5 Easy Steps to Get Organized For Your 2010 Tax Appointment

November 2, 2010

1. Gather all your tax documents such as W-2s, 1099-MISCs, 1099-INTs, 1099-DIVs, 1099-G, 1098 Mortgage Interest, Real Estate Property Tax Statements, etc., and put them a large envelope for your tax preparer.
2. Take out your prior year tax returns and refer to them as a guide for the same types of income and deductions that you may be having again this year.
3. If you have a sole-proprietorship, gather your business bank statements and track your income and deductible expenses using MS Excel or QuickBooks and compare these figures with your prior year’s Schedule C to be sure you have not overlooked anything.
4. Gather your “final settlement” escrow documents if you bought, sold, or re-financed your home.
5. Make a list of all “out-of-pocket” expenses for deductions such as use of your automobile, client gifts, meals, travel expense, cell phone expense, dues, etc., that your employer does not have an “accountable plan” with which to reimburse you for.


The American Economy Is In The Hands Of The American People

September 2, 2010

We can end the American economic recession now. The power to do this is in the hands of the American people. Did you know that American Wall Street corporations are hoarding cash because of the instability of the American economy? I know you have heard that American workers are not spending cash because of they are financially hurting. You surely have read the news that nearly 1 out of ten Americans are unemployed because of the poor state of the American economy?

We don’t have to politicize the American economy. This economic problem is equally shared by both Republicans and Democrats alike. We are all in the same boat, and there is only one way we can row our boat ashore, my American friends. We Americans need to put our oars in the water, and we need to begin to row like crazy in the same direction… toward American soil!

Big American companies are sitting on cash partly because they have purchased foreign labor and foreign products at greatly reduced rates. Main Street American consumers are purchasing cheap foreign goods and labor too. Are you seeing a problem with this yet in terms of how this might affect the state of our American economy?

What if Wall Street corporations purchased only American goods and services while at the same time Main Street Americans consumed only American goods and services? What would happen to the American Gross Domestic Product (GDP)? The GDP would go way up of course! We would not have to raise taxes or cut good social programs. And what would happen to the American unemployment figures? They would go way down. Am I right? If the American unemployment figures go down, and the American GDP goes up, we Americans could essentially end the American Great Recession ourselves, simply by buying American products and hiring American workers.

I believe Americans can make a commitment to changing the American economy during the upcoming Holiday Season. We did this during the Great Depression in the 1930s, and we can do it again during the 2010 Great Recession. During this upcoming Holiday Season, let’s experiment with some good old fashioned American styled macroeconomics. Let’s go back to scrutinizing all labels to be certain we are buying products made in America. Big Wall Street American corporations can go back to hiring unemployed American workers instead of outsourcing to foreign labor and then hoarding cash. Happy Holidays America, BUY AMERICAN AND END THE AMERICAN RECESSION!

Let’s lay off outsourced foreign labor immediately and begin to hire the nearly 10% of Americans who would just love to have those contractor and employee jobs you are outsourcing now. Let’s start consuming goods only made in America, and services only from Americans. We can watch the American GDP go up faster than Santa and Rudolph take to the skies on Christmas Eve. And we can watch our unemployment figures go down faster than Santa scoots down the chimney with a big bag of toys. It’s up to you America. WE CAN make this Holiday Season the best we have ever had, and WE CAN end the American Great Recession once and for all!

