Three Good Reasons to Hire a CPA

Do you enjoy perusing the shelves of your local bookstore or library from time to time and checking out the latest advice on money matters? It’s an important part of my job as a financial professional, of course, and I go straight to the index to see what the authors have to say about certified public accountants.  I’m confident in my necessity and relevance for just about every person who has an income, but it’s always good to see how it’s expressed in so many words as the economy goes through its many changes.  

Here are three main points that five top financial authors agreed upon regarding the need to hire a CPA when building and protecting your wealth and assets, whether you’re just starting out, have a small nest egg, or a fortune. Please let me know what you think of these ideas. I love your feedback!

1.) Separate Your Wealth from Your Personal World – A CPA will help you set up a corporation for business income that is separate from income that you earn as an employee. These are the two main tax structures in our country, and when maintained completely separate from one another, your risks are minimized, your assets are protected, and your wealth remains secure.


It is well known that wealthy people utilize wise tax strategies like this and accelerate their wealth with multiple corporations, real estate investments, trusts, and charities. The average person does not have all of these things in place, but they are subject to tax audits from the IRS many times more often than the wealthy and they overpay in taxes far more often, so it behooves the Average Joe and Jane to work with a CPA and keep more of their money.


“A good CPA will prove to be one of the most important members of your wealth-building, and more important, your wealth-sustaining, team.” – Loral Langemeier, author of the national bestseller, The Millionaire Maker.


2.) Year-Round Availability Trumps Seasonal Tax Preparers – The unconventional but completely logical wisdom of one author built a strong case for the advice that a CPA can offer a business owner or an individual filing a personal tax return throughout the year, when decision are being made that can affect their overall finances and taxes when the time comes.

“No one, repeat, no one, should use anyone other than a certified public accountant (CPA) or enrolled agent as a tax preparer….Of all professionals, the CPA has traditionally ranked at the top of the list for the most trusted adviser.” – Stephen M. Pollan and Mark Levine, authors of the national bestseller, The Die Broke Complete Book of Money.

3.) Perform Your Due Diligence and Research Your CPA – Not that anyone looks forward to being viewed under a microscope, poked, prodded, and questioned intensely under hot overhead 3rd degree lights, but we CPAs understand how important it is that a shrewd and savvy client who is serious about his or her money and wants to know that a CPA can be trusted will want to check out our backgrounds and our reputations. I hope that my networking and satisfied clientele in Gwinnett County speaks for itself. For a complete list of questions to consider when selecting the accounting professional who best suits your needs, consult the book Simple Money Solutions, by NPR commentator Nancy Lloyd.

Here’s to your financial health and a successful tax season for 2014!



The Smart Way to Give

Making tax-deductible donations during the “season of giving” has proven to be beneficial to both the giver and the receiver. It can be a smart business decision that keeps a business or individual in the lowest tax bracket possible, and the charity can continue to help less fortunate people in our communities.  To make the most of this win-win situation, however, we must keep four (4)  important rules in mind:

1.) The non-profit organization must qualify under IRS guidelines. Not all non-profit and tax-exempt organizations are eligible to receive contributions that a business can itemize as a “charitable gift” for a tax deduction. The organization must have either 501(c)3 or 501(c)19 status to qualify. To confirm that an organization has the proper status, you could verify their registration credentials through your state’s Attorney General’s office or the Better Business Bureau. Beware of organizations that have names similar to established charities or include “police” or “fire” in their name in order to appear more credible than they really are. United Way is an organization that  usually maintains high standards when accepting a charity as an affiliate. Because religious organizations are not required to apply to the IRS for their qualifying status, you can call the IRS at (877) 829-5500. This phone number is exclusively for concerns regarding tax exempt organizations, not other tax questions.

2.) You must determine the true and correct  value of your donation.  Usually you can deduct the fair market value of the goods that are donated, taking into account the depreciation that corresponds with its age at the time the donation is made. Car donations are a little different. The “blue book”  value does not apply if significant repairs are needed, so the fair market value must be lowered accordingly. If f the car is valued at more than $500, Section A of form 8283 must be completed, and if it’s more than $5,000, Section B of that form must be filled out and accompanied by the signature of an authorized official from the charity. A written appraisal must also be submitted. IRS Publication 561, Determining the Value of Donated Property, should be helpful. In most states, you must  transfer the title of the car to the charity.

