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Do You Need Help From An Accountant Navigating The New Tax Reform?

Do You Need Help From An Accountant Navigating The New Tax Reform?

While the new tax reform will not affect your 2017 tax filing, it may affect some of the choices you make throughout the year. Depending on if you are filing as an individual filer or a business may change what help you need from our accountant.

Complicated Aspects Of The Tax Reform For Individual Filers

Many of the changes that came about during the tax reform were aimed at individual filers. While these changes are not permanent and are slated to end in 2025, they will affect your filing for the next handful of years. Below are some of the major changes which may affect you enough that you need to talk to our accountant to understand the full effects on your personal taxes.

Personal exemptions are gone. Your personal exemptions were deductions which allowed you to exempt some of your income. After they were applied, the IRS only taxed the remaining income. However, with the tax code change, you can no longer make these personal deductions.

The standard deduction has nearly doubled. Perhaps to balance the lack of the personal exemptions, the standard deduction for single filers, married joint filing, and head of household has nearly doubled. This move has made it less appealing to file an itemized tax return, though it will depend on your personal circumstances.

For more individual filer changes, be sure to check out our breakdown on the Trump tax reform.

Navigating Business And Corporate Tax Changes

There were not many changes to business and corporate taxes but the changes which occurred were impactful. A couple may require you to consult with our accountant to fully understand the ramifications of the change.

Pass-through business owners have a new tax break. If you own a pass-through business which you draw a salary, you will be allowed to take 20% out as a deduction. There are some stringent rules tied to this break, so you should definitely consult with our accountant to understand the full impact on your income and taxes.

U.S. companies earning overseas have new taxes. Previously, U.S. companies which earned money in foreign countries were not taxed on those earning until they were brought back to the U.S. The tax reform has changed it so that they are all required to pay 15.5% on their cash assets and 8% on all non-cash assets.

If you feel concerned about the new tax reform and are wondering how they will affect you in the next tax year, be sure to contact us. Our accountant is more than willing to walk you through the changes and help you understand what you need to know.

Tax News: Trump’s New Tax Reform

Tax Changes Via The Trump Admin

Many people are concerned how the new tax reform will affect their taxes. Yet, for the uninitiated, reading through legal documents to understand the new tax laws can be difficult. To help you better understand, AA Tax and Accounting Services has sorted through the tax reform and compiled it in a way to make it more understandable.

Tax Changes For Individual Filers

The majority of the tax changes were directed at individual filers, though they will only last until 2025. The first major change was the individual filers rates as shown below.

Income Bracket

Single Filers

Married, Filing Jointly

10% (remained the same)

$0 – $9,525

$0 – $19,050

12% (down from 15%)

$9,526 – $38,700

$19,051 – $77,400

22% (down from 25%)

$38,701 – $82,500

$77,401 – $165,000

24% (down from 28%)

$82,501 – $157,500

$165,001 – $315,000

32% (down from 33%)

$157,501 – $200,000

$315,001 – $400,000

35% (remained the same)

$200,001 – $500,000

$400,001 – $600,000

37% (down from 39.6%)

$500,001 or more

$600,001 or more

You should also be aware of many other important tax law changes:

  • Personal exemption – There is no more personal exemption for single filers or married joint filers.
  • Standard deduction – The standard deduction has almost doubled, going from $6,350 to the now $12,000 for single filers. Married couples who file jointly have had their standard deduction go from $12,700 to the present $24,000.
  • Child tax credit – Credit now gives filers $2,000 per child under 17 years old.
  • Non-child dependent credit – Parent can temporarily take a $500 credit for each and every non-child dependent they are financially supporting.
  • Cap on local and state tax deduction – The new deduction cap is now $10,000. The deduction will remain the same if you want to itemize.
  • Estate tax – Almost all estates are now exempted from the estate tax. Those who will still have to pay are those who inherit $5.49 million for individuals and $10.98 million for couples.
  • Alternative minimum tax – The income exemption rates for the alternative minimum tax has been raised and now single filers can exempt $70,300 and married filers can exempt $109,400.
  • Health insurance penalty – There is now no penalty for not having health insurance.
  • Mortgage interest deduction – With a new mortgage on your first or second home, you can only deduct the interest up to $750,000.
  • Inflation adjustments – Inflation will be measured more slowly, which will make your deductions worth somewhat less.

Tax Changes For Businesses And Corporations

The new tax reform has also changed things when it comes to business and corporate taxes. Below is a short overview of what has been changed.

  • Corporate tax rate – The corporate rate has gone from multiple income brackets to just one. All corporations will be taxed 21% of their taxable corporate income.
  • Pass-through business tax lowered – Will now require owners, partners, shareholders of LLCs, S-corporations, and partnerships to pay taxes on 20% of their income.
  • Pass-through business tax break – If the partner or owner of a business also draws a salary from their business, that income will be subject to task.
  • U.S. multinational taxes – U.S. companies who earn overseas will now be required to pay taxes on their taxable corporate income whether they bring the profits home or not. The tax reform requires corporate businesses pay 15.5% on their cash assets and 8% on their non-cash assets.

These changes can be complicated. If you want to be sure you have everything in order when it comes to your taxes, feel free to contact us today and set an appointment. Our accountant can walk you through the tax changes which apply to you so that you can feel comfortable when filing your taxes.

Tax Preparer For St George, Utah Business Owners Can Increase Your Return

For business owners in Southern Utah, working with a St. George tax preparer is one of the best ways to maximize their next tax return. If you would like to see a dramatic decrease in the taxes you pay the next time you file taxes for your business, then keep reading to see how a tax preparer can make this possible.

Ways A Local Tax Preparer Increase Your Return

There are a variety of reasons why you should entrust your business taxes to a local tax preparer and not some tax preparation software.

  • Personalized help – By working with a St George tax preparer, you can receive personalized help that is unavailable when trying to use tax preparation software. A local preparer will, for instance, be able to identify if you need to provide more paperwork, see possible mistakes, and more.
  • More experience – Even though businesses need to file quarterly taxes, few business owners will have the range of experience with filing taxes that a tax preparer will have at their disposal.
  • Deductible expense – As long as eligibility requirements are met, having professional tax preparation done can be a deductible expense that can be folded into your tax return.
  • Familiar with state taxes – Choosing to work with a local tax preparer means you are working with someone who is more familiar with the state laws which apply to your area.

How To Identify A Good Tax Preparer

When it comes to tax preparation, not all tax preparers are equal in ability. In fact, it seems when tax seasons comes around, suddenly everyone is a qualified tax preparer. Nothing could be farther from reality.

As you look for a quality tax preparer, look for these things:

  • Multiple qualifications – You should always investigate the qualifications of your tax preparer before you decide to work together. The best ones will be professional accountants who have years of training. An example of ones you may want to avoid are the ones with a sign spinner directing you to file taxes with that particular tax preparation business. Those tax preparers are likely not very qualified and only have limited representation rights.
  • Good reputation – The best tax preparers have built a good reputation that will help them rise above the less proficient tax preparer. Some ways you can go about finding a reputable tax preparer are by word-of-mouth, online reviews, and Better Business Bureau rating.
  • Answers questions – As you review your tax return before it is filed, a good tax preparer will allow you all time you need to review and ask questions. If they cannot answer your questions, you may not want to accept the filing.

Tax time can be difficult for business owners, especially if they are not receiving the proper tax return. Be sure to work with a St George tax preparer and see how much your business could be saving.

St George Accountants Offer 5 Major Bookkeeping Benefits To Business Owners

St George Accountants Offer 5 Major Bookkeeping Benefits To Business Owners

There are many demands on a business owner’s time. As much as the owner would like to be able to be completely hands-on with every aspect, the owner only has so much time in a day.

For many busy business owners, outsourcing their bookkeeping to an accounting firm just makes sense. It is one of the tasks that can be greatly time-consuming and also very expensive to bring a bookkeeper in-house.

AA Tax and Accounting Services offers top-notch bookkeeping services to St George and Cedar City business owners. Below are five of the major benefits your business with receive when working with AA Tax and Accounting Services.

Let Your Accountant Deal With General Ledger Management

Since a business’ general ledger one of the key ways a business tracks their financial transactions, it is key that it is maintained properly. However, it can be a tedious task that can cut into time which could be more profitably spent.

By allowing a bookkeeper manage your business’ general ledger, you won’t have to spend another afternoon trying to make sure all your accounts are balanced.

Bank Reconciliation Handled By Your Accountant

The work of balancing your accounts doesn’t end with your business’ general ledger. Another excellent bookkeeping service offered is bank reconciliation. An accountant will regularly audit your business’ cash statements versus your business bank account. By doing this, the accountant can:

  • Detect/prevent fraud
  • Detect/prevent embezzlement
  • Correct company records
  • Assess penalties
  • Track cash flow

Receive Accurate Income Statements

Having accurate income statements are key for business owners so they can see exactly how their business is performing.

