Thursday, October 9, 2014

Xero posts steady revenue growth / Analyst Forsyth Barr upped its forecast of Xero stock rating to "underperform".

Tom Pullar Strecker for Stuff.NZ.Co writes: Analysts remain troubled by Xero's sales trajectories outside its engine rooms in Australia and New Zealand, despite the company reporting steady overall growth in its half-yearly update.
The Wellington online accounting firm reported that its global work force had topped 1000 and said expatriate Kiwi Andy Lark would join the company next month as its chief marketing officer.
Xero said its subscription revenue grew 85 per cent to reach $52 million during the six months to the end of September, and it confirmed its July guidance that it expected about an 80 per cent annual increase in sales in the year to March, before taking into account any movements in the dollar.
It has yet to release its audited interim results but said it expected its loss to be about $25m.
Xero shares were down 0.8 per cent at $21 in mid-afternoon trading.
Woodward Partners analyst Nick Lewis said a "fantastic" 115 per cent jump in Xero's Australian revenue to $23.9m for the half-year was stronger than he had expected.
He said that was offset by a lower than expected doubling of its sales in the "conservative" British market, which contributed $8m to its interim revenue.
Xero's sales in New Zealand, where its business is more mature, rose 42 per cent to $15.1m.
Xero's interim revenue in North America grew 131 per cent to $3m, year on year, but its 22,000 customers there still accounted for less than 6 per cent of its total sales.
Forsyth Barr was concerned the update showed Xero had added only 4000 customers in North America during the six-month period.
Analyst Blair Galpin said that was "slow progress", which overshadowed its strong growth in Australia.
Forsyth Barr upped its forecast of Xero's annual loss to $50m, cut its target share price by $1.25 to $20.50 and reduced its stock rating to "underperform".
Galpin noted that investors who participated in a $180m capital raising last year would be free to trade the 9.9 million shares they acquired in a week's time.
Many of the shares held in escrow were owned by United States investors, and Xero would need to show them how it would gain traction in that market, he said.
Lewis said Xero was not gathering steam in the US. "This is a disappointment for everybody, I'm sure."
He said Xero had consumed $40m of cash during the six-month period and that as the company was still hiring, a day of reckoning was approaching.
"Our prediction is they will want to raise more capital in about a year's time," he said.
"But absent of a 'US growth story' it will be really hard to pull off a Nasdaq listing. So they have got 12 months to sort the US out."
Xero said Lark, as its global chief marketing officer, would help its drive into the US.
It is still recruiting to replace former PayPal vice-president Peter Karpas, who left Xero last month after seven months in charge of its US operations.
Lark is a former vice-president of marketing at computer-maker Dell and more recently chief marketing officer of the Commonwealth Bank in Australia, which he left last November after two-years.
One of the most active members of the Kiwi expat tech community, Lark describes himself on his website, The Daily Lark, as a "prolific writer, blogger and speaker on marketing, technology and Web 2.0".
He is on the board of Christchurch software maker SLI Systems, Mighty River Power and Wellington information technology services firm Fronde, which has a possible NZX listing on the backburner.
Xero spokeswoman Janna Wilkinson said Lark would continue to reside in Sydney but would travel to all Xero's major markets.
Posted on 7:47 PM | Categories:

Xero shares under $20 after downgrade / Goldman Sachs slapped a sell recommendation on XERO - has a 12-month price target of $18 on the stock.