3.) Only certain types of donations are permissible. Here are examples of donations that do not qualify for a tax deduction. You cannot deduct the value of the time volunteered to a qualified organization, but you can deduct out-of-pocket expenses associated with your service. Only a portion of the ticket price for a charity fundraising dinner can be deducted, unless specified by the organization, only the fair market value of the meal can be applied. If a charity gives you a thank you gift or any other benefit in connection with your donation, the value of that gift must be deducted from the amount that was donated. An advertisement in a charity’s special publication does not qualify for a deduction. These are some “Don’ts.” Check with your CPA for donation “Do’s.” 

4.) Proper documentation of the donation is required. For all donations that are valued at $250 and more, the charity must provide written acknowledgement for your records. Bank statements, receipts that specify that a donation was made – including the amount, and written communications from the charity are acceptable for donations that are valued at less than $250.

Details are available at



How Do Your Earnings Look So Far?

Now that the final quarter of the fiscal year is here,  it’s time for business owners to start planning for end-of-year tax calculations. Take time to recap your profits for the year so that your CPA can help you estimate your tax liability for 2013. The only surprises you want at the end of the year are gifts from family and friends, not a tax bill for an amount that you are not prepared to pay.

Block out a couple of hours  to make sure that you can determine a pretty close estimate of your company’s taxable income. Start by collecting  all of your financial records and statements for the year, including the statements for both income and expenses, and their balance sheets. Since IRS Form 1120 is the main way to determine your corporate income tax, download a copy of the form as well as the instructions for it from

Your company’s total income is not always going to be the same amount as its total profits. Be sure to include income sources such as capital gains, net gains, gross interest and royalties, and dividends.

Three things to subtract from the total gross income from all sources are returns, allowances, and the cost of goods that were sold this year.

The next step is to figure out all of the tax deductions that are available to your company. Once you subtract your total deductions from your total income, you will have your preliminary taxable income. Deductions include taxes, paid interest, repairs, advertising expenses, lease expenses, pension funds, payroll and benefits, and debt write-offs. Ask your CPA about certain other expenses that can be deducted from your total income. Some deductions can be taken based on net operating losses. The end result is your company’s taxable income.

Find out the minimum corporate tax amount this year from IRS Form 1120, then use the Tax Rate Schedule provided to determine whether your tax owed exceeds the minimum or not. Don’t confuse that with the alternative minimum tax that is available to certain businesses.

Information for the alternative minimum tax is in IRS Form 4626.  There are three situations that will cause you to be exempt: 1.) Your corporation was established in this year; 2.) Every year since 1997 your company has been exempt; 3.) Your company’s gross receipts did not reach the amount specified in Form 4626 for this year. 

A common mistake that small business owners make is using payroll taxes withheld from employees to cover business operations or expenses. If the payroll taxes are not turned over the IRS at the scheduled times, the owner’s personal assets can be tapped to pay them and penalties can be assessed.

One idea to reduce your tax burden is to donate unsold or unused inventory to get a deduction. Donations of goods valued greater than $500 have more rigorous reporting rules than smaller values, so multiple smaller donations might be easier.

Also, you could hire your spouse and children. The income of a minor child that is less than $6,000 in a year is not taxed the same way as ordinary income. The health care costs you’d pay for your employee-spouse’s family (which is, of course, your family) are tax deductible, and could also save money for both your business and your family if you’re not paying for any other health coverage.  

Calculating your corporate tax liability can be daunting, but your accountant’s job is to make the entire process easier for you. Quarterly meetings with your CPA will help you keep track of your business’s ever-changing needs and make taxes and everything else more manageable. 

Top 10 Tax-Saving Tips for Seniors

For many people who have reached the age of 55, terms like “retirement planning” and “reduced tax burden” take on a far greater meaning than they did at the age of 25. They might be anxious about having enough money to live on in the future, whether they retire at the traditional age of 65, or the preferable age of 70. The good news is that there are numerous ways to save money in our later years, and one way is through wise choices regarding our taxes.

Here is a list of 10 ways to reduce the amount that you will owe in taxes, so that more money stays in your pocket for retirement. There are specific conditions and limitations for each tax-saving tip listed here, so you will not qualify for all of them, but it would be good to research the possibilities.

Only a well-trained or certified tax professional can determine which of these Top 10 Tax-Saving Tips would benefit you, so be sure to consult with them as soon as possible. April 15, 2014 will be here before you know it!

