Find Success in the Cloud with Xero Accounting Software

Bruce Phillips  for The Sleeter Group writes: Have you been considering transitioning to the cloud with Xero accounting software? I know many of you are. The interest keeps growing and the inquiries keep coming. I’ve personally spoken with many of you over the last 90 days. These are exciting times and we’re all on the front line.

My Journey to Xero Accounting Software

My story is that we were a traditional CPA firm for over 20 years. I knew things needed to change. That was especially true around 2008 when the economy and real estate market crashed. We lost a few significant clients through no fault of our own. It seemed to be as good a time as any to look at fresh ideas and new ways of doing things. We had the time and the need. I’d been toying with the idea of expanding the accounting services part of the practice, and I have to tell you, the idea of recurring revenue and being closer to our clients was quite appealing. [snip]  The article continues at The Sleeter Group. Click Here To Continue Reading.  The author Bruce Phillips is a CPA with Harshman Phillips & Co.

Financial Planning: Biggest urban legend in taxation

Brian Eisenmenger for HeraldNews.com writes: What is the biggest urban legend in the area of taxation?  If you answered “the gift tax,” score one for the home team.

The most common phone call received by tax professionals involve inquiries from parents or grandparents about whether or not they will have to pay gift tax on their monetary gifts. Adult children and grandchildren call to ask about whether they will have to pay a tax on gifts received. [Lots of hand-wringing going on]

Like the urban legends that struck fear in many of us as youngsters, the dark, scary world of gift taxes does the same to adults. One person whispers a rumor of a gift tax nightmare that some other person experienced and the urban legend grows and grows.

People fear the gift tax simply because they don’t understand how it works.

Knowledge conquers fear: Demystifying the gift tax

The gift tax is a real tax. You don’t necessarily need to pay it, but there are a number of rules surrounding this inconvenient tax.

First, any person can gift any individual up to $14,000 in 2014 and have no obligation to report it to the IRS. So mom and dad can give a combined $28,000 to their favorite child without creating any new filing requirements for themselves. But, if mom and dad gift little Johnny anything above that amount – even $28,001 -- they will need to file a gift tax return with their annual tax return.

Filing a gift tax return does not mean that these generous parents will automatically have to pay a gift tax (yes, the IRS assesses the gift tax based on the giver’s financial circumstances), but they will have to file the return. In fact, an individual owes no gift tax until he or she gives away the lifetime exclusion amount.

So what’s the lifetime exclusion amount?

For 2014, the lifetime exclusion amount is quite generous at $5,340,000! If you give away more than that, then you will owe gift tax – assessed at the whopping rate of 40 percent. This means that for the average taxpayer, fear of having to pay a gift tax represents an unfounded worry. You don’t need to add unnecessary sources of stress to your life.

Every rule has its exception (or two)

In some situations, you may not have to file a gift tax return even if you give over the annual limit.

Let’s suppose your favorite Aunt Martha is very sick and out of the goodness of your heart, you decide to pay her medical bills. No gift tax return is required, even if the amount exceeds $14,000. However this exception comes with an important caveat – you must pay the medical provider directly. If you give Aunt Martha the money and she then chooses to use it to pay her medical bills, you’ll need to file a gift tax return if the amount exceeds $14,000.

Another exception involves gifting money for higher education costs (i.e. college tuition). So, let’s say you decide to pay little Scarlet’s university tuition. You won’t need to file a gift tax return, even if the amount exceeds $14,000. But just like the example with Aunt Martha above, you’ll need to pay the money directly to the university. If you write young Scarlett a check for her tuition and the amount exceeds $14,000, you’ll need to file a gift tax return. By making payment directly to the educational institution, you can gift an unlimited amount of money with no obligation to file a gift tax return, or pay gift tax on it in the future.

Now you know the facts, so stop living in fear and embrace your desire to gift money to your loved ones. Unless you are giving away more than $5,340,000 you will not owe any gift tax.

