Xero: Payroll for the United States

At Xero blog we read: Today we’re proud to announce that payroll and accounting are available seamlessly together for our US customers. In what is our biggest feature release this year, it’s being made available to all Xero users in the following US states;

• California
• Utah
• New York
• New Jersey
• Virginia
• Florida

Separate online payroll and accounting is a pain and has been for a long time now. So we’ve solved it – and then some. It means you no longer have to export and import your payroll data, nor use separate logins.

You can be instantly more efficient and have fewer errors by having your general ledger automatically updated after running payroll. You can also share the payroll tasks by easily collaborating with employees through an employee app, where they can view pay stubs, submit timesheets and even apply for time off.

Check out the goodness in this video!

Seamless Payroll

With the general ledger automatically updated, you can easily follow the underlying payroll data through several comprehensive payroll reports as well as the balance sheet, income statement and other relevant accounting reports.

Payroll administrators are empowered with an easy-to-access dashboard providing a quick overview of the payroll with employee timesheets and time off requests.

This is just the beginning for US payroll. Early in the new year we’ll add electronic payroll tax payments and filings in our supported states, which makes the dreaded filing and payment process super easy.

What’s coming?

Beyond all this, we’re already working on employee W2 forms as well as the entire end of year (FY14) payroll process. Also on the radar is a graphical view of all requested, approved and denied employee time off, an employee pay day iOS application, more comprehensive opening balances capability, conversion functionality, an open payroll API and of course the remaining 44 States.

Check out our all inclusive subscriptions, get started through the dedicated area in our Help Center or attend one of our in person or online certification courses.

We’d love to know what you think, so feel free to weigh in on the discussion in the Xero Community.

Read more about Accountants, payroll

James 
9 December 2013 #

Neat!

Can you give an indication on when AU gets seamless payroll?

Stuart McLeod 
9 December 2013 #

@Jame,s we’re actively working on AU GL integration, so we’re aiming for first half of next year.

Benjamin Bowles 
9 December 2013 #

UK soon? Please…. 

Stuart McLeod 
9 December 2013 #

@Benjamin, we are at the very beginning of UK payroll and it’s still a while off yet. Watch this space for more info though.

James Solomons 
9 December 2013 #

Roll it out here in Aus Stu, roll it out ! Don’t forget your roots mate !

Sandra Stubbs 
9 December 2013 #

It would be great for the kiwis too 

Stuart McLeod 
9 December 2013 #

Thanks @Sandra. We announced in our last investor update that NZ payroll would be coming in 2014. No specific timeframes yet, but watch this space.
http://www.xero.com/media/816428/xero_november_2013_investor_presentation.pdf

Jason DuPont 
9 December 2013 #

I’ve already up’ed my payment plan and am ready to roll on this because xero has been saying this will be ready in December. Now I’m logged in and setting it up and it says that my state, South Carolina is not yet supported. I REALLY need this. When will my state be ready?

Stuart McLeod 
9 December 2013 #

We’re so glad you’re keen to give it a try, @Jason! Please see here for a list of our State priorities.
https://community.xero.com/business/discussion/3085450/

Intuit : Could This Intuit-ive Stock Mint Solid Returns?

Caroline Bennett for the Motely Fool writes: Intuit  (NASDAQ: INTU  ) dreams of becoming synonymous with all things personal finance. And with hugely popular (and helpful) products such as TurboTax, Mint, and Quicken, the company appears well on its way to doing so. Last quarter saw an 11% boost in Intuit's revenue, along with the completion of several acquisitions and a healthy share buyback. 

Despite those positive stats, on the day of Intuit's earnings call, the company's stock took a dip. It was practically infinitesimal -- only about 1.5% -- but odd nonetheless. When a company seems to be thriving, why would its stock drop on the news of surging revenue, as opposed to rising along with it? Let's take a look under the hood and find out.

Financials
Recently, Intuit has begun placing particular emphasis on its small-business solutions, and on the cloud, perhaps to combat lagging sales on its tax products this time of year. During its quarterly conference call, Intuit explained that two-thirds of its $622 million in quarterly revenue came from "higher value cloud and connect services," which garnered "predictable recurring revenue streams."

