A Week in Perspective
It would seem that while I was out of town last week I had a lot of extra time to look around. Surf the net if you will. This weeks perspective is the largest I have ever posted. I hope you all have the time to enjoy each site as the information is as always well worth the read.
Finding Work You Enjoy – Recently asked if folks would take a pay cut for happiness. Not surprisingly, many people said that they would. While I’d also be willing to take a pay cut to increase happiness, I’d rather take a pay increase, and/or make my job more enjoyable. In other words, I think there are usually other options
And My favorite post this week has three videos.
If Anyone Wonders Why the Economy Isn’t Adding Jobs – All I am going to say here is Read it and watch the videos. Oh, Russ I’d like to know where do you get these videos?
This weeks must read
CASE IN POINT – By reducing one’s AGI one can often increase a multitude of deductions and credits and reduce taxable Social Security or Railroad Retirement benefits. Here is an excellent case in point.
Verify the Background When Hiring a Bookkeeper – Always follow your gut instinct:-if something doesn’t feel right, it probably isn’t! Always verify the background and skills of anyone you hire to handle your books before they begin work.
How and When to Say No to a Client – We’ve discussed saying no to potential clients before, but the post was focused on how to recognize bad clients and/or bad projects and deadbeats. While it’s definitely important to pay attention to the red flags that may be telling you that a prospect or a project is a dud, there are other times you may find yourself refusing work.
Here are some instances when you may decide to turn a project down:
Lame Duck, Lame Duck, Goose! – Nothing is quite so exciting as a lame duck Congress. And I mean that in the most snarky, sarcastic, rolling of my eyes kind of way.
How Getting Married Affects Your Taxes – When you get married, your tax situation changes – for better or for worse – and there are decisions to make regarding how the two of you should file. Here are the most important things to know.
If your first 2011 paycheck is smaller, thank, er, blame Congress – the payroll withholding tables for 2011 that employers (or payroll companies that workplaces outsource the job to) are now based on what the law will be in January.
“Many of life’s failures are people who did not realize how close they were to success when they gave up.” – Thomas Edison
ITEMIZED DEDUCTIONS: A COMPLETE GUIDE TO SCHEDULE A – a new comprehensive special report that discusses just about everything that is, and is not, deductible on the 2010 Schedule A.
In it he discusses –
- Deducting Medical Expenses,
- Deducting Taxes,
- Deducting Interest,
- Deducting Contributions,
- Deducting Casualty and Theft Losses, and
- Deducting Miscellaneous Deductions
Spend the money. You need this. I was allowed to review this and it is the best information you can find.
The Case For (and Against) Killing the Mortgage Interest Deduction – he chairmen of the president’s deficit commission skewered a number of sacred cows in their widely discussed, and widely criticized, report. But few ideas have received more outrage than the plan to limit the mortgage interest deduction — the costliest tax giveaway in the United States. What is the mortgage interest deduction and why should we want to reduce it?
Why Clients Cling to the Stock Market—Even When They Suffer – Why do people stay in the stock market even when they take losses? What is the psychology behind this dilemma? A financial planner must understand this psychology.
Retirement Planning Strategies – The strategies you use will depend on how far away you are from possible retirement, your expenses, the tax bracket you expect to be in, what you expect to be able to do once you’ve retired, and how long you believe you might live. (With so many variables to consider, getting professional, customized advice is a great idea when it comes to planning for retirement.)
Meanwhile, here are a few government resources that may get you thinking:
Retiring Early? – Okay let’s be honest here, how many people my age are actually going to be retired at 50 or 55? I got into it with my mom this weekend because the TRUTH is pretty much none. And an even bigger truth is that people my mom’s age of 58 can’t AFFORD to be retired like her because they don’t have the awesome pension and medical plan she has. Bottom line? She’s the last of the dinosaurs.
Year-End Tax Planning – Going Against Conventional Tax Knowledge? – For years, we accountants have advised clients to “defer income” and “accelerate expenses.” The thought behind this strategy is that it is better to pay tax next year than it is to pay it this year. In most years, under most circumstances, this approach makes perfect sense. But. . .