Immigration Reform and the CPA

May 4, 2010

We are getting a lot of news about Arizona and their method of handling illegal immigration. What could be a better and more fair approach other than offending people with bigotry? I think I have the answer. The responsibility of a good CPA is to educate clients who are employers about the legal ramifications of paying their workers “cash under the table”. I tell them the stories that most CPAs know as we have personally witnessed “payroll audits” and know of the importance of issuing a 1099-MISC when necessary. Some clients express fear about losing good workers, but I explain that there is no need for this fear. All they must do is simply give their worker a form W-9 every year (unless they have an employee, and then it would be a W-4). My clients know they should do this before their workers even receive their first paycheck. In California, my clients also need to complete a Form DE 542 online if they anticipate paying their worker more than $600 for that year. Some of my clients’ workers balk and say they do not have a Social Security Number. That’s okay! My clients’ workers do not have to worry about any trouble at all with the INS when they make that phone call to collect their “TIN” from the IRS for my clients. I educate my clients about this for their sake because I know what happens to people who break the payroll tax laws. They go to jail, or pay such huge fines that they end up having to go into bankruptcy. So, I urge all CPAs to have that frank discussion with each and every new client. Help them to help their workers comply with completing the necessary W-4 and/or W-9 each year. This way the U.S. and California will have more tax revenues and the workers will have a work history of paying federal and state income taxes so they can apply for Amnesty (if we have another one).

80/20 Rule

February 9, 2010

Hello my fellow SmallBiz friends (not you OC freaks of nature hovering around $5M in annual gross revenues and “swallowing whole” every penny of “SmallBiz” loans available to my REAL SmallBiz friends). I am pleading with my REAL SmallBiz brothers and sisters in OC who are beating back visions of pushing a shopping cart down the street with a sign around your neck saying “WILL WORK FOR FOOD”. Pretty please protect yourselves now from embezzlement from your “right hand employee”. These valuable workers may be in financial trouble right now too, and they may be thinking “All’s Fair in Love and a Bad Economy”. Here are 7 tips to help mitigate embezzlement:
1) Have a paper copy of your monthly bank statement (with both sides of cleared checks) snail mailed to your home. Go though and quickly eyeball the back sides of the cleared checks looking for recognizable signatures on any payments made to unrecognizable vendors. Memorize your office employee(s) handwriting.
2) Review and initial all odd automatic transactions, wire transfers, and unusual ATM transactions. Get explanations “yesterday”.
3) Repeat #1 and #2 every single month.
4) The reason why your “most dependable right-hand employee” never goes on vacation is not because they love their job. It is to cover the fact that they are tapping the till, and ripping you off with a variety of schemes that cause them to need to BE THERE, every business day, so they can babysit their scams. Make sure they go on vacation for a week, at least twice a year, and then keep your eyes open for any unusual transactions or activity.
5) Review payroll BEFORE they hand it out to your employees to be sure that there are no “employees” who are “shams”. Check the backside of the “sham” cleared payroll check (see #1) for any RECOGNIZABLE handwriting.
6) Review all “write-offs” of accounts receivable with your “most dependable” bookkeeper, I won’t explain it now, because there just is not enough space here. Just do it. You are looking for any write-offs that don’t make any sense. Have your “highly valued” bookkeeper explain all write-offs to you AHEAD OF TIME from now on, and make sure he or she gets your initials on each write-off, or else!
7) Review all vender payments before they are mailed, or wired to your venders. Be sure you are one of the signers on both your business checking and savings account and make sure everyone knows you must authorize all wire transfers. Be sure to have your “most trusted bookkeeper” provide you with all “backup” to requested vender payments e.g. invoices, signed off packing slips, etc. and please READ through this pile before you sign on the dotted line of even one stinking check…or you may be paying your right hand employee’s daycare center (see #1).
Understand that this friendly SmallBiz CPA auditor of financial statements is “over it” that roughly 80% of humans are honest and sadly for us REAL SmallBiz folks, 20% of humans are really very dishonest! Especially when they are hungry, can’t make the mortgage, or their children need expensive medicine that they can’t afford. Hedge your bets like good CPAs that book that 20% “allowance for doubtful accounts” on the accounts receivable balance, and follow the above 7 tips.

Consolidating Debt? Thinking about Bankruptcy?

January 30, 2010

Do it yourself. Use the link on my website for tools and then go to the debt calculators. Make sure you don’t get duped by the so called debt counselors from non-profit organizations funded by Bank of America. They will counsel you to “set aside” their debt! Not good if the best thing to do is get a good lawyer and file for bankruptcy. You may not “set aside” such creditors six months prior to filing. Therefore by using a “non-profit” organization your banks are screwing up your opportunity later to file for bankruptcy if that is what is called for in your case. How do they get away with this you might ask? I don’t know but I think they have a corporation that should be taxed for this type of con.

