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Bank Reconciliations

How often do you review your monthly bank statements in-depth?

Have you ever reviewed your statements and felt as though your bank balances were wrong?

To have a complete picture of your finances, it’s important to reconcile your accounts regularly.

With only so many hours in the day, reconciling your accounts often falls to the wayside. Instead, you should consider having a certified bookkeeper manage your bank reconciliation so you can have a clear understanding of your finances.

At AA Tax & Accounting Services, LLC, we understand the importance of bank reconciliation, which is why it’s a core part of our bookkeeping services. By helping our clients have a better idea of their balances and cash flow, they’re able to make more confident financial decisions.

AA Tax & Accounting Services, LLC offers the following bank reconciliation services to all of our clients both locally and nationally:

  • Entrepreneur and Small Business Bank Reconciliation
  • Bank Reconciliation for Businesses and Corporations
  • Personal Bank Reconciliation for Individuals
  • Bank Reconciliation for Not-for-Profits (Non-Profits)
  • Bank Reconciliation for Start-Ups

If you need any of these bank reconciliation services, give our team a call. Keep reading to learn more about what our team can do for you.

What is bank reconciliation?

Bank reconciliation is the process performed by a company or individual to balance and match bank statements to the accounting records. This is done by comparing the amounts recorded by the company to the amounts on the bank statement to ensure that everything aligns and adds up accordingly.

When payments match up currently to the corresponding invoices, the transaction has been balanced. This process allows you to uncover any discrepancies and resolve any differences so that they become reconciled.

Without proper bank reconciliation, it’s difficult for an individual or company to have clarity over their finances.

How to perform bank reconciliation

At the end of each month, you receive a bank statement that details all of the transactions, deposits, and withdrawals that occurred over the previous month. Once you have the bank statement in hand, you can begin the bank reconciliation process at the place you left off last time.

Review deposits and withdrawals

Review your business records and match them up with the corresponding line item on the bank statement. If the amount of each deposit or withdrawal matches up, make a note.

If there is an item missing in your records, you will have to add it.

Account for income and expenses in your records

Compare your books against the bank statement to ensure that each transaction is properly accounted for. Any unexplained differences will need to be investigated, so you understand why the income and expenses aren’t aligning.

Adjust the bank statement

In certain instances, your bank statement may not accurately reflect your transactions for the same time period due to pending deposits, outstanding checks, or even bank errors.

If something is not accurately reflected on the bank statement, make the necessary changes.

Adjust the cash balance

Similar to adjusting the bank statement, you will also need to adjust your books to correctly reflect any transactions made in the cash account.

Review the end balances

Now that all necessary adjustments have been made to the bank statement and cash balance, you’ll need to review the end balances to verify that they are now the same.

If they align, you’ve completed the bank reconciliation process.

If the end balances are still not equaling one another, you’ll need to repeat the bank reconciliation process to resolve any remaining discrepancies.

Call AA Tax & Accounting services for bank reconciliation

There are only so many available hours in the day, and as a business owner, you have a long to-list that needs to get completed. To help you win back some time, AA Tax & Accounting Services, LLC offers various bookkeeping services, including bank reconciliation.

You can trust our team to deliver a level of service that the average bookkeeper cannot. AA Tax & Accounting Services is available to help you with all your bookkeeping needs. Contact us today to schedule a consultation.

Planning to Freelance in 2021? How Much Will You Pay in Taxes?


Whether you want to make some extra money on the side or like the idea of being your own boss, freelancing can be a great option.

Once you get started freelancing, the excitement you feel when that first paycheck hits your bank account is contagious! Unlike a standard paycheck from an employer that calculates out the taxes you owe, though, your freelance check does not. This can make filing your taxes a bit more complicated.

As a freelancer, the Internal Revenue Service views you as a self-employed individual. This means that you are responsible for covering both your income tax, as well as self-employment tax. Without proper preparation throughout the year, you may find yourself with a hefty tax bill and no funds to cover it — which is why it’s imperative you set aside enough money throughout the year to cover your payments.

If you’re new to freelancing, this can seem very overwhelming. How much should you be setting aside to cover your taxes?

Do you pay it all when filing your taxes, or should you pay it throughout the year?

AA Tax & Accounting Services, LLC has compiled a guide for freelancing taxes to make the process less daunting.