Some Thoughts on Passive Personal Finance Barriers – there are many opportunities to utilize passive barriers in your own financial life. I certainly use them in my own life in order to subtly push myself into good financial habits. Here are nine passive barriers you can utilize in your own life to encourage better financial results:
How to make sure your QuickBooks Company File agrees to your tax return – You may not even be aware of it because your CPA very possibly makes an adjustment without even bothering you about it, but it is very possible and in my experience very likely that each year when you submit your QuickBooks Company file or your profit and loss and balance sheet to have your tax returns prepared the Retained Earnings Account does not reconcile.
Impulse Control – Breaking free of such impulses can have a very large and dramatic effect on your finances. It becomes easier to budget and plan ahead. You suddenly have more resources each month with which you can save, pay off debts, or invest for the future. Best of all, you find that you value the things that you do buy a lot more than you used to.
5 tax moves to make now – Everyone’s talking about what taxes might look like in 2011. Quit worrying about future IRS bills! Make some tax moves now that could lower what you’ll owe Uncle Sam on your 2010 income tax return. Here are five easy ones.
2 Child-Care Tax Breaks So You Can Go to Work – As many parents know, it can cost money to go to work. Those with kids under the age of 13 may have to set aside a little extra for childcare expenses. Fortunately, a federal income tax credit can help pay the bill. It’s available to all eligible parents, regardless of their income (although lower-income folks get bigger credits). You might also be eligible for your employer’s childcare flexible spending account plan. When the FSA deal is available, it can be a bigger tax-saver than the credit. Here’s what you need to know about both breaks.
How to Survive the Holidays without Wiping Out Your Savings Account – It’s almost that time of year again. I’m not talking about gingerbread houses, cocoa, and caroling; I’m talking about shopping, impulse-buying, digging ourselves into more credit card debt, and raiding our savings accounts. We undoubtedly lose a bit of sanity, self-control, or both when it comes to holiday spending.
How to Keep Your Identity – and Your Credit – Safe While Shopping – Each year more people are becoming victims of identity theft. When this happens, it could take years for the person to regain their rightful identity and their good credit standing. And the bad news is that identity thieves are getting much more sophisticated about identity theft and will stop at almost nothing
How to Avoid Identity Theft and Protect Your Finances – One of the hot financial topics today is identity theft. And if you think it can never happen to you, you are wrong. According to the Federal Trade Commission (FTC), there were 1.3 million people falling victim to the crime, which accounts for 21% of total complaints.
Tax cuts outlook spurs Roth conversions – It’s looking more likely that the expiring Bush tax cuts will live at least a bit longer and that’s starting to have a domino effect. Take Roth IRA conversions. With the elimination of the $100,000 income cap, anyone can now convert a traditional IRA to a Roth.
How to Start Investing (with $1,000 or Less) – I want you to know that it is possible to get started with investing, even if you don’t have a huge amount. I’ve included a small guide on how you can set up an IRA and maintain your contributions. Hopefully you can use it as a jumping point and build from it.
Finding Money to Invest – I know your type. You always say you’re going to start investing for your future once you have just a little extra money in your account. The problem is time keeps passing by and that extra money always seems to end up somewhere else!
Not Sure About a Roth Conversion in 2010? Don’t Fret – As you’ve undoubtedly seen EVERYWHERE, 2010 is a special year with regard to Roth Conversions. This is due to two changes to the law that took effect this year: 1) the income limit on Roth Conversions was lifted – previously if your MAGI was greater than $100,000 you couldn’t do a conversion; and 2) there is a special provision for 2010 conversions that allows you to spread the tax over 2011 and 2012.
Take your Required Minimum Distribution – RMD – RMDs dictate when tax sheltered retirement plans should end. This is because congress did not intend on allowing retirement plans to be major multi-generational wealth transfer vehicles. With the concept of the stretch IRA you can push this to the limit, but still have to contend with a required annual distribution.
More Tricks to Get Going: Saving Enough for Retirement!