That revenue is impressive, but there are a couple of dubious statistics farther down the income statement: namely, the company's margins. Intuit's operating and net profit margins were negative this time last year, and not much has changed since. Operating losses widened from $73 million to $77 million, mainly because of a boost in selling and marketing expenses. Net losses, in the meantime, narrowed slightly from $19 million to $11 million, thanks to a boost in funds from discontinued operations. Without that, Intuit would have been $57 million in the red.

Detailing the divestiture
It turns out Intuit spent the quarter unloading quite of a few of its former resources. On July 1, the company let go of its Financial Services business -- which focused on providing banking software to financial institutions and markets -- for $1 billion. That segment brought in $326 million in revenue last year, and its divestiture caused Intuit to have to lower its original annual guidance, from between $702 million and $727 million to between $615 million and $625 million. Additionally, in August Intuit completed the sale of its Intuit Health business, which brought in around $16 million annually.

In selling these divisions, Intuit has proved that it is taking the process of reinventing itself seriously. According to its earnings release, the company wants to become the go-to operating system for small-business success, and "do the nation's taxes in U.S. and Canada." Anything standing in the way of those goals is considered dead weight, and Intuit isn't afraid to prune some branches when necessary.

Taxing times to come?
Intuit has certainly transformed its business model over the past quarter. While it may take a while for profits to catch up, it's worth noting that even after divesting two segments and lowering its projected guidance, Intuit still saw an 11% increase in overall Q3 revenue, which is certainly impressive. For investors leery of hopping on board a company right in the middle of reinventing its structure, wait a quarter or two to see how Intuit manages to shape up its operation and net incomes. If there's continued improvement, Intuit could become a stock to hold onto for the long run.

Make your 401(k) work

W. Devin Wolf for BBJ Today writes: 1. Take the free money

Make sure you are taking advantage of your employer match. They have been increasing, with most offering a dollar-for-dollar match for the first 6 percent of employee deferrals (up from $0.50 per $1), according to a 2013 survey from the AON Hewitt consultancy.

If you aren’t participating in your employer’s retirement plan or maximizing the matching opportunities, you are drastically reducing your chances of success.

Think of it this way: If an employee is making $50,000 per year, contributing 6 percent for 35 years, receiving a full match on the first 6 percent and earning a 6 percent annual return, then that employee is not only missing out on the $357,958 from their contributions, but they are also missing out on an additional $357,958 from the matching contributions for a total of $715,916. Not bad considering this employee only contributed $105,000 of their own money.

2. Increase your savings 

The 401(k) contribution limits are set to stay the same in 2014, allowing employees to contribute $17,500 annually with an additional $5,500 “catch up” contribution for those turning 50 or above in 2014.

Not only will the increased savings increase your chances of retirement success, but qualified retirement plans receive tax deferral. This means that when you have dividends, interest and realized gains in your retirement account, you don’t owe taxes in the current tax year. By deferring the taxes until later, the money you would have spent on taxes is put to work increasing your nest egg.

It is always best to make your savings automatic, and some plans allow you to set up automatic annual increases to your contributions as well. If you don’t have this luxury, make it a point to increase your contribution percentage every time you get a raise.

3. Save to the proper account 

According to AON Hewitt, half of all plans now include a Roth 401(k) option. With the Roth option, you forego the immediate tax savings of the traditional 401(k), but in return receive tax-free growth.

The key to determining which account is right for you is understanding your taxes relative to the tiered-income tax brackets. If you think you will receive a greater tax deduction now relative to your tax bracket in retirement, the traditional 401(k) may be best.

Are you uncomfortable predicting future tax brackets? Me too. One strategy to combat this is to diversify between Roth and traditional 401(k) accounts.

Let’s say you are in the 25 percent tax bracket by $10,000 of taxable income. In this case, you might want to save your first $10,000 to the traditional 401(k), locking in the immediate 25 percent tax savings, and the remaining $7,500 contribution to the Roth 401(k). By doing this, your tax rate on the Roth 401(k) contribution will be reduced to the 15 percent bracket.