How to calculate tax payments for freelancers

As a freelancer, you are required to pay income tax and self-employment tax. Self-employment tax refers to the taxes that a typical employer would withhold from your paycheck on your behalf, covering Medicare and Social Security taxes. In this scenario, your employer would pay half, and the other would be withheld from your paycheck — but that isn’t the case when you’re self-employed.

Since freelancers are considered the employee and the employer, you are responsible for covering all tax payments based on your income. Self-employment tax is 15.3% of the first $142,800 of income you receive, plus 2.9% of anything you earn over this threshold.

If you don’t have a budget for the taxes you’ll owe when filing your tax return, you may find yourself with a high tax bill. Instead, you should set aside 25% to 30% of your income to cover these costs. The easiest way to do this is to estimate how much you should deduct from your income each month and make estimated quarterly tax payments.

To get an estimate on how much you will owe to the IRS, you can use IRS Form 1040-ES to calculate your estimated tax payments.

Factor business expenses into taxable income

Although you will likely owe 25% to 30% of your income to the Internal Revenue Service for taxes, you may be able to deduct costs associated with running your freelance business. Using a Schedule C form, you will be able to subtract qualifying business expenses from your freelance income, calculating your taxable income for the year.

To ensure you get the most out of your business expense deductions, keep records of the following expenses:

  • Office supplies
  • Travel expenses
  • Mileage driven for business purposes
  • Maintaining a home office

Once you’ve calculated your taxable income from freelancing, you can determine how much you should be set aside for quarterly tax payments, so you don’t have a significant tax bill.

Do I need to make estimated tax payments?

When freelancing, the IRS expects you to pay your taxes at regular intervals throughout the year. Although you won’t know the exact amount you will owe, you can use the form mentioned above to calculate your estimated quarterly payments. If you expect to owe more than $1,000 in taxes come tax season, you are required to submit estimated payments quarterly by the following deadlines:

  • April 15 of the current year
  • June 15 of the current year
  • September 15 of the current year
  • January 15 of the following year

Not paying estimated quarterly taxes may result in tax penalties, causing you to owe the IRS more than you accounted for. Budgeting for income tax and self-employment tax will provide you with peace of mind knowing that you’re prepared for tax season and won’t be hit with an expensive tax bill — you may even get a refund!

Tax consulting services in Cedar City, Utah

If you’re self-employed, we recommend consulting certified public accountants like AA Tax & Accounting Services to better understand what you will owe come tax season and how much you should be paying to the IRS quarterly.

The AA Tax & Accounting Services team can help you execute the right self-employment tax strategies for peace of mind. Contact us to schedule an appointment.

30 Accounting Terms All Business Owners Should Know


When you go in to meet with your local Cedar City accountant to discuss your business, there are many business-specific accounting terms that will be used. While our accountant is always happy to stop and explain an unknown term, you may feel more comfortable going into a business meeting with a firm understanding of accounting terms that apply to company operations.

While there are industry-specific terms, below are thirty accounting terms that all business owners should know.

General Accounting Terms

To start off, let’s lay the groundwork for other accounting terms by clarifying general accounting terms. Many of these terms are what business owners will encounter even before they start their company, so it is essential to understand what they mean.

1. Accountant

The term accountant often gets thrown around to describe anyone who deals with numbers. However, this loose definition isn’t quite sufficient.

While the exact requirements can vary to state-to-state, an accountant should have a four-year accounting degree from a higher education institute. They can act as bookkeepers, and with the right certifications, certified public accountants.

2. Accounting Period

An accounting period is a defined time span where all of a company’s financial statements—i.e., balance sheet, income statement, statement of cash flow—are included. By having accounting periods to reference, business owners can quickly find information on how the company financially performed during any set time.

3. Cash Flow

To describe the flow of cash in and out of a business, accountants use the term cash flow. The cash flow is tracked from the beginning of an accounting period and ends with the conclusion of the accounting period. A negative cash flow indicates a business had less money comes in than went out, while a positive cash flow shows the opposite.

4. Allocation

Allocation describes how businesses assign funds to different accounting periods or departments within the business.

5. General Ledger

A whole and complete financial record that keeps track of a business’ financial accounts. This ledger should be maintained on a daily basis, and it is used to help create financial statements.

