Imagine Payroll - In The Know - IRS Issues Fiscal 2018 High-Low Per Diem Rates

Imagine Payroll - In The Know! 

IRS Issues Fiscal 2018 High-Low Per Diem Rates  - September 29, 2017

The list and rates of high-cost locations used to substantiate the amount of expenses for business travel away from home in fiscal 2018 were issued Sept. 25 by the Internal Revenue Service.

The rates are used with the high-low substantiation method, the IRS said in Notice 2017-54. The per diem rates, effective from Oct. 1, 2017, to Sept. 30, 2018, are to increase to $284 for travel to any high-cost location, up from $282 in 2017. The rates for travel to other locations in the continental U.S. are to increase to $191 from $189. For 2018, high-cost locations have a federal per diem rate of at least $238, up from $236 in 2017.

The amount of the $284 high rate and $191 low rate that is treated as paid for meals remains $68 for travel to any high-cost locality and $57 for travel to any other location in the continental U.S., the notice said.

These locations were added to the high-cost list: Oakland, Calif.; Lewes, Del.; Fort Myers, Fla.; Hyannis, Mass.; Petoskey, Mich.; Portland, Ore.; and Vancouver, Wash., the notice said. These locations were removed from the high-cost list: Sedona, Ariz.; Los Angeles; Vero Beach, Fla.; and Kill Devil Hills, N.C. The special rates for meals and incidental expenses for taxpayers in the transportation industry remain at $63 for any location in the continental U.S. and $68 for any location outside the continental U.S., the notice said.

Oklahoma Releases 2018 UI Wage Base, Tax Rates 

Effective Jan. 1, 2018, Oklahoma's unemployment-taxable wage base is to be $17,600, down from $17,700 for 2017, the state Employment Security Commission said Sept. 25 on its website. Effective Jan. 1, 2018, unemployment tax rates for experienced employers are to be unaffected by a conditional factor and are to range from 0.1 percent to 5.5 percent, unchanged from 2017. The tax rate for new employers is to be 1.5 percent, also unchanged from 2017.

West Virginia UI Wage Base, Rates Unchanged for 2018 

West Virginia's unemployment taxable wage base, range of unemployment tax rates for experienced employers and unemployment tax rates for new employers are to be the same for 2018 as they are for 2017, a spokesman for the state Department of Commerce told Bloomberg BNA in an email Sept. 25. Effective Jan. 1, 2018, the unemployment taxable wage base is to be $12,000. Unemployment tax rates for experienced employers are to be determined with Column C and are to range from 1.5 percent to 4.5 percent for positive-rated employers and from 6.5 percent to 8.5 percent, including a surtax of 1 percent, for negative-rated employers.

Effective Jan. 1, 2018, the standard unemployment tax rate for new employers is to be 2.7 percent. The rate for new construction employers that are contractors headquartered outside the state is to be 8.5 percent.

Indiana Releases Local Tax Rates Effective Oct. 1 

Indiana's revised Departmental Notice No. 1, used for calculating state and local income tax withholding was released Sept. 25 by the Indiana Revenue Department and takes effect Oct. 1, 2017. Tax rates for the counties of Allen, Clinton, Fountain, LaGrange, Marion, Sullivan, and Vermillion are to change Oct. 1, based on the notice. Rates for other counties are unchanged. The state-wide withholding tax rate remains 3.23 percent.

Wisconsin Reduces Threshold for Electronic Filing

Wisconsin employers filing at least 10 wage statements or returns are required to do so electronically under a law that took effect Sept. 23, 2017. Electronic filing previously was required for employers filing at least 50 or more wage statements.

Imagine Tool: Privacy.com - Virtual Credit and Debit Cards

Privacy

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Hurricane Irma - Florida IRS Tax Relief Information Sept 2017

IRS Tax Relief Information

“ IRS Gives Tax Relief to Victims of Hurricane Irma; Like Harvey, Extension Filers Have Until Jan 31 to File”

FAQ for Disaster Victims – Affected Taxpayer and Records Necessary to Meet a Deadline for Filing and Paying

Tax Relief for Victims of Hurricane Irma in Florida 

Definition of an Affected Taxpayer

A taxpayer does not have to be located in a federally declared disaster area to be an “affected taxpayer.” Taxpayers are “affected” if records necessary to meet a filing or payment deadline postponed during the relief period are located in a covered disaster area.

An affected taxpayer can be:

·         An individual

·         Any business entity or sole proprietor

·         Any shareholder in an S Corporation

(10/11) Q: I own an interest in a partnership, or I am a shareholder in an S Corporation that is located in a federally declared disaster area. However, I do not live in the disaster area myself. I rely on information (Schedule K-1) from the partnership or S Corp to file my tax return. Do I qualify as an affected taxpayer for purposes of receiving filing and payment relief?

