Saturday, May 31, 2014

The Best Cloud-Based Accounting Tools for Small Businesses / It's taken more than a decade, but online accounting solutions for small businesses are finally close to matching their desktop counterparts. Here are the top-rated cloud-based products we've tested.

Kathy Yakal for PC Magazine writes: It's hard to deny the appeal of online, Web-based tools. From personal banking services to Gmail, the convenience of accessing your information from any Internet-connected device is unparalleled. Wouldn't it be ideal, if you could run your small business from the Web, too? While it might be premature for some businesses to move all their bookkeeping and management online, we're certainly getting closer to that dream. For some small and micro businesses, however, cloud-based tools already make perfect sense.

I looked at several of the top online accounting solutions and found four that are worthy of consideration, depending on the type and size of business you run. They all follow standard double-entry accounting rules, equipped with a customizable Chart of Accounts and the ability to create journal entries. You can create records for customers, vendors, items and employees. Using that data, your business can manage its income and expenses via transaction forms, such as invoices and bills.
Payroll processing is available in all these cloud-based solutions, either as an integrated add-on or as a standard feature. Financial reports give managers critical information about the company's financial standing. And businesses are encouraged to invite their accountants in to monitor their work and perform thorny tasks, like journal entries, which are at the core of the double-entry accounting system, but which are hidden by these applications' exceptional user interfaces and navigational tools.
These four also use Web and mobile technology capably. You can connect them to your financial institutions online and track transactions from your bank and credit card accounts, and mobile apps make accessing them remotely possible, too.
Only you (and your accountant) can decide if a cloud-based accounting solution is right for your business, but our in-depth reviews can help you start thinking about them. Click the titles of the services below to read our full reviews. Think we missed a great service? Had a terrific (or terrible) experience with a cloud-based accounting service? Let us know in the comments below. For PCMag's complete business coverage, please visit our business landing page[snip]  The article continues reviewing Quickbooks, Wave, Xero, & Paychex, continue reading by clicking here
Posted on 8:41 AM | Categories:

Tax Brackets and Cap Gains

David John Marotta for AdviceIQ writes:  How you deal with the new capital gains rates hinges on what your tax bracket is. The strategies to deal with cap gains differ for each level.
Capital gains taxes became very confusing last year. You might pay one of at least four different rates on market earnings, depending on how much income and gain you see in any year. Good news: You can take steps to chip away at even the harshest tax rates.
When you sell certain assets, such as stocks and bonds, you may incur capital gains. A capital asset also includes most property you own and use for personal or investment purposes. If the original purchase price of the asset plus associated expenses (the basis) is less than the proceeds you receive from the sale, you incur a capital gain.
The 0% rate. If you’re in the 10% or 15% federal tax brackets (in 2014, you must make less than $73,800 annually if married filing jointly or $36,900 if you file tax returns as single), you have this capital gains rate available.
If in these brackets, you can realize capital gains between your current adjusted gross income (AGI) and the top of the 15% tax bracket each year at a 0% rate. If you let your gains build and realize them all in one year, you pay a 15% tax on much of the gain.
The 15% rate. Most middle-income taxpayers pay this. Sometimes, trying to avoid paying this rate is not worthwhile, as we’ll show.
When you sell $20,000 of stock with a cost basis (original value) of $10,000, you pay capital gains on the $10,000 of gain. You owe federal tax of $1,500 (15%) plus your state tax. (In Virginia, where I live, that’s an additional 5.75%, or $575, for a total tax of $2,075.)
That leaves you only $17,925 of your original $20,000 to reinvest. When you reinvest, your new cost basis starts at $17,925 instead of $10,000, meaning you need to earn a little more on whatever you reinvest in to make up for the loss from taxes. The extra amount that you have to earn to break even is the growth hurdle.
(We previously explored the amount of this hurdle based on the percentage of appreciation and the amount of time you hold the new investment.)
If your investment is highly appreciated and you can only increase the return or reduce the expense ratio(operational costs that fund management charges you to oversee the money) by a little, say 0.20%, selling and buying slightly better investments may not pay. If you hold an investment with a higher-than-normal expense ratio (above 1%), selling the expensive position is nearly always better even if you must pay significant capital gains tax.
Another factor: If you hold highly appreciated stock in a single company, the risk to your portfolio is not worth trying to avoid capital gains. Whenever a single company’s stock represents more than 15% of your portfolio, work to trim your holdings in that stock.
The 18.8% rate. Should your modified adjusted gross income (MAGI) exceed $250,000 (if married filing jointly) or $200,000 (single), you owe an additional 3.8% for the Affordable Care Act. This tax rate applies up to the 39.6% federal bracket of $457,601 (if married filing jointly) or $457,601 (single).
In this situation, two financially successful persons have little incentive to get or remain married. The tax rates, and therefore the growth hurdle, are higher simply because their incomes or the profits of their businesses stack on each other and spill into the higher brackets.
Nevertheless, still diversify investments to reduce any one individual company’s stock in your portfolio.
The 23.8% rate. If in the 39.6% federal tax bracket and making $457,601 (married filing jointly or single), you are subject to a 20% capital gains tax. Since your MAGI is automatically high, you are also subject to the 3.8% Affordable Care Act tax as well, hiking your total federal tax to 23.8%.
Paying capital gains tax at this rate hurts, especially after adding in your top state tax rate. In Virginia that top rate is 5.75% – but California’s is 13.3%. Hurdle rates become particularly important for decisions regarding realizing capital gains.
The 10-year growth hurdle in California for an investment with a 100% unrealized capital gain is 1.25%. That means even if you hold the new investment for 10 years you must earn 1.25% more in the new investment to achieve the same spending money in 10 years as with the old, inferior investment.
If you hold the investment until you die and your heirs get a step-up in cost basis, meaning the asset’s cost basisresets to its current-day fair market value, your growth hurdle shoots to 2.24%
At this point, tap your charitable intentions. Gifting highly appreciated stock is one way to avoid such onerous tax rates.
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Posted on 8:35 AM | Categories:

Five reasons to ditch the spreadsheet in favor of an accounting app today

Todd Spear for GetApp writes: If the words “accounting software” do not immediately excite you, it’s perfectly understandable. Chances are you have not heard about the latest innovations in that area of tech. The latest cloud-based accounting apps are breathing new life into accounting in the digital space, a field formerly dominated by all those similarly-named accounting applications that you find in the electronics department at your local “big box” retailer. That is simply no longer the case – thankfully!
Those accounting applications are quickly going the way of the dodo as they are readily being replaced by software-as-a-service (SaaS) providers. SaaS uses the power of the computing cloud to put the accounting tools you need right at your fingertips, where you are in the world, with on-demand consistency. What’s more,financial reporting apps also offer the benefit of automatically updating with click-free ease.
If you’ve been using a legacy accounting application, or worse, an Excel spreadsheet, to manage your finances, now is the prime time to transition your financial reporting to the cloud. So what’s stopping you from putting your financial reporting in the cloud? Is it concerns over migration? Security? Ease of use?
Perhaps it’s some combination of all of the above. Whatever the case may be, in an effort to quell those fears and help you make a seamless transition to an accounting app, we’ve put together this list of five reasons to make the switch, sooner rather than later.

Reason #1: Modern accounting apps are more intuitive

If you think that an “app” isn’t quite an “application,” think again!
The current generation of cloud-based accounting apps boast all the features of legacy, desktop applications and a whole lot more.
Case in point: FinancialForce. FinancialForce sports an intuitive, feature-rich interface that easily rivals what you might have seen in a desktop application.
But FinancialForce ups the ante by adding Salesforce support, real-time reporting, and detailed, multi-dimensional analysis, all within a single-screen interface. And that is the most striking feature of current accounting apps – they bring everything you need to a simple, easy to navigate user interface.
FinancialForce puts everything you need all in one place.
Those old Excel spreadsheets, time-tested though they may be, just can’t compare to the ease of use of accounting apps like FinancialForce.

Reason #2: Apps put accounting on autopilot

Let’s face it, unless you are an accountant, you’d probably rather be doing something other than managing your finances. Say you’re a freelancer, for example. You’d rather be working in your craft than your accounting, right? Or, if you’re a busy owner/operator, you’d rather be keeping the wheels of business turning, right?
Accounting apps take the dread out of the financial equation.
Take an app like FreshBooks cloud accounting solution. Freshbooks is nowhere near as bogged down as legacy applications and complicated (read: always broken) spreadsheets. Freshbooks just works.
Such an app puts easy time tracking and snappy invoicing, as well as expense tracking and financial reporting, together in a super simple interface. In a nutshell, Freshbooks stands out as exemplary of the simplicity of the modern accounting app.
Even without reading the help guide, you can get started with it from day one – a testament to just how far accounting in digital has come compared with the steep learning curve of older applications (remember the first time you used Excel).
Accounting doesn’t get much easier than it does with Freshbooks.

Reason #3: Accounting apps grow with your business

Accounting apps scale alongside your business.
Zoho Books is among the most scalable accounting apps currently offered. What’s more, Zoho makes a suite of business apps and provide an email service, making the company one of the strongest (okay, admittedly few) companies that can seriously contend with Google’s lineup.
In Zoho Books you’ll find integrated (and easy) invoicing, online payment platform integration, time and expense tracking, and totally free support. If you’re already using another Zoho product, you’ll also find it easy to access contacts and share data interchangeably with Zoho Books.
While Zoho Books is the standout offering for SMBs and freelancers, larger enterprises with team members distributed around the world will find similar features in many of the accounting apps currently on the market, but, as always, some comparison shopping is advisable.
Zoho Books offers online payment integration by way of PayPal, Stripe, and others.

Reason #4: Accounting apps work on an international scale

Because accounting regulations vary from one locale to the next, accounting apps work with different currencies, languages, and rules. Some apps, like NetSuite OneWorld, can factor in international tax jurisdictions for more than 190 countries, making financial reporting a snap come tax season.
NetSuite OneWorld works with international currencies and tax codes to make your global business accounting worry free.
If your business is a large organization with a global reach, you really owe it to yourself to compare the accounting apps currently on the market side-by-side.

Reason #5: The QuickBooks switch is simple

If you are among the many users of Intuit’s QuickBooks you’ll be happy to know that the company now offers QuickBooks Online, a cloud-based version of its esteemed financial reporting software.
QuickBooks Online makes it easy to send invoices, accept payments, track expenses, and even conduct payroll services inside your browser or on your mobile device.
Like a familiar friend: QuickBooks Online is the easiest way for QuickBooks users to make the switch to cloud-based accounting.

Are you ready to make a seamless transition to an accounting app? Which one do YOU recommend?

If you’ve been clinging to an increasingly out-of-date legacy accounting app or an overwrought spreadsheet for too long, now’s the time to make the switch to an app. Accounting apps have hit their stride and come into their own as the best way to conduct financial reporting in the cloud.
GetApp has a comprehensive list of accounting apps, which is regularly updated for your convenience.
And we’ve got plenty of head-to-head comparisons to help you pinpoint the accounting app that’s perfect for your business.
Posted on 8:32 AM | Categories: