Thursday, May 29, 2014

The Top 5 Cloud Accounting Solutions

Dave Nevogt  for Hubstaff writes: If you’re an entrepreneur, you know that having good accounting is a must for your business. You just have to handle all of those financial transactions, invoices, taxes and get the accounting in order. As it turns out, up until recently, you had to use complicated software in order to do your own accounting.

And then cloud accounting solutions changed everything

Ever since cloud accounting became popular, business owners were relieved to find that they can skip the complicated old accounting software.Cloud accounting solutions are web-based and place heavy emphasis in simplifying your workflow.
Up until recently, there were only two major choices when it comes to cloud accounting software providers, Sage and Quickbooks.

Which cloud accounting application should I choose?

There is great difficulty in choosing just the right provider, considering that there are dozens of them out there. So how can you tellwhich one is best for your business? The unfortunately simple answer: you go out there and try a few and see which one suits you best. There’s just a large part of the selection process that relies on personal preferences, and there is simply no substitute for testing.
To make the testing process easier for you, we will review the top 5 cloud accounting software applications that currently dominate the market. Pick 2 or 3 of these to test and find your match.

1) Kashoo

Kashoo cloud accounting dashboard
Kashoo is rather simple to use; therefore, it is great for beginners. It is especially popular among iPad users since its iPad app is fully featured. With Kashoo, you will be able to automatically import your bank information and the multi-currency facilities should really impress you.
Besides getting access to financial statements, invoices, checks and reports, you also get to use their multi-tax rate feature, which also allows you to download transaction information from any bank, which even includes credit card transactions.
While you don’t get to track complex projects, you do have a lot of other advantages with Kashoo, such as quick entry and simple invoicing. Find out how your business is doing right away with the help of instant financial reports. Unfortunately, they don’t have any iPhone or Android apps right now.
You can try Kashoo for free for one month and then continue paying $20 a month in order to continue using it.

2) Sage One

Sage one cloud accounting dashboard
The best thing about this service is probably the fact that one doesn’t need any accounting knowledge in order to use it. It features a very simple accounting system and is therefore perfectly suited for small businesses or freelancers.
Another great advantage of Sage One is that you get to create and manage tasks. It also lets you track projects and collaborate with teams and customers.
While it is great for small businesses, startups and freelancers, it will not suit larger companies that have a greater number of employees. There is also no support for foreign currency transactions or stock control.
It starts at $9 a month depending on the features and benefits that you need. You can try it for free without having to use a credit card.

3) Xero (Hubstaff uses Xero and we love it)

Xero cloud accounting dashboard
Are you a small business owner that wants to save on time spent in accounting? Then this is the accounting solution for you, since it can manage simple accounting tasks such as invoices, general ledgers, customer payments and much more.
It records your bank account information daily, so you don’t have to it manually.
Xero lets you use multiple currencies and tax rates, integrate various business applications and enjoy its beautiful interface.
While Xero does provide some of the most basic accounting tools, it does not provide more advanced tools such as time tracking. You will need to add other tools to your workflow in order to turn this into a complete business application.
You can try Xero for free; when the trial ends, you can choose a monthly plan, starting from 20$ a month.

4) FreshBooks

Freshbooks cloud accounting solutions
FreshBooks is a great accounting tool for small businesses since it can be used for managing expenditures, invoicing, time tracking and other basic accounting calculations. The interface is very simple and easy to use, which makes it perfect for small business owners and freelancers.
Online invoicing is probably the best part about FreshBooks, since it is easy to use and features basic accounting tools. Since it’s not considered a full accounting solution, you are able to add on products that bring it closer to a full accounting solution.
The reason why FreshBooks isn’t suited for big companies is the fact that it cannot cope with a large inventory. Another con is that you cannot distribute payments across multiple invoices with FreshBooks.
You can use the product for free for as long as you want; the payment packages start at 20$ a month.