Making the Most of Your Workplace Retirement -
Planning for a secure retirement can be challenging, but the sooner you start, the easier it will be. The Department of Labor’s Employee Benefits Security Administration offers the following tips to help you succeed in reaching your retirement goals:
Rollover 401(k)s to an IRA – Why and How – studies show that the average American holds over eight jobs between the ages of 18 and 45. Because of that, many are asking the question during job transitions, “what do I do with my retirement benefits now that I’ve changed jobs?” Today, you may have retirement benefits in a variety of different accounts. You may have a 401(k), IRA, 403(b) or a privately held pension plan especially if you’re a federal, state, or government employee. It would make sense (where possible) to consolidate all of these accounts in to one fund, right?
In Graphics: How Does a 529 Plan Work?
From Traditional IRA to Roth IRA: New Rollover Rules – For years prior to 2010, only taxpayers with modified AGI of $100,000 or less generally were permitted to convert a traditional IRA into a Roth IRA. For years beginning in 2010 and after, the AGI limitation has been eliminated. Thus, regardless of AGI, all otherwise eligible taxpayers will be allowed to convert an IRA to a Roth IRA. The amount converted is includible in income as if a withdrawal had been made, but no early withdrawal penalties are assessed.
Seven Errors to Avoid in the IRS Offer in Compromise Process – While the IRS is more determined than ever to enforce collection activity for back taxes owed, the IRS Offer in Compromise program can help taxpayers who are experiencing significant financial problems get a fresh start, if they qualify.
However, it is important to note that the IRS Offer in Compromise acceptance rate is less than 23% (less than one in four will be accepted) when a taxpayer prepares, submits, and negotiates his/her offer without professional expert representation.
Fixing FBAR – The curent rules for reporting foreign bank accounts are a mess. Many taxpayers have innocently exposed themselves to horrendous fines for foot-fault violations of these obscure rules — even when they are fully tax compliant. The Treasury’s shoot-the-pickpockets enforcement policy makes a bad situation worse.
How to Raise Financially Savvy Kids – Children are often not adequately prepared for a financially savvy adult life. Between a lack of formal education and bad habits at home, kids can often be set up to make some costly mistakes once they set out on their own. Therefore, it is essential that parents begin to instill financial values in their children and it is never too early to start.
20 Blogs Accounting Students Will Love.
Helping your boss, his wife, and his mistress evade taxes may be unwise – An Ohio accountant was sentenced last week to 11 years in prison on federal tax charges. It would take me at least that long to understand the situation that led to his sentence.
Students get a grip on money – She plans on keeping track of her spending by writing down and budgeting all of her expenses, a tip she learned at the Get a Grip on Your Finances workshop.
CPA Websites Marketing Tips – Why This Feature Draws in More Clients
Criminal borrowing – When a small business fails to remit payroll withholding to the IRS, sometime they justify it to themselves as only a short-term loan to tide the business over tough times. The IRS doesn’t look at it that way at all, as a South Dakota manufacturer has learned the hard way:
Got Payroll Tax Problems? Get Help from a Tax Professional – If you are in a position in a company that allows you to make the payroll tax decisions, we hope that you are making the right decision. It is so easy to divert the money to be used in other areas of the business yet what you may not know is that the IRS acts aggressively when collecting past payroll taxes. If you owe past payroll taxes, seek help from a tax professional – a tax attorney or Certified Tax Resolution Specialist – before the IRS seeks you out and puts you out of business and behind bars.
“For myself, I am an optimist – it does not seem to be much use being anything else.” – Sir Winston Churchill
Zapper Zapped – There are some technologies that the IRS doesn’t appreciate at all. High in the IRS black book of bad modernity is “zapper” software, which is software designed to hide from the IRS revenues recorded in other accounting software. The IRS displayed its feelings in this Justice Department press release:
Did Obama do good? – Found this piece from the NYT from a friend’s link, How Obama saved capitalism and lost the midterm elections. So what has impressed me? Well how about the 77% return on the stock market and 48% if you invested in the S & P index? Amazing. Seriously you would think that we are out of a recession.
