Monday, April 14, 2014

Australian software developer Reckon announced the official launch of their new online accounting application for small businesses, Reckon One.

The new online accounting solution, specifically built for web, allows users to choose and pay for only the parts of the program they need to use. Reckon One is now available for Australian small businesses to try for free via the Reckon website and it will be available in New Zealand soon.

Pete Sanders, MD of Reckon’s Business Group says the unique design of Reckon One will shift perceptions about how business software can be purchased, designed and used. He says while the modular design sets the program apart, it’s the user-design of Reckon One that gives small businesses, and the professionals who support them, the simplicity they’ve have been crying out for.
“We feel the modular design of Reckon One will change how small businesses view accounting software. There’s no longer a big set of features they need to purchase as part of a package, a user can simply choose the parts of the program they need, we call this designed by you. We feel Reckon One is so simple that small businesses will quickly be able to gain control of their business finances,” says Sanders.
“By being unencumbered by unnecessary features, and having the control to choose only the features they need, small businesses can quickly gain control of their business finances. The user can also switch off features they don’t need, so they’ll only pay for the one’s they use.”
The initial release of Reckon One includes the modules of:
·         Core – necessary module for recording of receipts and payments;
·         Invoicing – for creating invoices;
·         Projects – a project management tool for tracking costs; and
·         Reckon BankData – for receiving transactions directly from connected bank accounts.
The Reckon One Core module starts at $5 a month.
According to Reckon this low entry cost will be especially attractive to micro-business owners seeking to improve how they manage their business. With the cost of entry significantly reduced, in comparison to competing products, a new business can get up and going with the right tools to help them succeed says Sanders.
“Reckon One is ideal for the micro-business owner. Automating financial tasks and having access to business performance data from anywhere on a smartphone will definitely increase their chances of success. The program also has clever budgeting, forecasting and reporting tools.”
Nathan Elcoate, the owner of Axis IT, has been involved in beta testing Reckon One. He says the simplicity and speed of the program are most impressive.
“The simplicity of the software is beyond belief. It is so fast to enter, so logical to lookup and retrieve information; and the dashboard is fully functional and informative. I am really looking forward to seeing the ongoing developments with this product,” says Elcoate.
Reckon has plans to quickly grow the functionality of the new cloud accounting app, with payroll and inventory modules already in development, as well as a time and billing module.
“As a company we have never been as excited about a product release as we are about Reckon One. This is unlike anything we’ve created before and the journey so far has been incredible. We are already looking ahead at how the program will evolve,” says Sanders.
Small business owners and anyone interested in trying the new online accounting solution can get started with a 30-day free trial today by visiting www.reckonone.com, once signed up users can also download the free Reckon app via the Apple App store or Google Play store.
Posted on 9:47 PM | Categories:

H&R Block Doesn't Want to Do Your Penny-Ante Taxes

Kyle Stock for Businessweek writes: In its ongoing death-match with Intuit’s (INTU) TurboTax, H&R Block (HRB) has finally stopped playing nice.

Leading up to Tuesday’s tax deadline, H&R Block spiked its free service for bare-bones filings and made it more difficult for customers with more complicated finances to find a free or discounted option on its online platform. This year, a greater share of those customers were funneled into upgrades, and the company raised prices overall, though it won’t say by how much until after the deadline.

This is a fairly novel approach. Until recently, the general approach in the tax-prep game was to help everybody—an arms-wide-open strategy based on the assumption that today’s low-income customer pocketing a decent refund on a free filing may eventually become a higher earner who pays handsomely for a complicated tax project in a brick-and-mortar Block location.

Apparently, Block isn’t buying into that lifetime-value theory anymore. “It simply does not make sense for us to focus our resources in areas in which we do not generate profit,” Chief Executive William Cobb said on a conference call last month. Corporate consultants call this firing the client. Block, meanwhile, said it thinks of the switch as simply dropping a promotion that it has been running for three years.

At the same time, Block produced an aggressive ad campaign featuring walking, talking CPAs who promise to ferret out big refunds. The tagline—“Get Your Billion Back America”—refers to a Block study that found errors on do-it-yourself returns added up to $1 billion in missed refund money last year. The chipper message has a slightly sinister subtext: If you do your taxes yourself, you’re probably going to screw them up. Last year, roughly 40 percent of tax returns were self-prepared and filed electronically, according to the IRS.