Yes. If the affected partnership or S Corp cannot provide you the records necessary to file your return then you’re also an affected taxpayer. Your filing and payment deadlines are postponed until the end of the postponement period just like the affected partnership or S Corp.

To get the postponement for filing or payment, you must:

·         Call the Disaster Assistance Hotline at 1-866-562-5227

·         Explain that your necessary records are located in a covered disaster area

·         Provide the FEMA Disaster Number of the county where the affected partnership or S Corp is located

·         See Treas. Reg. § 301.7508A-1 and Rev. Proc. 2007-56 for a list of taxpayer acts that may be postponed in response to a federally declared disaster

How to Organize Change Orders in QuickBooks

Each customer that you set up in QuickBooks is allowed to have jobs as sub”customers”. Each contract should be its own job and each change order its own job as well. For example, Joe Smith signs a contract for a construction project and then adds a patio that is outside the contract, and some driveway improvements. Each add-on is independent of the other. The QuickBooks client would look like the example below.

Smith, Joe
Smith Contract 2015
Smith CO #1 Patio
Smith CO #2 Driveway

This allows you to review job costing as well as Estimate v. Actual reports independently for each portion of the work for the client as well as in an aggregated format. If change orders are not added as jobs under the customer their costing in the job costing reporting will become commingled with the cost of the original contract. This will make it difficult to control job costs, report out on those costs and in the case of allowances or contract stipulations that require detailed reporting to the client those numbers would become entangled with the contract costs. It is important the original contract also be its own job as well. When assigning costs and invoicing the various jobs related to the customer should be used in the customer field in QuickBooks. Payments can be received by the main customer name and applied across various jobs when a single payment is issued for various segments of the job.

The files that are kept for this client, either paper or digital, should also be separated. Individual files for each change order should be kept. Signed change order copies, documentation related to the costs, and payment records should be maintained independently of the main contract.

If there is disagreement at a later time or any kind of litigation you will be grateful that the costs and income related to various non-contract aspects of the project are easily reported on separately.

Contact Imagine Solutions today if you need any assistance with Change Orders or Construction Bookkeeping! 

TURN ACCOUNTS RECEIVABLE INTO IMMEDIATE CASH

At one time or another, every company runs into a cash flow crunch, losing out on business opportunities or falling behind while waiting 30, 60 or even 90 days for customer payments. Unfortunately, traditional financing doesn’t always fit these needs, may have too many restrictions, or takes too long for approval.

Accounts receivable financing, or factoring, with Imagine Solutions sister company AmeriStrength gives you the cash flow you need to keep going. You sell us your invoices and we immediately advance you the funds to operate and grow your business. It’s a line of credit based on your sales, not your net worth.

Plus when you factor at AmeriStrength, there are:

• No monthly minimum obligation
• No minimum fee requirements
• No long term contract requirements 
• No closing costs (other than a one-time due diligence fee)
• No legal fees
• No obligations to sell all receivables. You choose which receivables to fund 

There are hundreds of situations in which our fast, flexible receivables financing can help. Benefits include:

• Meet payroll and other immediate cash flow requirements
• Spend more time on business operations and less time on reporting requirements
• Obtain customer credit risk protection
• Buy inventory for increased sales
• Have an alternative to bank financing or equity financing
• Supplement or reduce the amount of equity being raised
• Take advantage of vendor discounts and opportunistic purchases
• Bring taxes current
• Acquire equipment necessary to reduce costs
• Reorganize, whether in or out of bankruptcy
• Make strategic acquisitions
• Manage seasonal sales fluctuations

If you are in need of factoring services, please contact us or AmeriStrength today! 

Years behind on your accounting.... We have you covered!

As a bookkeeper, there are few things scarier than when a new client approaches you and says they have a few tax issues.  It is a cringeworthy moment.  When it involves more than 5 years of unfurled taxes and missing financial documentation it can be overwhelming. The data entry alone on a multi-year backup could be a full-time job never mind trying to keep current on the day to day.  Over the years we have seen this more times then we can count. 

A bit of organization combined with a bit of technology makes it possible to recreate those financials, on a cash basis, in just a few weeks of work.  Here’s how we tackled it…

• First, you will need to find out exactly how far back the issue goes.  Asking the client isn’t always going to get you an accurate result.  We ask our clients to provide a tax transcript or their last complete return. This gives us a baseline for how far we must go back in the data reconstruction process.