Tax Basis: An Infographic – With the repeal of the estate tax for 2010, and its return in 2011, the concept of tax basis has extra significance this year. The following infographic illustrates some of the basics associated with this complex concept.
RESTATING MY THOUGHTS ON “TAX EXPENDITURES” – As expected the proposal to start from “ground zero” by doing away with all “tax expenditures” currently in the Tax Code from the discussion draft issued by the co-chairmen of President Obama’s National Commission on Fiscal Responsibility and Reform has not been universally praised.
How Much Money do Small Business Owners Make? – Many people are curious about what the average small business owner earns. The IRS Statistics of Income provides some data on the average income of sub chapter S corporations and sole proprietorships, which helps to estimate small business owners’ earnings.
4 People You Should Never Hire – There are many people you can hire to make your life a little easier. These people have successful businesses because people operate on the assumption that they just don’t have enough time to do certain tasks. The truth is, you don’t need to hire these people because you do have enough time to take care of the tasks they would take care of for you. In fact, most of the time hiring these people simply constitutes laziness on your part.
How to Tell if an Option is In the Money – A stock option that is considered to be in the money holds what is called intrinsic value. The intrinsic value of an option is the difference between the strike price and the actually share price of the stock. In this case, the strike price of the option is more valuable than the actual share price of the stock if it were to be exercised.
Did you miss the guest post I had yesterday? If so please check it out, Simple solutions to IRS tax debt problems
Couples and Money: Do You Have Joint or Separate Finances? – Should a long-term couple (married or not) have combined or separate finances?
How Do Couples Divide Their Money?
“My problem lies in reconciling my gross habits with my net income.” –Errol Flynn
Creating a Financial Plan – The list of required equipment for creating a financial plan isn’t very long: a sharp pencil, an eraser, blank paper.
Small Businesses and Expanded 1099 Filing Obligations - Will the new 1099 reporting be repealed? It would be a good idea given that it is not really designed to lower the tax gap. Congress should find alternatives that really do address the tax gap without requiring compliant businesses to incur great costs. A challenge of course will be Congress to find a revenue offset that people will tolerate.
Will the 1099 rule be the first part of Obamacare to be repealed? – It looks that way. Max Baucus, Senate Finance Committee Chairman, says he will introduce a stand-alone bill to repeal the Obamacare provision that vastly expands the Form 1099 requirements for businesses.
This is great. Social Security vs. Saving – “. . . started work at age 20 retire at age 70. Over 50 years of work I average $50,000 a year. If I put 10% of my income away every month from age 20 to age 70 how would I come out versus depending on the government social security checks I would receive after retirement.”
Small Business Guide to Cloud Computing – Let’s start with defining cloud computing. Cloud computing can simply be defined as a computing model in which services (e.g. web based email) and storage (e.g. web hosting) are provided over the Internet.
Deficit cutting proposals are not popular – The survey found that 57 percent of respondents were uncomfortable with gradually raising the Social Security retirement age to 69 over the next 60 years. Roughly 70 percent had qualms about cutting Social Security, Medicare and defense programs in order to reduce the deficit.
Deductions, Credits and Tax Reform
The Grand Delusion: Balancing the Federal Budget Without Tax Increases – The deficit cannot be eliminated merely by cutting spending, unless Congress wants to strip the military down to pretty much nothing, eliminate Social Security and Medicare, and put an end to a variety of other programs.
Do YOU Want To Pay More to the IRS? Learn About the AMT - Without the alternative Minimum Tax patch, middle-class taxpayers could owe a greater amount of alternative tax to the IRS. Congress needs to take action and save taxpayer’s money A.S.A.P!
The best time to start a startup is not tomorrow, not next week, and certainly not next year. The time is right now, at this very second. Here’s why: 14 Reasons Why You Need To Start A Startup
Intuit 2020 Report: 20 Trends That Will Shape the Next Decade builds on more than five years of research led by the Institute for the Future and Emergent Research. It is the first in a series of reports looking at key trends affecting consumers and businesses in the coming years. Subsequent reports will drill down into specific trends and industries, but the current report presents a broad overview.
