Saturday, February 1, 2014

Gem Accounts Review – Serious Business Accounting Tools for medium and large-size businesses.

Stephanie Miles for GetApp writes: Gem Accounts Review –  Managing financial accounts for a large company is serious business, but that doesn’t mean accounting professionals shouldn’t have a little fun in the process. Gem Accounts is a full-featured cloud accounting system that walks the fine line between light and simple, and heavy and robust. Although the system is designed with medium and large-size businesses in mind, small business owners with growing companies will feel right at home using Gem Accounts’ advanced accounting tools.
In this Gem Accounts review, I will take a close look at which features are available through the cloud accounting system and explain which specific tools are most beneficial for large and medium-size businesses. I’ll also explain the overall the benefits—along with any drawbacks—of double entry online cloud accounting software.

Gem Accounts Review - About the Product

When it comes to accounting, small businesses seem to be having all the fun. Most cloud-based accounting systems are targeted toward the needs of small and micro-size businesses, with transaction volume limitations and audit controls that make it impossible for larger businesses to use the same platforms. As a result, large companies are typically exiled from cloud accounting systems and forced to use traditional accounting methods instead. These methods are expensive, time consuming, and outdated, which puts these companies at a real disadvantage.
Gem Accounts has found a solution for medium and large-size businesses, along with growing small businesses. The cloud accounting system provides all the features that large businesses need and expect from accounting software, with unlimited transactions, unlimited users, multi-currency control, audit controls, inventory management tools, consolidated reporting, full API, and an integrated payroll system.

Main Functionality of Gem Accounts

Gem Accounts doesn’t place limitations on its users, which means that large businesses have the ability to add as many users and process as many transactions as they wish. Regardless of volume, Gem Accounts performs at lightning speed. Inventory management tools, along with serialized stock, are included with all accounts. Companies can also use Gem Accounts to take care of payroll requirements, with flexible entitlements, taxes, and deductions, along with audit controls and comprehensive reporting. The system’s freight module allows users to manage, track, and dispatch freight for purchases and customer transactions. Users can also switch between currencies and languages, making Gem Accounts a solution for any business with international clients.

Benefits of Using Gem Accounts

Companies that are concerned about security, performance, and portability would be smart to think about using a cloud accounting system like Gem Accounts. The platform itself is protected using ACID compliant database technology and 256bit SSL encryption. Backups are performed 24/7 at Gem Accounts’ secure facilities, making it easy for users to rest assured that their important financial information is safe.
Gem Accounts’ performance is not altered by the volume of a user’s transactions. It’s actually quite the opposite. Gem Accounts scales for companies of all sizes, allowing businesses to maximize performance. Gem Accounts even functions when its users are outside the office. Because the cloud accounting software is tablet ready, users are able to stay updated on their accounting performance from their mobile devices.

The Basics: What Does the Interface Look Like?

See an overview of your company’s accounts. From one screen, you can see a complete financial summary, recent business activity, current balances, and current operations.
Accounts overview
Accounts overview
List information about each of your customers on the Customers page. In addition to the customer’s name, you can include a reference number, contact information, phone number, and email address. Gem Accounts also provides you with ample space to include all relevant account and tax information.
Customer page
Customer page
Click on the Receivable tab to generate a custom quote for customers. Gem Accounts will auto-populate quotes with the customer information you’ve already uploaded. Once you’re finished, you have the option to save your quote, preview it, or ship it.
Receivable tab
Receivable tab
Manage inventory through Gem Accounts, as well. List the number, description, warehouse, serial number, make, model, tool number, and barcode for each part you’d like to add to your inventory list.
Inventory tab
Inventory tab

Support Information

Gem Accounts users are encouraged to visit the Knowledgebase, powered by Kayako Help Desk Software, for the answers to most basic questions. Users can search for articles by keyword or browse by topic. Gem Accounts also offers an RSS feed that users can subscribe to if they wish to receive automatic updates when new articles are added to the Knowledgebase.

Pricing Information

All new users are encouraged to try Gem Accounts for free for 30 days before activating a SME or MME plan. SME plans cost $99 per month, and MME plans cost $199 per month. For those prices, users get unlimited file storage, employees, and users. Gem Accounts also runs automatic software updates and backups on a regular basis.

