I sat down with Chuck McCumber of the Nevada Small Business Development Center (NSBDC) and talked taxes. The interview was featured in the NSBDC’s monthly e-newsletter. Here is one quote from our conversation:
“It’s also one of the best times,” said Tim Nelson, “because when the economy is down it stirs people to be more creative, entrepreneurial.”
To read the rest of the interview CLICK HERE.
Reno’s Best CPA,
Tim Nelson
[youtube]http://www.youtube.com/watch?v=kKXoXk7PQzg[/youtube]
Every year in April, everyone begins scrambling to complete and file his or her taxes. Although many people prepare their own taxes, a business owner or someone with significant assets and investments needs to use a professional’s services. There are many kinds of Reno tax preparation services and Reno tax planning professionals. Some of these are Enrolled Agents, CPA’s, and attorneys. What is the difference between a tax preparation service and an Enrolled Agent?
Tax Preparations Services
Most people are familiar with Reno tax preparation services, such as H&R Block and Jackson Hewitt. These services will prepare and file your yearly return for a fee, and often offer refund advance loans. Many smaller such services exist all over the country. Usually they are staffed with certified professionals such as accountants, although some may hire experienced nonprofessionals or accounting students. Be careful using an uncertified tax preparer, because they may not know the tax code well and miss deductions.
CPA’s
Individuals can be certified as tax preparers in many ways, but the CPA is the most common. A Certified Public Accountant has to attend secondary school and receive a degree in accounting. They are licensed by their state, and take yearly continuing education classes for re-certification. Accountants do not just prepare taxes; they also give financial, business and tax planning advice. Some CPAs work for tax preparation services full- or part-time. It is recommended that large businesses keep a CPA on retainer. Any Reno CPA should display their most recent credentials or offer them openly.
Tax Attorneys
Attorneys can choose to specialize in a certain area of the law, just like doctors. Some choose tax law, which can be a very lucrative specialty. Tax attorneys are there to assist their clients in tax disputes, to set up tax shelters, draw up paperwork for corporate tax measures, and more. They are not specialists in filing actual returns. A tax attorney is good to have on retainer for a larger corporation, as they know the tax code well and can advise how to invest and what deductions might be best for the business. Check with the local Bar Association to find out if the attorney you are considering is well qualified.
Enrolled Agents
A Reno Enrolled Agent (EA) is different from a CPA in the scope and training of their job. EA’s are certified by the IRS to represent taxpayers. They do not have a set training course, but do have to pass a certification exam and get continuing education. An EA is a tax specialist who advises taxpayers in audits, investigations, and can prepare taxes. They have client privacy obligations, unlike other most tax preparers. An authorized agent is also the only taxpayer representative designated by the federal government. There are only about 49,000 EA’s in the US, and they should display their credentials prominently.
Different Areas of Expertise
CPA’s are financial jacks-of-all-trade. Their certification exam has 1000 questions, only about a quarter of which deal directly with taxes. Most Reno accountants focus more on actual accounting practices and only actively work on taxes during tax season. Their advice and guidance is very important for running a business efficiently. An Enrolled Agent, however, specializes only in taxes. Their exam covers every part of the tax code and does not include accounting and business principles. They have passed a very strict exam to become an EA in the first place, plus yearly Continuing Education classes and tests.
Practical Application
A company should have a CPA on retainer all year, to give advice on business matters as well as taxation. Their services are invaluable for running a business efficiently and profitably. While an Enrolled Agent will charge slightly less than a CPA, their services are more limited. If you or your business have specific tax problems, it might be best to call an enrolled agent instead of a CPA. They are bound by EA-Client privacy privileges, and are extremely experienced in tax matters, especially audits. A tax attorney should be retained by corporations or people with a high net worth to take proactive measures to shelter their income.
Reno tax preparation services can and do employ all types of tax professionals. When it is time to choose your tax-planning professional, determine the extent of your needs first. If you are an individual with a straightforward return, a tax service or CPA will work fine. If you fear an audit or need special representation to the IRS, employ and enrolled agent. For legal tax matters, hire a tax attorney. Each of these financial advisors can do their job within the scope of their specialization, but are not necessarily interchangeable.