None of this is winning H&R Block any feel-good points. Through February, the volume of U.S. returns it handled was down 6 percent, as would-be customers fled to competing platforms such as TurboTax. But that’s just fine with Block. Its storefront accountants and online help personnel now have more time to focus on the lucrative customers who stuck around. “The net result of these factors is that we’re achieving exactly what we set out to do, driving higher revenue and earnings by focusing on improving our service to an improved mix of clients,” Cobb said.

Jason Houseworth, Block’s president of product management, is also pleased to see Intuit stealing some of his market share with cut-rate offers. It proves, he argued last month, that Block’s online product is finally competitive with TurboTax.


Posted on 3:40 PM | Categories:

5 Tax Myths That Could Cost You Cash

MyBankTracker for Business Insider writes: Tax deadline day — April 15, 2014, is just about to hit American taxpayers.  If you haven’t filed yet, try not to rush (too much) through the process. That’s where you can make mistakes or lose money to the federal government that otherwise belongs in your bank account.

One potential stumbling block: preconceived notions of where to put your focus. Over-emphasizing what professionals call “tax myths” can leave big money on the table. Here are five myths cited by accountants, tax preparers ,and other tax professionals who reached out to Investopedia.

1. Getting a refund means you’re a savvy tax filer.
Many people enjoy receiving a big tax refund from the IRS every year. That’s a big mistake, says Brian Vnak, director of integrated advice strategies at Minneapolis-based Wealth Enhancement Group. “If you like loaning money and not earning interest, then big tax refunds are your best friend,” explains Vnak. “A wiser approach is to implement tax-saving strategies to minimize the amount of tax you pay. Once this plan is established, reducing withholding and estimated payment amounts should be your best friend.”
There is another downside to refunds: The IRS is authorized — and in some cases required — to offset federal income-tax refunds against certain other taxpayer liabilities. “These include federal and state taxes due for prior years, past due child-support payments and student loans that are in default,” says Christine Reuther, a tax attorney at Radnor, Pa.-based McCausland Keen & Buckman. “If you owe any of those types of debts, you would be better off using the extra withholding to pay down the obligations as soon as possible instead of having it taken at the end of the year when the past-due liabilities have already accumulated penalties and interest.”

2. I’ll be tax-free when I retire.
Some retirees have so little income that they don’t pay any tax, says Randi L. Jowers, a Wilmington, Del,-based certified public accountant. But it’s unwise to base what you do now on that assumption. If you do at all well during your working years, you will have to pay taxes after you retire. “In most cases, people are withdrawing money from retirement plans, such as a 401(k), to support their retirement,” she explains. “Contributions to a 401(k) plan are tax free when made, so the amounts withdrawn from the accounts are taxable when received.”

In some cases, retiring could even make your taxes worse. “When a person retires, his or her income is typically replaced with Social Security, pensions, investment income, and eventually required minimum distributions from IRAs,” notes Vnak. “This means that taxable income after age 70 is often higher than before retirement. In that case, not only is the person not tax free, he or she may pay even more in taxes.”

One way to cut future taxes now, is to open a Roth IRA before April 15. According to IRS rules, withdrawals from a Roth IRA are tax free if you are 59-and-a-half or older — or your IRA account is five or more years old. That’s one way to guarantee that at least some of your post-career income really is tax free.

3. You can “audit-proof” your tax return.
No, actually, you can’t. “Nobody can audit-proof their tax return,” says John C. Brandy, a Washington state-based financial advisor. “We don’t get to know what the guidelines are for those who get chosen, but it is reasonable to assume that a pattern of questionable deductions or unusually high income, or typically high-income professions, all have a greater chance of being selected for audit.

The good news? Your overall chances of being audited are not great, says Mark Luscombe, a principal analyst at Wolters Kluwer Tax & Accounting, in Riverwoods, Ill. And even if you do get audited, it’s usually not that intimidating. Most “audits” are “correspondence audits,” conducted by mail only. Even face-to-face audits generally involve individuals coming to the IRS office, not the IRS coming to their home. “The IRS is more likely to visit business locations when auditing business tax returns,” he says.