Gift for Labor Day 2009

September 7, 2009


Here are my personal desktop notes kept with Google’s Desktop “Notepad” Gadget every time I found something worthwhile to share with you.

I lovingly share my notes with all the hard working small business owner certified public accountants out there who may find these notes useful.

Best IT support for Small Biz CPA:

Best CPA coach for Small Biz CPA:
*Larry Gassin: Winner’s Edge

Best Online Tax Research, Projection & Tax Tools for Small Biz CPA:
*Wolters Kluwer: IntelliConnect, CCH Perform Plus III
*CFS: Tax Tools
*IRS: Linked Tax Publications

Best A&A Research, electronic workpapers & SQC for Small Biz CPA:
*Thomson Reuters: PPC Checkpoint Tools & Online PPC Guides (by annual subscription)

Best A&A Reporting Software for Small Biz CPA:
QuickBooks Premiere Accountant’s Edition, Linked Reporting Excel Workbook Wizard

Best Payroll Software for Small Biz CPA:
*ADP Online
*Wolters Kluwer: CCH’s Perform Plus III: After-The-Fact Payroll
*CFS Tax Tools: After-the-Fact Payroll

Best Independent Contractors for “As Needed” for Small Biz CPA:
*Robert Half Accountemps: Temporary Staff Accountants
*QuickBooks ProAdvisor Member Job Board
*Abigail Abbott: Temporary Administrative Assistants

Best Webcam and Applications for Small Biz CPA:
*Logitech: Orbit AF with Logitech Vid

Best PC Gunk Cleaner:
*Piriform: CC (used to be called Crap Cleaner)

Best Timesheet Software:
*Timesheets Lite: you can export to Excel and then import to QB

Best Anti-Spam Software:
*NetworkSolutions: reportspam@networksolutions.com
*AVG: Internet Security (lightweight & Anti-AllBadStuff)

Best Anti-Malware:

Best Anti-Virus & Internet Firewall:
*AVG: Internet Security (Firewall & Identity Protection)

Best Website Host for Small Biz CPA:
*Wolters Kluwer: ProSystems Fx: Execusite

Best Secure FileShare website portal for Small Biz CPA:
*Wolters Kluwer: ProSystem’s Fx: Execusite: FileShare

Best Remote Access Software for Small Biz CPA:
*Citrix: gotoassist.com
*Citrix: gotomypc.com
*Citrix: gotomeeting.com

Best Wireless Laptop Secure Broadband Access for Small Biz CPA:
*Verizon Wireless: USB760 Modem Device:
(Buy device outright without a plan; it’s already preloaded with VZAccess)

Best Scanner for Small Biz CPA:
*Fujitsu: fi-6130 (comes with Adobe Acrobat Software!)
Perfect for Lacerte’s DMS & Document eSort Software

Best Laptop for Small Biz CPA:
*Dell: <$900 includes downgrade of operating system to Win XP Pro

Best Archival/Encryption software for Small Biz CPA:
*WinZip Pro 12.1 for perfect encrypted password coded e-mail attachments
*Genie Backup Manager Pro 8.0 with a LaCie USB 1TB HD (offsite storage)
*LaCie 1 year FREE subscription Carbonite’s Online Backup (disaster recovery)

Best Electronic Data File Storage for returns & source docs for Small Biz CPA:
*Intuit: Lacerte's DMS
*Intuit: Lacerte's Document eSort

Best Electronic Data File Storage for A&A for Small Biz CPA:
*SmartVault (client scans in back up source docs for pertinent QB transactions)