For those really excited about the Roth 401(k) option, the Taxpayer Relief Act of 2012 allows in-plan Roth conversions. Essentially, you are able to pay the tax and move assets from the traditional 401(k) to the Roth 401(k) if your plan supports this feature.

4. Reduce expenses

Retirement-plan expenses have been a hot topic lately. 408(b)(2) regulations implemented in 2012 require that fee information be provided to each employee. While you may not be able to control plan expenses, you can review investment expenses and select more cost effective investments.

Use a free service like Morningstar to view the fund expenses and avoid investments with loads, 12b-1 fees or high administrative fees. These expenses have nothing to do with the actual management of the investment, and you may actually be paying for more of the plan level expenses by using these funds.

5. Diversify 

Too often, investors feel like they are diversified because they invest in multiple mutual funds. Diversification is about what you own inside of the mutual funds and how diversified these holdings are.

You can use a free service like Morningstar’s portfolio x-ray to see how your portfolio looks as a whole. For stocks, review diversification between regions, market capitalization (Large Cap, Mid, and Small), valuations (growth versus value) and sectors.

Review your portfolio to make sure you are taking an appropriate level of risk and you are fully diversified. Company stock can increase risk and reduce diversification. If you hold company stock and the company folds, you lose both your job and your retirement.

Finally, once you have built the right portfolio, be sure to routinely rebalance the account. Many plans allow you to automatically rebalance, or buy and sell the funds in your portfolio to get back to your desired asset allocation, once per year.

Your Lifetime Social Security Taxes and Benefits / A new report also looks at your personal balance sheet for Medicare

Journal Reports for the Wall St Journal writes: TAXES AND BENEFITS For both your own planning purposes and a better understanding of looming budget battles in Washington, check out a new report: "Social Security and Medicare Taxes and Benefits Over a Lifetime: 2013 Update." The study, from the Urban Institute, a nonprofit research and educational group, offers a look at the taxes you will contribute to, and the benefits you are likely to receive from, these two programs in your lifetime. You'll see how much of a part Social Security is likely to play in your retirement finances. Consider: A one-earner couple with a high wage ($71,700 in 2013 dollars) retiring in 2015 can expect lifetime Social Security benefits of $640,000. The same couple can expect to get $427,000 in lifetime Medicare benefits—while paying only $111,000 in Medicare taxes. The latter figures help illustrate how Medicare, in particular, is expected to strain future federal budgets.

To learn more go to urban.org/retirees and click on the above title.

MONEY MANAGERS If you aren't doing so already, chances are good that you will end up as a "financial caregiver," helping older family members with their personal finances. It can be a difficult job, but new help is available. The federal Consumer Financial Protection Bureau has just published four guides titled "Managing Someone Else's Money" to assist financial caregivers. Each guide is tailored to individuals in a specific role: people named agents under a power of attorney; those appointed by a court as a guardian or conservator; trustees in charge of living trusts; and those appointed by a government agency to manage Social Security or veterans' benefits. And each guide has three purposes: to walk caregivers through their duties; to tell them how to watch for scams and financial exploitation (and what to do if a family member becomes a victim); and to tell caregivers where they can turn for additional help. In short, an invaluable resource.

To learn more go to consumerfinance.gov/managing-someone-elses-money.

Empty Nester Tax Strategy

Over at Bogleheads we read: Empty Nester Tax Strategy

Empty Nester Tax Strategyby Crimsontide » Wed Nov 27, 2013 7:42 pm

Hi All,

Long time lurker, first time poster. The DW and I have been empty-nesters for the past few years and need some help with our tax strategy. I’m 51 and she is 48, our only child is married and doing a great job of being independent. Our current tax filing parameters are:

- Married filing jointly

- Zero dependents

- AGI = $185,000 (all income from our jobs)

- Both contributing max to 401ks.

- We have no mortgage or any other debt, we own our home free and clear.

