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Archives for December 2019

accounting

Are You Ready For Tax Day?

Because deadlines are strict, and penalties will be given to late tax payments, you should make sure that you do not put off your “tax day.”  You should definitely start preparing your income tax return well before April 15. Whether you are doing your own income tax return or you are getting the help of a certified public accountant or firm to prepare your income tax return, you should get a few things together before you begin or meet with the CPA.

The main thing you will need for your income tax return is proof of the income you made and the taxes you paid in the previous year.  That includes income made through employers, interest from accounts, dividends from investments, income made through self-employment, income made as a subcontractor, and any other income.  Student loans and other types of loans may also be considered income for the purposes of income tax, as can winnings from a lottery, casino, or other contest. If you are unsure about what can be considered as income for tax purposes, you should contact a certified public accountant.

The other thing that is important is social security numbers for everyone you will claim on your income tax return.  That includes social security numbers for your spouse and any children you will claim. Without social security numbers, proof of residence, and birth dates, you cannot claim deductions on your income tax return for these individuals.

The next thing that you should gather is what you will need for deductions.  If you have a mortgage, your interest paid to the mortgage company may be tax-deductible.  If you use a vehicle for business purposes, you can claim a tax deduction for mileage. If you have children in daycare so that you can work, you can claim a tax deduction for that expense.  You can also claim tax deductions for excessive medical expenses and charitable contributions.  

If you are self-employed, you will need to also gather your receipts for tax-deductible expenses.  A tax-deductible business expense is any expense that is used solely or primarily for the business you are involved in.  The tax-deductible expense must be documented in order to claim it, so any receipts you have, usage logs for computers and vehicles, etc. should be gathered so that you can take the highest deduction possible.  If you have any doubts about what is tax-deductible for your business, you should contact a certified public accountant to assist you in your income tax preparation.

Once you have gathered all of the necessary tax documents, you must determine which tax forms you need to file.  If you are an individual with a few tax-deductible items, you can file a simple tax return. However, if you are self-employed you must also file a tax form called Schedule C.  If you have a lot of tax-deductible items, you will want to file a more complex tax return to itemize your tax deductions. If you are unsure what tax forms you need to file, you should contact a certified public accountant to assist you in your income tax return preparation.

Tax Day can be a stressful time, but it doesn’t have to be.  Gather all of your required tax documents as early as possible, and don’t put off the inevitable.  Contact a certified public accountant as soon as you can if you are unsure what tax forms you need to file, or what tax deductions you can take.  And, most importantly, don’t panic on tax day!

 

At Peavy and Associates PC our mission is to assist you with all your tax preparations, payroll and accounting needs.  We provide our clients with professional, personalized accounting services and guidance in a wide range of financial and business needs. Give us a call today and discover why our clients return to Peavy and Associates, PC year after year!

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All About UK Accountancy

UK accountancy is somewhat different from American accountancy, in that there are more regulatory standards for accounting in the UK than in America.  In America, companies must follow the Generally Accepted Accounting Principles (GAAP) set down by the Financial Accounting Standards Board. The UK uses the generally accepted accounting principles as a standard for accounting in UK companies.  However, there are other guidelines accountants in the UK must consider.

UK accountants must also consider the International Financial Reporting Standards (IFRS) set forth by the European Union (EU).  These international financial reporting standards were developed in an attempt to streamline the financial reports from UK companies as well as companies in other European nations.  This makes financial reporting easier to understand by everyone. The international financial reporting standards also allow UK businesses to more easily compare their financial statements to those of companies in other nations for the purpose of determining competition and industry standards.

In addition to the generally accepted accounting principles (GAAP) and the international financial reporting standards (IFRS), UK businesses must also adhere to UK law, such as the Companies Act 1985, as amended by the Companies Act 1989. These UK laws incorporate both the GAAP and the IFRS, as well as other European laws. The UK Companies Act 1985 also requires UK companies to file their accounts with the Registrar of Companies, which makes the financial reports available to the UK and worldwide public.

The Companies Act 1985 will soon be superseded by the Companies Act 2006, which is not yet in effect in the UK.  This UK Companies Act 2006 will restate in varying fashions the provisions laid down in the Companies Act 1985, and the amendments of the Companies Act 1989.  However, changes are being made to incorporate the European Union’s takeover of financial standards, and the laws regarding international trade and financial reporting that are now necessary for UK companies to follow.  It will also put into codified law the UK common law that was previously used in regards to UK companies and accountancy.

Any UK accountancy issues that require immediate attention but are not covered by the generally accepted accounting principles (GAAP), international financial reporting standards (IFRS), or Companies Act 1989 are brought before the Urgent Issues Task Force.  This group determines solutions to issues of UK accountancy, and publish Abstracts which are binding immediately for UK companies. These additional standards must also be followed by UK companies.

As you can see, accountancy in the UK is much more complex than that of the United States of America.  There are many UK laws, European Laws, and accounting standards to follow for UK companies. While Americans must only adhere to the generally accepted accounting principles (GAAP) set down by the Financial Accounting Standards Board (FASB), UK companies must adhere also to the International Financial Reporting Standards (IFRS) set down by the European Union.  If you have any question about standard accounting practices for UK companies, you should contact an accountant to help you with your UK accountancy as soon as possible

 

At Peavy and Associates PC our mission is to assist you with all your tax preparations, payroll and accounting needs.  We provide our clients with professional, personalized accounting services and guidance in a wide range of financial and business needs. Give us a call today and discover why our clients return to Peavy and Associates, PC year after year!

CONTACT US TODAY

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All About Tax Planning

Tax planning is very important if you want to make sure that your income tax return is filed quickly, effectively, accurately, and painlessly.  Through careful tax planning, you can have everything you need to file your income tax return at your fingertips whenever you are ready to file.  Tax planning is also helpful in the case that your income tax return is brought up for audit by the Internal Revenue Service.

Tax planning is essentially tracking your income tax-deductible items as they come up, and keeping records organized and handy in case they are needed.  The most important tool for tax planning is a small filing cabinet. You can use this filing cabinet to file your tax planning documents and receipts, as well as keep track of previous tax returns filed and other important documents such as birth certificates and social security cards.  The file cabinet you get to use for your tax planning should be fireproof and have a lock. That way your tax planning documents are safe in almost any disaster and other people cannot easily gain access to your tax planning and other important documents.

Part of tax planning is making sure that you are aware of what expenses are tax-deductible.  You cannot engage in tax planning and track tax-deductible expenses if you don’t know what you should be tracking!  The Internal Revenue Service offers many publications on this subject. However, if you have any questions about income tax-deductible items you should contact a qualified, certified, and licensed tax professional.

Once you know what tax-deductible expenses you will need to track for the coming tax year, you need to set up a tax planning record-keeping system.  This can be a simple receipt book, expanding file, index cards, envelopes, or any other method that makes sense to you. Keep in mind, however, as you engage in tax planning, that your tax planning record keeping system should not only make sense to you but also make sense to your income tax preparer and the Internal Revenue Service if necessary.

At the end of each month, you can add up the totals for the different types of income tax-deductible expenses you recorded in your tax planning records for that month.  This way, all you have to do to discover your tax-deductible amount is add up the totals for each month. The other records you collect and track through your tax planning are simply for proof that you can claim these income tax deductions, and are not really needed for preparing your income tax return if you have all of your totals in order.

On the surface, income tax planning may seem complicated and difficult.  But with proper organization, tax planning is really quite easy. Not only that, but when you engage in income tax planning, you better your chances for that larger income tax refund that you need and deserve.  If you have any questions about tax planning, you should contact a tax planning professional tax accountant today!

At Peavy and Associates PC our mission is to assist you with all your tax preparations, payroll and accounting needs.  We provide our clients with professional, personalized accounting services and guidance in a wide range of financial and business needs. Give us a call today and discover why our clients return to Peavy and Associates, PC year after year!

CONTACT US TODAY

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All About Tax Deductions

Income tax time can be a dreadful season if you are not aware of all of the income tax breaks you can get through income tax deductions.  It is important to understand what is tax-deductible so that you can get as large of a tax refund as possible.

Probably the most well-known income tax deduction is the Earned Income Credit.  The earned income tax credit is available to those who make a minimum amount of money and can file tax as single, married, or head of household.  The more money you made, the more your earned income tax credit is until you hit the peak, which is around $30,000. Once you hit that peak, the earned income tax credit goes down until you reach the maximum income allowed to receive the earned income tax credit.

The second well-known income tax deduction is the Child Tax Credit.  The child tax credit is available to you if you have two or more children in the home for more than six months out of the year for which you are filing tax, and if you have a tax liability.  Through the child tax credit, you receive around $1000 per child. This total amount is then applied to your tax liability, and any amount of child tax credit left over is made a part of your income tax refund.

Another income tax deduction is for child daycare when the child daycare is needed in order for one or both parents to work outside the home.  This daycare income tax credit is equal to a percentage, up to a maximum amount, of the actual daycare expenses paid for that tax year.  

Other expenses can also be tax-deductible.  Interest paid on a mortgage for the primary residence can be claimed as an income tax deduction.  Medical expenses can also be claimed as an income tax deduction, although this is not very helpful unless you have an excessive amount of medical expenses to deduct on your income tax return.  Tax paid to another state can be used as an income tax deduction in the state that you live in. Donations and contributions to charities, fundraisers, churches, etc. can also be tax-deductible.  

If you are self-employed, you can also claim business expenses as income tax deductions.  This includes any expenses directly related to running your business. You can take a mileage income tax deduction for any miles you put on your vehicle for business purposes.  You can also take an income tax deduction for your office space in your home if it is used only for business purposes in the form of a portion of your rent, utilities, and phone bills.  You can also take an income tax deduction for your personal computer, printer supplies, and other office supplies as long as you have the receipts for the tax-deductible expenses, and usage logs for the personal computer and other equipment to show that it is used primarily for business.

As you can see, there are many income tax deductions available to you.  If you have any questions about what is tax-deductible, you should contact a qualified, certified, licensed tax accountant today.

 

At Peavy and Associates PC our mission is to assist you with all your tax preparations, payroll and accounting needs.  We provide our clients with professional, personalized accounting services and guidance in a wide range of financial and business needs. Give us a call today and discover why our clients return to Peavy and Associates, PC year after year!

CONTACT US TODAY

Read more