1. Start WinZip by double-clicking the WinZip shortcut on the desktop.
2. Switch into the WinZip Classic interface if you are in the Wizard mode (the button is in the lower left corner of the WinZip Wizard Panel).
3. Click the New button on the toolbar (or click the File, New Archive menu item). The New Archive dialog box should appear.
4. Navigate to the folder you want the archive to go into. In the field at the bottom labeled File name, enter the name of the archive you want to create (e.g., TEST.ZIP). Then click the OK button.
5. The Add dialog box should appear. If necessary, click the Add button on the toolbar (or click the Actions, Add menu item).
6. Navigate to the folder that contains the file you want to add to the archive, click the file you want to add to the archive.
7. To encrypt files while they are being added simply check the "Encrypt added files" check box in the Add dialog. Before adding the files, WinZip will display the Encrypt dialog, where you will specify the password and encryption method (always use Zip 2.0 compatible). When you add files to a Zip file from Windows Explorer, you will have an option to encrypt the files if the Add dialog is displayed.
8. If files are being shared and some users are not using WinZip 12.1, it is recommended that all parties, for maximum compatibility use, 'Legacy compression (Zip 2.0 compatible)' compression, which is compatible with Compressed Folders and all WinZip versions.
9. To change default compression setting to Zip 2.0 Compatible from the WinZip Classic interface:
a) Start WinZip by double-clicking the WinZip shortcut on the desktop.
b) Switch into the WinZip Classic interface if you are in the Wizard mode (the button is in the lower left corner of the WinZip Wizard Panel).
c) Click the "Options" menu item and choose "Configuration".
d) Click the "Miscellaneous" tab. In the bottom right of this tab UNCHECK the box next to "Create new
Zip files using best compression (.zipx)"
e) Click "OK".
f) The Compression default setting should now be set for "Legacy (Zip 2.0 Compatible)".

(Run reboot.bat to re-register file in Microsoft Windows)
RIGHT click desktop icon 'QB Premier- Accountant Edition 20XX'
click 'properties'
click 'find target'
double click 'reboot.bat' or 'reboot' depending on Windows extension file type
click 'Start', 'All Programs', 'QuickBooks', 'QuickBooks Premier – Accountant Edition 20XX'

Use file search for file extensions: QBW, QBB, QBX, QBA, QBY by:
RIGHT clicking 'start' button,
click 'explore' link,
click 'My Computer' link,
click 'Local Disk (C)',
Search for specific file type by using asterisk and file type you are looking for e.g.: *qbw (or *qbb, etc.)

Enter adjustments to file
Click 'backup' prompt
Select 'Save to' file:
C:\Documents and Settings\Your User Name\My Documents\QBData\20XX\CLIENT'S NAME]

Open SmartVault Inbox on desktop
Sign in at task bar pop-up prompt
Open QB file
Close QB file
Follow SmartVault's pop-up prompts

Client creates (QBX) file and sets the dividing year end date
Client uploads zipped (QBX) file to CPA's FileShare portal
Client meanwhile continues current year transactions as usual with (QBW) file
Client meanwhile continues normal back up process with (QBW) file
CPA downloads (QBX) file from client from CPA's FileShare portal
CPA converts (QBX) file to (QBA) Accountant's Copy Working File
CPA makes necessary adjustments using (QBW) file (including tax journal entries)
CPA creates and uploads the adjusted (QBY) file to CPA's FileShare portal
Client downloads (QBY) file from CPA's FileShare portal
Client imports (QBY) file into the current (QBW) file
All adjustments made by CPA are now imported to (QBW) file based on dividing date

Best Social Networking sites for Small Biz CPA:
*Microsoft Office Live

Best Leads Groups for Small Biz CPA:

Best Husband for Small Biz CPA:
*Eugene L. Davila, Ph.D.

Copyright© 2009 by Laurel M. Davila, CPA

Are you a Professional who just got laid off?