20 Questions to Ask Yourself Before Accepting a New Job – before you jump at the opportunity, I recommend taking a few minutes to really evaluate the position and how well it meets your needs.
Why You Don’t Want a Tax Guy Doing Your Books – In short, I suggest you hire two accounting professionals – one to do your taxes and advise you on tax law with certain decisions and another with the skills to help you make your business the best it can be.
Tax Filing Using Tax Software – Have you ever wondered just how hard is to file a tax return? If you are single or even married and don’t have many claims or exceptions to report then you might want to consider filing return yourself; and even if you did have to claim several items in your return, today’s tax software applications are up to date with all the changes made to tax laws, those who use these programs usually end up saving quite a lot in tax return fees.
Be sure to check out these round ups from other sources.
WHAT’S THE BUZZ? TELL ME WHAT’S A HAPPENNIN’
BlogRoll Beans “Almost” Thanksgiving Addition
WHAT’S THE BUZZ? TELL ME WHAT’S A HAPPENNIN’ – WEDNESDAY EDITION
In Pursuit of Debt Freedom: Mint’s Personal Finance Roundup
Top Blogs On Startups – This is a list of the best startup blogs, ranked daily based on traffic, search authority and online buzz.
Other info:
Building the Firm of the Future
How to Write Magnetic Headlines
13 Great Sites for WordPress Tips, Tutorials, and Hacks
11 Ways To Do More With Online Video
50 Ways to Get Your Site Noticed
How exceptional is your client service?
Tax for Truckers
Truck-driving is a vital industry to our economy. I have been a part of that industry for 24 years and know I will always be a part of it. I even maintain a Class A CDL. As such I am very familiar with the ins and outs of the trucking industry and its related tax issues.
Congress has designed numerous tax benefits designed specifically for truck drivers. However, I have always conceded that there is not nearly enough information available to truck drivers concerning taxes. So here, I plan to shed some light on the issue. To help truckers across the country, I have compiled the following information for Drivers, to give them/you a better idea of what could be important towards your taxes.
Trucking Tax Deductions
Keep Immaculate Records
Remember, records are the key to getting all the deductions you are entitled to and in the event of an audit are required to back up the deductions you claimed. Get receipts for everything when you are on the road and if no receipt is available make your own receipt for the expense. Keep your receipts together and record them somewhere, in a journal, a notebook or a computer so you can total them up at the end of the year. While an audit is never a “good” thing, as long as you have your financial information organized then you should not have anything to worry about. Throughout the year, keep your receipts and financial records together and safe in a box. When its time to get your taxes done, take the whole box in so that you have all the information you need for your preparer. I have my clients who are drivers bring them in or by as they are in town and I keep them safe for them.
People always seem to lose something; they should do accounting work themselves every month or deal with a bookkeeper to get this stuff done all year long. The income statement should be reviewed throughout the year. We can’t consult people when we see them once a year.
Track the little things
As an independent owner/operator you have the ability to claim a portion of your rent or mortgage as office space. You can also claim office expenses ranging from pencils to logbooks things you may pay cash for and forget about. Tools such as tire chains should also be claimed. Keep receipts for everything that’s work-related and to stay organized throughout the year, even if that means visiting your accountant on a regular basis.
Meal Allowances
The Standard Meal Allowance (per diem) is different for truckers than it is for other people. Taking the standard deduction relieves you of the responsibility of keeping records and receipts for all your meals, and most will find that the $36.00/day allowance will cover your actual expenses. There are special rules that apply to the meal deduction that you should also be aware of. If you get home, or pass by the house during the day you will have to pro-rate your deduction for that day.
For example,
you’re out on the road and decide to pass by the house to collect your mail and check out the homestead. You arrive home at 6:00 am and stay for 3 hours.
