03 Apr

9 Ways We Can Be Financially Independent

financially independent

Financial independence: No, it doesn’t mean retirement! Retirement is the end of your working life. Especially if you’re one of those who love what you do, retirement doesn’t need to be your goal. But financial independence should be! “Financial independence” means you’re able to take advantage of life’s opportunities without worrying about money. Of course, getting to that point can be intimidating. Where do you even start?

We are income tax professionals who recognize that for some people, tax savings alone are not enough. When you need assistance growing your top line, you can turn to us. We’ll help you achieve sustainable prosperity and financial independence.

Below are just a few ways we can work closely to help you realize your financial goals. Remember: Thinking “long-term” is a key characteristic in accumulating wealth.

  • Defining Ownership Goals
    We’ll help you analyze your current financial position, define goals, establish key performance indicators and define an achievable time line.
  • Business Diagnosis
    Together, we’ll determination your current strengths, weaknesses, opportunities and threats and establish priorities to resolve.
  • Business Performance
    Through carefully implemented strategies and measures, we’ll improve your profit and cash flow.
  • Certified Business Valuation
    We’ll help you know your current business value, understand your opportunities and implement improvements.
  • Business Value
    Let’s increase your business equity value by increasing net free cash flow, risk reduction and owner independence.
  • Industry Comparisons
    How does your company or financial status compare with others in your industry, including key ratios of strength and performance?
  • Transition of Owner’s Role
    Elevate your owner’s role from crisis manager to strategic planner in order to realize your true vision!
  • Business Independence
    We’ll help you craft operational and functional measures to gradually reduce dependence on owners for daily operations.
  • Owner’s Lifestyle
    Increase free time for more pleasure and enjoyment, exploration of new opportunities and reduction of stress.

If you’re ready to make the process of managing your company’s finances that much easier, we’re here for you. Fill out the form below to schedule a call now.


Our conversation is strictly confidential and complimentary.


15 Mar

Relief from Your QuickBooks Headache:

Articulate and Accurate QuickBooks Bookkeeping

quickbooks

QuickBooks is easily one of the most popular programs to help businesses keep their finances, budgets and expenses in check. But, when every other aspect of your business is competing for your attention – especially your clients — who has the time to learn the in’s and out’s of this intricate software program? So maybe you’ve set it up but don’t keep it updated regularly, and when you do, you end up doing more harm than good.

We know it: QuickBooks can quickly become overwhelming. Our team is here to get you on the right track. Let us help you set up your files while showing you the basic functions of this beneficial software. Or if you’ve already set-up QuickBooks but are finding your business in a data crisis, we can help with that, too. We’re interested in learning the specifics about your QuickBooks and business needs, so let’s set up an exploratory call and get you on the right track! But while you’re here, read on to learn the many ways our QuickBooks services will help give you peace-of-mind and a firm grasp on your finances:

  • Certified Bookkeeping
    Certified QuickBooks ProAdvisor ® who has over 40 years experience in accounting principles and practices.
  • Correct Classifications
    Transactions are carefully reviewed to classify into correct categories for optimum income tax treatment.
  • Accurate Exact Descriptions
    Special care in creating exact descriptions for account names to provide breakdowns for tax returns.
  • Checking Balances
    Regular reconciliation of cash accounts, receivables, credit card, loans and owner accounts to cross-check balances.
  • No Forced Balances
    Bank checking and savings accounts are reconciled to the penny. No accounts are “plugged” to force a balance.
  • QuickBooks Training
    We offer paced and patient training for client personnel to use bookkeeping software for their company.
  • Crisis Resolution
    Effective measures to properly diagnose, repair and restore QuickBooks data problems.
  • Conversion from Quicken ®
    Efficient conversion from clients using Quicken to convert to QuickBooks with minimum intervention.
  • Bookkeeping Repair and Restoration
    Special access to senior technical support staff at QuickBooks to ensure quick repairs.
  • Catchup Services
    Special services available to ensure prior year catch-up is done efficiently and accurately.
  • Liaison With Tax Preparer
    Professional presentation of comprehensive of annual bookkeeping documentation to client’s tax preparer.
  • Client-Approved Pricing
    Fixed pricing or hourly estimates arranged in advance with client’s approval before commencing work.

If you’re ready to make the process of managing your company’s finances that much easier, we’re here for you. Fill out the form below to schedule a call now.


Our conversation is strictly confidential and complimentary.


12 Mar

Don’t Go It Alone:

Save Time, Money, and Worry with A Dedicated Tax Professional.

tax prep

There’s no way around it: You have to file your tax returns. If you’re one of those who have a multitude of tax deductions, or especially if you’re business owner, a dedicated tax professional is the safer option.

There are many benefits to partnering with a knowledgeable, experienced tax accountant, who knows how to present your tax returns professionally, which also truthfully and legally minimizes your taxes and audit exposure. Those rare qualities which also save you time and money, and most of all, the heartache and worry of IRS abuses. Confidently going into tax season is a feeling many aren’t familiar with. With Provident Professional Services, we’ll ensure you feel that way every tax season going forward! Nothing compares to a tax professional who understands you, your distinct situation and your financial needs.

Want a good reason to consider our services? Frustrated, disappointed or dreading the usual, ordinary, mediocre tax preparation ordeal? Want to escape the mundane, archaic tax preparation process? Here are a few of the ways that we ensure a superior experience for our clients.

Choice of Tax Preparation Service Level

  • You’ll choose from three service levels for the best fit for your needs and budget.

Direct Access to the Accountant

  • No runaround with junior team members who don’t know you or can’t answer your questions!

Year-Around Access

  • We are available year around to answer questions about tax returns at no charge.

Discrete Office Facilities

  • We’re located in a quiet residential area where you’ll have direct and private access, and ample free parking. Not to mention: Great coffee!

Maximum Legal Tax Deductions

  • We legally cut taxes by asking the right questions and knowing the intricacies of the latest tax laws.

Audit Deterrence Measures

  • We proactively add context, dismiss unwarranted presumptions, dispel suspicions and clarify ambiguities in your tax returns.

Comprehensive Questionnaire

  • Save time, travel, traffic and taxes by uncovering hidden deductions from the comfort of your home.

Disclosure of Specific Tax Savings Generated

  • Clients get a list of specific dollar value of the tax savings measures we’ve adopted.

Audio Commentary on PDF Files

  • Clients can listen to embedded audio files of voice commentary on PDF documents, providing a greater ease to your understanding of your tax returns.

Carefully Worded Deduction Descriptions

  • Accurate descriptions of your deductions to avoid misunderstandings or assumptions.

Professional Presentation

  • We take special care to present your tax returns with correct spelling, grammar and proper capitalization.

All Tax Forms and Schedules Included

  • All tax returns include all optional forms and detailed supporting schedules.

Detailed Expense Breakdowns

  • High audit-risk deduction categories are further expanded in supplemental supporting sub-schedules.

Notes on Tax Preparation

  • We inform our clients about the issues, limitations, assumptions and their preferences we’ve adopted.

Explanation and Report of Tax Bracket

  • Explanation of the client’s tax bracket and how it applies to future tax and financial planning.

Tax Return Copies Include Worksheets

  • Clients’ copy includes all worksheets and carryover information for future planning.

Client History on PDFs

  • Clients receive PDF files of tax returns, tax organizer, source documents and e-mail correspondence.

Annual Comparative Analysis

  • Showcases the current and prior year tax return dollar amounts, federal and state tax rates and tax brackets.

Prompt Service

  • Tax returns are ready for e-file approval within seven business days after all the tax information and clarified and resolved.

Client Advocate

  • We’ll present you with legitimate tax opportunities where the law is unclear or favors the client’s position.

Tax Penalty Avoidance Measures

  • We recommend timely payment of estimated taxes to avoid penalty assessments whenever possible.

No Reckless Tax Schemes

  • We won’t jeopardize your peace of mind by desperate measures that stretch beyond the boundaries of tax law.

Tax Preparation by One Accountant

  • All tax returns are handcrafted from start to finish by one tax accountant. No runaround!

No Offshore Outsourcing to Tax Mills

  • No off-shoring to deter the potential risk possible security breaches or identity theft.

Review of Prior Tax Years

  • For new clients, we review the prior three years for important carryover information, errors or omissions.

Optimized Tax Filing Status

  • For married taxpayers, we compute the lowest tax by comparing “joint” filing status to “separate” filing.

No Tax Season Overload

  • We limit our practice size to allow us time to complete returns well before tax deadlines and extensions.

E-mail Tax Updates

  • You’ll receive the latest tax news, warnings, traps and opportunities through brief, informative messages. No canned newsletters with cute pet stories or chicken recipes.

Computer-Modeled Tax Planning

  • Explore the alternative tax-saving measures in advance to select the optimum course for your financial future.

And last but certainly not least . . . Reality Check!

  • We’ll conduct a final review of your tax returns from the viewpoint of a tax auditor to ensure your tax returns “pass the test!”

Are you ready for our team to help you?

Fill out the form below to schedule an exploratory call now


Our conversation is strictly confidential and complimentary.


10 Mar

Business Tax Preparation Checklist


 
Business owners: This tax season, we want to help you prevent expensive mistakes, capture tax-saving opportunities, and be protected against unexpected events. Even small or simple businesses have risks to avoid and opportunities to explore and capture.

In the spirit of helpfulness, we are pleased to offer this courtesy business tax preparation checklist for your use in preparing your business income tax returns. We’ve crafted this information request from our years of experience supporting entrepreneurs and businesses big and small. Most importantly, this information request also serves to document your information in case there’s a dispute later. We invite you to share it with your tax accountant, who should be able to help you navigate this checklist with ease.

Should you discover you’d be better served by upgrading your financial team, we’re here for you. Please be advised this is a limited courtesy copy. Our clients take advantage of a full version which includes additional tips, notices, warnings, options and innovations.

Please fill out the form below to receive this free checklist.
Your contact information will be held strictly confidential.


Our conversation is strictly confidential and complimentary.


01 Mar

Tax Glossary

assessor
The following tax glossary is provided to help you know what various tax-related terms mean:

Accelerated depreciation. A depreciation method that allows larger deductions in the early years of an asset’s “life” and smaller deductions at the end of the period. (See “Straight-line depreciation.”)

Accrual method (or accrual basis). One of two main accounting methods for determining when a transaction has tax significance. The accrual method says that a transaction is taxed when an obligation to pay or a right to receive payment is created (for example, at the time products are delivered, services rendered, billings sent, etc.). This method is used by all but the smallest businesses. (See “Cash method (or cash basis).”)

Adjusted basis. The cost of property (or a substitute figure-see “Basis”) with adjustments made to account for depreciation (in the case of business property), improvements (in the case of real estate), withdrawals or reinvestment (in the case of securities, funds, accounts, insurance or annuities), etc. Adjusted basis is part of the computation for determining gain or loss on a sale or exchange and for depreciation.

Adjusted gross income. The amount of income considered actually “available” to be taxed. Adjusted gross income is gross income reduced principally by business expenses incurred to earn the income and other specified reductions (such as alimony).

Alternative minimum tax. An alternative tax system that says: your tax shall not go below this level. The alternative minimum tax works by negating (or minimizing) the effects of tax preferences or loopholes.

Amortization. The write-off of an amount spent for certain capital assets, similar to depreciation. This tax meaning is different from the common meaning of the term that describes, for example, payment schedules of loans.

Applicable Federal Rates (AFRs). Minimum interest rates that must be charged on various transactions that involve payments over a number of years. If the parties to a transaction do not adhere to these rates, the IRS will impute the interest. (See “Imputed interest.”)

At-risk rules. Rules that limit an investor’s deductible losses from an investment to the amount invested. Complications arise when investors finance their investment through loans that they are not personally on the hook for (nonrecourse financing). Without these rules, investors could raise their deduction limit considerably without being at-risk for the actual loss.

Basis. The starting point for computing gain or loss on a sale or exchange of property or for depreciation. (See “Adjusted basis.”) For property that is purchased, basis is its cost. The basis of inherited property is its value at the date of death (or alternative valuation date). The basis of property received as a gift or a nontaxable transaction is based on the adjusted basis of the transferor (with some adjustments). Special rules govern property transferred between corporations and their shareholders, partners and their partnership, etc.

Cafeteria plan. A plan maintained by an employer that allows employees to select from a menu of taxable and nontaxable benefits.

Capital expenditures. Amounts spent to acquire or improve assets with useful lives of more than one year. These expenditures may not be deducted, but are added to the basis of the property (See “Adjusted basis.”) and, for business property, may be converted into deductions through depreciation or amortization.

Capital gain or loss. Gain or loss from the sale or exchange of investment property, personal property (such as a home) or other “capital asset,” which is often entitled to preferential tax treatment.

Carrybacks and carryforwards. Deductions that may be transferred to a year other than the current year because they exceeded certain limits. These deductions are typically carried back to earlier years first and, if they exceed the limits for those years, are then carried forward to later years until the deduction is used up. Charitable contributions and net operating losses are examples of deductions that may be carried back or forward.

Cash method (or cash basis). One of two main accounting methods for determining when a transaction has tax significance. The cash method says that a transaction is taxed when payment is made. This method is used by most individuals. (See “Accrual method (or accrual basis).”)

Community property. A system governing spousal ownership of property and income that is the law in certain western and southern states and Wisconsin. The differences between community property and “common law” can change how federal tax law applies to spouses. For example: married taxpayers filing separately in a common law state do not have to report income earned by the other spouse. They do have to report income earned in a community property state.

Deferred compensation. An arrangement that allows an employee to receive part of a year’s pay in a later year and not be taxed in the year the money was earned.

Depletion. A system similar to depreciation that allows the owner of natural resources (for example: a coal mine or an oil well) to deduct a portion of the cost of the asset during each year of its presumed productive life.

Depreciation. A system that allows a business or individual to deduct a portion of the cost of an asset (“recover its cost”) during each year of its predetermined “life” (or “recovery period”).

Earned income. Income earned by working for it. Interest, dividends and other kinds of profits are examples of unearned income.

Earned income credit. A tax credit available to individuals with low earned income. An individual is entitled to the full amount of this credit even if it exceeds the amount of tax otherwise due.

Employee stock ownership plan (ESOP). A type of profit-sharing plan in which benefits come in the form of stock in the employer.

Estimated tax. Quarterly down payments on a year’s taxes that are required (on April 15, June 15, September 15, and January 15) if the total year’s taxes will exceed $1,000 and the amount is not covered by withholding.

Federal Insurance Contributions Act (FICA). Social security taxes (for both old-age, survivors and disability insurance-OASDI-and Medicare).

Federal Unemployment Tax Act (FUTA). Unemployment taxes.

Filing status. One of four tax ranks determined by your marital status, your dependents and the way you file your tax return: (1) single, (2) married filing jointly, (3) married filing separately and (4) head of household. Filing status determines your tax rates and your eligibility for various tax benefits (for example: alimony deduction, IRA deduction, standard deduction, etc.).

First-in, first-out (FIFO). A rule that applies to the sale of part of a group of similar items (such as inventory, shares of the same stock, etc.) that assumes the first ones acquired were the first ones sold. This is important if the items in the group were acquired or manufactured at different times or for different costs. The rule may be overridden by identifying the specific item sold, if possible. (See “Last-in, first-out (LIFO).”)

Generation-skipping transfer tax. An extra tax on gifts or on-death transfers of money or property that would otherwise escape the once-per-generation transfer taxes that apply to gifts and estates. For example: a gift from a grandfather to a granddaughter skips a generation and might be subject to this tax.

Golden parachutes. Bonuses payable to key executives in the event control of their corporation changes, as in the case of a takeover. “Excess” golden parachute payments are subject to tax penalties.

Gross income. All income that might be subject to tax. Most “realized” increases in wealth are considered income. The main exceptions for individuals are gifts, inheritances, increases in value of property prior to sale, loan repayments and some personal injury awards. For businesses, investments in their capital are not considered income.

Head of household. A filing status available to qualifying single parents (or others supporting certain dependents) that allows lower taxes than the normal rates for singles.

Imputed interest. A portion of a future payment that is treated as interest if parties to the transaction do not provide a stated amount of interest at a rate acceptable to the IRS. (See “Applicable Federal Rates (AFRs).”) This prevents improper use of certain tax advantages (capital gains rates or tax deferral). For example: if a business sells an asset on the installment basis, part of all future payments is treated as interest whether the transaction states it or not.

Incentive stock option. A stock option that may be granted to an employee under tax-favored terms.

Itemized deductions. Personal deductions that may be taken if they total more than the standard deduction. (See “Standard deduction.”) The following deductions are then itemized or listed on Schedule A of Form 1040: medical expenses, charitable contributions, state and local taxes, home mortgage interest, real estate taxes, casualty losses, unreimbursed employee expenses, investment expenses and others.

Investment credit. A credit against tax available for investment in a limited range of business property. The general investment credit was repealed in 1986, but this type of credit has been enacted and repealed repeatedly throughout history.

Involuntary conversion. The conversion of property into money under circumstances beyond the control of the owner. For example: (1) property that is destroyed and “converted” into an insurance settlement or (2) property that is seized by the government and “converted” into a condemnation award. Owners may avoid tax on any gain that may result (if the insurance settlement or condemnation award exceeds the adjusted basis of the property) by reinvesting in similar property within certain time limits.

Joint return. An optional filing status available to married taxpayers that offers generally (but not always) lower taxes than “married filing separately.”

Keogh plan. A retirement plan available to self-employed individuals.

Last-in, first-out (LIFO). A rule that applies to the sale of part of a group of similar items in an inventory that assumes the last ones acquired were the first ones sold. This is important if the items in the group were acquired or manufactured at different times or for different costs. (See “First-in, first-out (FIFO).”)

Like-kind exchanges. Tax-free swaps of investment property. Commonly used for real estate.

Limited liability company (LLC). A legal structure that allows a business to be taxed like a partnership but function generally like a corporation. An LLC offers members (among other things) protection against liability for claims against the business that is not available in a partnership.

Listed property. Property listed in the tax code or by the IRS that must comply with special rules before depreciation may be claimed. Cars and personal computers are examples of listed property. The special rules are designed to prevent deductions where the property is used for personal rather than business purposes.

Medical Spending Accounts (MSAs). An investment fund similar to an IRA that can be used to pay more routine medical expenses, when used in conjunction with “high-deductible” health insurance, which pays the big bills. Only 750,000 of these MSAs are available nationwide under a pilot program that runs through the year 2000. To qualify, you have to be self-employed or employed by a small employer that offers the program.

Modified Accelerated Cost Recovery System (MACRS). The system for computing depreciation for most business assets.

Net operating loss. The excess of business expenses over income. A business may apply a net operating loss to get a refund of past taxes (or a reduction of future taxes) by carrying it back to profitable years as an additional deduction (or by carrying it forward as a deduction to future years).

Original issue discount (OID). The purchase discount offered on some bonds (and similar obligations) in lieu of interest. For example: zero-coupon bonds. OID is generally treated as interest income to the holder rather than as a capital gain.

Passive activity loss (PAL). Loss on an investment that is deductible only up to the limit of gains from similar investments. The limit mainly affects tax shelters and does not apply to stocks, bonds or investments in businesses in which the investor materially participates. Special rules apply to investments in real estate.

Qualified plan. A retirement or profit-sharing plan that meets requirements about who must be covered, the amount of benefits that are paid, information that must be given to plan participants, etc. Qualified plans are entitled to tax benefits unavailable to nonqualified plans.

Real estate investment trust (REIT). A kind of “mutual fund” that invests in real estate rather than stocks and bonds.

Real estate mortgage investment conduit (REMIC). A kind of “mutual fund” that invests in real estate mortgages rather than stocks and bonds.

Recapture. The undoing of a tax benefit if certain requirements are not met in future years. For example: (1) The low-income housing credit may be recaptured or added back to tax if the credit property ceases to be used as low-income housing for a minimum number of years. (2) The alimony deduction may be retroactively lost or recaptured if payments do not continue at the requisite level for a minimum number of years.

Regulated investment company (RIC). A mutual fund.

Rollover. The tax-free termination of one investment and reinvestment of the proceeds. For example: An individual may roll over a lump-sum distribution from an employer’s retirement plan into an IRA.

S corporation. A corporation with no more than 35 shareholders that is not taxed, but treated similarly to a partnership, if other requirements are met.

Savings Incentive Match Plan for Employees (SIMPLE plans). A simplified retirement arrangement for small businesses that comes in two varieties: one similar to a 401(k) plan and one that funds IRAs for employees.

Standard deduction. A deduction allowed individuals instead of listing or itemizing deductible personal expenses. (See “Itemized deductions.”) The amount depends on the individual’s filing status. Additional amounts are available for taxpayers who are blind or are age 65 or over. Individuals may deduct either their standard deduction or the total of their itemized deductions, whichever is greater.

Straight-line depreciation. A depreciation method that allows equal deductions in each year of an asset’s “life” or recovery period. (See “Accelerated depreciation.”)

Swaps, tax-free. (1) Exchanges of like-kind property that result in no capital gains tax (commonly used for real estate). (2) Sales and repurchases of stock (or other securities) designed to realize a tax loss without discontinuing the investment. Transactions must comply with the wash sale rules to be effective. (See “Wash sales.”)

Taxable income. What is left after all deductions are taken. This is the amount upon which tax is computed.

Taxpayer identification number (TIN). In the case of an individual, the Social Security number. In the case of a business (even an individual in business), the employer identification number.

Top-heavy plan. An employee retirement or profit-sharing plan that disproportionately benefits top executives.

Uniform capitalization rules (Unicap). A set of uniform rules for computing the cost of goods produced by a business that prevents current deductions for costs that must be capitalized (See “Capital expenditures.”) or added to inventory.

Wash sales. Simultaneous or near-simultaneous purchases and sales of the same property, usually stocks or bonds, made to generate deductible tax losses without discontinuing the investment. Losses on the transactions are ignored for tax purposes, however, unless a 30-day waiting period is observed between them.

Withholding allowances. Adjustments made to assure correct withholding on wages for individuals who may have unusually large deductions or who may be subject to other special circumstances.

The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.

If you’re ready to make the process of managing your company’s finances that much easier, we’re here for you. Fill out the form below to schedule a call now.


Our conversation is strictly confidential and complimentary.


28 Feb

Why Businesses Fail

Why Businesses Fail

 

The Problem

Most business owners do not understand how to use financial statements to manage their businesses “by the numbers.”

Instead, they use substitute indicators which betray them, such as amount of cash in the bank. This often has little to do with profitability and the resulting taxes.

Some business owners believe that the faster you grow the better. However, studies show that companies can grow themselves into bankruptcy because they run out of cash and working capital.

Financial tools can help avoid disaster and guide owners toward greater profitability, cash flow and independence from the drudgery of petty problem solving.

The Result

Over 93% of businesses fail because of mismanagement. Of those that failed, over half were profitable, but failed because of mismanagement of cash flow. Source: Dunn and Bradstreet


The Cause

The “bean counter” mentality… Most traditional CPAs insist on performing obsolete practices by preparing financial statements in a format which most business owners do not understand and cannot use to improve their financial condition.

The reason? “That’s the way we’ve always done it.”


The Solution

Provident Professional Services has developed a simple way to communicate financial information for non-accountants. We have a consistent history where business owners can use our reports to manage their businesses to help control costs, increase profits and improve cash flow.

If you’re ready to make the process of managing your company’s finances that much easier, we’re here for you. Fill out the form below to schedule a call now.


Our conversation is strictly confidential and complimentary.


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