• Next, the collection of documentation comes into play.  Often the period is far more than can be downloaded from the banking institutions.  This often leaves you dependent upon paper copies of bank and credit card statements.  These may need to be requested from the banking institution if the client doesn’t have copies in hand.

• Once the documentation is received you can use a program like Scanwriter to convert PDF copies of the statements into data import files that are much like what you would download from the bank. By importing the transactions you will have an easily reconciled data set in a third of the time. This will allow only for cash basis reporting of income and expenditures, but when the accounting and taxes are this far behind it is often the only alternative.

• You will need to add any cash transactions, or contributions that never flowed through the banking institutions, via journal entries.

• You may need to make adjustments for payroll, loan interest, and depreciation as well. Inventory figures can be adjusted only if you have on hand counts for the various fiscal period end dates.

Once all accounts are reconciled and you have verified the balance sheet to be sure assets are all accurate and that all liabilities are represented the file should be ready to forward for tax preparation. If you are behind in filing your taxes, give Imagine Solutions a call so we can get you caught up! 

WHY WE REQUIRE CERTIFICATES AND WORKERS’ COMP COVERAGE FROM NEARLY EVERY SUBCONTRACTOR

When working with contractors we deal with hundreds and thousands of subcontractors. Often we get push back when we request their certificates of insurance.  I think I’ve had this argument probably hundreds of times.  The subs like to pull out the old well I’m not required to be on the policy while standing one hand in the electrical panel on the job site.  My other favorite is the sub that says he is a sole proprietor with no employees so the state says he doesn’t need to carry workers’ compensation insurance.  To all these subs we say yes you need it and here is our canned response.  Feel free to use it.

Insurance has nothing to do with an entity type.  Our liability on a job site is the same if the independently contracted service provider is a C corp or a one man D.B.A. sole prop.  Liability and exposure are liability and exposure.  If the sole prop work alone guy falls off the roof and dies or the C-corp employee does the exposure to the homeowner and contractor are the same.  Where the difference in exposure comes is the kind of work that is being done.  For example, there is less exposure and risk for the surveyor on the job site before the project starts than for the roofer.  This is reflected in the insurance rates they themselves pay.  As the contractor, we want to have everyone covered.  With the high net worth of individuals for which our contractors build homes, we are often held to a higher standard by their advisors and lenders as they have more at risk financially.  Exposure and risk mitigation are what is at hand here.  If someone isn’t covered by our company payroll and workers’ compensation insurance as well as by the GL policy of the company we want to see them insured or else they are falling under our exposure.

Some people get the state’s requirements and allowances for certain exemptions under labor laws confused with exposure and risk mitigation.  They are not one in the same.  The state of Massachusetts says that if the electrician is a sole prop or DBA with no employees he is not required to purchase workers comp insurance or that if he has employees he himself can opt out of coverage and only cover the employees.  The problem with this both in the eyes of our customers and in the eyes of our insurance company is that while that guy is allowed to do that by law it then shifts the risk and exposure to us.  If the owner of the electrical company never sets foot on the job site then great no worries, but if he is working alongside the guys or on his own on the job site we are just as exposed.  There is no magic bubble around him because he opted out and is self-employed.

There are all kinds of other audit considerations and legalities but those are secondary.

Imagine Solutions is here to help you manage your subcontractors, contact us today!

How To Practice Small Business Budgeting That Prepares For The Unexpected

A dollar saved is a dollar earned as they say. For small businesses perhaps that saying should be transformed into "A dollar budgeted for is a dollar earned". The process of budgeting is not the most exciting aspect of running a small business, but it is a vital process by which a business survives. Preparing for the unexpected in particular is a sign of a smart business leader. 

Estimates That Are Far From Reality 

It is all too easy for many of us to incorrectly estimate either how much money our business will bring in, or how much we are going to spend. Many fall into the habit of preparing for the best case scenario and daydreaming of a reality full of profits when in reality it is better to prepare for the worst that could happen. 

If estimates fall too far out of line, it is entirely possible to mess up the budget for the foreseeable future, and no one wants to go down that path. 

Paying Bills Late 

Individuals frequently pay bills late when they are strapped for cash and have to make decisions between what is getting paid and what isn't. Businesses too fall into this trap from time to time and must decide what their priorities are. Unfortunately, they will also have to be prepared to pay late fees on those bills just as individuals do. See what suncorpbank.com.au says about it, 

Even the smallest of businesses have bills to pay, and not paying them on time is going to cost you, even if you think you've budgeted for it. It's better to ensure that you stay on top of your regular outgoings. 

