Skip to main content Skip to search

tax accoutnant Conway

accountant conway south carolina

Common Practices to Reduce Your Tax Liability

At tax time, everyone is looking for ways to reduce their tax liability and keep more of their hard-earned income. It’s possible to reduce your liability without having your return red-flagged by the IRS. The following are just some of the common ways to do so.

Business Expenses

If you own a small business, always hire a professional to do your taxes. There are a variety of deductions you may be eligible to take, but may not take advantage of for fear of triggering an audit. A professional tax preparer will be cognizant of the types of expenses that you can claim and the documentation you’ll need.

Charity

Charitable donations can be written off if they exceed your standard deduction and you itemize your taxes. You’ll need receipts to prove the contribution and they should be realistic.

College

You can contribute to a 529 account for yourself or grandchildren, nieces and nephews. You can’t deduct a 529 on federal taxes, but it can provide savings on state tax returns, depending upon the state in which you live. You can also deduct $2,000 in educational expenses through the Lifetime Learning Credit, even if you aren’t working toward a degree and your income isn’t too high.

Health Insurance

The federal government will no longer penalize you financially for not having insurance, but many states have initiated their own fines in the form of a tax for not having a qualifying healthcare plan. The rules vary on what a qualifying health plan means, so it’s best to consult with a professional and get covered.

Retirement Funds

Contribute as much as you can to an IRA or 401k account. You can contribute $6,000 to an IRA or $19,000 to a 401k. Additional amounts can be contributed if you’re over 50.

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

Revenue and receivables

In most businesses, what drives the balance sheet are sales and expenses. In other words, they cause the assets and liabilities in a business. One of the more complicated accounting items are the accounts receivable. As a hypothetical situation, imagine a business that offers all its customers a 30-day credit period, which is fairly common in transactions between businesses, (not transactions between a business and individual consumers).

An accounts receivable asset shows how much money customers who bought products on credit still owe the business. It’s a promise of case that the business will receive. Basically, accounts receivable is the amount of uncollected sales revenue at the end of the accounting period. Cash does not increase until the business actually collects this money from its business customers. However, the amount of money in accounts receivable is included in the total sales revenue for that same period. The business did make the sales, even if it hasn’t acquired all the money from the sales yet. Sales revenue, then isn’t equal to the amount of cash that the business accumulated.

To get actual cash flow, the accountant must subtract the amount of credit sales not collected from the sales revenue in cash. Then add in the amount of cash that was collected for the credit sales that were made in the preceding reporting period. If the amount of credit sales a business made during the reporting period is greater than what was collected from customers, then the accounts receivable account increased over the period and the business has to subtract from net income that difference.

If the amount they collected during the reporting period is greater than the credit sales made, then the accounts receivable decreased over the reporting period, and the accountant needs to add to net income that difference between the receivables at the beginning of the reporting period and the receivables at the end of the same period.

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

Determining Your Tax Status

There are five classifications from which you choose to file: single, married filing jointly, married filing separately, head of household or qualifying widower with dependent child. If for some reason, more than one status applies to you, you should choose the status that gives you the greatest tax benefit.

 

Determining your status as a single filer seems simple enough, but there are different situations that exist that can qualify the taxpayer as single. For example, if you are legally separated even in the last month of the year, you are considered single for the entire year. With no dependents and you are unmarried, you are considered single. Divorce and annulment within the year also qualifies you to file as single.

 

However, even if you are single, but you have a dependent, or were widowed during the tax year, and you have dependents, your filing status would change to head of household or widowed with qualifying dependent child, not single.

 

When it comes to determining your status as a married taxpayer, there are simple qualification assessments that establish your legal filing status and if you’re considered married. Obviously, if you are legally married and living together as husband and wife, even for a small part of the tax year, then you would be considered married. If you are living together as common law spouses, and it is legally recognized in the state in which you live, or you lived part of the tax year in the state where the common law marriage began, then your filing status is married. Your filing status is still married even if you are married but not living together, but are not legally separated or divorced.

 

If you have unique circumstances, it might not be so easy to determine your filing status. If, for example, you were widowed during the tax year and did not remarry, you can file as married with your deceased spouse, and then file as widowed with qualified dependents for the next two years, so long as you do not remarry. If you remarry within the tax year that your spouse passed away, you would file as married with your current spouse, and file with your deceased spouse as married filing separately.

 

If you are married and want to file a joint return, your tax status is married filing jointly. All income to the household must be included on the one return, and both spouses must sign and date prior to submitting the tax return. All exemptions, deductions, and credits are reported on the joint return, and you share equal responsibility and liability for the information reported on the tax return, as well as any tax money owed. There are ways to ask for release from joint responsibility, either through innocent spouse relief, separation of liability for spouses who have not lived together for the past year, or equitable relief.

 

There are sometimes reasons that a spouse cannot sign a joint tax return, such as a spouse stationed abroad for the military. In this type of situation, you may sign for your spouse as a proxy, and attach a written explanation.

 

Choosing your filing status, while lengthy and sometimes complicated, is an important in the process of completing your Federal Income Tax return.

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

All About a Certified Management Accountant

A CMA is a Certified Management Accountant.  This is different from a Certified Public Accountant.  A Certified Management Accountant is employed by a business firm or a not-for-profit organization and deal with private accounting.

A CMA can obtain employment by companies, government, and non-for-profit entities.  A CMA can obtain employment as a Bookkeeper, Payroll Clerk, General Accountant, Budget Analyst, Cost Accountant, Internal Auditor, or Information Technology Auditor.  These CMA careers have starting salaries ranging from $28,500 to $72,500, which is much higher than the salary range for CPAs.  

A Bookkeeper does not need to have any certification and therefore does not have to be a CMA.  A Payroll Clerk must have certification called Certified Payroll Professional, or CPP, but does not need to be a CMA.  A general accountant or budget analyst may not be required to be a CMA, but many CMAs begin as a general accountant or budget analyst.  A Cost accountant must be a CMA and be licensed by whatever state agency monitors and regulates accountancy in that state. An Internal auditor must be a CMA and have an additional certification as a certified internal auditor, or CIA.  An Information technology auditor must be a CMA and also have certified information system auditor licensing, or CISA.

The certification program to become a CMA is sponsored by the Institute of Management Accountants or IMA.  The CMA certification is proof of competence in management accounting. To receive a CMA certification, you must have a college degree, two years of experience, and pass a two-day session of testing.  

A CMA does not have the versatility of a CPA.  Because a CMA works internally within a firm, the duties given to a CMA are fairly rote, meaning that the CMA does typically the same work each day.  On the other hand, a CPA has as much variety in the type of work and work duties as the variety of his or her clients. It is due to this fact that most accountants choose to obtain a CPA certification and licensing rather than a CMA certification and licensing.

Most CMAs are cost accountants.  A CMA cost accountant enters transactions into accounting records like journals and ledgers.  CMA cost accountants also prepare financial statements. The financial statements that the CMA prepares are vital to the business.  The financial statements that the CMA prepares are used for business decision making, investor decision making, competitive comparison, and searching for industry trends.  A CMA must also attempt to discover and correct any errors in the cost accounting records. This can be done in a number of ways but is always very tedious for the CMA.

A CMA should be found if you are starting a business that will require extensive and accurate bookkeeping and accounting.  You can save a lot of money in your business by hiring a CMA in house rather than using a CPA on a fee for service basis. In this way, you are left free to run your business while someone else worries about the accounting for your business

 

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