Even so, any time you plan to give away large amounts of money, it’s wise to consider sitting down with a qualified tax professional. He or she may know of some legal ways to avoid the 40 percent rate on taxable gifts.

Brian Eisenmenger is a certified public accountant and founder of Eisenmenger & Co. CPAs in Wheaton, Ill. Brian has extensive experience in income tax preparation and financial consulting, including trust and business planning and management services. In addition to his practice, Brian is a frequent speaker on tax and accounting topics throughout the United States for Thomson Reuters.  You can follow Brian on Twitter Here.

Top 10 Tax Time Tips from the IRS

The tax filing season is almost over. You can make tax time easier if you don’t wait until the last minute. Here are 10 important tax time tips:

1. Gather your records.  Collect all tax records you need to file your taxes. This includes receipts, canceled checks and records that support income, deductions or tax credits that you claim on your tax return. Store them in a safe place.
   
2. Report all your income.  You will need to report your income from all of your Forms W-2, Wage and Tax Statements, and Form 1099 income statements when you file your tax return.
   
3. Get answers.  Use the Interactive Tax Assistant tool on the IRS website to get answers to many of your questions about tax credits, deductions and many more topics.
   
4. Use Free File.  You can prepare and e-file a tax return for free using IRS Free File, available exclusively on IRS.gov. If your income was $58,000 or less, you qualify to use free tax software. If your income was higher, or if you’re comfortable doing your own tax return, you can use Free File Fillable Forms, the electronic version of IRS paper forms. Visit IRS.gov/freefile to check your options.
   
5. Try IRS e-file.  Electronic filing is the best way to file a tax return. It’s accurate, safe and easy. Last year, more than 122 million taxpayers used IRS e-file. If you owe taxes, you have the option to file early and pay by April 15.
   
6. Weigh your filing options.  You have several options for filing your tax return. You can prepare it yourself or go to a tax preparer. You may be eligible for free, face-to-face help at a Volunteer Income Tax Assistance or Tax Counseling for the Elderly site. Weigh your options and choose the one that works best for you.
   
7. Use direct deposit.  Combining e-file with direct deposit is the fastest and safest way to get your tax refund.
   
8. Visit the IRS website 24/7.  IRS.gov is a great place to get everything you need to file your tax return. Visit ‘1040 Central’ for online tools, filing tips, answers to frequently asked questions and IRS forms and publications. Get them all anytime, day or night.
   
9. Check out number 17.  IRS Publication 17, Your Federal Income Tax, is a complete tax resource. It contains helpful information such as whether you need to file a tax return and how to choose your filing status.
   
10. Review your return.  Mistakes slow down the receipt of your tax refund. Be sure to check all Social Security numbers and math calculations on your return, as these are the most common errors. If you run into a problem, remember the IRS is here to help. Start with IRS.gov.

Additional IRS Resources:

• IRS Tax Map

Why Your Company May Dump QuickBooks This Year

Saunders, Wangsgard & Associates post Gene Marks for Forbes writing: Believe it or not, your company is about to be part of an enormous wave of change in the next few years.