- Taxable income after standard deduction = $165,000

So the question is what options do we have for reducing the amount of tax owed or the amount of income subject to federal taxation? I believe we are ineligible for taking any deductions for traditional IRAs and do not qualify for Roth’s either (I guess a back-door is possible but I’m not sure if this will help with the tax owed on income situation). We don’t qualify for any sort of tax credits either, as far as I can tell. Is there anything we can do other than maybe buying some rental property or starting a “business”?

Thanks,

Crimson

Crimsontide

Posts: 10

Joined: 25 Oct 2013

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Re: Empty Nester Tax Strategyby livesoft » Wed Nov 27, 2013 7:47 pm

Bunching deductions was recently discussed along with giving to charity via a donor-advised fund.

Also, look at your Schedule B. You all should have no income in the top half of Schedule B and only qualified dividend income in the bottom half. But with all income from your jobs, you probably don't even file Schedule B.

Tax-loss harvesting could reduce AGI by $3,000.

See also the Taxes on family with $200,000 gross income thread even though some will not apply to you.

Maybe start working part-time to reduce job income?

Why don't you qualify for the foreign tax credit?

It's all about market timing, uh, I mean rebalancing, uh, I mean opportunistic rebalancing, uh, I mean short-term opportunistic rebalancing due to a short-term change in one's asset allocation.

livesoft

Posts: 28764

Joined: 1 Mar 2007

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Re: Empty Nester Tax Strategyby Crimsontide » Wed Nov 27, 2013 8:21 pm

Thanks for the quick reply Livesoft. I'll check the link you posted and also investigate the Foreign Tax credit. You are correct about the Schedule B, the vast majority of our money is in tax deferred accounts. We do have a pretty nice emergency fund and some CDs but with interest rates as low as they are we are not seeing much taxable return at all...

Crimsontide

Posts: 10

Joined: 25 Oct 2013

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Re: Empty Nester Tax Strategyby Bob's not my name » Wed Nov 27, 2013 9:51 pm

Crimsontide wrote:do not qualify for Roth’s either (I guess a back-door is possible but I’m not sure if this will help with the tax owed on income situation).

I don't see why you wouldn't do back door Roths. Aren't you saving in taxable space with $230,000 of gross income and no mortgage? You will be glad you have the Roths if you move from Texas to an income tax state to retire (that is, an income tax state that doesn't exempt all retirement plan withdrawals). Your marginal rate is 28% now but it might actually be higher than that in retirement if you're in the 25% bracket and have moved to a state with a high income tax. In any case, you don't have a choice of pre-tax vs. post-tax retirement savings, since you're maxing all your pre-tax space already, so Roth IRAs are the obvious next thing to do.

Maybe pretty soon you won't have to use the back door. At $185,000 MAGI you're in the eligibility phaseout, but not all the way through it. In 2014 the phaseout is $181,000 - $191,000, so you'll be in about the middle of it. In 2015 she'll be able to contribute $23,000 to her 401k just as you're doing already. Considering that the phaseout, the 401k contribution amount, and your salaries are all inflation-adjusted, you may be just under the phaseout in 2015. Are you using a health FSA or HSA? That would knock more off your AGI and taxable income -- and off your wages for ACA tax purposes. You're not currently subject to the ACA tax on wages but the $250,000 threshold (wages, defined as earned income minus pre-tax insurance premiums and FSA contributions -- not sure about HSA), is not inflation-adjusted so you may hit it before you retire. It's only 0.9%, but it will add to your effective marginal rate.

Bob's not my name

Posts: 6469

Joined: 15 Nov 2009

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Re: Empty Nester Tax Strategyby Calm Man » Wed Nov 27, 2013 10:54 pm

[OT comments removed by admin LadyGeek]

Calm Man

Posts: 1578

Joined: 19 Sep 2012

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Re: Empty Nester Tax Strategyby SGM » Thu Nov 28, 2013 5:34 am

Maximum 401k is 22,500 for you and 17,500 for your spouse. So if you have a salary of 185,000 and taxable income of 165,000, you have investment income. At age 50 your spouse will max out at 22,500 yearly too.