Still, that doesn’t mean those not in these categories should feel safe and take risks in how they file that could expose them to penalties. “Some audits are triggered strictly by chance — so whatever you file may have no bearing on whether you get hit with an audit or not,” Luscombe explains.

4. Small businesses can expand without tax consequences.
Small-business owners who think they can expand the size of their business, especially by moving to a new location, should prepare to pay for the privilege.
“Creating or expanding the footprint of a business can trigger unexpected tax liabilities,” says Reuther. “Before venturing into a new location or expanding your online venture, research the state and local (or international) tax obligations,” she explains. “In some cases you can minimize or avoid the local taxes through careful planning. But failing to address the issue in a timely manner can create liability for back taxes, interest and penalties years down the road that dwarfs the cost of compliance in the first instance.”

5. Your child works, so that means you can’t use him/her as a deduction.
Again, that’s just not so. If you provide more than 50% of your child’s support, your working teenage son or daughter can still qualify as your dependent. And that’s worth a $1,000 tax deduction per child, so don’t miss out.

The Bottom Line
If you’ve been operating on any of these tax myths, talk to your accountant or financial adviser, if you have one, to see how it could affect you. And don’t file your taxes until you’ve thought through the best strategy to limit your bill — and your exposure if you’re considering something potentially risky.

 You can visit the author, MyBankTracker here,
 
Posted on 3:27 PM | Categories:

XERO LIMITED ANNUAL REPORT 2013

"Xero is delivering on its plans and with substantial cash resources will continue its growth agenda to create long-term shareholder value by building a global Software as a Service (SaaS) company.The excerpt on the right from a paper by SaaS commentator David Skok of Matrix Partners* highlights how SaaS companies differ from traditional businesses. With a market approach well proven in New Zealand and foundations created in Australia in the previous year, we’ve seen substantial growth in both countries. We’ve also seen strong growth in the United Kingdom and are well underway in the United States. As we progress towards our immediate goal of one million customers we are learning what works in each region and applying the lessons to the next." -  Xero Limited Annual Report

Click here to view and or download the Xero Limited Annual Report 2013.


Posted on 9:54 AM | Categories:

Solo 401K Matching Question in Running Your Own Company

Over at Bogleheads we came across the following discussion: 

solo 401kPostby pteam » Sun Apr 13, 2014 8:36 pm

I have a solo 401k for my wife and I. I want to max out each 401k to the maximum allowed 52k each for a total of 104k. We have two businesses one for myself that will fund the 200% match, and a different business for my wife which will fund her 200% match. How much income/profit is needed for each company to be able to contribute the max 200% match which is $34,500 plus the $17,500 personal for a total of $52k each. I mean doesn't the companies have to make a certain amount of income/profit to be able to contribute this much?

Anything else I should be aware of?

Thanks!
Posts: 400
Joined: 17 Mar 2010
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Re: solo 401kPostby Spirit Rider » Mon Apr 14, 2014 12:49 am

The identified 200% match does not exist. A solo 401k does not have an employer elective match. It has an employee elective deferral and a employer non-elective profit sharing. The profit sharing max is 25% of compensation, but is calculated differently for a sole proprietor than an S-Corp.

For a Sole Proprietor it is 20% of self-employment income (business profit - 1/2 SE tax). So if the maximum contribution is $34.5K, you would need 172.5K of self-employment income. This would require a business profit of $185.6K.

For a S-Corp it is 25% of W2 wages. So if the maximum contribution is $34.5K, you would need $138K of wages. The Corp would also require the $34.5K for the contribution and $10.6K of employer FICA. So you would need $183.1K of business profit + Unemployment Insurance and maybe workman's comp.

So generally, you need about $185K of business profit to max out the profit sharing.
Posts: 1024
Joined: 2 Mar 2007
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Re: solo 401kPostby J295 » Mon Apr 14, 2014 12:51 am

Take a look at Fidelity's online calculator in the retirement section on its site.
Posts: 144
Joined: 2 Jan 2012
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Re: solo 401kPostby Spirit Rider » Mon Apr 14, 2014 1:16 am

Take J295's advice.