That’s because, if you’re like most small and medium sized businesses, you’re likely using an on-premise accounting application. And most likely that on-premise solution is QuickBooks.  QuickBooks is by far the most popular accounting application for SMBs and deservedly so – it’s full featured, easy to use and well supported by Intuit.  My company is an Intuit INTU +1.76% partner. We sell QuickBooks. But this year we’re going to look into selling other products as well. Why? Because as good as QuickBooks is, I believe that many of my clients are going to dump it starting this year and over the next few years. You too. That’s because the cloud has caught up to the accounting world. And there are many competitors to QuickBooks standing by to pounce. My consulting firm serves about 600 active companies. More than 90% of them currently use an on-premise accounting (or financial management or Enterprise Resource Planning/ERP) application. Isn’t it ridiculously obvious that within the next few years just about all of those companies will be using a cloud-based application instead? Of course it is. I’ve watched the enormous growth of software-as-a-service applications for customer relationship management, human resources and payroll. I’ve noticed the faster performance. I’ve witnessed their ease of access from tablets and mini-laptops and even smartphones. I’ve watched companies move more and more of their in-house systems to hosted ones, eliminating their servers and IT infrastructure. And I’ve seen my own clients, small business owners who look at any new relationship or technology with a wary eye, grow more comfortable letting other companies handle their data on managed servers over the past few years. We admit that though no one’s infallible, the security that they provide are better than our own. The environment is perfect for cloud based accounting applications. And it’s a perfect environment for software developers too. “Most of the large software companies aren’t putting many resources into on-premise solutions any more,” Brian Jacobs, a partner at venture capital firm Emergence Capital told me recently. “They are basically pushing their customers into a software-as-a-service environment.”  This is true. Emergence Capital invests in cloud based business applications and Jacobs believes the market is in its infancy.  Ask anyone at Microsoft MSFT +0.77%, Sage, Oracle ORCL +1.01% or SAP and they’ll tell you what the guys at Salesforce.com have been saying for years: the cloud is the future for them. It’s a more profitable and more productive business model for a software company to distribute their products. “There are so many advantages of a cloud solution that I personally don’t see how these on-premise systems can move into the future,” said Rob Reid, CEO of Intacct, an online financial management application. “VCs are not investing in premise software companies any more.” Which brings me back to QuickBooks. In the next few years it’s inevitable that you’re going to replace your on-premise QuickBooks system for something cloud-based. You won’t have much of a choice. And you’re going to take that opportunity to look around. And you’re going to discover there are some interesting alternatives. There’s Xero, which just raised $150 million in October. And Intacct, which has received multiple rounds of financing over the past few years. There’s FreshBooks. There’s NetSuite and of course there’s QuickBooks Online. There are others but these, in my opinion, are the big players right now in the cloud accounting/ERP market. To oversimplify, Xero, FreshBooks and QuickBooks Online are arguably geared to the basic bookkeeping/invoicing/bill-paying customer – the startup, the very small micro-business, the mom and pop. Intacct and NetSuite are targeting the next level – those companies that employ controllers or CFOs, are growing, have multiple users and need advanced tools like sales order processing, purchase order, inventory and warehouse management, workflows, automation and more complex reporting for cash flow and consolidations. These applications have been built from the ground up and support a better, more flexible web-based architecture. Smelling the opportunity, resellers and partners for these products (like me) are popping up everywhere. Migration tools to move away from QuickBooks are available. Deals have been struck to integrate these products with other popular online services and collaboration tools like Dropbox, Zoho, PayPal and Bill.com. So what will happen? Many current QuickBooks customers (perhaps you?) who are frustrated with the software’s older architecture but have suffered with it because they/you did not feel the need (or were just too lazy) to change will now be forced to change in the next few years. And they/you will be looking at other alternatives. And, for the first time in a long time, there are many great other options to consider. “50% of the customers we are getting are coming from QuickBooks,” Intacct’s Reid told me. “And we’re expecting a tornado wave of activity in the next few years.” The company has experienced a 150% growth in bookings over the past year alone. So be prepared: maybe this year, but certainly during the next few years you will be part of this enormous trend. That’s a certainty. Will you be one of the many who decide to dump QuickBooks?

Two Tax Credits Help Pay Higher Education Costs

Did you, your spouse or your dependent take higher education classes last year? If so, you may be able to claim the American Opportunity Credit or the Lifetime Learning Credit to help cover the costs. Here are some facts from the IRS about these important credits.

The American Opportunity Credit is:

• Worth up to $2,500 per eligible student.
• Only available for the first four years at an eligible college or vocational school.
• Subtracted from your taxes but can also give you a refund of up to $1,000 if it’s more than your taxes.
• For students earning a degree or other recognized credential.
• For students going to school at least half-time for at least one academic period that started during the tax year.
• For the cost of tuition, books and required fees and supplies.