I bonds will defer some income and up to 10k per ssn can be put away yearly. Muni bonds might be helpful. Both might be considered loans to the government or to state government and agencies. That is just as patriotic as paying taxes.  

I would consider some Roth conversions now or even non deductible traditional IRA contributions that might be converted or not at a later date. Saving more for retirement by paying less taxes now so that you will not be a burden on society as you become elderly is admirable behavior in my book....also very actionable.

"Let us endeavor, so to live, that when we die, even the undertaker will be sorry." Mark Twain

SGM

Posts: 719

Joined: 23 Mar 2011

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Re: Empty Nester Tax Strategyby Bob's not my name » Thu Nov 28, 2013 5:40 am

SGM wrote:you have a salary of 185,000

MAGI of $185,000, not salary. Gross income would have to be about $230,000 to produce a $185,000 MAGI.

SGM wrote:Maximum 401k is 22,500 for you

$23,000

SGM wrote:I would consider some Roth conversions now or even non deductible traditional IRA contributions that might be converted or not at a later date.

Converting pre-tax savings at 28% tax wouldn't make sense, especially if early retirement is a possibility. Why would you not convert non-deductible TIRA contributions immediately -- viz., do back door Roths?

Bob's not my name

Posts: 6469

Joined: 15 Nov 2009

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Re: Empty Nester Tax Strategyby SGM » Thu Nov 28, 2013 1:01 pm

Oops yes it changed to 23k. I knew that and already did that for myself.

Thanks I didn't notice the AGI.

I think there are reasons to not convert immediately. Say your traditional IRA contribution goes down in value. That might be a better time to convert. Recharacterization is an alternative, but I tend not to use it. Say income goes down for some reason. That may be a better time to convert. Say you have filled your 8606 and you have to pay taxes on some percent of the conversion. The opportunity may come up to put some tIRA into a 401k and change the basis to your advantage. Most of the time you would want to do the back door immediately. Maybe I am misunderstanding the back door, but don't you have to pay some taxes on it if you have other tIRAs?

"Let us endeavor, so to live, that when we die, even the undertaker will be sorry." Mark Twain

Using Bitcoin With QuickBooks- Part 2: Revaluing Your Wallet and Converting to Cash & Part 3: Paying Vendors

Earlier we introduced you to  Using Bitcoing with Quickbooks Part 1 Here : Recording Sales & Accepting Payments .  Click that link to read Part 1, following are Part 2 & 3 in the series.  Jason M. Tyra writes: Using Bitcoin With QuickBooks- Part 2: Revaluing Your Wallet and Converting to Cash:   This is the second part of a multi-part series that will explain how to integrate Bitcoin as a payment method using your existing accounting software package.  Why would you need to do this?  Because generally accepted accounting principles and regulatory authorities require reporting in US Dollars and other conventional currencies.  This procedure will allow you to properly account for the full extent of your Bitcoin sales and integrate those sales into your business records as if they had originally be made in your home currency.

You will need to record changes in the value of your Bitcoin wallet from time to time to account for variations in the exchange rate.  You will use a journal entry for this.

1. Select “Make General Journal Entries” from the “Company” menu.  General journal entries must have two equal parts- a debit and a credit.

1. From the account menu on the general journal entry screen, you will select two accounts- the Bitcoin Wallet other asset account and the Bitcoin Exchange Gains income account that you created earlier.

1. To increase the balance, post a debit for the amount of the increase to your asset account and an equivalent credit to your income account.  To decrease the balance, post the decrease amount to your income account as a debit and an equivalent credit to your asset account.  For example, the journal entry for a $100 change in the value of your Bitcoin holdings will look like this:

For Increase

Account                                               Debit                                     Credit

Bitcoin Wallet                                    $100

Bitcoin Exchange Gains                                                                  $100

For Decrease

Account                                               Debit                                     Credit

Bitcoin Exchange Gains                  $100

Bitcoin Wallet                                                                                    $100

