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January 2019

Tax Checklist for Small Businesses: Five SMB Essentials

Tax season has officially begun, and every business owner should start preparing to file their corresponding taxes. With millions of small and medium businesses starting every year, having a clear and simple tax checklist for small businesses should be of great help for everybody. Whether you are filing your taxes on your own or working with a tax consultant, these are five essentials we can’t forget about.  

To begin with, we should always make sure all our personal and business information is correct and mistake-free. Also, depending on the structure of our business, different tax forms will apply. Preparing your bookkeeping documents beforehand will make the job of your tax professional easier. For those who work from home, understanding home office deductions is key. Going over any other deduction eligibility will ensure we maximize our tax return, too. These are five essential tips for a useful tax checklist for small businesses.

Double Check Your Information 

One of the most essential items that must be on the top of any tax checklist for small businesses is checking your information. When filing our company’s taxes, make sure your legal name, social security number, address, and legal business name are correct. We must also confirm our Employer Identification Number is properly written, too. Any typos or mistakes could cause a significant delay in our refunds, and that’s the last we want.  

File the Correct Form 

Depending on the structure of our business, different forms will be required by the IRS. That’s why it is extremely important that we make sure we are filing the corresponding form for our company. Sole proprietors and single member LLCs on Schedule C will file the Form 1040 Individual Income Tax Return.  

Partnerships and multi-member LLCs should report their income and expenses using Form 1065. Form 1120-S is used by S Corporations. Plus, shareholders of any partnership, LLC, or S Corporation will receive a Schedule K-1 with the company’s income, deductions, and credits.  

Remember to double check with your tax professional before filing or issuing any form. They will help you make sure your company is using the right one.  

Prepare Your Bookkeeping Documents 

Having your bookkeeping records ready on a timely manner will make it easier for you and your tax preparer to get your tax return ready. When we take care of our bookkeeping in advance, we can end up saving a lot of money on service fees. Besides, tax preparers can work on submitting your taxes sooner rather than later. This can only mean that we will receive our tax refund sooner, too.  

Understand Home Office Deductions 

When we use our home as part of our business facilities, we qualify for some home office deductions. However, we must be fully aware of how such deductions work before going any further. The IRS has a list of instructions to follow when filing home office deductions under Form 8829. If we are eligible, we will need to get the square footage of our entire home, and the part that we use for home office. Then, we need to calculate the percentage of all the expenses and multiply it by the percentage of space used for our business.  

Go Over Your Deductions Eligibility 

Many companies are eligible for many different deductions, including vehicle use, health insurance premiums and medical charges, etcetera. Other examples of business deductions include costs of supplies, depreciation, utilities, traveling, and advertising.  

Each deduction will come with different instructions and requirements of eligibility. You can always refer to the IRS website to get more details on business deduction eligibility. However, if you are working with a professional tax preparer, they should be able to guide you through this.  

4 Useful Tips to File Your Taxes Online

Trying to file our taxes as soon as possible requires careful planning and a decent amount of time. However, the Internal Revenue Service (IRS) made available an online tool that has made the process easier and faster. During the last two decades, there has been a significant increase in e-filing. Last year, 92% of taxpayers chose e-filing for their tax return. Thus, we are bringing four useful tips to file your taxes online in case you need some help on this effective and simple process.  

When you work with a professional tax assistant, you don’t really need to worry about the process. However, if you are doing this on your own, these tips might be of great help. First, you need to do your research and learn about the dates for filing. After that, you should sign up with the IRS for your direct deposit payment. Only then you might continue and actually submit your taxes through the IRS website. Lastly, you just need to sign off your tax return and wait until you receive your deposit. We hope these tips to file your taxes online makes the process simpler and easier for you.  

Know the Dates and Don’t Miss Them 

One of the most important tips to file your taxes online include knowing the relevant dates and not missing them. Earlier this month, the IRS announced that the tax filing season will begin on Monday, January 28th, 2019. The due date to file your tax returns is by midnight of April 15th, 2019. This date only changes to April 17th for residents of the states of Maine and Massachusetts. We should also remember that we should apply for an extension around March if we think we will need one. 

Sign Up for Direct Deposit Payment 

Another important step to take when filing our taxes online is signing up for your direct deposit before actually filing. This will help you ensure you receive your refund sooner rather than later. When opting for a direct deposit instead of a physical check you won’t have to worry about having the check lost or stolen. You can go to the IRS website and visit their Refunds section or have your tax preparer do it for you.  

E-File Your Taxes through the IRS Website 

Once you’re on the IRS website, you can go to their e-filing portal and start the process. They also have an article with different tips to file your taxes online that might be worth checking first. Taxpayers with an adjusted gross income of $66,000 or less have the option to use the IRS system to file their taxes. For those with an AGI over such figure, the IRS will direct you to a certified service for e-filing.  

