Read below for do it yourself bookkeeping tips, announcements and tax news
I get questions on a regular basis about HSA accounts, and how to open them and which expenses are eligible to use with and HSA account. I thought I would answer those questions here.
In my opinion, HSA's are the second best form of healthcare for United States Residents, especially those are are younger and generally healthy. The best, is a healthcare sharing ministry, but that is a topic for another article.
First, in order to open an HSA account you need two things; a qualifying health insurance plan, and a trustee to open the account with.
A qualifying health insurance plan is generally one that qualifies as a High Deductible Health Plan and will be identified by the insurance agency providing that plan. The best place to browse insurance plans is www.healthcare.gov Once you have established a health insurance plan, then you can open an HSA account, which simply operates like a bank account. Searching for the term "open HSA account" will give you multiple results of companies that will open the HSA 'bank' account for you.
Now that you have an insurance plan in place, an HSA opened, and funds in the account the question is what expenses can you use those funds for. The specific list of qualifying medical expenses can be found here but in general, if it's not something a Doctor would write a prescription for, its not an HSA expense. No gym memberships, no over the counter medicines, no workout supplements.
Remember, this article provides only general advice. If you would like advice specific to your situation, feel free to email or call before you act.
We are making a move to simplify our pricing. We are only offering fixed rate pricing on bookkeeping services, all other services are billed hourly.
We have many different types of clients and projects, some want to be involved and some want to be efficient. Hourly pricing allows a common price denominator across all of those variables.
Bookkeeping is a predictable and mechanical function, especially for long term clients and so having a fixed repeating rate well suited for those customers.
The updated pricing is here: Pricing
Under the most recent Tax Cuts and Jobs Act, there were a number of great breaks for small businesses, but there were also some doors that were closed. The most understated, but important, was the removal of the entertainment deduction. Formerly, this was lumped in with meals and could be included for a 50% deduction. It is now not deductible at all.
This change is updated in the US code title 26 section 274 and reads
"(a) Entertainment, amusement, recreation, or qualified transportation fringes
(1) In general No deduction otherwise allowable under this chapter shall be allowed for any item--
With respect to an activity which is of a type generally considered to constitute entertainment, amusement, or recreation, or"
That is it. No baseball games, movies, operas, roller derbies or golf tournaments. Golf deserves a special mention as memberships for recreational or sports clubs are also disallowed. By disallowed it means they are non-deductible. They aren't illegal, but can't be included as a business deduction on a tax return.
How far this expands is currently unknown, and will of course be defined as cases are tried. For example, if you take a client out for a few drinks at a bar, is that a meal or entertainment? Are two pints of Guinness a meal? What about two martinis? There are no answers here.
This is effective for the 2018 tax year.
Tax Season is here and we are experiencing a normal increase in requests from new and existing clients. If your taxes are relatively complex, please get in touch with us early in the season.
If you are a timber related client, have a look through your records for 2017 to see if they are complete and then set up an appointment with us. I've recently written an article for the Tennessee Forestry Association outlining some of those documents you want to have in your records. You can read it here
Sometimes we get requests for bookkeeping service from business owners who are busy, but not quite big enough to warrant paying for a bookkeeper each month. These folks are usually 1 man operations working as sub contractors or part time ventures. They are busy with their business that they need a real system to track income and expenses, especially for tax filing, but not so large that they need an accounting system with all of the functions.
Previously I had struggled to recommend a full system like Xero, or Quickbooks as it just resulted in more questions than progress. Quickbooks and Xero have now created products to bridge that gap though.
Quickbooks has come out with "Quickbooks Self Employed" quickbooks.intuit.com/self-employed/ which is amazing. It provides just enough bookkeeping functions, tax estimators and mileage trackers. All for about $5/month (if you send me a message I can get that price for you if you can't find it).
I test drove it this week and definitely recommend it to anyone that is a contractor, or sub contractor working for themselves. It will make your life at tax filing time infinitely easier, whether you file yourself or get us to do it.
A question came in through the "tax question" section that is bookkeeping related. I get asked this a lot so I figured I would answer as a post.
The question was:
"In tax software, when setting up rules for a bank feed to follow, there is an option on spend rules to set a tax rate when allocating to accounts. Is it normal to track what tax you paid on purchases?
Or should spending rules be applied with 0% tax rate.
I ask because I obviously want to be doing this correctly, but also, if tax rate should NOT be applied, then the rules can be set up faster without taking consideration of the store location when a vendor has multiple, and I wont have to set up a bunch of tax rates for every purchase location."
The answer requires a bit of Xero history. Xero was originally designed in New Zealand and matches what I call the commonweath tax system that you'll find in Australia, Canada, the UK and europe. In those places you can offset your sales taxes owed by sales taxes spent in your business. In America, that doesn't apply, unless you are a reseller, and even then you get a sales tax exemption.
So, the way to deal with this in Xero is to make sure that sales tax on purchases are not tracked, or set at 0% when setting up rules and accounts for purchases. When setting up sales rules, then you definitely need to set the applicable sales tax rates.
If you start tracking sales taxes on purchases, Xero will track them in a manner that it assumes you can use them to credit your taxes taxes owed. That will cause problems.
If you are running Xero on your own and looking for direction. Xero has a lot of really good, built in help features and resources that you can use.
There is a youtube video below, but on some browsers it may not post correctly. There is a direct link here as well www.youtube.com/watch?v=nBbAnnM2dR0
Welcome to all of our customers from Windigo that are arriving here as part of the rebranding process. You're in the right place and Avery is still your point of contact.
We will be at the Annual TFA Meeting this year!
Come join us: Wednesday October 14th -Friday October 16th, 2015
Where: Chattanooga Marriott Downtown
1073 Carter St
Come say hi and ask Avery any questions you may have about Paul Bunyan Tax Services and tell us how we can help you.