The bookkeeper will prepare an income statement for a set period of time. In that report, business owners will generally see:

  • Revenue
  • Gross profit
  • Cost of sales
  • Expenses
  • Profit before tax

Depending on the business’ needs, this report can be created with more detail so that the owner can track the various aspects of their business.

St. George Accountants Can Manage Your Accounts

Business owners can waste hours keeping track of their account payables and account receivables. The duties surrounding these types of accounts are distinctly different, which all could be managed by a good bookkeeper.

Once you turn over the management of these accounts to a bookkeeper, you will never need to scramble to find and pay an invoice or organize another deposit receipt.

Stay On Top Of Your Bookkeeping Reports

There are a large variety of financial reports that your bookkeeper can generate. That way, you can have a quick and understandable way to see how your business is doing. AA Tax and Accounting Services is ready to customize your reports so that you can have exactly what you need to keep your business on track.

Feel free to contact us today and start enjoying more financial security by entrusting your bookkeeping to AA Tax and Accounting Services.

Is Your Business Structure Helping You Make The Most Money?

Is Your Business Structure Helping You Make The Most Money?

Your business structure has a direct impact on your revenue recognition strategy, as the structure may determine whether or not you make any money.

There are several factors involved when determining what your business structure will be going forward. As you read through, keep in mind your revenue recognition strategy to see which of these business structures is most compatible with your business.

The Four Business Structures

When it comes to structuring your business, there are four different ways you can go about it. Those ways are:

  • Sole proprietorship – You are the only owner of this company.
  • Partnership – Company is owned by several individuals. There are general partnerships, where the partners share in the obligations and debts of the company. With a limited partnership, these partners act as investors and have no control over how the company operates.
  • Corporation – Most complex business structure, it also operates on the largest scale. A corporation is a legal entity in its own right, apart from the legal entities of the business owners. The shareholding owners can direct the company.
  • Limited liability company – Blending corporate structure and partnerships, there is no limit on shareholders and any member of the LLC has a full partnership.

How Taxes Affect Business Structure

Each of the four different business structures have a different set of tax laws. Depending on your revenue strategy, one of these business structures will suit your business best.

  • Sole proprietorship taxes – Business taxes and personal taxes are inseparable with this business structure. You will need to pay self-employment taxes using your Schedule SE with your Form 1040. Your business earnings will only be taxed once with this business model.
  • Partnership taxes – The business itself does not become taxed. Instead, the losses and profits are passed to the individual partners. Each partner has to report their own taxes using the Schedule K-1 of Form 1065.
  • Limited liability company taxes – When doing taxes on an LLC, the earnings and losses go straight to the owners and are applied to their personal taxes. This is much like a sole partnership, except that the earnings and losses are split between the various owners.
  • Corporation taxes – Some significant tax drawbacks are attached to corporations. The corporation itself is taxed on the state and federal level, but also the shareholders are taxed on their earnings.

You may still not be sure if your business model is helping you make the most money. To help clear the confusion, you can work with trained accountants who can consult with you regarding your business. With an accountant’s insight on tax law and the various rewards and drawbacks these different structures present, you can make sure you are making the most money possible with your business structure.

2 Important Steps You Can Take to Ensure You Are Prepared For Dreaded Tax Season

2 Important Steps You Can Take to Ensure You Are Prepared For Dreaded Tax Season

While many Americans put off preparing their taxes until the last moment, this can contribute to the dread they feel as the tax season deadline approaches.

But you don’t need to panic as April 15 comes closer. Whether you have simple taxes or complicated ones that need an accountant to help you deal with them, there are two steps you can take to prepare yourself for tax time.

Organize Your Forms And Paperwork

Organizing all your paperwork and forms before tax time will help you skip the last minute scramble many people struggle with during tax season. Some of the key forms you will want to secure will depend on various circumstances.

Income Forms – You will want to gather all of your W-2 forms, 1040 Schedule C, 1099-MISC, and any other income forms you have received. You may need to be proactive about collecting your forms, as some companies do not mail forms anymore and simply make the information available through your employee access portal. If you are the business owner, then you will need to hold yourself accountable for acquiring the necessary paperwork.

Receipts – Depending on whether you want to file an itemized return, you will gather up your receipts for several things. Common qualifying deductions are:

  • Mortgage interest payment
  • Medical expenses
  • Investment interest payments
  • Charitable contributions
  • Property taxes.

If you run a business, you will naturally need to gather more information. Some common business deductions are:

  • Employee salary and wage information
  • Contractor payments
  • Business property rent or mortgage
  • Utility payments
  • Company supplies
  • Business insurance.