Gem Accounts Review - The Bottom Line

Gem Accounts differentiates itself from cloud accounting systems already on the market by catering almost exclusively to businesses in the medium and large-size category. Businesses that want the freedom that cloud accounting provides, but without the limitations and volume restrictions generally put in place by applications developed for smaller businesses, are finding that Gem Accounts offers the perfect middle-of-the-road solution. Gem Accounts provides the exact functionality that is missing from most online accounting platforms—including unlimited transaction volumes and account auditing features. Despite its robust nature, Gem Accounts never feels bogged down and it never runs slowly. It’s easy enough for even novice accounting professionals to set up and use.  
Ratings: ease of use 5/5, features 4/5, value 4/5
Stephanie Miles
By 
Overall rating:  (4.5/5)



Pros: Gem offers tools designed specifically for large-size businesses.
Cons: SME accounts only include 1,500 transactions (AR + AP) per month.
Posted on 8:05 AM | Categories:

Tax Efficient Asset Management: Evidence from Equity Mutual Funds / Surprisingly, mutual funds that generate lower taxable distributions do not underperform other funds before taxes, indicating that the constraints imposed by tax efficient asset management do in practice not have significant performance consequences.

Research & Study Paper 

Tax Efficient Asset Management: Evidence from Equity Mutual Funds

Clemens Sialm : University of Texas at Austin - McCombs School of Business; Stanford University; National Bureau of Economic Research (NBER)

Hanjiang Zhang : 

Nanyang Technological University - Nanyang Business School

December 16, 2013

Abstract:   Investment taxes have a substantial impact on the performance of taxable mutual fund investors. Mutual funds can reduce the tax burdens of their shareholders by avoiding securities that are heavily taxed and by avoiding realizing capital gains that trigger higher tax burdens to the fund’s investors. Such tax avoidance strategies constrain the investment opportunities of the mutual funds and might reduce the before-tax performance of the funds. 

Our paper empirically investigates the costs and benefits of tax efficient asset management based on U.S. equity mutual funds from 1990-2012. We find that mutual funds that follow tax-efficient asset management strategies generate superior after-tax returns. Surprisingly, mutual funds that generate lower taxable distributions do not underperform other funds before taxes, indicating that the constraints imposed by tax efficient asset management do in practice not have significant performance consequences.


 Click Here To Read or Download (Key Points Highlighted Below)

We came across this study from the following discussion @ Bogleheads:


"Tax Efficient Asset Management"

Postby Taylor Larimore » Fri Jan 31, 2014 2:00 pm
Bogleheads:

As a former IRS Revenue Officer, I am acutely aware of the impact that taxes have on our investments, and the fact that knowledgeable investors can do something about it.

Below are excerpts from a recent study:

Investment taxes have a substantial impact on the performance of taxable mutual fund investors.

The average tax burden is similar in magnitude to the average expense ratio.

A $10,000 investment in 1990 in the most tax-efficient domestic equity mutual fund over our sample period would have accumulated to $91,200 in 2012 after taking into account taxes on dividend and capital gains distributions. On the other hand, an equal investment in the least tax-efficient domestic equity fund would have accumulated to only $40,800 after taxes, although both funds exhibited very similar performance before taxes.

Unrealized capital gains remain untaxed until the securities are liquidated and can completely be avoided due to the “step-up of the cost basis at death”

Tax burdens on mutual funds tend to be higher for funds that focus on small-capitalization and
value portfolios, as these investment styles trigger relatively high capital gains distributions. Tax burdens also increase with the turnover, the age, and the capital gains overhang of the fund. Finally, the tax burden also increases as funds experience outflows or volatile flows.

Passively-managed funds tend to exhibit lower tax burdens than actively-managed funds, despite their higher dividend yields.

Many mutual funds attempt to create value for their investors through stock selection or
market timing strategies. However, such active strategies often cause substantial expenses and
trading costs that make it difficult for actively managed mutual funds to persistently generate superior performance for their investors.

We selected two growth funds with extreme average tax burdens over the whole sample period. The tax-efficient fund has an average tax burden of 0.44% per year, whereas the tax-inefficient fund has an average tax burden of 3.77% per year.