Sign Off Your Tax Return 

The last step of e-filing online is signing off your tax return using one of their many electronic signature options. The IRS has available two signing options, both through the use of a Personal Identification Number, or PIN. First, taxpayers have the option of using the AGI figure or PIN number from the year before. For the second option, the taxpayer and their tax preparer need to sign the tax return. Then, the IRS will generate a signing authorization request they must confirm later on.  

The Internal Revenue Service has done an excellent job in simplifying and perfecting their online filing systems. This is why, every year, millions of taxpayers decide to go through this simple and easy process. We hope these tips to file your taxes online are useful and help you completing your e-filing process for this season.  

4 Useful Tax Tips for Filing Season 2019

The Internal Revenue Service announced that the 2019 Tax Filing Season will begin on Monday January 28th. This should give us a couple of weeks to start preparing and gather our papers and any other documents we might need. This is why we have decided to gather four useful tax tips for filing season 2019. We hope these tips will help you stay on top of your income tax return and let you be as ready as possible for when the time of filing comes.  

Since we have until April 15th to submit our 2018 tax returns, we should take our time and do some research. There have been changes and updates on tax laws, and it´s always better to stay up to date with them. Also, checking on your tax withholding is a strategy that tends to be left aside. Considering all our deductions can help us reduce the amount of time we spend preparing our files. Keeping track of our state income tax can also save us time and money and avoid having a not-too-pleasant surprise.  

Do Your Research 

One of the most important tax tips for filing season 2019 is trying to take a fresh look at our taxing situation. There were several changes to current tax laws regarding thresholds and brackets. So, the best approach this year, is to avoid assuming we qualify for a given break and do our research instead. 

When it comes to tax credits, deductions, withholds, and even state income tax, the more accurate we are, the better. Therefore, we should take advantage of the time we have before tax season begins and do our homework. Confirming whether we qualify for a credit, deduction, bracket, etc., will help us save time and money this year.  

Remember to Check your Tax Withholding 

Keeping track of our tax withholding is always a good idea. This is particularly true at the beginning of the year and when tax law changes. If we work for a company, most likely our employer withholds a part of your salary and pays it to the IRS. This way, you receive a smaller paycheck, but your income tax is taken care of.  

However, we should be aware of how much they are withholding, or if they are at all. This will help us calculate our tax return more accurately when filing comes. If our employer withholds too little, we might be subject to a higher tax bill. If they are paying too much, however, we might have to wait until our refund check arrives.  

Consider Your Deductions 

Most taxpayers tend to struggle when deciding to itemize their tax deductions or going for the standard one instead. Because of the changes on tax laws, with almost doubled the standard deduction, we need to consider our options more carefully.  

If we hadn´t itemized our deductions before, we might want to consider this possibility this year. However, if we had been itemizing them, we should take a deeper look into this possibility. We want to make sure that itemizing makes sense financially, and that we will benefit from it.  

Keep Track of Your State Income Tax 

Last but not list, one of the most useful tax tips for filing season 2019 is keeping track of our state income taxes. There are many reasons why we should do the necessary research regarding what happens in our state. For example, there are many states that have independent tax systems. This means that not every state will reflect tax law changes that happen in a federal level.  

This year’s tax season will be a bit different for the majority of us. We need to make sure we are ready for those changes. Therefore, the best way to stay ahead of the taxing game is with the support of a professional tax broker or tax consultant. This way, we’ll be able to make the most out of our income tax and start a new year with the right foot.  

Fraud Threats to Financial Institutions: A Constant Online Struggle

During the last couple of years, the interaction between financial institutions and their customers has become more digitized than ever. Online services, requests, and applications are key aspects of an enjoyable and memorable customer experience. However, the process of online identity verification has brought several fraud threats to financial institutions, which represent a significant risk for institutions and customers.   

Back in June 2018, the credit reporting agency TransUnion hired the research company Forrester Consulting to carry out a study regarding fraud threats to financial institutions. During August and September, Forrester conducted a survey that 153 institutions from the US, Canada, and India responded to online. The results of the survey showed that fraud against financial institutions is increasing at an alarming rate. It also showed that financial institutions lack tools and strategies to tackle fraud. Besides, finding an effective solution without mitigating the customer experience is the main goal of financial institutions.   

Fraud Threats to Financial Institutions Have Increased  

Fraudulent activity has increased within the financial industry. Thanks to the digitization of processes and information, new fraud threats to financial institutions have risen. According to Forrester’s survey, 94% of the firms have experienced some type of fraud. The most common types of fraud include identity theft, new account fraud, synthetic identity fraud, and account take over fraud.   

The study also found several tendencies that are having an influence on fraud threats that financial institutions experience. First, behaviors and expectations of customers have changed, which forces companies to provide remarkable and memorable experiences. 70% of the firms mentioned that they interact with their customers online more than face-to-face.   

Also, the fact that fraudsters are keeping up with technology enables them to outsmart security systems and surveillance strategies. Almost 70% of the firms mentioned that they feel one step behind fraudsters.   

Lastly, this survey also revealed that financial institutions don’t seem to be equipped with the necessary tools to tackle and unarm the most advanced fraudsters. Thus, more than 50% of the firms stated that their security systems are not effective enough to fight fraud properly.   

Challenges that Financial Institutions Face Against Fraud Threats  

Besides these complex dynamics, there are several challenges that financial institutions face when trying to fight off fraud threats. TO begin with, the current systems financial institutions use lack essential capabilities to combat fraudsters. More than 50% of the firms stated that they do not have access to the tools they’d like to, such as real-time insights. They also mentioned that the current tools they do have access to don’t support multi-channel protection. Missing analytics capabilities like machine learning, predictive analytics, and social media analytics make them vulnerable, too.   

Another significant challenge is the difficulty of accurately and efficiently detecting and mitigating fraud altogether. According to the survey, 92% of the firms stated that they experience several issues when trying to remain compliant and respond to real-time alerts.   

The fact that their current fraud solutions rely on inaccurate data to try to prevent and mitigate fraud has become an issue, too. This is because fraud detection and identity verification vendors do not meet the firms’ expectations. Having issues with costs, support, and quality of service is another challenge institutions must work with regularly.   

Key Recommendations to Tackle Fraud Threats to Financial Institutions  

Even when the current situation regarding fraud to financial institutions has become difficult to manage, Forrester’s survey provided several key recommendations to manage such threats more effectively.   

One important recommendation is to understand the importance of high-quality data and its sources. Having a fraud detection system that relies on quality data will reduce fraud risks significantly.   

The quality of our fraud prevention strategies and decisions can benefit greatly from using consortium data. All the information our company generates from fraud management attempts can be useful to prevent fraudulent activity in the future.   

The importance of choosing the right vendor to manage and design our fraud prevention strategies is another key aspect. We need to make sure that our vendors will provide high-quality data, and that have documented and proven security services. This way we’ll know that our company is collaborating and being protected by the right partner.   

Crypto Taxes: What You Need to Know about Cryptocurrencies and Taxation

The concept of cryptocurrencies and crypto investment has been around for a couple of years now. It is so that we have seen a continuous increase in mainstream investments and crypto transactions recently. However, we need to start thinking about the crypto taxes and liabilities that come from investing in currencies such as bitcoin, ethereum, and others of the like. This is still a gray area that might confuse people, whether they are investing or not. 

The very first thing we need to consider is that cryptocurrencies are indeed taxable. This means that crypto taxes will apply. Nevertheless, we must remember that the IRS sees cryptocurrencies as property, not as dollars or cash. Therefore, crypto taxes will apply for capital gains or losses, depending on our particular case. This means that, just as with any other property, we need to keep track of each crypto transaction.  

Cryptocurrencies Are Taxable 

Since 2014, the Internal Revenue Service made available its official guidance document regarding crypto taxes. This means that, for the IRS, cryptocurrencies do generate tax liability. However, we must note that cryptocurrencies count as property, not as actual currencies or dollar amounts. The IRS has been focusing more on crypto transactions than they did before. Failing to pay our crypto taxes still constitutes tax fraud. This can result in a minimum sentence of 5 years in prison or having to pay a fine of up to $250,000. 

Cryptocurrencies Count as Property 

As we mentioned above, the IRS counts cryptocurrencies as property, just as stocks or real estate. This means that you will have to pay taxes on it if there has been a capital gain. However, if you have taken any kind of loss, you might be able to get a lower tax bill.  

It is important that we keep track of each and every one of our crypto transactions as accurately as possible. Recording when we buy cryptocurrencies, how much we paid, when we sold them (if we did), and what we received for it is essential. This way we’ll be able to properly calculate whether we had a gain or a loss.  

Keep Record of Each Crypto Transaction 

Keeping record of each and every one of our crypto transactions is essential. This will help us calculate our investment and allow us to properly file our crypto taxes report. Besides, having a complete and detailed log will help us avoid miss a transaction. Even when involuntarily, it could count as tax fraud, and the consequences are severe. As a result, we recommend hiring the services a professional tax consultant. This way, we will be able to maximize our refund and avoid having to pay a fine.