Divide the day up into 4, 6 hour periods (Note: IRS rules state you can use any period that you consistently apply and that is in accordance with reasonable business practice.), so you would have the following 4 periods in a day –
-
Midnight to 6 am
-
6 am to Noon
-
Noon to 6 pm
-
6 pm to Midnight
Since you arrived home at 6 am and stayed till 9 am you would be eligible for the standard deduction for the other 3 periods which is $27.00 ($36.00 times 75% -3/4-.75) for that day. If you arrived home at 10 am and stayed till 1 pm then you would be eligible for 2 periods or 50% of the daily deduction. This same system would also apply to days when you arrived home for a few days off or left home to go back out onto the road. In the event of an audit your log book would be used to validate your time at home and on the road, so hang on to those old log books. Keep a logbook with dates and amounts that you eat while on the road or it will be very difficult to come up with an accurate number.
Travel Expenses
According to the IRS, travel expenses are ordinary and necessary expenses that you pay while traveling away from home for your business or profession. An ordinary expense is one that is common and accepted in your field of business, trade or profession. A necessary expense is one that is helpful and appropriate to your business. An expense does not have to be indispensable to be considered necessary. However, you cannot deduct expenses to the extent they are lavish or extravagant.
Anything you spend on, in or around the truck would normally be considered a deduction.
For example:
Antennas, batteries (for the flashlight as well as the truck), binders, blankets, boots, briefcase, calculator, CB repairs, CB’s, cellular phone, chains, checking account fees (atm fees for the extra charge because you’re away from your home bank), chrome things, cleaning supplies, com check charges, coveralls, Federal Express (UPS, Postage for business mail or other mail which is necessary because of your absence from home), flashlights, gloves, hand tools, ice box, insurance, laundry, legal fees (not fines, but the cost for legal fees to defend yourself and court costs), lights, log books, luggage, lumpers, maps, motels, office supplies, pens, permits, pillows, radio, repairs, ropes & equipment, safety equipment, safety glasses, scales, scanner, sheets, showers, signs, smelly stuff, special clothes, special equipment, stapler, staples, stereo, storage, sun glasses, tarps, taxi, tires, tolls, tool boxes, truck organizations, truck parking, truck wash, truckers newspapers & magazines, TV, and uniforms.
This list is by no means all conclusive, but it should give you the idea. If you’re not sure about a particular item, check with the IRS or your accountant on it, especially if it’s a large expense. If you take an expense and it’s later ruled invalid you can be charged penalties for any additional tax now due from the time the tax would have originally been due. There are also a few other items worthy of more specific mention.
Lumpers
If you use lumpers and are not reimbursed by the company for the amount you pay the lumper, or are only reimbursed for part of the cost of the lumper you can deduct the amount you paid or the difference if you were partially reimbursed. Get a receipt from the lumper that includes his name, address, social security number, and the company at which you used his services, the date and the total amount you paid him. Make sure you get the information before he loads or unloads your trailer. If he won’t, chances are you don’t want him in your trailer at all.
Truck Weight
If you drive a truck with a large gross weight (over 55,000 pounds) you will need to pay the federal highway use tax by August 31st every year. If you have not already purchased a truck with this weight, be aware that if you do, this tax will be due for the first time at the end of the month in which you make your truck purchase. After you have paid it for the first time, you can decide to pay it every year in August, or in quarterly payments to reduce the burden.
Fuel Taxes
Luckily for truckers, most states appreciate your purchase of their fuel and will give you specific tax breaks. Therefore it is imperative that you keep good track of your mileage and your fuel purchases.
Hire a specialized accountant
That brother-in-law whose been filing your income tax for the last 10 years may be cheaper than an accounting firm that specializes in trucking, but does he really understand the ins and outs of the business? Chances are he doesn’t and chances are it’s costing you money.
Dealing with a specialized accountant that deals specifically with the trucking industry (spicifically drivers), allows you to maximize your claim and minimize the taxes you’re forking out each year. I think specialization means you should be getting a more knowledgeable tax return and more insight into expenses and how to handle them properly. A general accountant probably won’t get it all right, especially when it comes to things like meals. It’s important to sit down with an accountant who knows the trucking industry and discuss the intricacies of your business. An accountant who specializes in trucking will then be able to determine how you can maximize your claim.