5) Wave

Wave cloud accounting dashboard
Wave accounting is a free cloud based accounting software solution which automatically backs up your data. For a fee, Wave lets you handle credit card payments with the invoices. Besides accounting and invoicing, Wave features an affordable payroll solution as well.
This application is simple to use and anyone can learn to use it fairly quickly. Wave also saves you a lot of time when it comes to financial transactions since everything is automated. And unlike many other accounting applications, Wave supports multi-currency transactions.
Since Wave is free, some might find the ads that come up quite irritating. You cannot import your existing contact list into your account and there are limitations when it comes to invoice templates.

Making the final decision

Figure out what kind of software you need based on the type of business you run. As you can see, all of these applications are best suited for small businesses, freelancers and startups.
Ask yourself some questions:
  • Are your projects complex or simple?
  • Will you need multi-currency facilities?
  • Is it important for you to access accounting info on all of your devices?
  • Will you need to track projects and collaborate with teams/customers?
  • Do you need additional features such as time tracking?
  • Do you need to distribute payment across multiple invoices?
  • What about credit card payments and a payroll?
In order to make the final choice, you need to rank the importance of these various features so that you can see which application suits you best.  [end]  
The author Dave Nevogt is the co-founder of Hubstaff and manages a team of 15+ contractors and developers on a daily basis.Dave has a deep understanding of what it takes to increase productivity and specializes in management of remote teams.You can get his free training on outsourcing and remote management.
Posted on 8:33 AM | Categories:

Hot new free accounting app: A review of Qualt

Leighann Morris for Accounting Bites UK writes: Qualt, sister company of Home Learning College, has developed a brand new free app that gives you an easy introduction to accounting. It’s like a taster with information, quizzes, dictionaries of terms and course options, based on the same syllabus as the AAT Access course, the first level of study for Accounting Technicians. I downloaded it to see what it was all about and it turns out it’s well worth getting.
Here are some screen shots of me navigating the app on iOS myself:
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 You can study 4 courses based on the AAT Access syllabus at your own pace. Above is the home screen, which you can return to any time. As you can see my profile is at the top; the app matches your profile to Facebook- but don’t worry it doesn’t post anything, it just means you don’t have to fill out your details.
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Modules are really easily laid out, with readable chunks of information and images to accompany the writing. It’s also super easy to click through the information- it’s in a slideshow kind of format.
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Above is a screen shot of the initial skills test, which you simply answer “agree” or “disagree”.
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The best part of the app is the dictionary of terms. Normally you’d have to write these out on post it notes. Major points here.
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 Quizzes test you on your knowledge as you progress, which is a fun way to learn.
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After completing the course, if you want to progress towards a recognised Accounting Technician qualification that provides you with the skills you need to work in an accounting job or set-up business for yourself, you can click on the “Take your Career Further” button to learn more.
Overall, the Qualt app is easy to use, enjoyable to navigate, beautifully laid out, and informative. 5/5 stars! 

Posted on 7:44 AM | Categories:

Solving the Retirement Income Puzzle: Gamma and the Tax Efficient Frontier

 David Lau,  Chief Operating Officer for Jefferson National & Think Advisor writes: You know about alpha and beta, but you should know about gamma, which provides  advisors with the foundation to help their clients generate more retirement income 
In an environment of low yields and higher taxes, as ongoing volatility remains a factor and Americans live longer, advisors must manage multiple challenges to help their clients generate lasting retirement income. 
Traditionally, fixed income has been the core of most retirees’ portfolios. After the financial crisis, many Americans saw it as a safe haven from the volatile stock market. But in today’s low yield environment, advisors cannot rely on fixed income alone to meet their client’s income needs. 
To help improve clients’ chances of generating more income for more years, many advisors seek to maintain a significantly higher allocation of equities in clients’ retirement income portfolios. But a higher allocation to equities comes with higher risks, making proactive strategies for risk management an increasing imperative. 
Research shows that most Americans still need to accumulate more assets to generate sufficient income in retirement, and outliving their assets in retirement has become their number one concern. Studies also indicate that even high-net-worth investors face serious risks to their retirement income—including rising healthcare costs, the threat of inflation and the impact of prolonged periods of increased tax rates on their investments.
Facing this triple threat of a low yield environment, maintaining adequate equity exposure and managing volatility, advisors are turning to tax-optimized tactics to increase Gamma. According to Jefferson National's latest survey of over 400 advisors, 85% say tax deferral is one of the most important solutions to maximize accumulation and generate more retirement income. 
What Is Gamma?
The concepts of Alpha and Beta are well known and regularly used by financial advisors to discuss investment strategies with their clients. However, these are not the sole factors that produce more retirement income. 
Last year, David Blanchett and Paul Kaplan of Morningstar introduced an intriguing new approach to measuring Gamma in their published research, “Alpha, Beta, and Now…Gamma.” This new approach to Gamma was developed "to quantify the additional value that can be achieved by an individual investor from making more intelligent financial planning decisions." According to the research, Gamma, when used in the context of generating more retirement income, is created from five factors:
1) asset location and withdrawal sourcing
2) total wealth asset allocation
3) annuity allocation
4) dynamic withdrawal strategy
5) liability-relative optimization. 
As clients are primarily concerned with outliving their retirement savings, we believe Gamma helps fill a gap in the discussion that advisors are having with their clients about their investment decisions. 
While all five factors play an important part to achieve Gamma and generate more retirement income, the factor of tax-optimized investing through asset location and withdrawal sourcing is becoming increasingly important for advisors and their clients, especially HNW clients who experience the highest burden when taxes rise. According to the research, there is measurable value in the asset location component of Gamma, which may add as much as 320 basis points (bps) of additional retirement income to client portfolios every year. 
As advisors work with their clients to maximize their investment performance while ensuring income in their Golden Years, boosting Gamma through tax-advantaged investing should be a key strategy. Specifically, advisors can look to a concept known as the "Tax-Efficient Frontier," which is simply locating assets based on their tax treatment to increase returns—without increasing risk. In fact, 88% of advisors surveyed leverage tax deferral by using asset location to help minimize the impact of taxes and enhance after-tax returns. 
Optimizing Portfolios Through Asset Location 
The Tax-Efficient Frontier begins with asset location, which is typically defined as placing assets in the most tax-advantageous account type. This decision should begin by considering the tax characteristics of asset classes, turnover rates, the time horizon for their clients’ investments and breakeven points. 
Advisors should not only evaluate their clients' portfolios by asset class or risk, but also by tax characteristics: identify the tax-efficient assets and tax-inefficient assets. Tax-efficient assets, such as index funds, funds with low turnover and passively managed investments generate long-term capital gains and dividends, currently taxed at a maximum of 20%. Tax-inefficient assets, such as bonds, REITs and many hedge-like funds, generate ordinary income or short-term capital gains, currently taxed as high as 39.6 percent. Moreover, actively managed investments can suffer the biggest hit: short-term capital gains tax plus the added cost of multiple transaction fees. 
To further evaluate tax efficiency we can look at breakeven points, which is the point in time when tax-deferral will help assets yield a better after-tax return. Tax-efficient assets typically have longer breakeven points and should be located in taxable vehicles, unless individuals plan on holding these assets for a time horizon of several decades. Conversely, tax-inefficient assets can have breakeven points of one year or less and should almost always be located in tax-deferred vehicles. 
Tax-Advantaged Solution to the Retirement Income Challenge 
Once the tax efficiency of assets has been determined, the next step is to evaluate which assets in the portfolio should be located in taxable vehicles and which should be located in tax-deferred vehicles such as IRAs, 401(k)s and next-generation variable annuities. This will minimize the impact of taxes on accumulation and maximize after-tax returns.
Placing tax-inefficient bonds, REITs, and investments that generate dividends in tax-deferred vehicles allows income to continue compounding for years without paying taxes until assets are distributed. This approach can be particularly attractive for clients who are close to or in retirement and who may still rely on bonds and dividends to provide conservative but predictable income. 
A tax-deferred vehicle provides additional benefits for advisors using tactical management , liquid alternatives or high turnover strategies, allowing them to reallocate as the market requires, to capture more upside, minimize the downside, while cutting costs and compounding the gains for years. In this way, tax-deferred vehicles help advisors controlhow much their clients pay in taxes and also when they pay taxes.
When using tax-deferred vehicles, it is first important to maximize contributions to qualified plans, such as an individual retirement account (IRA) or 401(k). However, high-net-worth individuals can easily max out the IRS' low contribution limits of qualified plans and will need additional vehicles and strategies to grow their portfolio while minimizing taxes. Specifically, the IRS' deferral limits for 401(k) plans is $17,500, which can be easily met by those who have higher incomes. 
One tax-deferred vehicle advisors can use is low-cost variable annuities. Many advisors are reluctant to use traditional variable annuities because of their high asset-based insurance fees, limited investment options, steep commissions, surrender fees and complex insurance guarantees. According to the survey, 52% of advisors who use traditional variable annuities are not satisfied with them and 54% of their clients express concerns about these products. 
However, a new generation of variable annuities has been designed to provide a low-cost tax-advantaged investing solution. For example, with a flat-fee variable annuity, advisors can help clients earn higher returns and build more long-term wealth while eliminating asset-based insurance fees altogether. Instead of complex insurance guarantees, flat-fee variable annuities offer a broad range of investment options, including liquid alternatives with unique strategies for managing volatility and funds designed for active trading with no transaction fees.
Even clients who have already accumulated enough assets to reach their retirement goal are still looking to their advisors for sophisticated planning to ensure that they will have enough income to last a lifetime. Blanchett and Kaplan's unique approach to using Gamma provides financial advisors with the foundation to help their clients generate more retirement income and achieve a secure financial future.
For investors who rely on fixed income, for those who use tax-inefficient strategies to manage volatility and for high-net-worth individuals who face rising tax rates, the impact of Gamma can be especially helpful as it alleviates taxes while generating more wealth for more years.
Posted on 6:22 AM | Categories:

Navigating The Myth of IRA Deductions

 Manasa Nadig for TaxConnections writes: ccording to the Merriam-Webster dictionary, a nest egg is a natural or artificial egg left in a nest especially to induce a hen to continue to lay there. Apparently this nest egg could be expanded to include teenagers still in bed at noon…but I digress! Well, we all know that a nest egg is a fund of money accumulated as a reserve and for most of us, that means a retirement account.

One general trend I saw this tax season was, as more and more median incomes rose shifting people into the next higher tax bracket, more often than not, retirement savings schemes such as the 401(k), the Individual Retirement Account (aka IRA) seemed to be the salaried man’s (or woman’s) major or only avenue to tax savings. This is what I tell my clients, if the government gives you an opportunity to avoid income taxes, you should graba hold of it and not let go.
There are various employer offered retirement plans, like the Section 401(k), 403 (b) etc. These have more or less the same rules for 2014. The maximum annual contribution for these plans remains unchanged at $17,500 and $23,000 if aged 50 and above. The Individual Retirement Accounts contribution limits also remain unchanged for 2014- $5,500 and $6,500 for age 50 and above.
The maximum contribution limits are easy to remember. The tricky part is understanding the phase-out limits for tax deductions when contributing to an Individual Retirement Account.
Most of the confusion arises when taxpayers are already contributing into an employer retirement plan and want to bolster that with an IRA contribution. The table below should help:
5-27-2014 4-06-04 PM

*If filing with the MFS status and the taxpayer did not live with the spouse at any time during the year, the IRA deduction is determined as if under the “Single” filing status.
If you go through the above table you will get that being in the “Full Deduction” and “No Deduction” group is easy to figure out, however if you fall into the “Partial Deduction”, make sure you talk to a tax professional BEFORE you make your IRA contribution for the year.
I would say DO NOT try any of these calculations on your own if you do not know what your Modified AGI or MAGI is going to be for the year.
Posted on 6:18 AM | Categories: