aussie shores we can expect to see a brand new mobile phone app including:

• a function for employees to clock timesheets and apply for leave
• a function for employers for leave management
• the ability to upload photos, job descriptions, roles, and contact details for each employee
• document storage
  
  

FIXED ASSET MODULES:

In 2014 Xero’s fixed asset module is being overhauled to comply with ATO depreciation standards.The overhaul will allow depreciation schedules to be hosted on the site, and give Xero users the ability to upload photos and tax invoices for each asset. This will enhance your accountant’s ability to comprehensively review your assets and ensure you are receiving the best deduction.

App center links online billing to back-office processes / New Bill.com platform enables small companies to connect the finance function with other related tasks, such as expense reporting and online mail management.

Heather Clancy for ZD Net writes: Billing and invoicing is one of those onerous tasks that challenges even the most organized entrepreneur, and Bill.com was created with the idea of streamlining those functions for smaller companies. 

Now, the company is reaching even further into the back office with a new application center that will include third party cloud services that integrate well with its core capabilities. Some of the processes being targeted with the Bill.com App Center include expense reporting, online mail management and accounting.

"Just as Bill.com pioneered sync in the payment space with seamless integration with all leading accounting software, we are now enabling data to be kept current across multiple systems," said Rene Lacerte, founder and CEO ofBill.com. "The Bill.com App Center will grow with our company's continued focus on finance professionals' needs in mind, with more self-service integrations chosen and added based on their business relevancy, ease of use and data accuracy."

One of the first integrations in App Center is for Tallie, a cloud expense reporting service from SpringAhead. The application scans, categorizes and matches receipt and credit card data, which helps automate the process of managing expenses. Using the Tallie and Bill.com integration, a small company's finance team (or bookkeeper) can streamline reconcilation between expenses and associated clients. This data can be synchronized with accounting applications including QuickBooks, Intacct, NetSuite and Zero.

Another App Center partner is Earth Class Mail, which lets small companies digitize paper bills and move to paperless processes more easily. The digital bills can then be categorized, approved and paid with the Bill.com online payment services.  

The Bill.com business payments network currently supports 250,000 users. Aside from the self-service integrations featured on the site, the company is providing new tools for developers interested in integrating other financial management and administrative services with the platform.

How Much Are You Leaving on the Table? Improving Your After-Tax Financial Efficiency

David B. Mandell, JD, MBA and Carole C. Foos, CPA, OJM Group write:  Most spine surgeons strive to achieve two goals in their practice – to "do good," by being a quality practitioner and helping patients; and to "do well" in terms of financial rewards.  Unfortunately, as to the second goal, many spine surgeons in private practice do not operate their practices with optimal after-tax efficiency. In fact, we often see doctors leaving tens of thousands of dollars "on the table" each year – which can equate to nearly $1 million of lost wealth over a career. The good news is that many of you reading this can likely improve your post-tax bottom line in a number of ways.

Time is of the Essence

There is truly no better time than now over the last 30 years to focus on post-tax efficiency. As you know, when President Obama signed the Taxpayer Relief Act of 2012 in early January 2013, taxes increased on high-income taxpayers like most of you –in some cases, dramatically. While the details of the "fiscal cliff" deal is a topic for another article, the important take-aways are:

1. Many spine surgeons face a 50 percent-plus marginal income tax regime, when all of the new tax increases are accounted for. Depending on the city/state where you live, tax rates are now between 45 to 55 percent, no less. Income tax planning is more important now than at any time in the last 30 years.

2. These higher rates will apply to more income, with the reinstatement of the itemized deduction limitations and the personal exemption phase-out.

3. Total taxes on long term capital gains and dividends can now reach 23 to 33 percent when the new federal tax, Obamacare tax and state and local taxes are assessed.

The Common Causes of Dollars "Left on the Table"

While the causes of "dollars left on the table" in a medical practice can range from billing errors to unproductive employees, our expertise and focus is corporate structure, tax reduction and benefit planning.  For this article, we will focus on three strategies for recapturing some of the funds left on the table:

1. Using the ideal corporate structure;
2. Maximizing tax-deductible benefits for the spine surgeon-owner(s); and
3. Utilizing a captive insurance arrangement

The most important thing you can do is keep an open mind. Just because you have operated your practice a certain way for five, 10 or 20 years, you don't have to keep doing the same thing. Changing just a few areas of your practice could recover $10,000 to $100,000 of "lost dollars" annually. Let's explore the three areas:

1. Using the Ideal Corporate Structure

Choosing the form and structure of one's medical practice is an important decision and one that can have a direct impact on your financial efficiency and the state and federal taxes you will owe every April 15. Yet from our experiences in examining over 1,000 medical practices of our clients, most surgeons get it wrong. Here are a few ideas to consider when thinking about your present corporate structure:

A. You must avoid using a partnership, proprietorship, or "disregarded entity": These entities are asset protection nightmares and can be tax traps for spine surgeons. Nonetheless, we have seen very successful doctors operating their practices as such.  The good news is that doctors who run their practices as a partnership, proprietorship, or disregarded entity have a tremendous opportunity to find "dollars on the table" through lower taxes – especially on the 3.8 percent Medicare tax on income.This can be a $10,000 to $30,000 annual recovery.