My calculation for the sole proprietor number is incorrect. In my calculation to go from self-employment income to business profit, I was adding back in the 1/2 SE tax. Unfortunately, I was not incorporating the $117K max wage base. The sole proprietor number is more like $182K..

My calculation for the S-Corp is also incorrect. The W2 wage calculation is correct, but I was not incorporating the $117K max wage base to calculate the employer FICA. The employer FICA would be more like $9.25K. The S-Corp number is also more like 182K.

The sole proprietor and the S-Corp require about the same business profit to max out the profit sharing. That is to be expected. The sole proprietor would pay Medicare tax on the $34.5K contribution ($500), but the S-Corp would not. However, the S-Corp would pay UI and depending on the state one, both, or neither might pay WC.
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Joined: 2 Mar 2007
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Re: solo 401kPostby pteam » Mon Apr 14, 2014 2:14 am

Ok I'm looking into this. Thank you for your help

Is the business "profit" before the 401k money is subtracted as an expense?

Also our corps are S corps.

The calc at http://www.solo401kcalculator.com shows I need about $145k each to get to the $52k for 401k, Is that not right?

Also if the business has $50k in expenses that means I would need 50k more income?

Also fidelity had several calculators in the retirement section but I didn't see one that pertained to solo 401k. I surely could have missed it
Posts: 400
Joined: 17 Mar 2010
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Re: solo 401kPostby DSInvestor » Mon Apr 14, 2014 3:44 am

If you're S-Corps paying W-2 salary, the Solo 401k contribution is easy. It is purely driven by your W-2 salary.

1) Employee salary deferral 17.5K (23K if over age 50).
2) Employer profit share can be 0-25% of W-2 salary.

If you're under age 50, you can max out for 52K if salary is 138K (17.5K + 25% of 138K = 52K)

Don't forget that you can each also contribute to Traditional or Roth IRA.

Posted on 7:40 AM | Categories:

6 Reasons Why SMBs Should Use Business Intelligence Solutions

Giancarlo Cammarota for Get App writes: Some SMB managers and entrepreneurs still think that business intelligence solutions are sophisticated and expensive tools needed only by large enterprises managing enormous amounts of data. But is it true? These are six reasons why I think it’s not.

1. Business Intelligence Is for Everyone

Business Intelligence, despite its sophisticated aura, is a very straightforward practice. It is all about collecting relevant data about your company performance and taking actionable conclusions from it so you can make informed decisions on how to improve different aspects of the business.
I am sure you are already gathering data, analyzing it, looking for trends and valuable insights but probably using multiple spreadsheets, going over lengthy manual and inefficient processes to make calculations, identify patterns, come to conclusions and generate reports to share with your colleagues.
A business intelligence solution could help you to automate and simplify all these processes, offering you insightful dashboards, visualization tools and rich reports to easily attain better insights and make more informed decisions. So why are you not using one of them?
If you still think that BI solutions are expensive, complicated and difficult to implement, you are wrong. I contacted three developers of popular business intelligence solutions for SMBs - BIME, SiSense and Zoho Reports - to get their feedback on this topic. They confirmed my own analysis and gave me insightful reasons to share with you.
SiSense dashboard
A business intelligence dashboard in SiSense

2. BI Solutions Are Now Simpler to Implement and Use

A few years ago, because of their complexity and specific requirements, business intelligence solutions could be installed and administered only by IT departments that only large companies could afford to have. But this has changed dramatically, with a positive impact on the price and ROI of BI software.
Now most business intelligence applications are cloud-based and ready to use, without any specific hardware or implementation requirements. Their interfaces, dashboards and reporting capabilities have improved radically, making them very user-friendly and easily manageable for any employee in a company.

3. Business Intelligence Can Level the Playing Field for SMBs

Business intelligence is not only about a company’s own data. With the rise of open data projects, SMBs can have access to data about economic and social trends that, when correlated with a company’s own data, can reveal previously unseen market trends. Thus, SMBs can level the playing field with big companies by identifying the opportunities in various areas faster.
zoho-reports-dashboard
Sales dashboard creation in Zoho Reports

4. Business Intelligence Allows SMBs to Be Even More Agile

Not only has business intelligence software penetrated SMBs with more affordable, scalable solutions, but using BI in small to medium size businesses is proving to be more rewarding for companies. This is mostly because SMBs have the ability to be agile and react quicker to freshly uncovered insights and make true data-driven decisions, which can be an advantage over slow-moving and larger organizations.

