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R.W. Ramsay & Associates, Ltd. Blog

February 21, 2012

Payroll Tax Cut Extension

On February 17th, Congress passed the “Middle Class Tax Relief and Job Creation Act of 2012″ and sent it to President Obama for his signature.  The act extends the 2% payroll tax cut through then end of 2012, assuring most Americans don’t see a 2% cut in their take home pay.

The act extends a prior stimulus measure which cut the amount each employee contributed to the Social Security fund by 2%.

Filed under: Business Advisory, General, Tax Related — Tags: , , , , , , , — Rich @ 8:45 am

November 23, 2011

Giving Thanks

The holidays seem to blur together just a bit more each year.  Still, Thanksgiving is a wonderful opportunity to take time and be thankful for what we’ve been given throughout the past year, and for the gift of family and friends.

Here are a few inspirational quotes to help spur you in your pursuit of the attitude of gratitude.

“Reflect on your present blessings- of which every man has many- not on your past misfortunes, of which all men have some.” - Charles Dickens, Writer

“I cannot tell you how to be rich. But I can tell you how to feel rich, which is far better, let me tell you firsthand, than being rich. Be grateful. It is the only totally reliable get rich quick scheme.” - Ben Stein, Actor

“Gratitude is not only the greatest of virtues, but the parent of all others.” - Cicero, Roman philosopher

November 14, 2011

What Motivates You?

Working in teams has become commonplace, and is a great way to leverage the strengths of a group to achieve a common goal. The process can, though, be difficult at times, because the same diversity of talent that makes group work so successful can also lead to friction on how to go about the task at hand.

Understanding what motivates our teammates, as well as ourselves, can go a long way toward achieving better communication, and help to get through those occasional difficult periods. The Forbes.com article, linked below, is a great primer on how to go about this.

http://www.forbes.com/sites/heidigranthalvorson/2011/10/27/how-to-recognize-your-motivational-strengths/?emc=lm&m=31098&l=5&v=2289097

Filed under: General — Tags: , , , , — Rich @ 5:30 am

April 28, 2011

Preventing Payroll Fraud

Payroll can create a golden opportunity for less than honest employees or advisors to steal funds from a business. The key to preventing it is to put in place the proper checks and balances, or internal controls, to be sure you know how much your paying and to whom. These are important in all sizes of businesses, but small businesses seem to be the hardest and most often victimized.

 

There are two leading types of payroll theft. In the first, an employee pays themselves more than their authorized salary, or pays relatives or friends who are not employed by the business. In the second, an individual trusted with making payroll tax payments takes them money for themselves, rather than paying it over to the proper taxing authority.

 

There are some simple steps that can prevent this from taking place.

 

  • Require that all paychecks be approved by another member of management prior to being authorized, and also have that manager check the paycheck against the current pay rates for the employees.
  • Reconcile your bank account monthly, and be sure the amounts authorized for payroll match what was disbursed from the account.
  • Check to be sure all tax payments were received by the IRS or state revenue department on a monthly basis, and in the correct amount.
  • Keep a 0 balance payroll account. Put in the exact amount of approved funds to the account the day before payday, and check to be sure it is 0 after paychecks are cashed and taxes are paid.
Filed under: Business Advisory, General — Rich @ 3:52 pm

February 17, 2011

Our New CPA

We wanted to share some excitement in our office with all of you. Excitement in a CPA office this time of year usually isn’t cause for public celebration, but this, we thought, deserved some publicity.

 

Michael Schaffer, who joined us a little over a year ago as one of our team of accountants, received his CPA license from the Minnesota Board of Accountancy today. In our field this is a major milestone – one Rich, Margie and Brady all remember clearly. We’re excited to head into the rest of tax season with 4 CPAs to serve our clients.

Filed under: General — Rich @ 8:59 am

January 17, 2011

S-Corporation Salary Fought In Court

           

           A district court has concluded that an S corporation shareholder-employee’s $24,000 salary in 2002 and 2003 was unreasonably low, and allowed IRS to reclassify as salary over $67,000 in dividend payments to the officer during each of those years. The corporation will also owe nearly $49,000 in employment taxes on the reclassified dividend payments.

          The case hinged on a few key facts. First, the taxpayer was an accountant, and was providing only personal services. Generally, much of the income from personal services should be declared as salary for an S-Corporation officer.

          Second, the taxpayer took profit distributions of between $175,000 and $205,000 in each of the two years at issue, in comparison to his $24,000 salary. This ratio is closely considered by the IRS and the courts.

          Finally, and likely most importantly, the taxpayer stated that he would not do the same level and intensity of work for anyone else for only a salary of $24,000 per year.

          If you’re an S-Corporation officer, and you work in your business, the time is now to assure you have been declaring a reasonable amount of salary each year.

Filed under: General, Tax Related — Rich @ 4:13 pm

December 30, 2010

Year End Is Coming!

As 2010 draws to a close and we look forward to the New Year, our minds turn to year-end and the up coming tax season. In just a few short weeks, we’ll be busy working with our clients to complete year end accounting and begin preparation of the tax returns. If you are one of those clients, or someone we hope will become one, there are a few things you can do now to make the tax season easier on yourself.

 

·        As your tax documents come in, they are almost always marked as containing tax information. Get a basket or a folder, and put all of those documents directly into it as you sort out your mail.

·        Once the organizer arrives, go through it an answer the questions. Doing this up front will save you having to look up information later on.

·        If you sold stocks during the year, be sure you have information on your cost basis for each of them. Many brokerages track this for you, but there may be some stocks they don’t have the information on, and getting that can take some digging.

·        If you are a business owner, use some time in January to complete your bookkeeping, or to get the last of your documents to your accountant for them to finish up.

 

The earlier you’re ready, and more organized you are, the easier the process of completing your taxes will be. And remember, we’re always here to help!

Filed under: General, Tax Related — Rich @ 12:00 pm

December 17, 2010

2010 Tax Extenders Act Passes House - President to Sign

On December 17, 2010, the US House of Representatives passed the 2010 Tax Relief Act on a bi-partisan vote. The law is expected to be signed into law by President Obama in its current form. Not a moment too soon, the Act provides for the following extensions through the end of 2012:

 

  • Income tax rates will be held at their current level
  • The Child Tax Credit, Earned Income Tax Credit, and American Opportunity tax credit (for higher education) have all been extended

 Other elements of the bill lasting less than two years, among others, are

 

  • The AMT has been “patched” to prevent it from assessing additional tax on middle income earners. This is effective for the 2010 and 2011 tax years.
  • The $250.00 deduction for classroom expenses of elementary and secondary school teachers is extended for the 2010 and 2011 years.
  • A 2% reduction in payroll taxes for employee and self-employed individuals for 2011 only.
    • This means the amount of taxes withheld from an employees paycheck will decrease 2%, effectively resulting in a 2% raise in pay.
    • Self-employed tax payers will pay 2% less in self-employment taxes.
  • Expanded section 179 expensing for businesses was extended through the end of 2011, allowing businesses to deduct up to $500,000 of new asset costs in the first year.
  • Beginning with 2012, the act provides for 50% bonus depreciation in the first year of an asset’s use, in lieu of the expanded 179 expensing.

 

Additional changes were made surrounding the estate tax, and a number of other areas. Conspicuously absent was the provision to repeal the new 1099 reporting requirements.

Want more detail on how the changes will affect you or your business? Feel free to contact us!

Filed under: General, Tax Related — Tags: , , , , , , — Rich @ 3:46 pm