B. If you use an "S" corporation, don't treat it like a "C" corporation. We estimate that 60 percent to 70 percent of all medical practices are "S" corporations. Unfortunately, many spine surgeons do not take advantage of their "S" corporation status – using inefficient compensation structures that completely erase the tax benefits of having the "S" in the first place. If your practice is an "S" corporation, you should maximize your Medicare tax savings through your compensation system in a reasonable way. This can be a $10,000 to $30,000 annual recovery for practices not properly structured.

C. Implement a "C" corporation. Once upon a time, "C" corporations were the most popular entity for U.S. medical practices. Today, fewer than 15 percent of medical practices operate as "C" corporations. Why? We believe it is because most spine surgeons, bookkeepers and accountants focus on avoiding the corporate and individual "double tax" problem.

While this is crucial to the proper use of a "C" corporation, it is only one of a number of important considerations a spine surgeon must make when choosing the proper entity. A common mistake is to overlook the tax-deductible benefit plans that are only available to "C" corporations. If you have not recently examined the potential tax benefits you would receive by converting your practice to a "C" corporation, we recommend that you do so. Utilizing benefit plans that only a "C" corporation can offer can create a $10,000 to $30,000 annual improvement.

D. Get the Best of Both Worlds – Use Multiple Entities. Very few medical practices use more than one entity for the operation of the practice ... and, if they do, it is simply to own the practice real estate. While this tactic is also wise from an asset-protection perspective, its tax benefits are typically non-existent.

Successful practices can often benefit from a superior practice structure that includes both an "S" and a "C" corporation. This can create both tax reduction and asset protection advantages. If you have not explored the benefits of using both an "S" and "C" corporation to get the best of both worlds in planning, now is the time to do so. Utilizing a two-entity structure properly can create a $10,000 to $40,000 annual improvement.

2. Maximizing Tax-Deductible Benefits for the Doctors in the Practice

If you are serious about capturing "dollars left on the table," tax efficient benefit planning must be a focus. Benefit planning can definitely help you reduce taxes, but that is not enough. Benefits plans that deliver a disproportionate amount of the benefits to employees can be deductible to the practice, but too costly for the practice-owners. These plans can be considered inefficient. To create an efficient benefit plan, spine surgeons need to combine qualified retirement plans (QRPs), non-qualified plans and "hybrid plans."

Nearly 95 percent of the surgeons who have contacted us over the years have some type of QRP in place. These include 401(k)'s, profit-sharing plans, money purchase plans, defined benefit plans, 403(b)'s, SEP or SIMPLE IRAs, and other variations. This is positive, as contributions to these plans are typically 100 percent tax deductible and the funds in these plans are afforded excellent asset protection. However, there are two problems with this approach: i.) many QRPs are outdated; and ii.) QRPs are only one piece of puzzle.

First, most surgeons have not examined their QRPs in the last few years. The Pension Protection Act improved the QRP options for many doctors. In other words, many of you may be using an "outdated" plan and forgoing further contributions and deductions allowed under the most recent rule changes. By maximizing your QRP under the new rules, you could increase your deductions for 2013 by tens of thousands of dollars annually, depending on your current plan.

Second, the vast majority of spine surgeons begin and end their retirement planning with QRPs. Most have not analyzed, let alone implemented, any other type of benefit plan. Have you explored fringe benefit plans, non-qualified plans or "hybrid plans" recently? The unfortunate truth for many spine surgeons is that they are unaware of plans that enjoy favorable short-term and long-term tax treatment. These can have annual tax advantages that vary widely ($0 to $50,000) and also have varying degrees of long term tax value as well. If you have not yet analyzed all options for your practice, we highly encourage you to do so.

3. Utilizing Captive Insurance Arrangements

For practices with gross revenues over $3 million, a small captive insurance arrangement might be significant way to recapture "dollars left on the table." Today, there are likely many risks in your practice that are going uninsured – from excess malpractice, economic risks, employee risks, and litigation defense risks from any number of audit or fraud claims. Like most spine surgeons, you likely just save funds personally and hope that these risks don't come to fruition. As a result of your de facto "self-insurance," you are not taking advantage of the risk management, profit enhancing and tax reduction benefits that are available to you with a captive.

