Archive for Bookkeeping Services

Expensing Limits Boosted For 2010

Tuesday, April 20th, 2010

Generally, taxpayers can elect under Sec. 179 to expense the cost of business machinery and equipment placed in service during the tax year, instead of depreciating it over a number of years.  As part of the stimulus legislation, these amounts had been temporarily increased for 2008 and 2009 and were scheduled to return to normal levels in 2010.

The HIRE Act of 2010 has extended the higher amounts for one additional year (through 2010).  Thus, for tax years beginning in 2008 through 2010, the maximum amount that can be expensed each year is $250,000.  The maximum deductible expense is reduced (i.e., phased out, but not below zero) by the amount by which the cost of property placed in service during the tax year exceeds $800,000.

Qualifying property for purposes of the expensing election is depreciable, tangible personal property purchased for use in the active conduct of a trade or business, including “off-the-shelf” computer software placed in service in tax years beginning before 2011.

Barring any additional legislation, the maximum amount will drop approximately to $134,000 in 2011.

If you have questions related to expensing purchases and the tax benefit of business acquisitions during 2010, please give this office a call at 888-564-5777.

Categories : Bookkeeping
Comments (0)

Are You Required to File 1099s?

Friday, March 5th, 2010

If you use independent contractors to perform services for your business or rental and you pay them $600 or more for the year, you are required to issue them a Form 1099 after the end of the year to avoid facing the loss of the deduction for their labor and expenses.  The 1099s for 2009 must be provided to the independent contractor no later than February 1st of 2010.  Generally, this due date is January 31, but when the due date falls on a Saturday, Sunday or holiday, it is not due until the next business day.

It is not uncommon to have a repairman out early in the year, pay him less than $600, then use his services again later and have the total for the year be $600 or more.  As a result, you overlook getting the information needed to file the 1099s for the year.  Therefore, it is good practice to always have individuals who are not incorporated complete and sign the IRS Form W-9 the first time you use their services.  Having a properly completed and signed Form W-9 for all independent contractors and service providers eliminates any oversights and protects you against IRS penalties and conflicts.

IRS Form (W-9, Request for Taxpayer Identification Number and Certification) is provided by the government as a means for you to obtain the data required to file the 1099s from your vendors. It also provides you with verification that you complied with the law should the vendor provide you with incorrect information. We highly recommend that you have a potential vendor complete the Form W-9 prior to engaging in business with them. The form can either be printed out or filled onscreen and then printed out. The W-9 is for your use only and is not submitted to the IRS.

In order to avoid a penalty, copies of the 1099s need to be sent to the IRS by the last day of February. However, the due date is extended to March 1, 2010 since the last day of February 2010 falls on a Sunday.  This must be submitted on magnetic media or on optically scannable forms (OCR forms). This firm prepares 1099s in OCR format for submission to the IRS with the 1096 submittal form.  This service provides recipient and file copies for your records.  Use the worksheet to provide us with the information we need to prepare your 1099s.

Please attempt to have the information to this office by January 20, so that the 1099s can be provided to the service providers by the January 31st due date.

If you have questions, please call this office at 888-564-5777.

Categories : Bookkeeping, Payroll
Comments (1)

To Terminate or Motivate?

Tuesday, February 16th, 2010

You come in to your office each day to an employee who lacks motivation and does the minimal amount of work to “get by”. He or she may leave early or come in late, all too often. Maybe they spend too much time surfing the web. You may have avoided terminating this person because you don’t want to expose yourself to the “risks” of termination or deal with the time it takes to replace him/her, all valid thoughts to consider. Yet, consider the repercussions of not terminating this person.

When an employee is not motivated to do their job and their performance is not up to par, it can affect more than their own productivity. Other employees are seeing a lower work standard set. Employee morale may be impacted. In addition, you spend time and energy to coach and monitor this person. All of these issues affect the focus of the business and ultimately, impacts your bottom line.

Before terminating this employee, there are steps to take to mitigate risks of litigation. Ensure that you have provided this individual with feedback regarding their performance or lack thereof. Have you been conducting performance reviews that show where the employees’ performance needs improvement? Is he/she aware, through face to face conversations or written documents, that you are not happy with their effort (site specific actions) or commitment to the organization? If you have given them verbal feedback, make sure you have documented and filed those conversations.

If you feel confident in your ability to terminate this person with minimal risks, know that now is a good time to replace this person. Your recruiting efforts will reap many more candidates than you have seen in recent years. With the economy still down and the unemployment rate high, there are plenty of eager candidates available, making your chances of finding that employee, who may shine, that much easier.

Terminating employees, while a difficult decision, is not one to be taken lightly. However, it is an undertaking that should be considered if there are legitimate, non discriminating reasons for the action. It is always advisable to consult with an HR Professional or an Employment Attorney before taking action.

If you decide to keep this employee on payroll, at least until you have been able to provide proper documentation, remember that feedback to employees should not just be about what they are doing right or wrong, but specific actions that need to be taken to improve performance. You may be surprised to find performance improving with direct communication and that the employee can be a productive member of your team.

For More Information on Payroll and Bookkeeping Services in the San Francisco Bay Area, give us a Call at 888-564-5777 or take our online assessment on this site.

Categories : Payroll
Comments (0)