  1.  Make a Contribution to a Traditional IRA – As late as April 15th
  2.  Itemize Rather Than Take the Standard Deduction – For business, home,  volunteering for charity, and medical expenses
  3. Pay Certain Upcoming Bills in December – Such as your mortgage, property tax, and business expenses
  4. Open a Health Savings Account (HSA) – Through a trustee like a bank, insurance company, IRA or Archer MSA trustee
  5. Convert a Traditional IRA to a Roth IRA – If the tax rate on the transaction will go up the following year
  6. Deduct State Tax That You Paid Last Spring – Don’t forget this or state taxes already paid during the year
  7. Credits for Lower Income and Disabled Individuals – Make sure your tax preparer checks every credit available through the IRS
  8. Include Reinvested Dividends in Your Cost Basis – This amount is deducted from the proceeds of a stock sale.  
  9. Set Up a Private Pension Plan – A little-known Non-MEC insurance policy with multiple tax benefits
  10. Avoid Late Fees: File and Pay On Time – Request an extension and pay an estimated amount if you’re not ready.

What Makes a Good CPA?

I’m sure that you come across many Certified Public Accountants in even the smallest of towns these days. When you want to trust someone with your personal or business accounting and tax needs, what should your process of elimination entail so that you can narrow down your choices?

Apart from getting a personal recommendation from someone who can vouch for their expertise and other qualities, do you know what it takes to be a good CPA? My two decades of experience have taught me that there are three things that I can do consistently to keep my clients happy. I’ll share them with you here, and you can tell me what you think.

1. Return Phone Calls, Texts, and E-mails Promptly – Even if you don’t have an answer to their question immediately, the courtesy of a return call to confirm that you are actively pursuing the answer goes a long way. Rather than leaving a client waiting in the dark and wondering when you’ll even acknowledge him, you could say something like this:  “Hi. I got your message, I’m working on that for you, and I’ll call you back with an answer within the next 48 hours.”  It makes clients feel valued and respected when you give them a time frame in which they can expect to hear from you. By all means, make sure you have something to tell them within the stated time frame.

2. Show Them How to Save Money – Everyone wants to keep his or her bottom line as robust as possible. Saving a little here and there can really add up. When you suggest ways to spend less or hold on to more, your clients’ appreciation leads to happiness and loyalty. People love to save money, and they love just about everyone who helps them to do that.

3.) Keep Good Contacts for Client Referrals – I often hear, “Do you know a good …. (Retirement Planner, Plumber, Real Estate Agent)?” Because I like to network and build relationships with a variety of professionals, I have a list of reliable contacts whom I am confident will do a good job for whatever my clients might need. Come visit my office and see my business directory wall lined with Lucite card holders that are organized by business category. Pick a card. Any card!

I believe that these three courteous and professional practices make a good CPA. Why not go the extra mile and show people that we care? Everyone benefits, and there’s nothing to lose.

How to Keep Records Well for Your CPA

“Paperwork, paperwork!”, you might say with frustration from time to time. Keeping up with records can be a challenge, but it’s an inescapable necessity if you run a business or want to enjoy certain tax benefits. Every piece of paper that shows proof of income, an expense, or a business transaction can help to substantiate statements made on your tax return, insurance claims, and regarding your property. As long as your records are organized, you should keep all of the documentation, invoices, receipts and financial statements that you have because you never know when might need them, especially if you are hit with the “Big A” – an audit.


Speaking of being organized, many wonder if there are good alternatives to the classic manila folder and envelope method. I am happy to tell you that there are several affordable options to keeping records efficiently and available for quick access while greatly reducing the amount of paper that you must keep.  The paperless office concept that has already been adopted by forward-thinking companies and medical offices can help you too. Here are three ideas for you:


1. Document Imaging – Scan all of your documents and save them on your computer as PDF or other digital files. Name each specific document individually so that you can tell them all apart. Include the main subject of each item that you scan along with the date, such as “OfficeMax_Printer_051013” or “Employee_Tax_Q2_2013.”


Scanners are included in three-in-one printer/copier/fax machines and can also be purchased separately. There are also portable scanners that are designed to fit receipts of all sizes. Scanner prices range from less than $100 up to $900, depending upon quality and speed.  


Don’t forget to check the back of two-sided forms so that you don’t miss anything.


2. Hard Drive Backup  – Be sure that you save all of your scanned documents on an external drive in case something happens to your computer. Flash drives are inexpensive and convenient, just keep them in a safe place because they’re small.


3. Cloud Drive – Secure online sites store your files and allow you to share them with others as well as access them instantly for printing. You can access your records from any computer, smartphone or device with internet access. Companies like Microsoft, Google, Apple, Amazon and Dropbox lead the pack of many offering this service. Some of them are free.


After you’ve saved all of the electronic files and backed them up, you can shred the originals and enjoy more space in your office. A word of advice:  Never shred legal documents such as a birth certificate or title deed, of course.


Here’s hoping that this year’s record-keeping is neat and clutter-free. If it is, your CPA will love you for it!