Reno’s Best CPA,
Tim Nelson
[youtube]http://www.youtube.com/watch?v=BjKMH9ozhAw[/youtube]
Cost behavior is an important tool for businesses to examine their success and actual profits. It can be used for many purposes, including strategic planning to determine effective price points that are above the break-even point. A qualified CPA in Reno can help a business use this principle to manage budgets more effectively.
What is Cost Behavior?
Cost behavior is often explained by CPAs in Reno as the study of how costs change in a business when there is a change in the activity level. Every company has a variety of costs, although there are four types that come up the most. Cost behavior analysis is used to predict costs over time and can help a business in many areas. Typically, businesses of all sizes hire a CPA to manage this aspect.
Variable and Fixed Costs
Variable costs are usually defined as those that change depending on the level of activity. A good example of a variable cost in a business is sales commissions paid to employees of the store. Because employees earn a percentage of the sales, the cost is variable based on the total sales in the store. Fixed costs, on the other hand, will not change with a difference in the level of activity. Examples of fixed costs in a business include rent and insurance premiums.
Step Costs and Mixed Costs
The step costs of a business are unique because they stay the same for a certain amount of activity. When the level of activity is surpassed the costs jump. These costs don’t apply to every business, but an example is payment to a service representative that has reached their maximum number of customer calls. At this point, a new employee must be added, and the cost of compensation jumps. Mixed costs, however, are a combination of variable and fixed costs. An example of a mixed cost is a telephone bill for the company. Generally, the charge is always the same unless the level of service is exceeded. At this point, an additional variable cost is added.
Why Cost Behavior is Important
A trained CPA in Reno can help a business fully use cost behavior for a number of purposes. Cost behavior is usually used for strategic planning in a company and is the only way to accurately predict cash flow over time. A CPA can also use this idea to determine the company’s break-even point for any cost, allowing management to create a proper selling price. Other uses in the company’s strategic planning include the determination of dividend payments and the preparation of budgets.
Every business has a variety of costs it incurs regularly. Understanding and planning for these costs is vital to ensure the company maintains profits and grows over time. All businesses should consult with a CPA to analyze the cost behavior of their company. A good analysis can lead to everything from the right selling price for goods to accurate dividend payments for stockholders.
Reno’s Best CPA,
Tim Nelson
[youtube]http://www.youtube.com/watch?v=3P3mdtbuaXk[/youtube]
Synergy may seem like a strange term to be thrown around in a business conversation, but it has become the focus of many small businesses and financial consulting institutions seeking to improve their total output and product quality. The basic premise of synergy is that by combining two separate companies, the positive qualities of each can be utilized to maximize potential. The concept of small business synergy further acts to increase productivity and financial profits, while also merging with a congruent and complementary business.
Small Business Financial Connectivity
Synergy ultimately acts as a connector for small businesses seeking to grow their companies. By combining two companies, the emerging company that results possesses the ability to access and service all of the combined business contacts. This connectivity not only extends to include the good will fostered between companies, but also reaches out to all of the costumers and connections previously associated with both businesses. Through the momentum of synergy, connectivity is increased and utilized to grow the newly formed business. It does this by extending the reach of its costumer pool to include new contacts, as well as more extensive financial consulting.
Collection of Skills
A major benefit resulting from synergy is the addition of new skills for workers. Through the combination of businesses, employees are introduced to new and more efficient methods of accomplishing the same old task. Overall, these combined increases most often prove to benefit the new company’s productivity and the accountant’s profit margins. Furthermore, without the combined momentum of the newly formed and improved work force each of the individual companies would be unable to duplicate the increased productivity and profits had they remained separate entities.
Elimination of Duplication
As any accountant of a small business in Reno can appreciate, the implementation of synergy enables the elimination and duplication of products and services. Often, when products and services are too readily available, prices are driven down. Through the combined synergy of small businesses, coupled with effective financial consulting, prices become fixed and steady as supply no longer out balances the demand. Accountants in Reno especially appreciate the leveling out of prices as it ensures a company’s continued existence at its current level and provides room for expected future growth.