By creating your own captive insurance company (CIC), you can essentially create a pre-tax war chest to manage such risks. If structured properly, the CIC enjoys tremendous risk management, tax and asset protection benefits. The potential tax efficiency, in fact, can be in the hundreds of thousands of dollars annually. While an experienced law firm, captive management firm, and asset management firm are crucial, you as the captive owner can maintain control of the CIC throughout its life. It can then become a powerful wealth creation tool for your retirement.

Conclusion

Nearly every one of you reading this article would like to be more tax efficient, especially with a new higher tax regime in place for 2013 and beyond. We hope these new tax rules motivate you to make tax and efficiency planning a priority, so you too can recapture the "dollars left on the table." We welcome your questions.

Year-end considerations and planning for closely held businesses

David R Valz writes: The end of any calendar or tax year naturally causes one to reflect upon initial targets and aspirations for such year, accomplishments during the year and aspirations for the coming year. As owners of closely held businesses turn their focus to financial performance, budgets, and new targets and projections, they also should think about tax planning, corporate records and relationships, succession planning, and gift and estate tax planning. By its nature, this article merely raises topics for review and consideration; you are urged to contact your professional adviser for details, discussion and review.

Income tax planning and review. 2013 began with the passage of the American Taxpayer Relief Act (2013 Act), which dramatically impacted certain income, estate, gift and generation-skipping transfer tax provisions. Businesses should review and consider, in concert with advisers, any income tax planning that may be accomplished as the end of the year looms and visibility as to year-end financial performance improves. Obvious candidates are the acceleration of expenses and the deferral, under certain circumstances, of income. Year-end is a good time to undertake a careful analysis of the payment of bonuses versus dividends versus other forms of compensation. Certain equipment may be able to be acquired and depreciated on an accelerated basis or, in certain circumstances, deducted. If you are planning to establish a 401(k) plan or other retirement vehicle, it could be hugely beneficial to accomplish this prior to the end of the tax year. The end of the year is also a good time to take a close look at your current business entity/structure and determine whether it makes the most sense for you going forward.

Among other things, the 2013 Act reinstated the 39.6 percent individual income tax rate over certain thresholds and increased the rate for certain long-term capital gains and qualifying dividends for certain taxpayers. Some of the taxes imposed by the Affordable Care Act (enacted in 2010) take effect in 2013, including net investment income tax of 3.8 percent assessed on interest, dividends, annuities, rents, capital gains and passive income from partnerships or S-corporations over certain thresholds, and an additional 0.9 percent Medicare tax on salaries, wages and bonuses over certain thresholds.

Depreciation is usually a significant consideration for closely held businesses, particularly when contemplating the purchase of equipment before the end of the year. The 2013 Act extended the Section 179 expense deduction (through 2013), increasing the annual limit for 2013 to $500,000, reduced on a dollar-for-dollar basis to the extent the cost of qualifying property exceeds $2 million. This means that small businesses may expense (rather than depreciate) most furniture and equipment bought in 2013 (certain conditions apply). Contrast this to the fact that, presently, for 2014 and forward, the maximum expensing amount is $25,000 with the phase-out limitation being $200,000.

S-corporation owner-employees must review their compensation for the year to ensure they have met IRS guidelines for reasonable compensation. They also must include any eligible health insurance premiums on their Forms W-2 for the health insurance premiums to be deducted as self-employed health insurance. Medicare premiums paid may generally be deducted as self-employed health insurance premiums. It is suggested that the S-corporation reimburse the owner-employee for the premiums paid. Please consult with your adviser concerning what premiums qualify for this deduction.

The end of the year is also a good time to review your county real estate tax bills to determine if the tax base (property valuation) upon which the applicable tax rate is applied is an accurate reflection of the value of your property. If not, you should file an appeal with the applicable county. Rules for such appeals can be complicated, and timing is very important.

Corporate records and business relationships. As we all know, to maintain its liability shield, a corporation must adhere to corporate formalities, including keeping organized and up-to-date corporate records (the same goes for other business entities). The end of the year is a good time to review your code of regulations (aka by-laws) to ensure that requisite meetings of the shareholders and directors have been held and documented. Further, any other actions taken during the year that have not otherwise been documented should be ratified and confirmed.