April 10, 2009

As a CPA member of the American Institute of Certified Public Accountants (AICPA) I receive daily informational feeds and e-mail alerts related to the AICPA’s economic resources and I like to pass on any help that I find to my clients who are suffering from the effects of layoffs due to the recession. Mark Koziel (Note A) did a wonderful job in his latest CPA2Biz Buzz article for AICPA members and he included the below excerpt of the AICPA’s famed “Outplacement Checklist” targeted to CPAs who may be laid off now, or after April 15, 2009 due to the recession. I think these same steps apply to other service sector professionals. Mark Koziel’s article recommends that CPA’s avail themselves of the information contained in the “Worker Adjustment and Retraining Notification” (WARN) Act, and that we visit http://www.dol.gov for the U.S. Department of Labor’s dedicated website regarding “Assistance Available After Job Loss”.
1) Sign up for COBRA benefits, which include continuation group health care coverage for plan participants and certain family members, if desired, within 60 day window (applies to organizations with 20 or more employees). Learn more about the new Federal COBRA subsidy at the 360financialliteracy.org site 2) Get your finances in order and conserve – learn more at 60financialliteracy.org
3) Decide where to take your career next and consider:
• Differences between working at a large public accounting firm vs. a small public accounting firm vs. business and industry or government
• Enrolling in an accounting PhD program – learn more about the ADS program
• Investigating career counseling and/or skills training programs offered at AICPA, CPA societies, local organizations or state and city government agencies (try http://www.doleta.gov/layoff/workers.cfm first)
• Researching financial assistance options for re-training and education – start at: http://www.careeronestop.org/ReEmployment/ 4) Develop a personalized job search strategy based on the results of step 3
• Plan search activity every day – searching is your occupation now
• Create and track weekly activity goals
• Keep good notes of everything you do
5) Build an effective resume
• Pay attention to details, grammar and consistency throughout
• Be honest
• Eliminate information that does not support your goal
• Summarize early employment responsibilities if you need space
• Use action and self-descriptive words
• Plan on crafting several drafts
• Remain tasteful and avoid fancy folders and envelopes
• Do NOT include references or salary or personal (e.g. marital status, children) information
6) Cover letters
• Make certain it reflects you as accurately as possible
• Personalize it to the specific position and/or company
• Be specific and concise
7) References
• Develop list of names and gain permission from each
• Gather all relevant contact information for future use on applications
• Give a copy of your resume to each reference
• Discuss your goals and desires with references
• Check-in as milestones are reached, such as job placement
8) Networking – many positions are unpublished and often who you know will open doors
• Reach out to co-workers, firm alumni, friends, relatives, business associates, bankers, lawyers, doctors, dentists, trade associations, club members, professors, fellow volunteers, small business owners
• Schedule informal coffee meetings, lunches or informational interviews
• Deliver a copy of your resume at each meeting
• Discuss your goals and career interests
• Get something from every discussion, such as advice, a new contact, the name of a hiring organization
• Follow-up periodically and professionally
• Develop a network on professional networking sites, such as LinkedIn 9) Search techniques
• Visit the AICPA’s CPA Job Finder to review profession-specific jobs
• Post your resume on a handful of respectful job search sites (see below)
• Research job openings listed with your state society
• Explore newspaper and on-line want ads with a variety of search criteria
• Contact your University’s career office
• Consider the recruiters/search firms with whom you have a good relationship
1. Be honest about your goals and requirements
2. Follow your gut and trust your instincts
3. Only go after the right jobs
4. Insist that you must give approval before your resume is sent to any company
10) Interviewing
• Check out helpful articles at http://economy.aicpa.org/ like Overcoming the ‘Overqualified’ Label
• Practice:
1. Points you want to be sure to cover in the interview
2. Anticipated, basic, behavioral and other interview questions
3. Questions you’d like the interviewer to address
4. Being able to explain anything on your resume
5. Giving thorough answers that are to the point
6. Being positive, smiling and being physically comfortable
• Dress the part – professional, classy and current
• Review the job description
• Gather all materials you may need (e.g. resume, company research)
• Arrive a few minutes early
• Send a thank you note
11) Evaluating positions and offers
• Ask questions
• Consider if the responsibilities, resources, performance measures and company culture meet your goals and mesh with your personality
• Be professional and open when deciding between offers
• Decline an offer in a diplomatic and positive way (verbally and written)
12) Stay positive and manage your stress:
• Surround yourself with family and friends
• Share your feelings, challenges and triumphs with those who are close to you
• Treat yourself to small rewards at the end of each week or interview (e.g. a specialty coffee, movie, or extraordinary snack)
• Exercise daily or find an activity that helps to clear your mind
13) Register for unemployment benefits at http://www.unemployment-benefits.org/ as soon as you are eligible. 14) Helpful links for resources – use these web sites to research interview questions, ideal resume and letter formats, job ads, career mapping, salary comparisons, search tips and more…
AICPA’s CPA Job Finder

(Note A) Published on 03/26/2009 in Career Resources, People Management, Public Practice

Save your home!