6. Business Entity

The term business entity refers to the legal structure of your company. For most small business owners, these company formations are usually sole proprietor, limited liability corporation (LLC), or partnership. There are also s-corporations and corporations. Depending on what business entity applies to your company, there are different laws, compliance requirements, and tax ramifications.

7. GAAP

Generally Accepted Accounting Principles (GAAP) refers to the basic rules that all accountants follow as they perform their duties. These principals guide accountants so that it is easier for other financial experts to review a business’ financial records.

8. Fixed Cost

Businesses have fixed costs, which are costs which do not change no matter how many sales are made. An example of this would be the rent of a business’ location, which would be a recurring fixed cost. While the rent could be raised over time, it will remain fixed throughout the length of the rental contract.

9. Variable Cost

Opposite of fixed costs are variable costs, which are business operation costs that change with how many sales are made. An example of this would be something like the cost of deliveries. With fewer sales, the amount of business funds dedicated to delivering goods is lower, though costs will go up as more sales are made.

10. Overhead

A business’ overhead refers to the expense of operating a business and is often a fixed cost. That means that overhead often refers to things like business rent, employee salaries, inventory storage costs, and fixed costs.

11. Liquidity

For businesses, when it comes to liquidity, it is a measure of how quickly a business can absorb short-term and immediate financial obligations and debts.

12. Return On Investment

The strict definition of this term refers to the overall profit that a business makes—the return—which is divided by the business’ investment. However, ROI can also be used a bit more loosely to describe how successful short-term projects and objectives have been.

Profit And Loss Statement Terms

When it comes to your company’s profit and loss statement terms—also called income statement terms—you will likely encounter more of these words when using accounting services. To help you stay in the loop when discussing your business’ financial status, here are some of the most common profit and loss statement terms.

13. Income Statement

Let’s start by defining what an income statement is when applied to your business. This financial statement will cover the expenses, revenue, and business profits for a set period of time.

It starts by displaying the company revenue at the top of the statement, then the expenses are displayed to show how much was subtracted. That way, you have a clear idea of where the money was spent. Finally, the income statement displays the net income at the bottom of the report.

14. COGS

COGS—costs of goods sold—is used to refer to the expenses that relate to the creation of your business’ service or product. This term does not describe operating costs; rather, the labor involved in your business’ provided service or the cost of the materials used to make your product.

15. Gross Profit

The profitability of your business in terms of dollars is described by gross profit. This number is reached without taking into account the overhead costs but is subtracted the COGS from the revenue.

16. Gross Margin

After the gross profit has been assessed, the gross margin is next. The gross margin is a percentage of the gross profit. You find this percentage by taking the gross profit and dividing it by the revenue to find the gross margin.

17. Depreciation

This term describes the loss of asset value over time. It does not describe low-dollar value items. An example of a depreciable business asset would be a company van. A depreciating asset is often shown on an income statement as a non-cash expense as it doesn’t directly affect your business’ cash.

18. Net Income

The net income (NI) is the actual dollar amount of profit your business earned. You can find the net income by subtracting the expenses from the revenue for a set period. These expenses should include your taxes, overhead, depreciation, and COGS for that given period.

19. Net Margin

Another term for the profit of your business, the net margin is the percentage of profit as it relates to the revenue. The net margin is found by having the net income divided by the revenue for a set earning period.

20. Expense

When your company incurs a cost, the term for this is an expense.

21. Revenue

Simply put, any money that is earned by your company is considered revenue.

Bookkeeping Terms

Some of the accounting terms that you will run into regularly as a business owner are bookkeeping terms. Many of these terms describe financial matters that concern the day-to-day operations of your company, so it is critical that you understand them.

22. Balance Sheet

A balance sheet is a term that encompasses your business’ financial report that shows all the liabilities, equity, and assets your business has currently. This report shows the balance of this equation: Assets = (Liabilities + Equity).

23. Accounts Payable

This term describes all of the business’ expenses that have not been paid yet. On a balance sheet, account payable is listed as a liability, since the business owes others.

24. Accounts Receivable

To describe the revenue of a business has but hasn’t received the payment, you would use the term accounts receivable. On a balance sheet, accounts receivable is listed as an asset that should become cash soon.

25. Payroll

Considered a standard business liability, payroll is an account that displays the payment of employee wages, salaries, deductions, and bonuses. On the balance sheet, you may see if there are any unpaid wages or accrued paid vacation time.

26. Inventory

A business asset that is meant to be sold to customers is considered inventory. Once inventory items are sold, the account tracking the inventory assets will lower so that businesses can track when they need to restock.

27. Asset

An asset is a term used to define the things owned by the company which hold monetary value. When you see your assets listed, they will be in order of liquidity, with assets like cash as the most liquid, to difficult to dispose of assets like a building being one of the least liquid.

28. Book Value

While you may have depreciating assets—like the example company van—there is a term to describe the original value of that asset, which is when the term book value is used.

29. Liability

A business financial liability refers to the unpaid debts that a company has accrued. Often, your business liabilities will be things like business loans, accounts payable, and payroll.

30. Equity

After the liabilities have been subtracted from the assets of your business, the leftover value is called the equity.

To start working with our accountant concerning your business accounting needs, contact us today to set up a consultation. He will provide you with a tailored accounting plan that will suit the unique needs of your business.

Accounting Tips to Make Next Year’s Taxes Even Easier

Accounting Tips
Quality tax preparation starts long before tax season. If this year’s tax season has been a bit difficult, there are some things you can start doing now to make your next year’s taxes easier.

Identify Accounting Areas Where You Struggled

Some people like to put their struggles out of their minds the moment things are resolved, but when it comes to your taxes, it is important to know what areas where you struggled. That way, on your next year taxes, you will know what to prepare for.

For instance, say you struggled with finding all your business receipts. While this is not an unusual problem, it can make tax time difficult. Once you know that this is where you struggled, make it a point to keep your receipts organized, whether in a filing system or other methods.

Work With A Qualified Accountant

Rather than visiting a tax professional once a year when tax season rolls around, develop a working relationship with a qualified accountant. Whether you are looking for accounting services to help you manage your business revenue strategies or are looking for help dealing with bookkeeping and payroll as well as tax preparation, working with a qualified accountant is a great way to make a headstart on your taxes.

With our accountant to work with you throughout the year, your taxes can be more manageable, as he will be able to keep an eye on your finances and help you make the right financial moves.

Set Up Quarterly Tax Reminders

If you are self-employed or a business owner, setting up quarterly tax payment reminders can save you a lot of headaches and scrambling later in the year. Also, along with the reminders, be sure to have the estimated payment written out.

Some entrepreneurs want to delay their quarterly tax payments to the last minute, as they aren’t positive what their income stream will look like. However, this can leave them struggling at the last moment. Instead, it is better to prepare and set aside a certain amount of money in anticipation of your quarterly tax payments.

Systematically Track And Categorize Expenses

Tracking your expenses throughout the year is something every business owner should be doing, so they can present an accurate view of their actual income. However, another essential aspect is categorizing those expenses.

As business expenses can come in a variety of categories, from company entertainment to operating costs, it is important to keep your expenses carefully categorized to make tax time easier for you and your accountant.

Create A Tax Plan With AA Tax & Accounting Services

Planning ahead when it comes to taxes is the best way to make your next year’s accounting work easier. That’s why we recommend you work with our accountant at AA Tax & Accounting Services. Our accountant can help you develop a yearlong tax plan, from the best ways to track income and expenses, to what you can do to maximize your deductible while future-proofing your business.

With the right tax preparation assistance, from filing your tax returns to assisting with an audit, AA Tax & Accounting Services is here for you. To work with our accountant, contact us today.

Applying Basic Accounting Principles to Managing Your Finances

Accounting Principles

It’s a jungle out there, both in business and the economic world as a whole. It takes some doing to stretch a finite amount of income to cover your family’s needs, and hopefully a few wants while saving for the future. Yet, that’s exactly what a household CEO must do to thrive and to avoid faltering financially, in the same way companies can and do fail.

Luckily, there are some basic accounting principles that provide a roadmap to navigating your personal finances. Even the most math- and money-phobic person can grasp these guidelines and take them to heart.

Many people find the assistance of an expert accountant—one skilled in budgeting, investing and planning —is well worthwhile. Whether you go it alone or lean on a professional, you’ll profit by familiarizing yourself with some rules of the game.

Set A Budget

Prospering economically starts with a fundamental precept: don’t spend more than you make. Reaching this aim starts with setting a budget.

Starting Out

Before sitting down to create your budget, collect a month’s worth of pay stubs, bank statements, and bills. It’s also helpful to keep a financial goal in mind while crafting your budget, like:

  • Putting money in a college fund
  • Reducing your debt
  • Repairing your credit
  • Saving for a house or car
  • Saving for retirement

Setting a goal keeps you on track toward your long-term financial plan, an actionable strategy you can create on your own or with an accountant who includes financial planning among their services. Tracking your progress toward a goal can also serve as an incentive when you’re making tough decisions, like trading this year’s vacation for a more modest “staycation.”

Determine Your Bottom Line

Next, it’s time to crunch some numbers. You can determine your bottom line by taking your monthly household income and subtracting everything you plan to pay for during the month, including fixed and variable expenses as well as discretionary spending.

Fixed expenses typically remain the same from month to month, while variable ones change a bit. When you’re creating your budget, you’ll have exact numbers for your fixed expenses but will be estimating variable expenses based on past behavior.

You want to budget conservatively for variable expenses because having an overage at the end of the month is better than falling short. For example, if you typically spend between $400 and $600 per month on groceries, it’s best to assume you’ll spend the larger amount.

Cut Back on Spending

If you’re making less than you earn and you want to stop the pattern, you need to cut your expenses. This is also the case if you’re in the black but want to introduce new expenditures or save for future ones.

Discretionary spending

The easiest place to start cutting is your discretionary spending. These are enjoyable but unnecessary expenditures like:

  • Cable or satellite TV
  • Clothing or beauty products
  • Eating out or going to the movies
  • Gym membership and hobbies
  • Personal gifts and donations to charitable causes
  • Vacations

Variable Expenses

Variable expenses are typically necessities, but the amount you spend on them can vary from month to month. These include:

  • Cleaning supplies and toiletries
  • Credit card payments
  • Gasoline
  • Groceries
  • Utility bills (electric, gas, and water)

You can work to minimize varying monthly expenses, too. For instance, you can save considerably on groceries by making meal plans ahead of time and drafting your shopping lists accordingly. This makes you less likely to overspend based on impulse and guesswork.

If possible, though, forgo cutting the amount you contribute to your credit card debt. If you can pay credit card debt off in full rather than the minimum amount each month, you’ll reap exponential savings in interest fees.

Fixed expenses

Fixed expenses carry the same charge and are generally include non-negotiable needs, like:

  • Alimony payments
  • Insurance premiums
  • Loan payments
  • Mortgage or rental payments
  • Property taxes
  • Spousal support
  • Tuition for school or daycare

Once you’ve addressed the lower-hanging fruit of discretionary and varying expenses, you can look for savings among your fixed expenses. For instance, you might take advantage of low-interest rates to refinance your house and get a lower monthly mortgage payment. Unlike cutting discretionary income, however, altering fixed expenses takes some time and effort.

Save For A Rainy Day

Ideally, a budget includes money put into savings accounts for long-term goals like retirement. At the very least, however, you should aim to create short-term savings for the proverbial rainy day.

Creating An Emergency Fund Is Crucial

If, like so many Americans, you live from paycheck to paycheck, you know how financial emergencies snowball.

Your car breaks down and a sizeable repair bill eats up your paycheck. You pay your bills late as a result and find yourself levied with late fees. You fail to pay your credit card bill and interest charges accrue. You float a check and end up with a bank fee for being overdrawn. You may even end up taking out a payday loan with its associated fee.

This downward spiral can be avoided by maintaining an emergency fund. Having a couple of thousand dollars tucked away can make all the difference when it comes to emergencies like an inoperable car.

If you can, though, try and save a more sizeable amount of money. Financial experts suggest you keep between three and six months of living expenses in case of catastrophic events like job loss, illness or injury.

These are just a few basic accounting principles that can guide you when it comes to navigating your personal finances. For more information or professional assistance, contact the experts at AA Tax & Accounting Services.

Starting a Business? Business Tax Basics You Should Know

Business Tax Basics

You’re finally taking the plunge and starting that business you’ve dreamed about for years. Congratulations are in order. So is a lot of hard work.

One of the tasks startup owners find challenging is navigating the vagaries of the ever-changing tax code. You’d do well to consult a full-service accounting firm that includes business tax preparation among its services. You can deduct the expense as part of your startup costs, and your accountant’s expertise in areas like business tax write-offs can pay for itself in savings and peace of mind.

Whether you outsource your tax services or go it alone, there are some business tax basics every fledgling entrepreneur should be aware of.

Choose Your Business Structure

A would-be business owner must first decide how to structure their company, a choice that significantly impacts your taxes as well as how much of your personal assets are at risk. Potential structures include:

  • Sole proprietorship
  • Partnership
  • Limited liability company (LLC)
  • Corporation
  • Nonprofit
  • Cooperative

Each structure has its own distinct tax rules—as well as particular tax forms—that apply to the business, its owner(s) and any employees. If you aren’t sure what structure is best for you, consider consulting with an accounting firm with expertise in startup company planning.

If you plan to do your own books and taxes, there’s a lot of material online on how taxes should be handled for each form of business entity. The IRS website—which, for instance, offers a wealth of information on how an LLC should navigate taxes—is a good place to start.

Know What Startup Costs Are Deductible

The IRS offers some tax breaks designed to help new business owners get off the ground. If your startup costs total $50,000 or less, you can deduct $5,000 in business costs and $5,000 in organization costs.

Some people opt include startup costs in their business’ first tax return. Others choose to amortize startup write-offs, deducting them in installments over a period of 15 years. The following are just some of the one-time capital investments that are deductible, either in full or in part.

Research Costs

Before you open the doors of your business, whether virtual or brick-and-mortar, there’s an active phase of researching and planning your enterprise. Talk to an accountant about how to get the most out of deductions available for:

  • Feasibility studies
  • Market and product analysis
  • Surveying the competition
  • Travel for scouting out potential business locations

Advertising And Marketing

Money spent promoting your business is deductible, including business cards, flyers, branded swag and advertisements, both print and digital. You can also write off the cost of website creation, including domain name purchase, web hosting, and software subscriptions.

Travel

You can’t deduct the cost of your commute but almost all other business-related travel is deductible. This includes money spent traveling to trade shows and meeting with prospective investors, suppliers, distributors, and customers. Business travel costs are closely scrutinized by the IRS, so take care to track your mileage and airfare and be prepared to produce records and receipts.

Professional Fees

You can deduct money spent on professional support, with potential write-offs including fees for:

  • Accounting services
  • Bookkeepers
  • Consultants
  • Incorporation or organization fees
  • Lawyers
  • License and permit fees

Employees

If you’ll be running your business with the help of employees, you can deduct money spent on:

  • Employee training
  • Employee wages
  • Employee benefits

Office Expenses

Many of the expenses of setting up your office are deductible, including:

  • Business equipment rental
  • Cleaning services
  • Mortgage, rent or lease costs
  • Office supplies
  • Utilities and internet fees

These deductions apply if you are outfitting a home office, but there are some specific rules you must follow for your home space to be considered a legitimate office.

Familiarizing yourself with tax basics is one of the first steps to running a business that is both profitable and in line with IRS requirements. If you want assistance, from startup support to help with tax preparation, bookkeeping and payroll, contact AA Tax & Accounting Services. Our team is ready to help you turn your entrepreneurial dreams into reality.

4 Tax Preparation Tips for Small Businesses

Tax Preparation

Hiring a professional accountant to prepare your taxes can take a huge weight off an entrepreneur’s shoulders. Here at AA Tax & Accounting services, tax preparation is one of our primary services, and it’s one we do with enthusiasm and efficiency.

If you decide to go it alone, here are some tips that will some of the uncertainty out of tax time.

1. Don’t fail to file your taxes

It seems elementary that a business owner should file taxes. However, every year entrepreneurs of every ilk set up their shingle, following their dreams and becoming their own bosses.

Some of these let their tendencies toward disorganization and procrastination get in the way of making their tax deadline. If you’re in this boat, filing your taxes late is better than not filing them at all because any penalties you rack up for filing late or not filing will keep accruing until you fix the problem.

Some people fail to file taxes because they’re afraid they can’t pay the money they owe. Individuals and business owners alike often owe less than they think, and may even have a refund coming their way. If you fail to claim a refund, however, it goes away after a few years.

It’s best to push through your trepidation and file to avoid penalties. If you do owe more than you have on hand, the IRS offers installment plans to help you get back on the right foot.

2. Familiarize yourself with the forms you’ll be using

There are many different forms you may need to fill out, based on the nature of your business. Do you operate a sole proprietorship? Then you should be filling out a Schedule C form. Other forms apply to a partnership, a corporation or a limited liability company (LLC).

There are employment tax forms to be taken care of and, if you work with contractors, you’ll want to utilize 1099-MISC forms. There are also forms to help you catalog myriad aspects of your company, including business expenses.

If you’re not sure how to decode the whirl of letters and numbers to make sure you’re filing correctly, it’s best to consult with a company experienced in business tax preparation like AA Tax Accounting And Services.

3. Keep clear records of your business deductions

Running your own business isn’t a free-for-all. There are, however, many expenditures that can be deducted including:

  • Advertising
  • Business car
  • Cost of office space
  • Insurance
  • Internet and phone service
  • Office supplies
  • Transportation
  • Travel

If you keep accurate records of these expenditures as you go along, writing them down and saving receipts, it’ll be easier to add them up and include them when you file your taxes.
In the off-chance you are audited, your clear record-keeping will allow you to prove your tax deductions are legitimate.

4. Look for the most common tax errors made by small business owners

You don’t have to reinvent the wheel when it comes to filing your small business taxes. We encourage you to learn from the most common mistakes by the many entrepreneurs who have gone before you.

There are certain pitfalls small business owners tend to succumb to when it comes to tax preparation. You can find some of these in our small business tax preparation checklist.

Here are a few quick tips. Avoid:

  • Claiming an excessive amount of expenses
  • Failing to report income as stated on 1099s
  • Falling short on record-keeping
  • Mixing business and personal finances
  • Overlooking self-employment taxes

If you have any tax or accounting concerns, contact us today to meet with our accountant.

Unique Tax Filing Situations Accountants Can Help You Resolve

There are a number of unique tax filing situations that can be challenging to navigate without the help of an experienced accountant like you will find at AA Tax & Accounting Services. A couple of the most tricky situations are:

  • What to do when you haven’t paid taxes for a year or more
  • How to file taxes as a U.S. expatriate

If you find yourself in any of these situations, our accountant Adrian Anderson can help you resolve them.

Resolve Back Taxes With AA Tax & Accounting Services

Once you skip a year of filing your taxes for fear that you can’t pay for the amount you owe, it can be difficult to resolve those back taxes. For those who find themselves in this situation, it is much better to address the issue rather than avoiding it.

The IRS penalty for late payment is not as harsh as the fines for those who fail to file altogether. Those attempting to avoid paying their taxes can have their:

  • Credit score lowered
  • Tax bill sent to collections
  • Passport removed if they owe over $51,000 in tax penalties
  • Driver’s license revoked
  • Loss of business license

Instead of undergoing these grim consequences, our accountant can help you. He will sit down with you to determine if you even owe as much in taxes as you assumed. From there, he will help you structure a payment plan that will allow you to regain good standing with the IRS and avoid these severe penalties.

Properly File Taxes As U.S. Expatriates

Citizens of the United States who are living abroad can have a number of unusual circumstances when they go to file their U.S. taxes. Depending on their situation, there are several ways in which our top-notch accounting service can help U.S. expatriates.

Dual citizen – Generally, U.S. citizens who have dual citizenship have been born abroad, sometimes born to a parent who is a citizen in another country. Someone in these circumstances might not know that they have a U.S. tax obligation if they grew up in another country.

It is possible to revoke the U.S. citizenship to be released from the tax obligation. But if you want to retain that citizenship, it is important to work with our accountant. That way, he can find you exclusions such as the Foreign Earned Income Exclusion, Foreign Housing Exclusion, and Foreign Tax Credit.

Non-resident alien spouse – For U.S. citizens who marry a foreign national who is not seeking permanent residency or a Green Card, there can still be a tax obligation which the spouse must meet. For instance, if the foreign spouse is claimed as a resident on the U.S. expatriates taxes, the spouse will have to disclose their worldwide income or face penalties. It becomes even trickier when children are involved, and their tax-deductible status depends on their connection to the U.S. expatriate.

U.S. resident abroad – If you are a U.S. resident living abroad, you have the opportunity to file your taxes two months beyond the original file date of April 15. Our accountant can help you organize your taxes in a timely manner and help ensure you are not double-taxed, much like the dual citizen example.

If you have found yourself in any of these unique tax filing situations or have other accounting-related concerns, contact us to meet with our accountant today.

Heavy Highway Use Tax Return Services in Utah

Heavy Highway Use Tax Return Services in Utah

If you need to use the highway a lot as part of your job, you may need to pay taxes. The following will tell you how much, if anything, you need to pay.

Heavy Highway Use Tax Form 2290

Highways are expensive to construct and maintain. While it’s impossible to charge everyone in the United States for their use of highways (besides putting tolls everywhere), the government has found a way to tax some of the heaviest users – operators of heavy vehicles.

Since heavy vehicles are often the ones that cause damage to highways, the government is taxing some of those operators to cover the cost of repairs. Not all heavy vehicle operators, though. Just the ones that drive vehicles that are 55,000 pounds or more, and travel more than 5,000 miles. Those who meet this criteria need to complete the Heavy Highway Use Tax Form 2290.

How Much to Pay

If your vehicle is less than 55,000 lbs., you are not required to file or pay taxes. If your vehicle is 55,000 to 75,000 lbs., you will be required to pay $100 plus $22 for each $1,000 pounds over 55,000 lbs. Any vehicle over 75,000 lbs. has a tax liability of $550.

When to File Form 2290

Form 2290 should be filed by the last day of the month following the first month you started using public highways. For instance, if you start driving in February, you need to file the form by the last day of March.

If You Don’t File

If you do not file Tax Form 2290 as needed, you will incur a 4.5% penalty of the taxes due. They will add this penalty for each month you did not pay, which can add up quickly. This is especially true since there’s also a .05% late fee. Some people end up having to pay hundreds of more dollars they originally needed to because they failed to file on time.

To ensure you file your heavy highway use tax return, it’s best to turn to tax professionals who know how to do it and do it on time for you.

About Heavy Highway Use Tax Return Services in Utah

We can help you with your heavy highway use tax return services in Utah. We will complete and file the Form 2290 on time, so you avoid penalties and late charges. Simply contact us today for more information on how we can make this tax liability much easier to deal with.

Your job is to drive a vehicle, not manage taxes. Let us do that job, so you can do your job.

Personal and Business Trust Account Services in Southern Utah

Personal and Business Trust Account Services in Southern Utah

Trust accounts are a great way to protect yourself from legal situations when either handling other people’s money or having people manage your finances. They are a secure way to have your money work for you with investments and other ways to save and make money. It can even ensure your money gets into the right hands in certain situations. Learn more about personal and business trust accounts below.

Personal Trust Accounts

Personal trust accounts hold people’s personal assets. These assets are usually deposited on behalf of grantors and living trusts. They are offered by finance advisors, who can help plan investments.

After opening a trust account, people have many options to invest the money. They can choose mutual funds, bonds and individual stocks. It’s a great way to make money from money.

There’s usually a minimum investment for trust accounts. This depends on the institution and what you can plan on doing with the funds. There are also service fees for whatever the financial advisor does with the funds in the trust account.

Business Trust Account

Businesses that manage their clients’ finances should consider a trust account. There are two types of trust accounts to consider:

Formal Trust Account: This type of trust comes out of an agreement. Most people have this as part of their will, but it can be part of other agreements. The account is established in the name of a person who will control it according to the statutes of the agreement. For example, if it’s a will, the trust will be governed by the person or entity stated on the will.

Business In-Trust Account: This type of account is established in the name of the business that is holding the money for the client. This gives the business authority in using the funds, but the client still has control of them.

Trusteed Deposit Service: This trust fund can be split up with many beneficiaries. Each beneficiary will have a separate sub account. People choose this because it’s easier to keep records when the money is used in many ways.

Taxes and Trust Accounts

Trust accounts are taxable. This means you will have to report earnings and pay taxes on them each year.

Personal and Business Trust Account Services in Southern Utah

Personal and business trust account services in Southern Utah are available. All you have to do is give us a call for more information on getting one set up. We would love to help you manage your finances in the safest, best way possible.

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