As a part of a year-end review, it is good practice to actually read your code of regulations, articles of incorporation, etc., to determine whether they are in need of updates and to ensure that operations are in compliance therewith. Ensure that stock records and ledgers accurately reflect the capitalization of the corporation. Likewise, in the context of a partnership or limited liability company, the partnership agreement or operating agreement, respectively, should be reviewed annually.

Generally speaking, year-end is also a good time for business owners to evaluate their relationships with financial institutions. Review your operating lines of credit and other debt instruments. Restructuring debt at the end of a high-performance year (when times are good and you do not need financing) is ideal, rather than when you are in need and at the mercy of your lender.

Succession planning. Succession planning is an attempt to ensure the continuation of your business when you and/or fellow owners face certain circumstances (i.e., death, disability, divorce, retirement, termination of employment, etc.). A properly structured buy-sell agreement is one tool often utilized by privately held businesses to address such contingencies. Said agreements also provide a process to handle situations where an owner desires to sell his/her shares (to third parties or other owners), transfer certain interests to heirs or trusts, or where inevitable owner disputes arise.

Properly structured buy-sell agreements consider appropriate valuation metrics (based on the nature of your business) and may provide for valuation penalties in the event certain frowned-upon circumstances arise (i.e., breach of restrictive covenants, “for cause” termination events, etc.). Other considerations involve the funding of buy-outs (cash, promissory note, life insurance, etc.) and the structure of the buy-out (redemption versus cross-purchase). The purpose of a buy-sell agreement is to provide certainty and continuity – a backstop in the event the parties cannot agree. Like other corporate instruments, a buy-sell agreement should be reviewed periodically to ensure compliance and appropriateness.

Gift and estate tax planning. While the end of the year is a good time to consider estate and gift planning, whether involving interests in closely held businesses or other assets, solid plans can take years to implement and will evolve with you and your business throughout your life.

Under the 2013 Act, the gift and estate tax exemption amounts remain unified with one another for 2013 and stand at $5.25 million. The exemption amount for the generation-skipping transfer tax also stands at $5.25 million for 2013. The annual exclusion for 2013 is $14,000.

Closely held businesses, by their nature, lend themselves to many advanced planning techniques that may be used to benefit spouses, children, grandchildren and generations to come. Valuation discounts reflecting lack of marketability, lack of control, etc., provide useful leverage in planning. The ability to separate ownership from control and control distributions makes closely held businesses ideal for this type of planning. Nelson Rockefeller was once quoted as stating that “The secret to success is to own nothing, but control everything.” In this planning arena, by separating ownership from control, transferring wealth in the form of closely held business interests does not necessitate that one relinquish control. Rather, this can be effectuated via a restructuring that entirely separates ownership from control.

Kashoo Unveils New Small Business Accounting iPad App

The App Store's most downloaded small business accounting iPad app from Kashoo, the leader in simple cloud accounting, features a fresh new design and new productivity-increasing enhancements including Quick Entry for speedy, accurate income and expense management.

The brand new Kashoo iPad app

The new Kashoo iPad app is all about making small business accounting easier and more intuitive than ever before.

Kashoo, the makers of simple cloud accounting for small business, has released a completely new version (v3.0) of its industry-leading iPad app. From a beautiful new interface to powerful new features designed to help small business owners take even better control of their finances, the app is fully optimized for iOS 7 and is currently available for free download in the App Store.

The most notable new feature on the Kashoo iPad app is Quick Entry. With Quick Entry, small business accounting is a breeze as Kashoo customers can create an income or expense transaction from any tab in the app, with minimal required information. This allows transactions to be recorded in bulk, quickly and accurately.

"The new Kashoo iPad app is all about making small business accounting easier and more intuitive than ever before," said Kashoo CEO Jim Secord. "Small business owners are increasingly adopting an 'anytime, anywhere' style of business and our app allows them to dominate their finances in just that way via the cloud. We're excited for people to download the Kashoo iPad app and give a it try."

In addition to Quick Entry, creating a new business within the Kashoo iPad app is markedly improved and simpler. At minimum, it now takes just four pieces of information to set up a business: company name, country, currency and fiscal year start date. Kashoo customers can input additional information such as a logo, a security PIN and other business details later, but four pieces of information are all it takes to set up a new business in the Kashoo iPad app.

To view a guided video of all that's new in the Kashoo iPad app, visit the Kashoo blog.

About Kashoo
With over 125,000 registered users in more than 180 countries, Kashoo is simple cloud accounting for small business—on the web and on the App Store’s most downloaded accounting iPad app. TUAW said of Kashoo: “If you’re starting a new business or thinking about breaking from a traditional small business accounting package, Kashoo’s the first place you ought to look.” Get started at http://kashoo.com or download the Kashoo iPad app.