Eventually, you will want to convert your holdings to dollars or you may want to convert some of your dollars to Bitcoins.  You can use another journal entry for this.  You will need to account for any fees that you pay for the exchange.  This example assumes a $1 transaction fee, accounted for using a service charge general ledger account, but you can create a new general ledger account for this if you want.  The journal entry will look like this:

Conversion to dollars

Account                                               Debit                                     Credit

Cash (or Bank Account)                 $100

Bank Service Charges                     $     1

Bitcoin Wallet                                                                                    $101

Conversion from dollars

Account                                               Debit                                     Credit

Bitcoin Wallet                                    $100

Bank Service Charges                     $     1

Cash (or Bank Account)                                                                 $101

 Bitcoin exchange gains are taxable as income for business taxpayers and individuals (more on this in a later post).  This procedure will post all of your gains and losses to one account which will allow you to declare your gains or deduct your losses at the end of your fiscal year.  Note that for tax purposes you will not need to declare income and cannot claim any loss until you convert Bitcoin to dollars (“recognize when realized”).  If you are a full or part time Bitcoin trader, you may want to use an equity account to track your unrealized gains or losses as you revalue your wallet over time.  As always, this is one of several ways to account for this kind of transaction in QuickBooks.  Other procedures may work equally well.

The next part of the series will be “Paying Vendors.”  Feel free to contact me with feedback, questions, or requests.

Jason M Tyra also writes: Using BitCoin with Quickbooks Part 3:  Paying Vendors: This is the third part of a multi-part series that will explain how to integrate Bitcoin as a payment method using your existing accounting software package. This procedure will allow you to properly account your Bitcoin expenses and integrate those expenses into your business records as if they had originally been made in your home currency.

QuickBooks’ workflow model allows you to track accounts payable by vendor, reminds you when your bills are due and provides an easy to understand way to enter payments. If you are fortunate enough to identify a vendor in your supply chain that accepts Bitcoin, then you may choose to do this instead of converting to dollars. However, you should ensure that your vendor dynamically updates the Bitcoin exchange rate so that prices remain relatively stable in your functional currency.

1. Enter a bill into Quickbooks using the “Enter Bills” function on the home screen. Update the vendor name, address, and payment terms and assign an expense account to the expenditure. This will most likely be a cost of goods sold (“COGS”) account if you are purchasing items for resale. Be sure to enter the amount of the bill in your functional currency; QuickBooks will not allow you to enter bills in other currencies unless the multi-currency function discussed in Part 1 of this series has been activated. Also, don’t forget to enter the due date.

2. At this point, your only options are checking account or credit card account to pay bills. QuickBooks will not allow you to pay using the Bitcoin account that you created previously. When the bill comes due or when you decide to pay, you will need to work around this by creating a general journal entry.

3. Select “Make General Journal Entries” from the “Company” menu. This will open the Journal Entry window. Your entry should look like this:

Account                           Debit                                     Credit                       Name_______

Accounts Payable       Amount to Pay                                                      Vendor to Pay

Bitcoin Wallet                                                                Amount to Pay

This entry will post a credit balance to the sub-journal in your accounts receivable ledger for the vendor that you want to pay. Note that this will not work if the vendor is not set up in your QuickBooks file or if you forget to select the correct vendor from the name box.

4. Select the “Pay Bills” option from the home screen. Select the bill that you want to pay by checking the box next to it. Near the bottom of the screen, you should see the amount you just posted for “Total Credits Available.”

5. Click the “Set Credits” button, then check the box next to the credit amount to apply the credit as a payment and click “Done.” Two things should happen – the credit amount you entered should zero out and the bill should now show as paid.

QuickBooks automatically numbers journal entries in the order entered, not by date, so be aware that your entries may appear out of order if you post-date them to reflect a future payment. Also, you may need to revalue your wallet before or after you use it to pay bills to ensure that you don’t end up with an incorrect ending balance for that account. See Part 2 for instructions on how to do this.

As always, this is one of several ways to account for this kind of transaction in QuickBooks. Other procedures may work equally well. Feel free to contact me with feedback, questions, or requests.