5. BI Turns Your Data Into an Invaluable Business Asset

Every company today collects data that customers or prospects leave behind from web, email, social media, and mobile, making it easy for even SMBs to accumulate more data than they know what to do with. Just the data from marketing and sales departments alone can be overwhelming and easily exceed Excel’s capacity. In addition, almost every business today stores all their transactional data in a CRM solution and marketing data in Google AdWords and Analytics, which adds an additional growing data source to the equation.
Large data isn’t the only reason companies need BI software, it is also about joining multiple data sets into a single version of truth to build dashboards with information that will show you a complete picture of your business. Data in every company, regardless of size and number of customers, is growing exponentially and the information this data holds is invaluable to every business.
bime-dashboard
A product dashboard example by BIME

6. Business Intelligence Offers Clear Benefits for SMBs

  • Merge and track all the business metrics from different applications/sources in a single dashboard, allowing for a 360° view of the business
  • Turn data into actionable information to make better decisions
  • Become faster at generating data-driven insights about market and revenue opportunities
  • Be prepared for continuous growth, with the capacity to process an ever growing amount of generated business data
  • Better understanding of customer patterns, trends and behaviours
  • Internal transparency, allowing any user to access relevant business data
  • Team empowerment, giving all employees the needed tools to make data-driven decisions
  • Easily create and share insightful reports, producing better business alignment within the company
Still in doubt of the advantages of implementing a business intelligence solution for your SMB? We will follow up this post with other helpful articles about the importance of BI for small and medium companies.
Ready to choose and try a business intelligence solution? You can check BIME, SiSense and Zoho Reports, as these are apps designed for SMBs needs. You can also compare these three popular solutions or explore other BI solutions.

Posted on 7:33 AM | Categories:

What You Should Know about the Additional Medicare Tax

Starting in 2013, you may be liable for an Additional Medicare Tax if your income exceeds certain limits. Here are six things that you should know about this tax:  

1. The Additional Medicare Tax is 0.9 percent. It applies to the amount of your wages, self-employment income and railroad retirement (RRTA) compensation that is more than a threshold amount. The threshold amount that applies to you is based on your filing status. If you’re married and file a joint return, you must combine your spouse’s wages, compensation, or self-employment income with yours to determine if you exceed the “married filing jointly” threshold.

2. The threshold amounts are:
 Filing Status                   Threshold Amount
 Married filing jointly         $250,000
 Married filing separately   $125,000
 Single                            $200,000
 Head of household          $200,000
 Qualifying widow(er) with dependent child      $200,000

3. You must combine wages and self-employment income to determine if your income exceeds the threshold. You do not consider a loss from self-employment when you figure this tax. You must compare RRTA compensation separately to the threshold. See the instructions for Form 8959, Additional Medicare Tax, for examples.

4. Employers must withhold this tax from your wages or compensation when they pay you more than $200,000 in a calendar year, without regard to your filing status, wages paid to you by another employer, or income that you may have from other sources. Your employer does not combine the wages for married couples to determine whether to withhold Additional Medicare Tax. 

5. You may owe more tax than the amount withheld, depending on your filing status and other income. In that case, you should makeestimated tax payments /or request additional income tax withholding using Form W-4, Employee's Withholding Allowance Certificate. If you had too little tax withheld, or did not pay enough estimated tax, you may owe an estimated tax penalty. For more on this topic, see Publication 505, Tax Withholding and Estimated Tax.

6. If you owe this tax, file Form 8959, with your tax return. You also report any Additional Medicare Tax withheld by your employer on Form 8959.

Visit IRS.gov for more on this topic. Enter “Additional Medicare Tax” in the search box. You can also get forms and publications on IRS.gov or call 800-TAX-FORM (800-829-3676).

Additional IRS Resources:
Posted on 7:01 AM | Categories:
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