The Lifetime Learning Credit is:

• Limited to $2,000 per tax return, per year, no matter how many students qualify.
• For all years of higher education, including classes for learning or improving job skills.
• Limited to the amount of your taxes.
• For the cost of tuition and required fees, plus books, supplies and equipment you must buy from the school.

For both credits:

• Your school should give you a Form 1098-T, Tuition Statement, showing expenses for the year. Make sure it’s correct.
• You must file Form 8863, Education Credits, to claim these credits on your tax return.
• You can’t claim either credit if someone else claims you as a dependent.
• You can’t claim both credits for the same student or for the same expense, in the same year.
• The credits are subject to income limits that could reduce the amount you can claim on your return.
• Visit IRS.gov and use the Interactive Tax Assistant tool to see if you’re eligible to claim these credits.

See Publication 970, Tax Benefits for Education for more on this topic. You can get it on IRS.gov or by calling 800-TAX-FORM (800-829-3676).

Additional IRS Resources:

• Tax Benefits for Education: Information Center
• Education Credits--AOTC and LLC
• American Opportunity Tax Credit
• Lifetime Learning Credit
• American Opportunity Tax Credit: Questions and Answers

IRS Answers Frequently Asked Questions About Virtual Currency - Bitcoin Taxed as "Property"

The IRS has issued guidance providing answers to frequently asked questions (FAQ) about virtual currency. Bitcoin is an example of such currency that has been the subject of recent discussion. The FAQ provides basic information on the tax implications of transactions in, or using, virtual currency. In some circumstances, virtual currency operates like actual currency, but it lacks legal tender status in any jurisdiction.

Virtual currency is treated as property for U.S. federal tax purposes and is governed by the same general principles that apply to property transactions generally. For example, wages paid to employees using virtual currency are taxable to the employee, must be reported by an employer of a Form W-2, and are subject to federal income tax withholding. Also, payments using virtual currency made to independent contractors and other service providers are taxable, and self-employment tax rules generally apply to such payments.

Payers must normally issue Form 1099. Further, the character of gain or loss from the sale or exchange of virtual currency depends on whether the virtual currency is a capital asset in the hands of the taxpayer. A payment made using virtual currency is subject to information reporting to the same extent as any other payment made in property.

The IRS and the Treasury Department have requested comments relating to other questions regarding the tax consequences of virtual currency not previously addressed. Comments should be addressed to: Internal Revenue Service, Attn: CC:PA:LPD:PR (Notice 2014-21), Room 5203, PO Box 7604, Ben Franklin Station, Washington, D.C. 20044. Comments may be hand-delivered Monday through Friday between 8:00 a.m. and 4:00 p.m. to Courier’s Desk, Internal Revenue Service, Attn: CC:PA:LPD:PPR (Notice 2014-21), 1111 Constitution Avenue NW., Washington, D.C. 20224. Taxpayers may submit comments electronically via email to Notice.Comments@irscounsel.treas.gov. Taxpayers should include "Notice 2014-21" in the subject line.

Severance Payments Are Wages for FICA Purposes, Supreme Court Holds

Supplemental unemployment compensation benefits (SUBs), which include severance payments, are taxable wages for purposes of the Federal Insurance Contributions Act (FICA), the Supreme Court held. In reaching this conclusion, the Court overturned a decision of the Sixth Circuit Court of Appeals (2012-2 ustc ¶50,551).

The taxpayer entered into an involuntary bankruptcy proceeding, before and after which the taxpayer terminated thousands of employees and provided them with severance payments. The Court held that severance payments are included in FICA’s broad definition of wages, defined in Code Sec. 3121(a) as "all remuneration for employment," and confirmed this principle through an analysis of the specific exemptions to this definition and of the statutory history.

Code Sec. 3402(o), which instructs that any severance payment be treated "as if" it were a payment of wages, does not alter the inclusion of severance pay as FICA wages. According to the taxpayer, this instruction is an indirect means of stating that the definition of wages for income tax withholding does not cover severance payments, and therefore severance payments are not covered by FICA’s similar definition of wages. The Court disagreed, holding that severance payments fall within the broad definition of wages for purposes of income-tax withholding under Code Sec. 3401(a), for the same reasons as with FICA’s similar definition of wages.