Leadership Issues
Leadership is a major consideration before implementing synergy within two individual companies. Superiors must take into consideration issues such as rank structure and seniority. Later on, it will become necessary to establish exactly how the new hierarchy of leadership will be determined. In addition, employees and superiors should observe a grace period in which adjustments and kinks can be worked out of the new system. In any business setting, it needs to be understood that companies, which were once separate, are not just going to fall into sync with each other automatically.
Synergy is a genius concept in business that allows small businesses to piggyback off another as they are merged into singular businesses. This springboard effect serves to create a profit for both companies due largely to the combined effort of two workforces coming together as one. It is important to remember that along with continued financial consulting, time is also necessary to establish a new business rhythm. However, the combined financial gains, increased productivity and overall company morale can prove exponentially beneficial in the end.
Reno’s Best CPA,
Tim Nelson
I would like to invite you to join Team Evans, Nelson & Company, CPAs for the Northern Nevada Susan G. Komen Race for the Cure. I am a new member of the Northern Nevada Affiliate’s Board and so would love to see all of my friends, family and co-workers come out on Sunday, October 2nd to Run, Walk or Sleep in for the Cure!
We are working on getting t-shirts for our team and hope to have a good show at the event for “Team ENCPA’s”. If you would like to join the team, click on the link below and then click the “Join Our Team” link.
CLICK HERE to join the team!
If you are unable to attend the event, but would like to be a part of the team anyway, you can choose to Sleep in for the Cure or you are welcome to make a donation on behalf of our team – all proceeds stay in Northern Nevada! Also, please feel free to forward this to your friends if you think they might be interested in participating.
Please let me know if you have any questions or difficulty registering for the Race – we look forward to contributing our efforts to this very important cause.
Thank you,
Emily Evans Nelson
Evans, Nelson & Company CPAs
50 Continental Dr.
Reno, NV 89509
775.825.6008 phone
775.825.6606 fax
[youtube]http://www.youtube.com/watch?v=8rftkxbK5j0[/youtube]
Whether it’s back taxes, money owed following an audit, or taxes due from the current year, owing money to the IRS can have devastating repercussions if left unpaid. The IRS has the right to place levies and liens against your property to insure tax repayment. This could lead to seizure of your home, automobile, or bank account with serious effects on your credit. When the IRS wants money, there are several options available. There are many ways a Reno CPA can help.
Notice of Tax Due
When an individual doesn’t pay the total tax amount due to the IRS by the annual filing date, they will receive a “Notice of Tax Due” letter. Within a few months, the debt will be in collections status and penalty fees will continue to add up. It is important to act quickly when you owe taxes to the IRS. A person who doesn’t agree with the amount stated has the right to ask for an assessment by an IRS manager. Copies of bank statements, receipts, and other finance related records will be needed for the hearing. Many taxpayers choose to hire a CPA to represent them at this point.
Finding a Qualified CPA
Retaining the services of a Certified Public Accountant can be very beneficial when you owe tax money to the IRS. Not all CPAs are qualified to represent taxpayers during the IRS collection process so it’s important to choose the right one. Beware of tax debt relief scams that may end up costing you even more money in the long run. Look for a CPA that specializes in working with the IRS on the taxpayer’s behalf. Read client reviews and look into their previous case history if possible before deciding to hire a professional. The right Reno CPA can offer sound advice and get the best IRS payment deal possible.
What to Expect from a Reno CPA
The first thing a CPA will do is discuss the available options. An “offer in compromise” is usually the best strategy. This allows the taxpayer to make a settlement with the IRS and pay less than the total tax amount. The CPA will help you decide on the best plan of action and will make sure it is executed correctly. He or she may file necessary paperwork with the IRS and will represent you in meetings with IRS agents. The CPA will also assist with appeals, hearings, or audits that may be required to help lower the tax amount you must pay.