April 9, 2009

This morning President Obama reiterated that you may take advantage of free help to save your home from going into foreclosure by visiting http://www.makinghomeaffordable.com. There is a free self-assessment tool on this website to see if you qualify for lower mortgage rates due to this recession and due to certain types of home mortgages. You may qualify for free help if the value of your home has decreased, and you are struggling to make monthly mortgage payments. This site also discusses how people struggling with interest rate increases, or who have a decrease in income from the recession are vulnerable to foreclosure rescue scams. There is an excellent FAQ regarding the ins and outs of making your home affordable (for free) right now.

The Home Office Deduction

March 17, 2009

When a taxpayer exclusively uses a portion of his or her dwelling unit on a regular basis as the principal place of business for any trade or business; as a place of business that is used by patients, clients, or customers in meeting or dealing with the taxpayer in the normal course of his or her trade or business; or, in the case of a separate structure that is not attached to the dwelling in connection with his or her trade or business, an allocable portion of expenses attributable to the residence is allowed as a deduction. The allocation is based on the square footage of the business area divided by the total square footage of the dwelling unit.

In the case of an employee, the home office deduction is allowable only if, in addition to satisfying the exclusive and regular use test, the home office is for the convenience of the employer.

In addition, expenses allocable to the use of a portion of a residence on a regular basis as a storage unit for the taxpayer’s inventory or product samples will be allowed as a deduction if the taxpayer is engaged in the trade or business of selling products at retail or wholesale, but only if the residence is the sole fixed location of that business.

The amount that a taxpayer may deduct for the business use of the home is limited to the gross income derived from the use of the residence for that trade or business, reduced by the deductions that are allowed without regard to their connection with the taxpayer’s trade or business. The deductions allowable without regard to whether the activity is a trade or business are deducted first. Any remaining gross income may then be reduced (but not below zero) by the remaining allowable deductions. Any disallowed deduction may be carried forward indefinitely.

Form 8829, Expenses for Business Use of Your Home, is used to determine the deductible expenses for the business use of a taxpayer’s home and is carried to the self-employed individual’s Schedule C. Deductible expenses include rent, casualty losses, mortgage interest, real estate taxes, depreciation, insurance, repairs, maintenance, utilities, and other operating expenses, including a security system.

Special rules apply when a taxpayer sells a residence used as a home office.

Free Help and Good News for Homeowners “Under Water”

March 6, 2009

HUD sponsors housing counseling agencies all across the U.S. for free advice on buying a home, renting, defaults, foreclosures, credit issues, and reverse mortgages. Visit http://www.hud.gov to find a counseling agency near you. Also you can learn about the “Making Home Affordable” refinance and modification options available, find out about the latest foreclosure rescue scams, and use free self-assessment tools provided on this website: http://www.financialstability.gov/makinghomeaffordable/. If you need urgent free help please contact the Homeowner’s HOPE Hotline: (888) 995-HOPE. Finally, here are two articles worth reading: A Reuters article about the $75 billion mortgage plan to aid homeowners released Mar 4, 2009 6:44pm EST: http://www.reuters.com/article/ousiv/idUSTRE5233J720090304. Another good article was in The New York Times Business section about how the U.S. is setting big incentives to head off foreclosures for people with mortgages as high as $729,750 qualifying for help, with no ceiling on how high income is as long as you are in danger of losing your home. Interest rates on these loans can go as low as 2 percent. You may read more about it at: http://www.nytimes.com/2009/03/05/business/