Code Sec. 3402(o)’s command that all severance payments be treated "as if" they were wages for income tax withholding is consistent with the proposition that at least some severance payments are wages. The Court also disagreed with the taxpayer’s contention that the boldface heading inCode Sec. 3402(o) must be read to require that SUB pay be exempt from FICA.

The regulatory background against which Code Sec. 3402(o) was enacted illustrates the limited nature of the problem the provision was enacted to address, relating to income tax withholding and the ability of employees to receive state unemployment benefits. The congressional decision to include within Code Sec. 3402(o) a larger set of SUBs than was already exempt from withholding under IRS rulings must most reasonably be read as a determination that, whatever position the IRS took with respect to certain categories of severance payments, the problem with withholding should be solved by treating all severance payments as wages requiring withholding.

Finally, if the Court had ruled that the severance payments were exempt from FICA taxation but not from withholding for income tax purposes, it would have contravened the holding in Rowan Cos. Inc., SCt, 81-1 ustc ¶9479, which held there should be congruence in the rules for FICA and income tax withholding.

Demystifying The Deduction Rules For Accrued Liabilities

Tony Nitti for Forbes writes: You’re fresh out of college, a new hire at the local CPA firm. It’s your first tax season, and you’re handed a business tax return to prepare.

As you peruse the file, you notice that in preparing the book-tax adjustments for the prior year’s return, the previous preparer analyzed a number of accounts found on the balance sheet. Included among them were:

       Accrued bonuses

• Accrued vacation
• Accrued rent
• Accrued warranties
• Accrued accounting fees
• Accrued workers compensation

Digging deeper, it becomes apparent that for each of the year-end accrual balances, the previous preparer asked the client to provide the amount of each liability that was paid within 8 ½ months of year-end.

Combining these two pieces of information, the previous preparer permitted a tax deduction for the amounts paid within 8 ½ months of year-end, and disallowed any remaining balance of the accrual.

Now you’re faced with preparing the current yearbook-tax adjustments, and you’ll be damned if you’re going to crack open the Code and figure out exactly why the previous preparer did what he did. Rather, you’ll just apply the tried-and-true Same-As-Last-Year method, analyze the same accruals, and ask the client the same questions that were asked in the past. 

Fast forward seven years, and now you’re a tax manager. And you’re stillasking the same “How much was paid within 8 ½ months of year-end?” question of all of your clients to determine the amount of their year-end accrued liabilities that may be deducted on their tax return.

And while I hate to be the bearer of bad news, I’ve gotta’ tell you – you’ve been going about it all wrong. To be fair, I can’t say I blame you; the rules for determining when a taxpayer may deduct an accrued liability are varied and confusing. But after this week’s Tax Geek Tuesday maybe, just maybe, we’ll get you on the right track. [snip]  The article continues at Forbes, click here to continue reading. 

How tax efficient is your municipal bond portfolio?

David Jurca for HelpingAdvisors.com/ Russell Investments writes: Investors typically think of municipal bond products as being tax-free. However, in many cases, that is not the reality. Although the interest income from municipal bonds is typically tax-free at the federal level, any price gains realized on buying and selling the bonds within the product can create a tax liability. Within Morningstar’s Municipal National Intermediate universe of mutual products, the average municipal bond fund surrendered 5 basis points (0.05%) per year of performance to taxes for the 10 years ending December 2013. In a year in which tax rates increased, the average tax cost for the same universe in 2013 was almost double the 10-year average, at 9 basis points (0.09%). This may not sound like much, but in the current low interest rate environment, every basis point counts.

Tax efficient municipal bond portfolio management techniques

Only 23% of the funds in the Morningstar Municipal National Intermediate universe have not had a tax distribution in the 10 years ending 2013. How do they do it? Here are some examples of techniques they may have used.

Tax-loss harvesting

Among other things, many savvy managers may apply tax loss harvesting techniques to help manage taxable distributions. For example, last year the broad municipal bond market experienced negative returns. While accounting for transactions costs, a portfolio manager could comb through the portfolio looking for securities to sell at a loss and replace with securities of equal diversification benefits. The losses could either be used to offset any securities that were sold at a gain that year, or tucked away as a tax loss carryforward. A hypothetical example is given below where characteristics for the two bonds are nearly identical, except for the issuer. The difference in issuer helps prevent a “wash sale.”¹

The benefit of a tax loss carryforward is especially relevant when interest rates are falling (and bond prices are increasing) as we’ve seen in early 2014. This allows a manager to continue to apply an active strategy of selling expensive bonds and purchasing cheap bonds, even if a capital gain is incurred. In the absence of a tax loss carryforward, the hurdle to sell a bond with a potential capital gain is much higher, and could prevent a tax-sensitive manager from actively trading the portfolio.

Additional active management strategies

Some managers may weigh the risks of holding a relatively volatile credit like Puerto Rico versus its benefit of triple tax-exempt status as a U.S. territory.² Managers may take active decisions regarding the purchase of municipal bonds subject to the Alternative Minimum Tax.³ Managers also generally keep an eye on excessive portfolio turnover.

Size matters when it comes to municipal bond products

But none of these tax-saving techniques would be nearly as valuable without one additional benefit of professional management: size. Municipal bond portfolio managers can benefit from scale to apply these techniques at low trading costs. Individual investors who attempt to do tax swaps in trade block sizes under a million dollars can have a hard time doing so efficiently. As the chart demonstrates, municipal bonds traded in smaller block sizes are at a significant pricing disadvantage.

Source: Municipal Securities Rulemaking Board (MSRB), S&P and AllianceBernstein. As of December 31, 2013. For illustrative purposes only. Dollar amounts represent the size of the block trades.

The bottom line

Municipal bond products are at the core of many tax-aware investors’ portfolios. However, just because a portfolio may be labeled “tax-exempt,” it may not necessarily offer tax-free returns. Generating capital gains can lead to tax distributions, even in municipal bond products. So don’t accept a product’s stated name at face value when evaluating tax-exempt investment options. Try to understand the true tax management techniques that are being used and the impact that they may have on after tax results. You may want to seek out municipal bond managers who have developed investment techniques that are designed to deliver on the benefits of active management while keeping tax distributions to a minimum. They exist.

¹ Wash Sale: Occurs when you sell or trade stock or securities at a loss and within 30 days before or after the sale you buy substantially identical stock or securities. You cannot deduct losses from a wash sale.

² Triple tax exempt status: exempt from federal, state, and local taxes.

³ Certain private activity municipal bonds are subject to the federal alternative minimum tax. The yield on these bonds tends to be higher to compensate for the potential risk that they become taxable to certain investors.

Bond investors should carefully consider risks such as interest rate, credit, repurchase and reverse repurchase transaction risks. Greater risk, such as increased volatility, limited liquidity, prepayment, non-payment and increased default risk, is inherent in portfolios that invest in high yield (“junk”) bonds or mortgage backed securities, especially mortgage backed securities with exposure to sub-prime mortgages. Investment in non-U.S. and emerging market securities is subject to the risk of currency fluctuations and to economic and political risks associated with such foreign countries.

Russell Investments writes: The Helping Advisors Blog aspires to be a resource you can count on for context, provocative ideas and practical advice all brought to you with the singular idea of earning the right to be part of your conversations with your clients.

We also want to establish a greater dialog with advisors, so please join the conversation and let us know what’s on your mind.

For more information about our services and offerings, please visit Russell.com/fp/Advisor_Central

Gem Accounts Accounting App Earns High Rating from GetApp

GetApp, a marketplace that helps businesses discover, compare, review and purchase business applications, today announced it has awarded a high rating (4.5 out of 5) to Gem Accounts upon completion of a thorough review of its cloud-based accounting for medium and large-size businesses.