Personal – Make sure you have all the personal information you need. It is easy to remember our own personal information, but depending on your circumstances, you may need to gather personal information that is not your own. Some information you may need to consider gathering:

  • Dependants’ information (children, elderly parents, etc)
  • Assets (Traditional IRA, house, stocks, etc)
  • Federal benefits (SNAP, Social Security, FAFSA, etc)

Work With A Great Accountant

Preparing for the tax season on your own can be difficult even if all you are taking care of is your personal taxes. If you are a business owner, the difficulty level skyrockets. But you don’t have to manage your taxes on your own.

AA Tax and Accounting Services is ready to help steer you through the muddy waters of tax season. They have the knowledge and experience to ease you through tax time and alleviate the normal stress most people feel when doing their taxes. So do yourself a favor and work with them today to prepare you for the fast approaching tax season.

​Pros And Cons Of Hiring Third-Party Bookkeepers

​Pros And Cons Of Hiring Third-Party Bookkeepers

Having a reliable accountant to handle your business’ bookkeeping is a key feature of any business. But the question comes down to whether you keep your bookkeeping in-house or outsource it to a third-party accounting firm.

Below are the pros and cons of hiring third-party bookkeepers which you should know before you make your decision.

In Favor Of Third-Party Bookkeeping

There are many benefits to outsourcing your bookkeeping to an accounting firm. The main upsides to sending your financials out-of-house are:

  • Cost reduction – Working with a third-party bookkeeper cuts down the cost of having an in-house bookkeeper. While you need to pay for the services you require from the outsourced bookkeeper, your business doesn’t need to pay for the third-party bookkeeper’s overhead costs as you would with an in-house employee.
  • Expert work – No need to worry about your bookkeeper’s qualifications or abilities. By outsourcing to an accredited accounting firm, you can be assured that they employ the well-trained and experienced experts.
  • Time saving – For many businesses, their in-house bookkeeper performs several roles such as human resources, scheduler, and training. By sending your accounting out-of-house, you can free up your employee. Also, you no longer need to spend time overseeing your bookkeeping.
  • Greater professionalism – Never deal with delayed or mishandled accounts again. With a third-party bookkeeper, you can feel secure knowing your business’ accounts will be taken care of on time.

Cons Of Outsourcing Your Bookkeeping

While there are many benefits to outsourcing your bookkeeping, there are still a few potential downsides as well.

  • Security risks – When transmitting sensitive financial data outside of your business, there is always the danger of the information being stolen or abused. It is important to inquire about the security measures your potential third-party bookkeeper uses.
  • Time difference – Even if you outsource to a third-party bookkeeper within your time zone, operating times between the two businesses can create difficulties. Even if your operating times coincide, communication can lag between your business and your third-party accountant.
  • Language barrier – Depending on how far afield you send your bookkeeping, language may be a barrier.

Many of the negatives your business may encounter when outsourcing your bookkeeping can be mitigated. The key way you can be sure you are working with a credible and reliable accounting firm is to make sure the accountants have a track record of success.

AA Tax and Accounting Services has experienced accountants at the helm. They have years of experience working with everyone from individuals to businesses. When your business chooses to outsource to AA Tax and Accounting Services, you can be assured that the downsides of outsourcing can be mitigated by their professionalism.

How St George Accountants Can Streamline Businesses

How St George Accountants Can Streamline Businesses

Businesses at all levels of development can benefit from having trustworthy accountants to help streamline operations.

It can be tempting to try to manage your business’ monetary needs without an accountant. But this is one area where you shouldn’t try to cut corners. By working with an accountant, you can save money as well as make your business more efficient.

Accountants Help Startups

When it comes to starting up a business, working with an accountant can seem like you are jumping the gun. But there are several areas where your business can be helped by an accountant.

  • Analyze your plan – Accountants can look over your business’ financial plan and help you analyze if your plan is sound. They can find financial areas you may have missed and where in your plan you may be able to save more money.
  • Business structure – Whether you need to create an LLC, partnership, corporation or something else, your accountant can help identify which business structure works best.
  • Tax code compliant – An accountant can help you set up your business finances to comply with the local and federal tax code.

Established Businesses Can Be Streamlined

Business owners can fall into the trap of – “If it’s not broken, don’t fix it”. However, your accountant can offer plenty of help when it comes to streamlining your established business.

  • Entity restructuring – As your business has grown, you may find your original business structure may not be the best fit anymore. An accountant can help you with entity restructuring, help you reduce your tax liability and mitigate personal risk.
  • Payroll and payments – An accountant can streamline the long process of handling payroll and processing payments. You won’t have to worry anymore about late vendor payments or incorrect payroll processing.
  • Submit taxes – Instead of trying to compile your business taxes on your own, you can work with an experienced accountant. With an accountant, you can receive help estimating your quarterly taxes, then have your accountant prepare and file your taxes.

Develop A Stronger Business

As businesses look to grow, an accountant can help guide a business as it looks to grow. Expanding your business can be difficult, but quality accountants can help smooth a business’ development by offering business consulting.

By working with your accountant, they can identify areas of improvement as well as areas for potential growth. So contact your local accountants and see how they can help you streamline your business today.

To File or Not to File?

Filing taxes

Everyone has to file a tax return, right? Actually, no…there are situations where a person may not have to file taxes. It depends on age, income level, where income comes from and what status you are filing under.

Let’s take a look at some of the guidelines provided by the IRS.

Thresholds For Income

Anyone who makes under the minimum income line does not have to file taxes. You are entitled to one standard deduction and an exemption, unless you are being named as a dependent on another person’s tax return that year. Anything over that rate is subject to a tax and you have to file a proper return.

The amount of those deductions and exemptions are changed every year to keep up with changing inflation rates. You can see those rates at the IRS website. The amount will be partially decided by whether you are filing as a single taxpayer or in a joint filing with a spouse.

Age Specific Exemptions

The rules for tax filings changes when you hit the age of 65. You may be subject to a higher income bracket before you are required to file, especially if you are receiving social security benefits.

Keep in mind that social security benefits are taxable if you are receiving an income from another source in addition to that monthly allotment. So make sure it is being factored into your final calculations when ascertaining whether you need to file a return.

ACA Status

The Affordable Care Act has opened up an insurance marketplace with benefits that offset the cost of health care for many Americans. At the end of the year, people who used the Marketplace are required to report it on their taxes, which includes providing information given from a special form issued in the mail along with W-2’s.

If you have used the Marketplace you will have to file a tax return.

Filing Rules For Dependents

Dependents are not able to name themselves as a deduction because they are being named on someone else’s return. Income they earn over $6,300 has to be reported on a return. If they are not employed but earning dividends on investment accounts or interest on bank accounts they are required to report it once it hits $1,500 per year.

Why You Should File Anyway

There are several instances where you can get out of filing a return. But do you really want to? Many Americans learn later on that they could have gotten a refund if they had only filed. You may want to consider filing a return even if it isn’t necessary. You never know what you could get.

Find out more at AATAS.

Trust Accounting Services

Trust Accounting Services

Allowing someone else to deal with your money requires a lot of trust. But that said, many people are nervous to meet with an accountant. Here is our four-step sequence for learning to trust your accountant.

1. Identify Your Fears

Ask yourself: What am I really worried about regarding my accountant?

Everyone’s answer will be different. You might realize your nervousness actually lies elsewhere in your business. You find some actual specific pain points with your finances: taxes! paying employees! spending! Or you might just find, you simply don’t like your accountant.

This last point is certainly a valid concern. Not all accountants are created equal. Maybe you a hard time communicating with your current accountant. If that is the case, find yourself a new accountant that you’re more comfortable with.

2. Take a look at your recent numbers

In step one, you clarified your emotions. Now, you’re going to get a numerical perspective.

Find key numbers for the last three to five years — yearly tax returns are a good place to start — and write the answers to these four questions:

  1. How much income did both my business and I receive?
  2. What the total expenses both my business and I accrued?
  3. How much did we each pay in taxes?
  4. How much did we each earn in profits?

Continue on to step three.

3. Speak with your Accountant

It is now time to speak with one or more accountants. Start by visiting your current accountant. If all you receive from that visit is bluster and jargon, find an accountant you can trust.

With whichever accountant you meet, focus your meeting on these three questions:

  1. What are the answers to the four fundamental questions above?
  2. How can I be more involved in my own finances?
  3. How can I trust you as my accountant?

The answers will speak volumes. You can expect a clear breakdown of the basic numbers and what they mean, practical tips on how to prepare for key parts of the financial year, and a walk through of the accountant’s process.

4. Commit to Trust and Understanding

Much of the hesitation for working with an accountant stems from a lack of understanding. Many people don’t understand what they are paying their accountant to do.

Learn more about your personal finances and learn more about your accountant’s process. As your understanding increases your trust will too. Then you’ll finally be able to get some sleep at night.

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