Christopher Adams for the New Zealand Herald writes: Xero shares fell sharply this morning after Goldman Sachs slapped a sell recommendation on the New Zealand accounting software developer
The brokerage said Xero's customer growth in the United States had been disappointing and the company's major rival in that country, Intuit, is experiencing increased success with its Quickbooks offering.
The technology stock dropped 5 per cent through the key $20 threshold to $19.90 in early trading.
In a research note Goldman analyst Robbie Aitken said the firm's latest trading update showed "solid trends" in this country, Australia and Britain.
However, the 4000 US subscribers Xero had secured during the first half of its current financial year was disappointing, he said.
"We believe structural factors will lead to slower growth in the US at a time when [Intuit] is having renewed success with its Quickbooks Online offering."
Yesterday's trading update came three weeks after the company announced the sudden resignation of its recently appointed US chief executive, Peter Karpas.
Goldman, which previously had a neutral recommendation on Xero, has a 12-month price target of $18 on the stock.
Wellington-based Xero had 22,000 paying customers in North America as of September 30, up from 10,000 a year earlier, according to yesterday's trading update.
Paying customers in New Zealand rose 38 per cent from their September 2013 level to 119,000, while Australian customers doubled to 158,000 and UK customers increased 103 per cent to 61,000.
Xero had a total of 371,000 customers at the end of last month, 76 per cent up on the same time last year.
Chief executive Rod Drury said he was disappointed by the view Goldman had taken in its latest research note.
"We're one of the best Saas [software-as-a-service] companies in the world," Drury said.
Xero's annualised revenues are now running at $132.3 million, up 87 per cent on the same time last year.
"I'm sure that if we're not the best we're in the top one or two in the world at those growth rates," Drury said. "We're doing exactly what we said we'd do. We said we'd focus on New Zealand and Australia for the last couple of years and those are massive markets and they're paying off."
He said Xero was well-positioned against Intuit's "execution".
"[Goldman's view] doesn't reflect the picture we see," Drury said. "We've beaten Intuit in three markets."
He said New Zealand-based analysts didn't understand "the significance of what we're doing".
Deutsche Bank maintained its sell rating on Xero following yesterday's update, saying growth was "extremely weak" in the US but strong overall.
Deutsche lowered its 12-month price target from $18.90 to $18.50.
Xero also announced yesterday it had secured high-profile expat New Zealander Andy Lark to become its chief marketing officer.
The company expects a net loss of $25 million of the six months to September 30.
Posted on 7:34 PM | Categories:

Investors unimpressed by Xero's jump / Analyst Lower XERO Target Price

Radio New Zealand News writes: Investors responded in a luke-warm fashion to Xero's 79 percent jump in first-half sales, mainly because they're disappointed with the growth in customers in the United States.
Xero shares ended down 1 percent at $20.95 yesterday.
The software accounting company expects to post a loss of about $25 million for the latest six months, up from $17 million in the previous first half.
Xero's sales for the six months ended September rose to more than $54 million while annualised subscription revenue has now reached more than $132 million from $93 million in March.
However, customer numbers in the US reached 22,000, up just 4000 since March.
Chief executive and founder, Rod Drury, was obviously sensitive to criticism and suggestions from an analyst that Xero probably would not get traction in the US until the 2017 financial year.
"I think it'd be good if some of the New Zealand analysts did a bit more work and actually looked at what was happening in the market, especially look at what's happening in the UK and Australia."
Xero's employees passed a thousand in the latest six months and it still had nearly $171 million in cash at the end September.
Xero's largest market is Australia where customer numbers leapt 49,000 to 158,000.
Mr Drury said there was plenty more growth available across the Tasman too.
Posted on 5:44 PM | Categories:

Intuit Patent # 885537 / Method and system for semi-automated setup of accounts within a data management system (Digital images of credit cards and checks, etc are captured & processed)

Intuit Patent No.8855377 : Digital images of account related items, such as credit cards, membership cards, ATM cards, checks, etc., are captured. The digital image of the account related items is then converted into electronic account data that is used to auto-fill add account information data fields of add account forms and semi-automatically add the accounts associated with the account related items to a data management system.

If you're interested in seeing that actual patent, complete with diagrams of checks and credit cards, flow charts, and a detailed explanation on how it all works?...Click Here: Intuit Patent 8855377.

Description

BACKGROUND

Over the past decade data management systems have enjoyed increasing popularity and use throughout the world. One important class of data management systems currently available are financial management systems.
Financial management systems are typically software applications which, along with a parent computing system or device, help users manage their finances by providing a centralized interface with banks, credit card companies, and other various financial institutions, to access associated accounts and obtain financial data for electronically identifying and categorizing user financial transactions. Currently, financial management systems typically obtain data associated with electronic financial transactions, such as payee, payment amount, date, etc. via access to a user's accounts with banks, credit card providers, or other financial institutions, using user provided login data and electronic data transfer systems or various other means for transferring financial transaction data.
While, as noted, financial management systems have enjoyed increasing popularity and now offer a significant array of services and/or features on both desktop and mobile platforms, one area that continues to be problematic for users of financial management systems, and particularly users of mobile financial management systems, is the process of adding and/or changing accounts that are to be accessed in order to provide data to the financial management system. This is particularly problematic when the user is initially using the financial management system because there are typically multiple accounts to be added, and the experience is likely to create the user's first, and lasting, impression of the financial management system and its ease of use
Currently, when a user of a financial management system desires to add or change one or more accounts to be associated with, and/or accessed by, a financial management system, the user must first access and interact, e.g., tap or otherwise manipulate, an interface screen on a display device of a user computing system to begin the add account process for each new bank account, credit card account, or other type of account.
The user must then search for the required/desired financial institution name associated with the new account in a search box, drop down menu, etc. In many cases, this step alone becomes an issue as potential users of financial management systems are often unable to find the desired financial institutions to add for one of various reasons including, but not limited to, typographical errors and/or misspellings, or the financial institution is not included in the provided listing of financial institutions.
Once, and if, the financial institution associated with the account is discovered/selected, the user must then select the financial institution name associated with the account and enter the account number manually. Only then can the user begin to enter the user's login data, e.g., password and user name, for the account.
Currently, even if successful, the add account process described above is tedious and must be repeated for each new/added account; thereby requiring the repeated accessing of multiple screens and/or interfaces for each added account. As a result, the current add account process is extremely burdensome for the user and particularly problematic for mobile computing system users who must enter the data via small display screens and with limited data input interface devices and capabilities.
Given that the process of adding and/or changing accounts for use with a financial management system plays a crucial role in enhancing user/customer satisfaction, and often determines if the customer continues the implementation and use of the financial management system, the situation described above is a significant problem for both the potential user of a financial management system and a provider of the financial management system. In addition, the situation described above is even more problematic for the ever increasing number of mobile financial management system users.
What is needed is a method and system to simplify the process of adding and/or changing accounts to be used within a data management system by making the add/change account process highly automated, intuitive, easy, efficient, and relatively error free.

SUMMARY

In accordance with one embodiment, a system and method for semi-automated setup of accounts within a data management system includes a process for semi-automated setup of accounts within a data management system whereby the common availability of digital image capturing capabilities, such as digital cameras, on computing systems, and particularly mobile computing systems, is leveraged. In one embodiment, digital images of account related items, such as credit cards, membership cards, or ATM cards, checks, etc., are captured. In one embodiment, a digital image of multiple account related items is captured at once.
In one embodiment, one or more edge/boundary systems are used to detect each individual account related item. In one embodiment, the digital image of the account related items are then converted by one or more OCR systems into electronic account information data that is used to auto-fill add account information data fields of add account forms and semi-automatically add the accounts associated with the account related items to a data management system, such as a financial management system.
Using the system and method for semi-automated setup of accounts within a data management system as disclosed herein, a process is provided to simplify the add account process by making the add account process highly automated, intuitive, easy, efficient, and relatively error free.
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Posted on 4:36 PM | Categories:

NetSuite Announces Next-Generation Premier Payroll Service / New Capabilities Scale Payroll Processing, Automate Payroll Workflows and Simplify Management, Delivering Greater Flexibility and Efficiency

NetSuite Inc. N, -1.36% the industry's leading provider of cloud-based financials/ERP and omnichannel commerce software suites, today announced its next-generation premier payroll service focused on boosting scalability, performance, and usability. These next-generation features include: a payroll interface that validates all leave, payroll and salary data; full gross-to-net calculations; support for check printing, pay cards and direct deposit; dramatically enhanced payroll workflows that handle unprecedented large transaction volumes; and employee self-service, expense tracking seamlessly integrated into ERP. NetSuite Premier Payroll Service users will be able to improve efficiency, visibility, and flexibility in managing payrolls. Companies can deploy NetSuite Premier Payroll Service at large, multi-location enterprises within the U.S. employing thousands of employees and contingent workers and take advantage of a new streamlined and intuitive user interface, leveraging the design elements and extensive user testing of the new NetSuite user interface with progressive disclosure, optimized user interfaces, and a flatter, more modern look.
"Complex payroll environments consume inordinate amounts of time and money, especially at fast-growing companies that need to focus resources on innovation and customer service," said Joseph Fung, Vice President of HCM Products at NetSuite. "These next-generation new features in NetSuite Premier Payroll Service make it the go-to solution for businesses that want to improve payroll accuracy and cost-efficiency while natively integrating with NetSuite accounting, expense management and commissions."
Many businesses confront the challenge of trying to move data between disparate systems spanning time and attendance, employee contact forms and compensation data from the ERP system. Each step requires imports and exports of data, often involving cumbersome manual entry or confirmation. NetSuite's Premier Payroll Service, with built-in employee self-service and a fully integrated payroll interface that automatically enters time, salary, and payroll data with a modern, social UI eliminates the multiple batches that are often required for every pay run.
NetSuite's Premier Payroll Service natively supports NetSuite cloud accounting, expense management, and commissions to deliver end-to-end process efficiency and control. This full-service solution automatically calculates earnings, deductions, contributions, taxes, paid time off, and more, with payments to personnel via direct deposit, printed checks, or purchasing cards. NetSuite Premier Payroll Service automates all payroll tax filings with U.S. federal, state, and local jurisdictions and streamlines creation and delivery of year-end Form W-2 and Form 1099-MISC.
New capabilities in NetSuite Premier Payroll Service include:
Deeper editing capabilities. Payroll managers will be able to make adjustments to information at a line-item level without recalculating the entire payroll batch.
Dramatically enhanced payroll workflows. High volume, complex payroll batches are processed quickly and efficiently.
Processing suspension. A payroll batch run can be suspended while in progress so revisions can be made with automatic resumption from the point of change.
New filtering and searching. Capabilities to filter and search by employees and other criteria improve overall control and management of payroll batch creation and execution.
Increased flexibility in managing automated processes. Managers will be able to adjust automated deductions and contributions within a payroll batch without creating separate data sets.
Next-generation UI. An enhanced user interface provides a simple, intuitive environment better designed to support larger data volumes and employee populations.
The above enhancements to the NetSuite Premier Payroll Service are expected to be available in early 2015.
Today, more than 20,000 companies and subsidiaries depend on NetSuite to run complex, mission-critical business processes globally in the cloud. Since its inception in 1998, NetSuite has established itself as the leading provider of enterprise-class cloud financials/ERP suites for divisions of large enterprises and mid-sized organizations seeking to upgrade their antiquated client/server ERP systems. NetSuite excels at streamlining business operations as demonstrated in a recent Gartner study naming NetSuite as the fastest growing financial management software vendor on a global basis. NetSuite continues its success in delivering the best cloud ERP/financials suites to businesses around the world, enabling them to lower IT costs significantly while increasing productivity, as the global adoption of the cloud is accelerating.
Posted on 3:49 PM | Categories:

Year-end planning: Careful handling of capital gains and losses can save taxes

Thomson Reuters Tax & Accounting writes: Individuals who lost money in the stock market in 2014 may have other investment assets that have appreciated in value.As this article explains, these taxpayers should consider the extent to which they should sell appreciated assets before year end (if their value has peaked) and thereby offset gains with pre-existing losses.
Capital gain and loss basics.Long-term capital losses are used to offset long-term capital gains before they are used to offset short-term capital gains.Similarly, short-term capital losses must be used to offset short-term capital gains before they are used to offset long-term capital gains.Noncorporate taxpayers may use up to $3,000 of total capital losses in excess of total capital gains as a deduction against ordinary income in computing adjusted gross income (AGI).
For 2014 and 2015, a noncorporate taxpayer is subject to tax at a rate as high as 39.6% on short-term capital gains and ordinary income.Long-term capital gains are taxed at a rate of:
…20% if they would be taxed at a rate of 39.6% if they were taxed as ordinary income,
…15% if they would be taxed at above 15% but below 39.6% if they were taxed as ordinary income, and
…0% if they would be taxed at a rate of 10% or 15% if they were taxed as ordinary income.
Note that for purposes of the 3.8% net investment income tax (NIIT) under Code Sec. 1411, net investment income (NII) includes net gain (to the extent taken into account in computing taxable income) attributable to the disposition of property, other than property held in a trade or business to which the NIIT doesn’t apply, minus the deductions that are properly allocable to that net gain.Gains taken into account in computing NII (to the extent not offset by capital losses) include gains from the sale of stocks, bonds, and mutual funds and capital gain distributions from mutual funds.
Restricting annual payouts from retirement plans and IRAs to the required minimum distribution (RMD) (and taking cash from other accounts as needed) may help some taxpayers to take advantage of a lower capital gains rate.Note, however, that gain on the sale of collectibles or section 1202 stock is taxed at the lesser of 28% or the rate at which it would be taxed if it were taxed as ordinary income, and unrecaptured section 1250 gain on the sale of depreciable real property is taxed at the lesser of 25% or the rate at which it would be taxed if it were taxed as ordinary income.
How to make the most of losses.A taxpayer should try to avoid having long-term capital losses offset long-term capital gains since those losses will be more valuable if they are used to offset short-term capital gains or ordinary income.To do this requires making sure that the long-term capital losses are not taken in the same year as the long-term capital gains are taken.However, this is not just a tax issue.As is the case with most planning involving capital gains and losses, investment factors need to be considered.A taxpayer won’t want to defer recognizing gain until the following year if there’s too much risk that the value of the property will decline before it can be sold.Similarly, a taxpayer won’t want to risk increasing the loss on property that he expects will continue to decline in value by deferring the sale of that property until the following year.
To the extent that taking long-term capital losses in a different year than long-term capital gains is consistent with good investment planning, the taxpayer should take steps to prevent those losses from offsetting those gains.
RIA illustrationEarly in 2014, Dan, a single taxpayer in the 35% tax bracket, recognized short-term capital gains of $150,000.He has not recognized any other capital gains or losses in 2014.Dan owns Corp W bonds with a basis of $800,000 that he has held for a number of years and are now worth $900,000, due solely to the decline in interest rates that took place after he acquired the bonds.He’d like to sell the bonds and invest the proceeds elsewhere, and doesn’t expect much movement in Corp W bonds over the next three or four months.Dan also owns some stock in Corp Z that he has held for more than one year, which has a value of $700,000 and a basis of $825,000.Dan expects the value of this Corp Z stock to either remain about the same or decline even more.He would like to sell the Corp Z stock.
…If in 2014, Dan sells the Corp Z stock, recognizing a $125,000 long term capital loss, and also sells the Corp W bonds, recognizing a $100,000 long-term capital gain, the long-term capital gain will be offset completely. Additionally, Dan will have $25,000 of long-term capital loss to offset $25,000 of his short-term capital gain. However, he’ll pay a $43,750 tax on the $125,000 balance of his short-term capital gain (35%).
…If Dan sells the Corp Z stock in 2014, and waits until 2015 to sell the Corp W bonds, he will have a long-term capital loss of $125,000 on the stock sale, which will offset $125,000 of his short-term capital gains if he has no other capital gains or losses in 2014. For 2014, he’ll pay $8,750 in tax on the remaining $25,000 of short-term capital gain ($25,000 × .35), and for 2015, he’ll pay tax of $15,000 on the Corp. W bond gain ($100,000 × .15) for that year. His total tax cost over 2014—2015 will be $23,750 ($8,750 + $15,000).
Thus, by taking the long-term capital losses in 2014, and deferring the long-term capital gains until 2015, Dan saves $20,000 in taxes in the two years combined ($43,750 less $23,750).
However, another consideration may be relevant to taxpayers in the situation described above.If a taxpayer doesn’t have a net capital loss for 2014, but expects to realize capital losses in 2015 well in excess of the $3,000 ceiling, he should consider shifting some of the excess losses into 2014.That way, the losses can offset 2014 gains and up to $3,000 of any excess loss will become deductible against ordinary income in 2014.
How to preserve investment position after recognizing gain or loss on stock.For the reasons outlined above, paper losses or gains on stocks may be worth recognizing this year in some situations.But suppose the stock is also an attractive investment worth holding onto for the long term.There is no way to precisely preserve a stock investment position while at the same time gaining the benefit of the tax loss, because the so-called “wash sale” rule precludes recognition of loss where substantially identical securities are bought and sold within a 61-day period (30 days before or 30 days after the date of sale).Thus, a taxpayer can’t sell the stock to establish the tax loss and simply buy it back the next day.However, he can substantially preserve an investment position while realizing a tax loss by using one of these techniques:
…Double up. Buy more of the same stocks or bonds, then sell the original holding at least 31 days later. The risk here is of further downward price movement.
…Sell the original holding and then buy the same securities at least 31 days later.
…Sell the original holding and buy similar securities in different companies in the same line of business. This approach trades on the prospects of the industry as a whole, rather than the particular stock held.
…In the case of mutual fund shares, sell the original holding and buy shares in another mutual fund that uses a similar investment strategy. A similar strategy can be used with Exchange Traded Funds.
RIA observation:The wash sale rule applies only when securities are sold at a loss.As a result, a taxpayer may recognize a paper gain on stock in 2014 for year-end planning purposes and then buy it back at any time without having to worry about the wash sale rule.
Posted on 3:36 PM | Categories:

Health Savings Accounts Offer Tax Breaks

Article Highlights:
  • Health Saving Accounts Tax Breaks
  • Eligibility
  • Contribution Limits
  • Example
A health savings account (HSA) is a trust account into which tax-deductible contributions can be deposited by qualified taxpayers who have high-deductible medical insurance plans. These accounts are set up at a bank or other financial institution. Income earned on the HSA balance is income tax-free. The funds from these accounts are then used to pay qualified medical expenses not covered by an eligible individual’s medical insurance. If these funds are not used, they roll over year to year. At age 65, the funds can be used like a retirement plan (taxable when withdrawn, but not subject to a withdrawal penalty) or continue to be saved for future medical expenses. Since the contribution is an above-the-line deduction, a taxpayer need not itemize to take advantage of this tax break. The rules discussed here are applicable to federal tax returns and may not apply to your particular state.

Who qualifies for an HSA? An eligible individual is one who is covered by a high-deductible plan (defined below) and, while covered by that high-deductible plan, is not also covered by another plan that does not have a high deductible. For purposes of determining if there is coverage that does not have a high deductible, the law allows certain types of coverage such as worker’s compensation, insurance for a specific condition, dental care, vision, long-term care, and certain others to be disregarded.

Any eligible individual, whether employed, unemployed or self-employed, may contribute to an HSA. Unlike IRAs, there is no requirement that the individual have compensation and there are no phase-out rules for high-income taxpayers.

High-deductible Plans - For 2014, high-deductible plans are defined as those with the following deductible amounts:

o Self-only coverage with an annual deductible of $1,250 or more and limits on annual expenses, other than premiums, required to be paid by the plan during the year, up to $6,350; or

o Family coverage with an annual deductible of $2,500 or more and limits on annual expenses, other than premiums, required to be paid by the plan during the year, up to $12,700.

  • Qualified Medical Expenses – Qualified medical expenses that can be paid from these accounts are generally defined as those that would be allowable as a medical deduction on your tax return.  
  • Contribution Limits - The eligibility and contribution amounts for these accounts are determined monthly. Therefore, during any month in which you qualify, you would be entitled to contribute 1/12 of the annual limits. However, an eligible individual who establishes an HSA plan during the year and is still an eligible individual during the last month of the year (December) can contribute the full-year amount (does not need to prorate the contribution). For 2014, the annual limits (note these values are adjusted annually for inflation) are:  
  • $3,300 for single coverage plans;
  • $6,550 for family coverage plans; and
  • $1,000 additional for individuals age 55 or older.
Individuals entitled to benefits under Medicare and those claimed as a dependent on another person’s tax return cannot make contributions. Contributions can be made as late as the due date of the tax return without extensions, and contributions in excess of the allowable amounts are subject to an annual 6% excise penalty.

If you are eligible for an HSA and your employer contributes to your HSA, the contributions (within the limits) are treated as employer-provided coverage for medical expenses under an accident or health plan and are excludable from your gross income. They are not subject to income tax or FICA withholding (or FUTA tax). If contributions to your HSA are made through your employer’s cafeteria plan, the contributions are treated as employer contributions. An employee may not deduct the employer’s HSA contributions as either an HSA contribution or a medical expense on his or her return.

Example: John, a single taxpayer, age 58, begins a high-deductible health plan with an annual deductible of $5,000 in March of 2014. He continues in the plan through the end of the year. He may set up an HSA, and is eligible to contribute the full year’s maximum of $4,300 ($3,300 plus $1,000 for being over 55) since he was in the high-deductible health plan in December. John’s employer does not contribute to the HSA. When John files his 2014 tax return, he claims an above-the-line deduction of $4,300. If John were in the 25% tax bracket, he would realize a tax savings of $1,075.

In January of 2015, John has $800 worth of medical expenses that are not covered by his health plan, so he withdraws $800 from his HSA to pay for them. The $800 distribution is not taxable income, but he can’t include the $800 as a medical expense for itemized deductions.
Posted on 12:33 PM | Categories:

In a marked heating up of the battle currently being waged between small business accounting software providers MYOB and Xero, MYOB chief Tim Reed has questioned Xero’s latest numbers and planted a stake in the ground when it comes to any claim by his Kiwi upstart rival to market leadership.

Peter Dinham for ITWire.com writes: New Zealand-based Xero is pulling out all stops to build its Australian business and challenge the market dominance of the 800 pound gorilla MYOB.

But according to MYOB boss Reed, Xero’s claimed numbers do not say anything about the type of customers the company has compared to the MYOB customer base, with a significant portion simply being non-paying customers of accountants using Xero.

Xero’s announcement today that it has doubled its Australian customer numbers over the past 12 months, with 158,000 Aussie customers (up from 79,000 one year ago) now using its online accounting platform, appears to show that it may be starting to make some inroads into the MYOB marketshare.

Xero says today its total customer numbers for the combined Australia and New Zealand market have now topped 277,000 and that a recent survey of its new customers who had joined the software since September 2013 found 67% of those who responded had switched from a “rival accounting software provider”.

Of course, that rival software provider is MYOB which just last month said it had “surpassed a record client milestone” of 100,000 online subscribers, and “further cementing its leadership in cloud accounting”.

Commenting on Xero’s numbers, Tim Reed says “It’s important to differentiate between Xero’s clients that are on simple ledgers through accountants (practice ledgers) and those that are similar offerings to our do-it-yourself cloud solutions (business ledgers)”.

Posted on 11:24 AM | Categories:

6 Key Tax and Financial Implications of the Supreme Court's Latest Action on Gay Marriage

Ken Berry for CPA Practice Advisor writes: The impediments to same-sex marriages throughout the country are being washed away. This trend has continued in the wake of the landmark Supreme Court decision last year (Windsor v. U.S, No. 12-307, 6/26/13) invalidating Section 3 of the Defense of Marriage Act (DOMA).
In the latest development on October 6, 2014, the U.S. Supreme Court refused to hear cases from five states -- Indiana, Oklahoma, Utah, Virginia and Wisconsin – where same-sex marriage is prohibited by state law. If six other states covered by the same circuit appeals court -- Colorado, North Carolina, South Carolina, Kansas, West Virginia, and Wyoming – drop their bans as expected, the number of states allowing same-sex marriage would increase from 19 to 30, or more than half the 50 states.
What are the financial repercussions? Although certain aspects are still being sorted out, here’s a brief summary of the lay of the land in several key areas. [snip].  The article continues @ CPA Practice Advisor, click here to continue reading....
Posted on 9:48 AM | Categories:

Intacct Hires Kevin Cumley to Continue Strategic Growth with Accounting Firms / Experienced Leader Joins Intacct as Director of the Intacct Accountants Program

Intacct, a leader in cloud financial management and accounting software, today announced the hiring of Kevin Cumley as its new director of the Intacct Accountants Program offered in collaboration with CPA.com. The addition of Cumley to the Intacct Channels Team will help the company continue its growth with accounting firms and other providers of outsourced accounting services, and further strengthen Intacct's relationship with CPA.com, an American Institute of Certified Public Accountants (AICPA) company. Cumley reports to Taylor Macdonald, vice president of Channels at Intacct.
Kevin Cumley joins Intacct from Abila, where he was the vice president of Strategic Alliances. Prior to Abila, Kevin was the president of Forepoint – a top Sage and Deltek value-added reseller. Cumley also has a long-standing working relationship with CPA.com whose mission is empowering CPAs and businesses for the digital age.
Intacct has a strong and growing presence among top accounting firms. Currently, 28 of Accounting Today's Top 100 Firms use Intacct applications to serve the needs of their clients – the most of any cloud financial system. Furthermore, in 2009, CPA.com named Intacct as a preferred provider of financial applications for AICPA Business Solutions.
"Intacct's cloud financial applications plays an important role in helping top accounting firms serve as a trusted advisor for their clients," said Taylor Macdonald, vice president of Channels for Intacct. "Kevin is an experienced leader and his addition to our team will provide a new level of focus around the Intacct Accountants Program. I am confident that Kevin's strong background will allow him to deliver a high level of value and increase the success of all our partners."
"The firms we're recruiting into the Intacct Accountants Program are committed to building high-value strategic advisory practices," saidMichael Cerami, vice president of business development and corporate strategy for CPA.com.  "Kevin understands the key to success in doing so is as much about firm enablement as it is about technology adoption. Our firms and strategic account teams will benefit greatly from his practical knowledge and insights."
"I am excited to join Intacct and be a part of a dynamic team of top-notch channel professionals," said Kevin Cumley. "Intacct has built an amazing program for accounting firms and I'm passionate about helping to make a positive difference for these partners. I look forward to continue working closely with CPA.com to help accounting firms leverage the benefits of the cloud with Intacct, and expanding Intacct's successful accountants program."
Cumley graduated from Eastern Washington University with a degree in Accounting and Information Technology. He is also a past chairman of the Information Technology Alliance.
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Posted on 9:28 AM | Categories:

Tax Benefits for Grandchildren

Roberton Financial Group writes: Article Highlights: 
  • Financially assisting grandchildren 
  • College savings 
  • Education savings 
  • Retirement accounts 
  • Medical expenses 
If you are a grandparent there are a number of things you can do to teach your grandchildren financial responsibility and set aside money for their future education and retirement. Before we get into actual suggestions, it is important that you understand the gift tax rules. You can give anyone, every year, an amount up to the annual gift tax exclusion. The gift tax exclusion is inflation-adjusted and is currently $14,000, which means that, in 2014, you can give any number of recipients up to $14,000. Thus, you can give each grandchild $14,000 per year; and, if you are married, both you and your spouse can each give $14,000 for a total of $28,000 per year. Gifts in excess of $14,000 per donee can certainly be made, but doing so will mean the grandparent must file a Gift Tax Return (Form 709) and pay gift tax on taxable gifts in excess of a lifetime gift and estate tax exclusion ($5.34 million for 2014). 

Of course, just handing out money to your grandchildren will not teach financial responsibility or meet specific goals you might have in mind for the money. 

The following are some suggestions. 

Savings for College: The tax code allows taxpayers to put away large amounts of money limited only by the contributor’s gift tax concerns and the contribution limits of the intended state plan. There are no income or age limitations for these plans, often referred to as Sec. 529 Plans (the tax code number) or Qualified Tuition Plans. The maximum amount - per beneficiary - that can be contributed is based on the projected cost of a college education and will vary among state plans. Some states base their maximum on an in-state four-year education, while others use the cost of the most expensive schools in the U.S., including graduate studies. These plans allow for tax-free accumulation provided the funds are used for qualified college expenses. Thus, a grandparent can currently contribute up to $14,000 per year to a Sec. 529 Plan. There are also special provisions that permit 5 years’ worth of contributions up front (this requires filing gift tax returns). 

Savings for Education: Funds from a Sec. 529 plan can only be used for college. Coverdell Education Accounts also provide tax-free accumulation like Sec. 529 plans; but, unlike Sec. 529 Plans, the funds can be used for education beginning with kindergarten and continuing through college. So, you might want to consider contributing the first $2,000 (Coverdell annual contribution limit) to a Coverdell account. One downside to a Coverdell account is that it becomes the child’s account to do with as the child wishes when the child reaches the age of majority (age varies by state); while, with the Sec. 529 plan, the contributor maintains control of the plan’s distributions. 

Roth Retirement Account: You may have a teenage grandchild who has a part-time job. To the extent the child has earnings from work, you – the grandparent – could fund an IRA for him or her. Generally, a child with a part time job will benefit very little, if any, from a traditional IRA deduction, so a Roth IRA is generally a better choice. Any contribution for 2014 would be limited to the lesser of $5,500 or the child’s earned income. A Roth IRA accumulates earnings tax-free and distributions are tax-free at retirement age. The amount of the IRA contribution you pay is considered a gift to the grandchild, and it goes against the annual gift tax exclusion amount. For example, if your grandchild had $3,500 of wage income in 2014 and you funded $3,500 into an IRA for the grandchild, the remaining balance of the $14,000 annual exclusion would be $10,500. If you decided to buy your grandchild a $12,000 used car later the same year, you would be over the annual exclusion amount by $1,500 and would need to file a gift tax return. You would likely not owe any gift tax unless you’ve previously made large gifts, but the $1,500 does reduce your lifetime gift and estate tax exclusion. 

Tuition and Medical Gift Exclusion – In addition to the annual exclusion, a grandparent may make gifts that are totally excluded from the gift tax in the following circumstances: 

  • Payments made directly (Sec. 529 plans are not direct) to an educational institution for tuition. This includes college and private primary education. It does not include books or room and board. This could also create a tax credit of up to $2,500 for the individual who claims your grandchild as a dependent.
     
  • Payments made directly to any person or entity providing medical care for the donee. In both cases, it is critical that the payments be made directly to the educational institution or health care provider. Reimbursement paid to the donee will not qualify. The tuition/medical exclusion is often overlooked, but these expenses can be quite significant. Grandparents interested in reducing the value of their estate should strongly consider these gifts. 

Establish Trusts - Although a somewhat more complicated possibility and one that will require the services of a trust attorney, there are a variety of trusts that can be established to make future distributions to a grandchild based upon the grandchild’s future achievements, such as completing his or her college education, holding a job, overcoming an addiction, etc. 

Although none of these suggestions provides any current tax benefits for grandparents other than reducing the value of their future estate, they will help grandchildren get off to a good start in life. Please call this office for further details.
Posted on 6:59 AM | Categories: