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Quickbooks Top 5 Tips for Effective Bookkeeping / Top 5 Tax Tips - Bryant, Spiegel

Tammy Bryant, Varney & Associates / Julie Spiegel, Varney & Associates

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Quickbooks Top 5 Tips for Effective Bookkeeping / Top 5 Tax Tips - Bryant, Spiegel

  1. 1. QuickBooks Top 5 Tips for Effective Bookkeeping Our QuickBooks Team can provide you with customized training, support, tips & more Tammy Bryant & Julie Spiegel 785-537-2202
  2. 2. Profit & Loss Setup • Setup income accounts based on tax reporting • Use sub-accounts if you want more details
  3. 3. Profit & Loss Setup • Setup expense accounts based on tax reporting • Use sub-accounts if you want more details
  4. 4. 1099 Tracking • Setup of vendors using proper names • Enter addresses • Check the box if you know they are eligible for 1099 • Obtain W-9s & enter Tax IDs
  5. 5. 1099 Tracking • Use 1099 Wizard – Vendors – Print/e- file 1099s • Vendors should already be selected from previous setup • Warnings of missing vendor information • Map vendor payment accounts
  6. 6. Structure of Loans • Create Liability Accounts for each lender • Create sub-accounts for each loan per lender • Break out principal payments vs interest • Separate mortgage interest from other interest
  7. 7. Segregate Personal Items • Use Other Income and Other Expense Account Type • Setup accounts for itemized deductions for Sch A reporting
  8. 8. Reconcile, Reconcile, Reconcile • Bank Accounts • Credit Cards • Loans
  9. 9. Reconcile, Reconcile, Reconcile • Pay attention to outstanding items – might be duplicates, errors, things that need voiding, etc. • Difference should always be zero when done
  10. 10. Thank You! Contact us today to explore options on cleaning up your QuickBooks. We look forward to working with you! Tammy Bryant & Julie Spiegel 785-537-2202
  11. 11. Top 5 Tax Tips Do you have the RIGHT financial partner for your farming, ranching or agribusiness operation – someone who understands the agricultural industry? Julie Spiegel & Tammy Bryant 785-537-2202
  12. 12. Depreciation • Section 179 - $500,000 (2016)/$510,000 (2017) new and used with 15-year life or less (permanent – indexed for inflation) • 50% Bonus – unlimited on new assets with 20-year life or less (2016 and 2017). Percentage declines in 2018-19; gone after 2019 (NOTE: Machine sheds qualify) • Asset lives:
  13. 13. Depreciation (continued)
  14. 14. HRA • An HRA is a Health Reimbursement Arrangement • Two examples: • Farmer employs spouse as only employee: Rather than taking deduction of health insurance premiums on front page of tax return (limited to farm net income), allowed to deduct health insurance and out-of-pocket medical expenses on Schedule F – lowers net income and reduces self-employment tax • Farm businesses with multiple employees: Offers employee attractive benefit package. Tax free benefit to employee and tax deductible expense to business
  15. 15. Classification of Livestock How you account for livestock makes a difference! • Raised livestock • Example: Calf sales • Report on Schedule F – ordinary income • Breeding livestock • Raised breeding livestock held at least 24 months is eligible for more favorable capital gains tax treatment (0% or 15% typically) • Purchased breeding livestock has been depreciated and is subject to depreciation recapture and taxed at ordinary gain rates • Report on Form 4797 – capital and ordinary gains
  16. 16. Repair Regulations • New guidelines issued in 2014 – taxpayer friendly • In 2014 and 2015, a de minimis safe harbor was created to expense amounts below $500 • In 2016, IRS increased the $500 de minimis safe harbor threshold to $2,500 per unit of property. • Applies per invoice or per item • Must be substantiated by invoice • Election must be made annually on the filed tax return De Minimis Safe Harbor
  17. 17. Repair Regulations • Safe Harbor - less than $200 can be expensed • Incidental (Not Inventory and consumed in 12 months or less) Materials & Supplies Repairs • Taxpayer can deduct amounts paid for repairs and maintenance to tangible property as long as not required to capitalize as an improvement. • Recurring activities expected to keep a Unit of Property (UOP) in ordinary operating condition • Cleaning, inspection, testing, replacing parts • (i.e. annual maintenance on tractor or combine)
  18. 18. Repair Regulations • Betterment • Corrects a material condition or defect • Makes it materially more efficient or productive • (i.e. modify farm equipment to do same thing better) • Restoration • Makes an asset like new again after the end of its class life • Replace major component or substantial structure • (i.e. 15-year old tractor – restore engine) • Adaptation • Adapts tangible property to a new or different use • (i.e. convert old barn to office space) Improvements
  19. 19. Cash versus Accrual accounting • Cash basis – report income when received and expenses when paid • Most farmers report cash basis accounting on tax return • Examples: Prepaids can be expensed; contract grain and insurance claim proceeds can be deferred to a future tax year; credit card charges are considered expensed when charged (not when paid); fixed assets are based on when placed in service (not when paid). • Accrual basis – report income when earned and expenses when incurred • Benefit: Better management reporting and overall picture of operations
  20. 20. Thank You! Contact us today to explore options on becoming financial partners. We look forward to working with you! Julie Spiegel & Tammy Bryant 785-537-2202