Tax Efficient Asset Management

Best wishes.
Taylor

Re: "Tax Efficient Asset Management"

Postby southport » Fri Jan 31, 2014 2:23 pm
My taxable account consists of Vanguard Total Stock Market, Vanguard Total International, and Prime Money Market. Keep it simple, with international able to benefit from the foreign tax credit. 

Everything else, including REITS and separate Index 500 and Extended Market funds (so I can re-allocate large and small), as well as a few actively-managed funds (including long-held Health Care, Cap Opp, and Selected Value) are in tax-sheltered accounts. Re-balancing takes place in the tax-sheltered space except when I add more to international. 

Every December I enjoy seeing all the capital gains generated on which I don't pay taxes. 

Thank you Taylor and Bogleheads.




Posted on 8:05 AM | Categories:

Don't Make These Tax Mistakes / Fifteen common tax-filing errors that can cost you dearly.

Laura Saunders for the Wall St Journal writes: How should you feel about this year's taxes? It's complicated.


The Internal Revenue Service opened its filing season Friday, and by midnight on April 15 the agency expects to hear from individual taxpayers filing nearly 150 million returns for 2013.
Thanks to the growing complexity of the tax code, that is 150 million opportunities for U.S. taxpayers to shortchange either themselves or Uncle Sam by making multiple errors.
For 2013, taxpayers will have to deal with a new tax on investment income, a new limit on deductions and a new phaseout of exemptions, among other provisions.
"Tax complexity confounds taxpayers and even preparers, and it's a major source of errors," says Nina Olson, the national taxpayer advocate, whose role is to be the taxpayers' voice before both Congress and the IRS. "Every year there's talk of simplifying the code, yet every year complexity seems to increase."
Consider: Last year's "fiscal cliff" revisions brought the total number of tax changes since 2001 to 4,838, or more than one a day, says Mark Luscombe, principal analyst at tax publisher CCH, a division of Wolters KluwerWTKWY -1.04%
All that complexity exacts a steep price. According to Ms. Olson's latest data, individuals and businesses spend more than six billion hours a year complying with income-tax filing requirements. In 2010 that came to about $168 billion, or 15% of total revenue collected.
For individuals, filing season often means choosing among options that are costly in time, money or both.
For 2013, taxpayers will have to deal with a new tax on investment income, a new limit on deductions and a new phaseout of exemptions, among other provisions. 
More than 50 million taxpayers prepare their own returns and run the risk of paying the IRS too much or too little. H&R Block HRB +0.93% is basing its tax-season marketing blitz this year on research it says shows that one in five self-preparers forgo an average of $460 each due to such mistakes.
Errors of underpayment bring woes as well. Even innocent ones, such as a transposed number, can cause months or even years of wrangling with computer-generated letters imposing penalties or threatening liens or other drastic actions.
"There's no way to email the IRS, and often you can't get them on the phone, either," says Doug Stives, a professor of accounting at Monmouth University in New Jersey.
According to Ms. Olson, taxpayers turn to paid preparers for help with nearly 60% of returns. But that is expensive, and professionals can make mistakes as well—especially if clients fail to share important information.
"Preparers aren't clairvoyant, and they don't know what you don't tell them," says Laura Peebles, a tax specialist at Deloitte Tax in Washington.
No matter how you tackle your taxes, here are errors to watch out for.
Claiming the wrong number of dependents. Each dependent exemption is worth $3,900 for 2013, although some higher earners will lose part or all of these breaks this year, due to the alternative minimum tax or a new "phaseout" provision that limits the exemption.
In general, someone is a dependent if you provide more than half his or her support—even if that person doesn't live with you or isn't a relative. IRS Publication 17 (available onIRS.gov) has 11 pages of details, including a 26-line work sheet.
Experts say that taxpayers often make errors with relatives who are undergoing life transitions. If your child finished college and got a job last year, for example, he still may be your dependent if you paid tuition and other expenses totaling more than half his support.