Gem Accounts is an online accounting solution that 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.

According to GetApp, Gem Accounts has a unique focus on larger businesses that are typically excluded from other cloud based accounting packages. It identified that Gem Accounts addresses concerns about security, performance, and portability. The platform is protected using ACID compliant database technology and 256bit SSL encryption. Backups are performed 24/7 at Gem Accounts' secure facilities and Gem Accounts' performance is not altered by the volume of a user's transactions.

In the GetApp review, Gem Accounts achieved the following ratings:

Overall: 4.5/5
Ease of Use: 5/5
Features: 4/5
Value: 4/5

"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. Larger 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, will find that Gem Accounts offers the perfect middle-of-the-road solution" said Stephanie Miles, GetApp reviewer.

"We are delighted to receive such a high score from GetApp," stated Andrew Crowe, Managing Director at Gem Accounts . "We have built Gem Accounts to provide the functionality that is missing from most online accounting platforms--including unlimited transaction volumes and account auditing features."

To read the full review on GetApp visit:
http://www.getapp.com/blog/gem-accounts-review/

To know more about Gem Accounts visit:
http://www.getapp.com/gem-accounts-application

About Gem Accounts
Gem Accounts has been designed from the ground up to deliver a fully featured, scalable Cloud Accounting Software system for Medium, Large and rapidly growing Small Businesses with all the features you would expect in a serious financial package at the price of a simple desktop package. Gem is fast and functional for all sized businesses with all the features expected in a serious accounting system.

Case Study: Outsourced Accounting Services for Microbrewery / TAG Provides Outsourced Accounting Services for Microbrewery

Sara Gilman for TAG writes: Client: Left Coast Brewing Company, located in San Clemente, CA, began operations in 2004. With the capacity to produce slightly more than 14,000 barrels in their facility, Left Coast distributes beers to bars and restaurants throughout the United States and some internationally.  In addition to brewing and distributing six full time beers, they also have a tap room on sight with seasonal beers available.  Left Coast produces beers for the Oggi’s Pizza & Brewing Company Franchise.

Challenge:

Brewing company was in need of controller services, but did not want the expense and burden of having a full-time accounting employee on staff.  They sought out TAG as an outsourced accounting option to improve and automate their financial reporting and general accounting needs.

“Initially, we hired TAG because they offered a cost-effective solution for our accounting needs, but we have received many more benefits from their services. TAG immediately came on board as another team member to give us financial insights to help us make better business decisions,” said Tommy Hadjis, General Manager, Left Coast Brewing Company.

Solution:

TAG’s initial and ongoing engagement includes the following:

• Calculate cost of goods sold and track profit margins
• Providing timely monthly financial statements, including balance sheet and income statement
• Reconciling bank account statements and monitoring cash flow
• Providing accounting system process improvements such as a month-end A/P checklist
• Cost of sales calculation for the preparation of beer tax reports
• Helping to integrate QuickBooks set-up to integrate with Brewery Management System
• Monthly meetings with brewery management to review financial performance and assess projections
• Working with brewery tax advisors to ensure proper tax planning and tax filings

Results:

Based on TAG’s financial expertise and proprietary systems, Left Coast Brewing Company is now making business decisions based on detailed, accurate and timely financial reporting.  TAG provides cost-effective results with on-going accounting system process improvements and better financial insight.

“It was a seamless fit from the beginning of our relationship with TAG,” said Hadjis.  “We quickly built a strong rapport and immediately saw the value in the financial oversight that TAG consistently provides for our company.”

TAG provides an unparalleled array of customized accounting services and software to support entrepreneurial companies and high-net worth individuals with complex needs in achieving their business and financial goals.

TAG serves as an engaged and trusted extension of each client’s business, using skilled team of experts and proprietary systems to ensure timely, dependable results, enabling its clients to focus on growing their business. TAG is located in Southern California and serves clients nationwide.