Currency Rates 

Businesses that deal in international trade (including online businesses) need to consider currency rates. When currencies rates get too far out of line it can put a damper on business profitability rates. This in turn can also make a mess of even a perfectly laid out budget. It is best to prepare for the reality that currency rates change all the time, and to leave some margin of error in the budget for these changes. If the rates happen to fall in your favor then great, but if they don't you want to be prepared for that as well. 

Contact us for more information regarding prudent budgeting practices to have as a small business. 

Budget

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ACA Compliance Bulletin: ACA Affordability Percentages Will Decrease for 2018

On May 5, 2017, the Internal Revenue Service (IRS) issued Revenue Procedure 2017-36 to index the contribution percentages in 2018 for purposes of determining affordability of an employer’s plan under the Affordable Care Act (ACA). For plan years beginning in 2018, employer-sponsored coverage will be considered affordable if the employee’s required contribution for self-only coverage does not exceed:

• 9.56 percent of the employee’s household income for the year, for purposes of both the pay or play rules and premium tax credit eligibility; and
• 8.05 percent of the employee’s household income for the year, for purposes of an individual mandate exemption (adjusted under separate guidance).

Read More Here... 

Is Workers Comp Necessary for Your Small Business?

There are small businesses sprouting up everywhere and thanks to the Internet, you can manage and grow your own business with ease and professionalism. Small side cleaning businesses, sales operations, cupcake bakers and baby-sitting operations have become full time endeavors for some; and though you can do a lot of things on your own, sometimes you do need others to work for you so that you can manage the operation.

Employees or Independent Contractors?

Though many small companies are opting to have independent contractor arrangements with workers, some still prefer to have employees instead of contractors as a personal preference. If this is your choice, workers comp must be a consideration for you.

When it comes to workers comp, various states have different requirements. For example, some states do not require you to have workers compensation insurance if you have less than three workers, while others require you to have it if you have one independent contractor who is subcontracting out jobs.

There are some trades that sometimes don't require you to get workers compensation insurance including, housekeepers, child care workers, farm workers, non-profit employees and paper boys. However, these trades are going to vary state by state.

What if You Don't Want the Hassle?

If you really don't want to hassle with workers compensation, then working only with independent contractors is the best way to go. However, if you really must have employees and subcontractors, there are things you can do if you don't want to get this type of insurance.

Basically, you have to make sure to cover yourself, especially if you have workers out doing any sort of physical jobs. In order to cover yourself effectively, you want to consult a lawyer and draw up several contracts. Your lawyer might also have additional contracts that he will recommend for you based on specific rules in your home state.

The basic contracts you will need your immediate subcontractors to sign include:

• A contract stating that they carry adequate liability insurance on the work that they do.
• A contract stating that they are taking care of workman's compensation, unemployment taxes, and any other taxes and benefits related matters on anyone working on the job under them
• A contract or waiver stating that all of their subs have been paid out (This contract must be signed after the job is complete and before you make the final payout. This insures that subcontractors you have no immediate relationship with, do not have legal grounds to come after you or any private property owners of the job site for non-payment)

Contact us to learn more strategies to increase the efficiency of your business.


 

The Importance of Small Business Financial Analysis and Strategy

When you launch your own business, every decision feels like it could make or break your company, and you’re not entirely wrong; your actions can either set you up for growth or failure. As your business grows and changes, you’ll likely face hidden costs, have to come up with funds to hire more staff, and potentially need to upgrade technology– the list goes on. While it seems intimidating at first, you can find peace of mind in the future success of your business if you have a realistic financial plan in place. Consider these four things as you lay the foundation of that plan down.

Where will the money come from?

Before you start deciding how many new team members you should hire or what kind of services to add to your lineup, you need to know how much these changes will cost and where the money will come from. Are you going to use your business profits to expand? Will you need to get a loan? Nail down a number from the beginning and start setting funds aside to avoid major budget cuts later on.

How realistic are your goals?

A financial plan is key to helping you reach your goals, but even the best plan won't work if your goals are not realistic. Start with small, short-term goals and detail the exact process and resources you’ll need to get you there. You may find your initial goals to be too ambitious, so continuously reevaluate and scale back if you need to.

How flexible is your budget?

Many small business owners make the mistake of stretching their budget to the max, or failing to account for potential budget changes such as outsourcing costs, recurring legal costs, or a fluctuating market. A workable budget is one that accounts for every realistic contingency, expects growth at a reasonable rate, and leaves room for human error.

Do you have the right help?

Hiring a professional to help you create a workable financial plan may seem like an extra expense now, but it is an investment that will help you budget and plan more efficiently to save you money in the long run.