By the Numbers

  • 12 Million: Projected number of automatic-extension requests this year
  • 83%: Percentage of individual returns that were filed electronically in 2013
  • $2,755: Average refund in 2013
  • 74%: Percentage of individual returns requesting refunds in 2013
There is little chance of double-dipping with this break, however: Most returns are filed electronically now, and the IRS's computers automatically reject any that claim a dependent already claimed on another return.
• Failing to itemize deductions. Don't be too quick to take the standard deduction of $12,200 for joint filers ($6,100 for singles) and forgo itemizing your deductions on Schedule A—even if you don't have a mortgage with interest to deduct. You still could trim your tax bill.
Jackie Perlman, a specialist at H&R Block's HRB +0.93% Tax Institute, says failing to itemize is a frequent mistake. "State income taxes, plus personal property tax on a car and a donation or two, can make itemizing worthwhile," she says. She adds that for people in states without an income tax, the deduction for state sales taxes still applied in 2013—and that could be another reason to itemize.
• Overstating charitable gifts. The IRS provides an overview of what you can deduct, and to what types of groups, in Section 24 of Publication 17. Experts say mistakes involving charitable donations are extremely common.
In general, donors have to subtract the value of any goods or services they receive from the deduction. So if you pay $100 to go a fundraising dinner, and the dinner was worth $40, you can deduct only $60.
Taxpayers must have a letter from the charity before filing a tax return for gifts of $250 or more. It must say whether anything of value was received—and if so, how much.
"If you have to, follow up with the charity to get a proper letter," says Annette Nellen, a professor of accounting at San Jose State University in California.
Gifts of property of more than $5,000 (other than traded securities) also require you to have a qualified appraisal before filing the return. In 2012, one taxpayer lost an $18.5 million charitable deduction in U.S. Tax Court because he didn't have the proper appraisal.
• Forgetting to claim charitable gifts made through payroll deductions or with IRA assets. The amount of any payroll deduction for gifts to charity won't show up on your annual W-2 income report, Deloitte's Ms. Peebles says.
In addition, IRA custodians often don't remind account owners 70½ and older of donations they have made with IRA assets up to $100,000, a tax-favored move allowed by the law. Although the charity itself should send a letter, this donation still can be easy to miss.
• Reporting incorrect net-investment-income tax. The new 3.8% tax on net investment income took effect in 2013 for joint filers with more than $250,000 of adjusted gross income ($200,000 for singles). Congress passed it in 2010 to help fund the health-care overhaul.
The tax applies to net income from rents, royalties, capital gains, interest and dividends, among other things. The IRS issued regulations for the tax in late 2013, but wrinkles remain as software companies update their systems.
If you fail to pay the tax, you may be subject to penalties and interest. Many people with complex returns—especially if they have rental income—will have yet another reason to request an automatic six-month extension to file (but not pay) taxes, says Mr. Stives, the accounting professor.
• Overlooking medical expenses. Many people can't deduct medical expenses because of the high hurdles: either 7.5% or 10% of adjusted gross income, depending on the taxpayer's age and whether he owes alternate minimum tax.
But some who qualify for a deduction—many of them elderly—don't take full advantage of it, says Donald Zidik, a tax specialist at Marcum LLP in Needham, Mass.
Deductible costs include not only the uncovered portions of drugs and doctor's bills but also Medicare premiums and some nursing-home or assisted-living expenses. For a full list, see IRS Publication 502.
Mr. Zidik urges taxpayers who can claim a dependent (such as a parent) to remember that they can often deduct eligible medical expenses they pay for that person.
• Double-dipping on education or dependent-care benefits. Congress may overhaul the tax code's crazy quilt of education benefits this year. But for now, taxpayers will have to navigate complex rules designed to prevent claiming two tax breaks for the same expenses.
In general, the American Opportunity Credit provides the most benefit for taxpayers who qualify, says Melissa Labant, a tax specialist at the American Institute of CPAs. (For more details, see IRS Publication 17, section 35.)