The IRS can be brutal when it comes to collecting taxes that are owed. Doing nothing when you owe money to the IRS can lead to wage garnishments, frozen bank accounts, and the loss of your home. There are several options available to pay back the tax money owed to the IRS. A qualified Reno CPA can help you make the best decision and can even reduce the amount you owe. Hiring a Reno CPA also brings peace of mind. It’s easier to be confident when there’s a knowledgeable, experienced professional working for you.
[youtube]http://www.youtube.com/watch?v=He76DTgDVAw[/youtube]
Like a knife, a Roth IRA is neither inherently good nor inherently bad. In the hands of a thug, a knife can be a deadly weapon. In the hands of a skilled surgeon, a knife is a life-saving device!
Roth IRAs are a special type of individual retirement account (IRA). When “traditional” IRAs were originally made available, it was on a tax-deductible basis. You could contribute up to $3,000 and if you were not participating in another retirement plan or did not make too much money, you could deduct the $3,000 on your tax return.
For 2010 and 2011, the amounts are $5,000 for people under 50 years old and $6,000 if you are 50 or older. If you are a participant in another retirement plan, you cannot contribute to a normal IRA if you make more than $109,000 in AGI (married filing jointly), or $66,000 (single). In a Roth IRA, you cannot contribute if you make more than $177,000 in AGI (MFJ) or $120,000 (single).
Under a Roth IRA, the difference is that these contributions are NOT tax deductible. The tradeoff is that if you meet certain conditions, such as holding the account for at least five years, then the increase in value of the account (interest, dividends, and capital gains) are ALSO not taxable!
Generally, the younger you are, the better it is to start putting into a Roth. The number of years of tax-free earnings will far outweigh the benefit of a traditional IRA. Conversely, the older you are, the less advantageous the few years of tax-free earnings will be. Your income tax bracket also comes into play here. If you are going from a high income tax bracket in your earning years and into a low one in your retirement years, perhaps the deferral is not as attractive.
In 2010, there was a big frenzy to convert traditional IRAs to Roth IRAs. The government was putting this forth as a taxing measure to offset some spending. If you converted to a Roth IRA, be sure to speak with a tax advisor to get the best tax treatment on the conversion.
My biggest concern over Roth IRAs is what I like to call the “Social Security dilemma.” They TOLD us that Social Security would never be taxed, until they needed the revenue from it! I fear that the same thing will happen to Roth IRAs. That they will not allow the tax deduction up front, but will later decide that Roths were a “bad investment” and decide to tax the earnings down the road!
For all of your investment, retirement and financial questions make sure to contact a trusted and experienced financial advisor.
Reno’s Best CPA,
Tim Nelson
[youtube]http://www.youtube.com/watch?v=lOiL4NV2xFo[/youtube]
Small business owners have a lot of tax filing requirements that have to be met, from filling out specific forms to keeping thorough records on everything. At times, the whole process can be very frustrating. It is easy to become fixated on one issue as you try to work things out, and it can quickly become problematic if you cannot determine how to make numbers match up or if there are pieces of the puzzle missing. Small business financial consulting with a certified public accountant in Reno is a great way to relieve the stress and make sure everything is filed correctly.
The Technical Help
One of the most important advantages of having a certified public accountant for financial consulting is that they take over the tedious, frustrating work of crunching the numbers and keeping expenses and profits organized. This allows small business owners to focus on more important things, like running their businesses. Whereas keeping up with things like this can be very frustrating for some individuals, CPAs are trained to do it, so it’s second nature to them. As long as they’re provided with the data, they can keep track of it in order to show the important information a business needs for tax preparation and for the day to day practices of running a business.
Expert Advice
Another important service a certified public accountant provides is avoiding audits. While a CPA can’t guarantee you won’t be audited, they can make sure your tax papers are all correct and error-free. This is one aspect of ensuring that you’re not targeted for an audit by the IRS. They also have the unique ability of looking at the entire financial picture rather than simply focusing on just one aspect. This is priceless, because they can use the information they receive to give you advice about the way your business is performing and different moves you can take to improve profits or reduce expenses.
