July, 2022

QuickBooks Tips

Tax Tips

Featured Articles

Any accounting, business or tax advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties. If desired, we would be pleased to perform the requisite research and provide you with a detailed written analysis. Such an engagement may be the subject of a separate engagement letter that would define the scope and limits of the desired consultation services.

  • Common Small Business Budgeting Errors to Avoid
  • Tips to Help You Get Started Saving for Retirement
  • New Pricing Structure, System Requirements for 2022

    Sometimes, deciding that you need to upgrade a piece of software is easy. Either a newer version has features you need that your current product lacks, or you've outgrown the application's capacity. You may be hesitant to move up, though, because you don't want to start over learning a new user interface and command structure.

    Fortunately. QuickBooks hasn't significantly changed its user experience for a long time. Even if you jump two or three versions, what you'll see should be fairly familiar, except for any added features.

    QuickBooks 2022 looks much like QuickBooks 2021, but Intuit has introduced significant changes to its flagship software. When you upgrade to the 2022 version, you'll find that the company has altered its pricing structure. You may also be unable to install and run it if your PC is a few years old. And getting bills into your company file is easier.

    A New Annual Obligation

    As you already know, QuickBooks Online is a subscription product. You can keep using it for as long as you pay your subscription fees once a month. The desktop versions of QuickBooks have always required one upfront payment that allows you to keep using the software for as long as you want (though Intuit discontinues support for older products eventually).

    Starting with the 2022 versions of desktop QuickBooks, you'll pay an annual subscription fee that you'll need to renew every 12 months. If you don't, you won't be able to continue to use the software.

    Note: If you have an older version of QuickBooks, you may not know that all desktop products now are "Plus" versions. These include unlimited support, data backups, and annual upgrades.

    Figure 1: Up until now, you had to enter bills manually. QuickBooks 2022 allows you to upload them from its mobile app, among other new options.

    QuickBooks Pro Plus 2022 costs $349.99 annually for one user. You'll need to pay another $200 for each additional user (up to three). QuickBooks Premier Plus 2022 is $549.99 per year. Additional users are $300 each for up to five users. If you're outgrowing Premier and want to stay in the QuickBooks family, please call to discuss upgrading to QuickBooks Enterprise. QuickBooks Enterprise 22.0 costs $804 per year ($1,340 after the first year) and supports up to 40 users.

    Easier Bill Entry

    You probably already know how to manage bills in QuickBooks. You open the Vendors menu, select Enter Bills, provide the basic details, and save it. You go to Vendors | Pay Bills when you're ready. That bill template will be available for paying subsequent bills (using a different date and – usually - amount).

    If you upgrade to QuickBooks 2022, you'll be able to complete this step in numerous ways. You'll have several options for automating your bill entry. You can:

    • Download the QuickBooks Desktop mobile app (be sure to get the right one – there's another mobile app for QuickBooks Online). Click Snap Bill, then Upload photo. It will be available in QuickBooks on a bill entry form with some of its details (like date, amount, and vendor) already transferred from the photo and filled in. You can edit it and treat it like any other bill. (QuickBooks 2022 Premier Plus and Enterprise and above only) .
    • Email PDFs of your bills, using a custom email address ending in @qbdesktopdocs.com.
    • Take a photo using your mobile device's camera (not the QuickBooks app) and email it to your custom email address.
    • Upload photos of bills from Google Drive.

    Figure 2: Using the QuickBooks Desktop mobile app, you can snap photos of bills and upload them to QuickBooks (QuickBooks Premier Plus 2022 and Enterprise).

    Keep in mind that this technology is not perfect. You may have to practice with it some, and all of the expected data may not transfer every time.

    Improved Performance

    If you have a large QuickBooks company file or an older computer, you may notice that the software runs slowly. QuickBooks 2022 has enhanced the product's performance by taking advantage of the 64-bit processor – in some cases, by 38 percent, according to Intuit.

    Note: If you're not sure whether your PC has a 32-bit or 64-bit processor, click on the Windows Start menu and select Control Panel, then System and Security | System.

    Although there are 2022 versions of QuickBooks, your current version may be working fine for you, and there is no need to upgrade unless you want to. That being said, the QuickBooks 2022 version is a preview of what is ahead. When you are ready to move up to the current version of QuickBooks Desktop, please call the office and speak to a QuickBooks professional who can help you make that decision and deal with any installation issues.

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  • Preparing for Hurricanes and Other Natural Disasters

    The Atlantic hurricane season officially begins on June 1, and now is a good time for individuals, organizations, and businesses to make or update their emergency plans. Here are five steps taxpayers can take to safeguard their tax records before disaster strikes:

    1. Secure key documents and make copies. Taxpayers should place original documents such as tax returns, birth certificates, deeds, titles, and insurance policies inside waterproof containers in a secure space. Keep duplicates of these documents with a trusted person outside the area of the taxpayer. Scanning them for backup storage on electronic media such as a flash drive is another option that provides security and portability.

    2. Document valuables and equipment. Current photos or videos of a home or business's contents can help support claims for insurance or tax benefits after a disaster. All property, especially expensive and high-value items, should be recorded. The IRS disaster-loss workbooks in Publication 584-B, Business Casualty, Disaster, and Theft Loss Workbook can help individuals and businesses compile lists of belongings or business equipment.

    3. Employers should check fiduciary bonds. Employers who use payroll service providers should ask the provider if it has a fiduciary bond in place. The bond could protect the employer in the event of default by the payroll service provider. As such, employers should carefully choose a payroll service provider.

    4. Rebuilding documents. Reconstructing records after a disaster may be required for tax purposes, federal assistance, or insurance reimbursement. If you have lost some or all your records during a disaster, please call the office immediately for assistance.

    After FEMA issues a disaster declaration, the IRS may postpone certain tax-filing and tax-payment deadlines for taxpayers who reside or have a business in the disaster area. The IRS automatically identifies taxpayers in the covered disaster area and applies filing and payment relief.

    5. Get assistance from a tax professional. Taxpayers who do not reside in a covered disaster area but suffered impact from a disaster may qualify for disaster tax relief and other available options. Please call if you have any questions or need more information about safeguarding your tax records.

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  • HSA Limits Increase Significantly for 2023

    Contributions to a Health Savings Account (HSA) are used to pay the account owner's current or future medical expenses, their spouse, and any qualified dependent and are adjusted annually for inflation. For 2023, the annual inflation-adjusted contribution limit for a Health Savings Account (HSA) increases to $$3,850 for individuals with self-only coverage (up $200 from 2022) and $7,750 for family coverage (up $450 from 2022).

    To take advantage of an HSA, individuals must be covered by a High Deductible Health Plan (HDHP) and not be covered by other health insurance with the exception of insurance for accidents, disability, dental care, vision care, or long-term care. Medical expenses such as deductibles, copayments, and other amounts (but excluding premiums) must not be reimbursable by insurance or other sources and do not qualify for the medical expense deduction on a federal income tax return.

    For the calendar year 2023, a qualifying HDHP must have a deductible of at least $1,500 for self-only coverage or $3,000 for family coverage (up $100 and $200, respectively, from 2022) and must limit annual out-of-pocket expenses of the beneficiary to $7,500 for self-only coverage and $15,000 for family coverage, an increase of $450 and $900, respectively, from 2022. As with contribution limits, deductibles and out-of-pocket expenses are adjusted for inflation annually.

    Please call if you have questions about Health Savings Accounts.

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  • Common Small Business Budgeting Errors to Avoid

    When creating a budget, it's essential to estimate your spending as realistically as possible. Here are five budget-related errors commonly made by small businesses and some tips for avoiding them.

    Not Setting Goals

    It's almost impossible to set spending priorities without clear goals for the coming year. It's important to identify, in detail, your business and financial goals and what you want or need to achieve in your business.

    Underestimating Costs

    Every business has ancillary or incidental costs that don't always make it into the budget - for whatever reason. A good example is buying a new piece of equipment or software. While you probably accounted for the cost of the equipment in your budget, you might not have remembered to budget the time and money needed to train staff or for equipment maintenance.

    Forgetting about Tax Obligations

    While your financial statements may seem adequate, don't forget to set aside enough money for tax (e.g., sales and use tax, payroll tax) owed to state, local, and federal entities. Don't make the mistake of thinking this is "money in the bank" and use it to pay for expenses you can't afford or worse, including it in next year's budget and later finding out that you don't have the cash to pay for your tax obligations.

    Assuming Revenue Equals Positive Cash Flow

    Revenue on the books doesn't always equate to cash in hand. Just because you've closed the deal, it may be a long time before you are paid for your services, and the money is in your bank account. Easier said than done, perhaps, but don't spend money that you don't have.

    Failing to Adjust Your Budget

    Don't be afraid to update your forecasted expenditures whenever new circumstances affect your business. Several times a year, you should set aside time to compare budget estimates against the amount you spent and then adjust your budget accordingly.

    Please contact the office if you have any questions or need assistance setting up a budget to meet your business financial goals.

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  • Tips to Help You Get Started Saving for Retirement

    It's never too late to start saving for retirement, but the sooner you begin, the more time your money has to grow. That's because gains each year build on the prior year's gains thanks to the power of compound interest - and it's the best way to accumulate wealth. Here are a few tips to keep in mind when saving for retirement:

    Set Realistic Goals and Understand Your Risk Tolerance

    Project your retirement expenses based on your needs, not rules of thumb. Be honest about how you want to live in retirement and how much it will cost. Then calculate how much you must save to supplement Social Security and other sources of retirement income. Generally, the greater the risk, the greater the reward will be, but not everyone is comfortable taking a lot of risk. If you're losing sleep over your investments (e.g., if your asset allocation is 100 percent invested in stocks during a volatile stock market), you should probably reduce your level of risk and opt for other types of investments such as index funds.

    Take Advantage of a 401(k)

    Contributing money to a 401(k) Is one of the easiest and best ways to save for retirement. Not only does it give you an immediate tax deduction and tax-deferred growth on your savings, but for many people, it also means a matching contribution from your employer.

    Contribute to an IRA

    As with a 401(k), IRA contributions offer substantial tax breaks and can give your savings a tax-advantaged boost. As a reminder, there are two types of IRAs: traditional and Roth. A traditional IRA offers tax-deferred growth, meaning you pay taxes on your investment gains only when you make withdrawals. If you qualify, your contributions may be deductible. By contrast, a Roth IRA doesn't allow for tax-deductible contributions, but it does offer tax-free growth; i.e., you owe no tax when you make withdrawals.

    Focus On Asset Allocation More Than Individual Stocks

    Asset allocation is dividing your investment dollars among the three main types of investment categories: stocks, bonds, and cash or cash equivalents. The right mix of assets is the single most important factor in determining the overall performance of your portfolio and will significantly impact your long-term returns.

    Stocks Are Best For Long-Term Growth

    Stocks have the best chance of achieving high returns over long periods. A healthy dose will help ensure that your savings grow faster than inflation, increasing the purchasing power of your nest egg. Keep in mind that investing in stocks doesn't necessarily mean individual stock picks. You can also invest in index funds, which are a type of mutual fund or exchange-traded fund (ETF) consisting of a basket of stocks that track one of the market indices such as the S&P 500 or the Nasdaq 100.

    Don't Move Too Heavily Into Bonds, Even In Retirement

    Many retirees stash a significant portion of their portfolio in bonds for the income. Unfortunately, over 10 to 15 years, inflation can easily erode the purchasing power of bonds' interest payments. Remember, it is important to diversify your portfolio to contain different types of investments within each major asset class.

    Make Tax-Efficient Withdrawals To Stretch The Life Of Your Nest Egg

    Once you're retired, your assets can last several more years if you draw on money from taxable accounts first and let tax-advantaged accounts compound for as long as possible. You can also withdraw from any investments that have lost value, then focus on selling investments held for more than a year to take advantage of lower long-term capital gains tax rates.

    Work Part-time

    Working part-time after you've retired benefits most people in more ways than one. It keeps you socially engaged and reduces the amount of your nest egg you must withdraw each year once you retire. In 2022, you can earn up to $19,560 without affecting your monthly social security benefit, for example.

    Think Outside the Box

    Other ways to get more mileage out of your retirement assets include relocating to an area with a lower cost of living or transforming the equity in your home into income by taking out a reverse mortgage. While reverse mortgages are not for everyone, they can be useful for retirees who might have trouble meeting basic expenses but live in a $500,000 dollar home with no mortgage.

    Consult a Tax Professional

    A tax and accounting professional will evaluate your financial situation (i.e., income and expenses), evaluate your tax situation, and help you figure out how much you can put towards your retirement savings.

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