Similarly, taxpayers aren't allowed to claim a full dependent-care tax credit if they participated in a dependent-care flexible spending account at work in 2013. (See IRS Publication 17, section 32.)
• Deducting points on a home refinancing. Because the fees known as "points" are fully deductible for the first mortgage taken out on your primary residence, Ms. Labant says, many people wrongly assume that they can take a full deduction on points paid in a refinancing. They can't.
Instead, the points can only be deducted in equal annual portions over the life of the loan.
• Not paying the penalty on an early retirement-plan withdrawal. Most withdrawals from tax-sheltered 401(k) plans or individual retirement accounts before the taxpayer is 59½ incur a 10% penalty and are subject to income taxes. For exceptions, see section 10 of IRS Publication 17.
Note: These taxes and penalties don't apply to qualified account rollovers.
• Reporting an erroneous cost basis. A taxpayer determines the taxable gain of an asset he has sold by subtracting the asset's cost (plus adjustments)—the so-called cost basis—from the selling price. So if an investor bought Acme stock at $10 a share and sells at $25, then the cost basis is $10 and the gain is $15.
Experts say cost basis is one of the most error-prone areas of the tax return. For example, taxpayers holding mutual funds in taxable accounts often forget that reinvestments of fund dividends or capital gains raise their cost basis—and lower their taxes. The same holds true for dividend reinvestment plans.
Other cost-basis problems arise when people who sell inherited stock or other investment property don't know its value on the original owner's date of death.
Congress has passed rules requiring brokers, fund firms and others to track basis information for customers, but the rules still are phasing in.
The upshot: Strive to keep good records. Taxpayers selling long-held assets should leave time to gather information. Some companies and brokers can help investors with records, and there are firms that will provide information for a fee.
Ed Mendlowitz, a tax specialist at WithumSmith + Brown in New Brunswick, N.J., says he often allows clients to estimate the cost basis if the total proceeds from a sale come to 10% or less of their overall income. "If it's more than that, you need to do the research," he says.
• Not checking income reports for mistakes. To prevent cheating, the IRS now receives a blizzard of reports—such as 1099s—for payments of interest, dividends, capital gains, trust distributions and other income made by third-party payers such as brokerages and banks. It matches these by computer with the information on individual returns, looking for discrepancies.
Tax preparers urge clients to check these forms for mistakes before filing. If there are errors, one strategy is to hold off filing until you receive a corrected 1099.
Another strategy is to enter the reported amount on the return, noting that it is incorrect—and then enter an adjustment so that only the correct one is included in total income.
• Overpaying tax on a sale of employer stock. When an employee sells stock options or restricted stock, typically the sale is reported on both the worker's W-2 wage report and a broker's report to the IRS. This can result in your double-counting the taxable income, Mr. Mendlowitz says.
• Mishandling the previous year's state tax refund. Even tax refunds can be complicated. Filers who deducted state taxes and received a refund the previous year need to include it as income this year on their federal return.
Taxpayers who didn't get a benefit from their deduction for state taxes the previous year because they owed alternative minimum tax won't owe tax on some or all of the refund.
• Not disclosing a foreign account. U.S. officials have been conducting an intense campaign against undeclared offshore accounts ever since Swiss bank UBS admitted in 2009 that it helped U.S. taxpayers hide money abroad.
The penalties for not disclosing a foreign account that you own, control or have signature authority over can be severe—up to half the account, even if little or no tax was owed on it.
There is a box to check on Schedule B disclosing such accounts, and information also may be required on Form 8938. Taxpayers who meet the threshold also must report accounts on a separate Treasury form due June 30.
• Not signing the return. As the number of e-filed returns with electronic signatures has grown, this blooper has decreased. But the IRS will always pick it up, a spokesman says.
If you don't sign the return, the agency will notify you and withhold any refund until it hears from you. But if you owe taxes, it will cash your check while it waits.
Posted on 8:03 AM | Categories:

Tax strategies for retirees — for 2013 and 2014

Robert Powell for MarketWatch writes: The 1099 and W-2 statements are starting to arrive in your mailbox. And that can mean only one thing. It’s time to file your 2013 taxes. It’s also time to start thinking about your 2014 taxes.
To help ease the pain, we asked experts what you should consider as you start to empty out your shoebox or enter numbers into spreadsheets. Here’s what they had to say.
Earned income before full retirement age
According to Mark Luscombe, a principal analyst with CCH Tax & Accounting North America, there’s no difference, from a tax perspective, whether the Social Security payments are received before the full retirement age or after.
The full retirement age, he said, affects the amount of income that can be earned without reducing Social Security benefits. “Benefits can be reduced because of income before full retirement age but not after,” said Luscombe.
How does that work? Well, according to Jerry Love, a CPA in Abilene, Texas, if a person is under the full retirement age, then their primary concern is did they have “too much” earned income.
In 2013, you were allowed to have up to $15,120 of earned income with no reduction to your Social Security retirement benefit. However, if your earned income exceeds $15,120, your retirement benefits were reduced $1 for every $2 over $15,120, Love said.
Here’s Love’s example: If a person was getting $800 a month or $9,600 for the year in Social Security benefits and they work and earn $24,720 (which is $9,600 over the $15,120 limit) during the year, their Social Security benefits would be reduced by $4,800 ($1 for every $2 they earned over the limit), but they would still receive $4,800 of their $9,600 in benefits for the year. ($9,600 - $4,800 = $4,800)
“If the person worked for someone else, there is not much they can do,” said Love. “If, however, the person is self-employed then they should consider maximizing their deductions such as first-year depreciation on assets purchased.” Read about Section 179 property in Form 4562, Depreciation and Amortization .
Of note, Love said, there is a higher limit for the earned income for the year a person reaches the FRA. For 2013 it was $40,080 and the reduction was $1 for every $3 over the earned income limit.
Love said it’s important to note that this is earned income, “not total income that might include retirement income or interest and dividends.”
Earned income after full retirement age
If you over the FRA, then you don’t have a limit on your earned income, said Love. However, a portion of your Social Security benefits may be subject to tax if your provisional income is high enough after full retirement age, said Luscombe. Provisional income includes adjusted gross income plus one-half of Social Security benefits plus tax-exempt income.
So, depending of the level of provisional income, either 0%, 50% or 85% of Social Security benefits may be subject to income tax.
So what’s the tax trap?
“Recent retirees receiving Social Security benefits for the first time may find that they have to worry about estimated tax payments during the year or face an underpayment of estimated tax penalty on April 15,” he said. “This can happen because not only are Social Security benefits being received for the first time but also tax-exempt income that had not been subject to tax before are considered in calculating the portion of Social Security benefits subject to tax.”
Another tax item that trips up retirees has to do with required minimum distributions, or RMDs, which start at age 70½. RMDs, said Luscombe, apply to 401(k) plans and traditional IRAs but not to Roth IRAs, which are generally not subject to required minimum distributions nor subject to tax on distribution. RMDs, Luscombe noted, are based on one of the IRS’ life expectancy tables. And distributions from IRAs and 401(k)s are subject to tax at ordinary income-tax rates.
Tax trimming for 2013?
Retirees working on their 2013 tax bill need to consider the following too.
Check your itemized deductions. For most individuals. Love said, the primary deductions they have are itemized deductions which include medical expenses, mortgage interest, taxes paid (primarily real estate taxes) plus state income tax or state sales tax, charitable contributions and some miscellaneous deductions which would include investment fees.
According to Luscombe, the medical expense deduction remained at expenses in excess of 7.5% of adjusted gross income in 2013 for taxpayers age 65 or older. But for taxpayers under age 65 the threshold went up to 10%. Of note: It is scheduled to go up to 10% for taxpayers age 65 or older in 2017.
Beware the new taxes that went into effect in 2013. According to Luscombe, these include a new top ordinary income-tax rate of 39.6%, a new top capital gain rate of 20% (both apply to taxable income in excess of $400,000 for single filers and $450,000 for joint filers), a return of the phase out of itemized deductions and exemptions for taxpayers with adjusted gross incomes in excess of $250,000 for single filers and $300,000 for joint filers, and a new 3.8% tax on net investment income applying to the lesser of net investment income or adjusted gross income in excess of $200,000 for single filers and $250,000 for joint filers. “If not anticipated, all of these could result in higher taxes for 2013 and a penalty for failure to pay sufficient estimated taxes during the course of 2013,” he said.
In 2013, Luscombe said IRA account holders had the ability to contribute their required minimum distributions directly to charity and avoid counting the RMD as income. “This might help keep adjusted gross income low enough to qualify for other tax benefits that phase out as income goes up,” he said. (Unfortunately, this provision expired at the end of 2013.)
Tax planning for 2014
So, what sort of tax planning — be it on the income or expense side of the ledger — might retirees do now in anticipation of filing their 2014 taxes next year?
Well, according to Luscombe, the higher taxes in 2013 continue into 2014. “If taxpayers underpaid their estimated taxes in 2013, they can plan better for 2014 based on their 2013 experience,” he said.
What’s more, there is now a phaseout of itemized deductions and personal exemptions when your income is greater than $305,050 if married filing joint, or $254,200 if single, Love said.
And with the medical-expense threshold going up to 10% in 2017, Luscombe said, “retirees may want to get as many elective medical procedures as possible done in a year before 2017 to maximize the medical expense deduction if the taxpayer itemizes deductions.” Read Changes to Itemized Deduction for 2013 Medical Expenses .
If you have a home office, Love said, you can take a standard deduction of $5 per square foot used exclusively for business up to a maximum of $1,500 (300 square feet at $5). To take this deduction, however, “you must meet the criteria of having a home office, primarily those who are self-employed,” said Love.
And speaking of the self-employed, Love said one of the biggest changes is the drop in the amount you can claim the Section 179 depreciation (first-year depreciation) which dropped from $500,000 down to $25,000.
Teachers, meanwhile, should note that the $250 deduction that they have been allowed in the past was not extended to 2014, Love said.
Another item that expired and has not yet been extended, Love said, is the deduction for sales tax for states that do not have an income tax.
As noted, the ability to distribute required minimum distributions directly to charity expired at the end of 2013 so, Luscombe said, retirees should not assume that it will be available for 2014. “It may get renewed retroactively toward the end of the year or it may be eliminated as part of tax reform,” he said.
And finally, if you’re subject to the net investment income tax in 2013, Luscombe said there may be ways to reduce the portion of investment income subject to tax by shifting some investments to tax-exempt investments.
“Doing a conversion from a traditional IRA to a Roth IRA could also help in future years but would add to tax in the year of conversion,” he noted. Read New CCH Tax Briefing Examines Final Net Investment Income, Additional Medicare Tax Regulations .
Happy filing.
Posted on 8:03 AM | Categories:

With $550K cache, accounting spinoff Sqrl scampers to market as electronic hunter-gatherer of financial documents from clients

Carrie Ghose for bizjournals.com writes: Sqrl, a software spinoff from a Columbus online accounting firm, has raised $550,000 and launched this week with some 200 beta customers who get the first version for free.


The round was led with $300,000 from Cincinnati-based CincyTech after the Sqrl team completed the summer round of the city’s Brandery business accelerator. Other investors include Hyde Park Venture Partners and Vine Street Ventures.
Sqrl, which started life last year as Accrew LLC, was founded by Ryan WatsonRyan Baker and Craig Baldwin.
The product does a seemingly simple task – gather information and financial documents from clients – over which accountants have been tearing their hair out.
John Venturella, chairman of tax services at Dayton-based Clark Schaefer Hackett & Co., explained via email: “In accounting firms, influencing the flow of client information – how and when it comes in – is called managing ‘the front door.’ And the front door is paramount to efficiency. The traditional way for an accounting professional to respond to trickling-in information is by manually tracking each item’s arrival, then repeatedly following up with the client to gauge how and when the rest will arrive. Minding the front door is time-consuming and inefficient.”
Clark Schaefer hasn’t seen another product that tries to solve the problem all at once, he said, so it’s among the testers.
Here’s how the product was born:
The three founders all left corporate accounting jobs in 2012 to form Upsourced Accounting, targeting millenials who are starting businesses and are comfortable working with technology and a virtual presence. The firm grew to 50 clients within 10 months.
“As we were having all that growth, we weren’t as profitable as we should have been,” Watson said.
They were spending twice as much time on unbillable work – gathering basic client information and documents – as they were accounting. Finding no available solution off the shelf or in other accounting firms, they built a product and spun off Accrew a year ago.
Going through the four-month Brandery program completely changed the product and the brand. Where Accrew was a platform both accountant and client had to log into, Sqrl just sends clients emails and automates reminders and tracking receipt of info.
The brand conveys an electronic hunter-gatherer.
“We really redefined our value proposition,” Watson said.
Baker still runs Upsourced Accounting, while Watson and Baldwin focus more on Sqrl. To comply with Brandery requirements, they incorporated the spinoff in Cincinnati and Baldwin moved there, but Watson and the guts of the business remain in Upsourced’s Short North office.
For now, clients are getting the product for free. The company will roll out premium subscription features in coming months. The investment gives it 18 months of runway while the company markets itself and adds clients. After that, they founders may seek a Series A funding round.
Watson projects up to $50,000 in monthly revenue by year’s end.
Posted on 8:02 AM | Categories:

Enhanced Accounting Services App Benefits Bookkeepers And Clients / Built for businesses, bookkeepers and accountants to collaborate

 Integration with DropBox adds an important new element to the document sharing workflow process

It’s an ongoing challenge for many small businesses owners: finding time to sit down with their off-site bookkeeper to go through queries on financial documents. Now a Canadian company has come up with an innovative solution.


  LedgerDocs : www.ledgerdocs.com/ is an online document management application and collaboration tool that allows businesses to scan and upload financial documents that can be accessed off-site by their bookkeepers who can then respond with questions and comments using the same platform.


 The service is now integrated with DropBox :  , a leading provider of cloud storage and document sharing for personal


and business users. Its wide range of functions simplifies the process of uploading and storing documents. Integrating LedgerDocs and DropBox provides a streamlined process for users to upload, manage, and share documents.

 Typically, off-site bookkeepers spend a lot of their time trying to communicate with clients by phone, fax or e-mail, or they have to travel to clients’ offices where they sift through piles of paper sorting out receipts, invoices and other financial records they require to keep the company’s books balanced and up to date.


 If a client is not available at the time to answer questions about the documents, the bookkeeper usually leaves notes and schedules a return visit or a follow-up call to get the answers. LedgerDocs puts the whole process online. In effect, it becomes a virtual shoebox coupled to functions that allow storage and sharing of documents and information and collaboration between bookkeepers and clients.


 For example, clients scan and upload the documents to the LedgerDocs platform, and their bookkeepers then sort, search and file them quickly and efficiently and use the platform to send notes back clients requesting more information if necessary. The service is available 24/7 which adds to its convenience.


 Faxing, phone calls, e-mails and face-to-face meetings to gather and clarify information can become the exception rather than the rule for bookkeepers using the new technology, says LedgerDocs founder Wayne Zielke.


 “LedgerDocs is a pure document management system and not tied to any specific accounting software platform, so it can be used anywhere in the English-speaking world – and translations of the app into other languages is on the cards,” says Mr. Zielke.


 And at a cost of only about $10 a month per client the return on investment when measured against the time saved is well worth it, he says.


 “We wanted to develop an application that would lower the cost of business for bookkeepers by reducing travel time to clients’ offices while also enhancing the level of service they were providing,” says Mr. Zielke. “LedgerDocs does that, and the time it saves bookkeepers allows them to expand their business by taking on more clients.”


 For clients, the benefit of LedgerDocs is their ability to deal with questions and requests for more information when it suits them, which is often after business hours, and then respond via LedgerDocs.


 Mr. Zielke says LedgerDocs is one of the most advanced applications currently available in its field and is in line with global trends toward the use of digital technology in accounting services.
 For example, he says a recent white paper 
:www.aicpa.org/interestareas/privatecompaniespracticesection/prac .. published by the American Institute of Chartered Public Accountants : www.aicpa.org/Pages/default.aspx based on research by Dr. Geoffrey Moore : www.geoffreyamoore.com/ , one of the world’s leading business strategists, pointed to three fundamental trends that are changing the future of client accounting services as a result of the impact that computing and networking is having on human culture globally.
 The three trends are:

The migration of text documents from paper to digital formats. A migration from business affairs being conducted in person and at a specific location to being conducted online from whatever location is most convenient.


A transition in business organization from large integrated corporations that staff up internally to meet all their requirements to a hybrid global model in which core functions are still done internally but context functions are outsourced to specialist providers.

 “LedgerDocs is perfectly aligned with these trends,” says Mr. Zielke. “We are meeting the needs of bookkeepers and their clients as they move into a digital age that will transform the way we do business.”


 For more information about LedgerDocs or to sign up for a free trial visit www.ledgerdocs.com :www.ledgerdocs.com/ 

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