If you have questions please let me know, With over 20 years in the trucking industry myself I will be clad to answer your questions. Contact me at L & R Tax Preparation.
Who is Who – a re-posted article
As a tax preparer I am often asked what is the difference between a tax attorney, an accountant/CPA, a bookkeeper, an Enrolled Agent, and a tax preparer.
A Tax Attorney is not the same as an accountant. The accountant can work with the financial issues and has a general knowledge of tax laws; however a tax attorney is a specialist in all aspects of tax law. Although they often work closely together, they are two complete different services. Typically large and even small businesses will meet with a tax attorney once every quarter or once a year to ensure that they are making the best possible business choices with regards to investments and tax issues. Since the taxation laws change constantly, this is an important step.
A Bookkeeper is responsible for keeping accurate, up-to-date business records for proper cash flow management, balance sheet preparation, and developing expansion and investment plans. A bookkeeper also assists in filing tax returns with updated tax records. Accurate bookkeeping is a legal requirement and should be kept well within the standards that are set by local and federal tax agencies. A bookkeeper accurately records all of the financial transactions. It is the responsibility of bookkeeper to note all monetary transactions that are received and paid out. The records also include outstanding balances that the company owes to other parties and others who owe to the business. Business bookkeeping takes a lot of time and cannot be done in a hurry. At small businesses, bookkeepers also double as company accountants. Perhaps bookkeepers have the biggest responsibilities in the company as business planning, payroll management, and tax return preparations are dependent on accurate bookkeeping. Bookkeepers often do not have the qualifications or certifications of accountants, but the responsibility is not any less. Bookkeepers that have a great deal of experience can market themselves as accountants or managers. For that, they also need to supplement their profession with certificate courses, seminar attendance, and on-job training. All types of businesses require bookkeepers who are experienced in their specific business functions.
Accountants keep track of a company’s money. The company’s managers and people outside the company read their reports. Managers look at the accountants’ reports to see how well their companies are doing. There are four kinds of accountants:
Public accountants work for public accounting companies. They do accounting, auditing, tax, and consulting work. Some have their own businesses. They do many different kinds of accounting for people outside the company.
Management accountants keep track of the money spent and made by the companies for which they work.
Accountants generally work a standard 40-hour week, but some work 50 hours a week or more. Tax accountants often work long hours during the tax season, from January to April. Most accountants have a college degree in accounting. Public accountants have to take a special test as well, resulting in a certification. Public accountants also must have a special license from the State in which they live. Accountants are generally good mathematicians, and have good analytical skills.
An Enrolled Agent (EA) is a federally-authorized tax practitioner who has technical expertise in the field of taxation and who is empowered by the U.S. Department of the Treasury to represent taxpayers before all administrative levels of the Internal Revenue Service for audits, collections, and appeals. “Enrolled” means to be licensed to practice by the federal government, and “Agent” means authorized to appear in the place of the taxpayer at the IRS. Only Enrolled Agents, attorneys, and CPAs may represent taxpayers before the IRS. The Enrolled Agent profession dates back to 1884 when, after questionable claims had been presented for Civil War losses, Congress acted to regulate persons who represented citizens in their dealings with the U.S. Treasury Department.
A professional Tax Preparer is an individual who prepares tax returns. A professional tax preparer can be a Tax Attorney, an Accountant/CPA, a Bookkeeper, an Enrolled Agent, or anyone who professionally prepares tax returns for clients. Most return preparers are professional, honest and provide excellent service to their clients.
So there you have it.
How do you choose the right one to prepare your taxes? There is no one factor to use in determining this. I suggest you read the IRS Tips for Choosing a Tax Preparer. Or my website page Finding a Qualified Tax Preparer. I would also hope you to read 5 Biggest Mistakes most taxpayers make when choosing a tax professional!
This is a re-post from 07/23/08
Prepare your taxes on-line With L & R Tax Preparation
L & R Tax Preparation
Tax Preparation, Payroll, and Accounting,
Including online services.
E=MC2 or use QuickBooks