Communication
Finally, with small business financial accounting in Reno, a certified public accountant can help you fully understand the numbers and what they mean. This gives you a unique advantage in business, and it can actually help improve your business. When you communicate with your CPA, you can learn a lot, without having to do the tedious job that your CPA is handling for you.
When it comes to small business finances, it’s more than just saving receipts and adding up profits. Having a CPA can help ensure that your numbers are thoroughly organized and that your business is on the up and up with the IRS.
Reno’s Best CPA,
Tim Nelson
[youtube]http://www.youtube.com/watch?v=g2thwedROxQ[/youtube]
A Reno CPA or certified public accountant is a huge help to individuals and businesses when it comes time for filing taxes. However, in order for the CPA and client relationship to be successful, communication is imperative. By understanding how communication works best between a CPA and his or her client, you can make sure your relationship with your CPA is solid. In addition, this helps to ensure that filing taxes, keeping records, and all other processes are easier and more accurate.
Don’t Be Afraid to Ask Questions
One of the best methods of communication is asking questions. As a client, if you are unsure of a specific process or you do not know why certain results are the way they are you can ask your CPA to explain it to you. Things like tax preparation, expense records, and loss charts can be very confusing for someone who doesn’t work with those numbers every day. A great accountant will take the time to explain what he or she is doing and why things have to be completed a certain way. Just because you’re not doing the tax preparation or other processes yourself, doesn’t mean you shouldn’t be able to understand what’s happening.
Reports and Information
If there’s something a CPA knows about, it’s keeping records. A great certified public accountant will record everything and provide reports and information to you regarding the processes he or she is going through in order to file your taxes or keep up with your business records. This will allow you to examine the processes yourself, and keep your own records for those processes. It’s also very important for you to keep records and provide your CPA with information as well. Keeping receipts and transaction logs of expenses will allow your CPA to prepare your taxes in the most accurate way. This ensures that your taxes are paid correctly and that you’re on an even ground with the IRS.
Why a CPA is the Best Choice
In addition to learning how to prepare taxes to begin with, a CPA will spend hours each year learning new information about laws that have changed, new stipulations for tax preparation and so much more. Most individuals don’t have the time to spend themselves learning these things, and trusting a professional is the best choice. A qualified CPA understands tax laws easily and in-depth, so they can make sure your taxes are filed correctly and accurately. In the same way that you’d hire an expert cake decorator to make sure your wedding cake is perfect, hiring a CPA ensures that your taxes are filed perfectly.
Overall, by having a great relationship with your Reno CPA, you can be sure that your tax preparation is done accurately and that nothing has been missed. It’s important to trust your accountant and communication is the best way to build that trust.
Hi there,
I have seen many articles about the amount of home-based online businesses that are started up each month and there are many more articles about how big Facebook and other social platforms are getting and how people are making money on them. The problem is there is sometimes a blur between what types of online behavior are taxable and what are not.
For example, if you are having an online garage sale, like selling some items on Craigslist or other such sites, you usually do not have to report sales. This is usually true if you sold the item for less than your cost.
However, if you are selling appreciated assets like paintings, antiques or collectibles and you are selling the item for more than your cost, you usually have to report the transaction as a reportable gain.
There are also individuals who either have an online business or have taken the garage sale theory to the next step by buying and reselling items. Any time you may be seen as running a business, especially with how blurry the line is online, you should contact a Reno Certified Public Accountant.
The last thing you want to do is get into tax trouble because of your actions online. Remember when you are making money you should always think about the potential tax implications. When in doubt, ask a Reno CPA about the situation. They will be able to tell you whether you owe taxes and, if so, they will likely be able to help you find deductions.
If you have further questions about this topic you can read more on the Internal Revenue Services’ Website: http://www.irs.gov/businesses/small/industries/article/0,,id=209314,00.html or you can contact Evans Nelson & Company CPAs today. (Contact us online or call 775-825-6008)
Reno’s Best CPA,
Tim Nelson