On-line (Cloud) Computing for Small Business

Posted on by William A Olson, CPA

More and more office applications are moving to cloud from spreadsheets and word processing programs to accounting systems. Some are even free of charge (Google Sheets and Wave Accounting) but others are available for a subscription fee. For the small business owner who wants to be able to access all of their data from anywhere they are on any device they are using, cloud computing is becoming more and more the solution of choice.

If you are interested in learning more about the options available to small businesses, this article from PC Magazine highlights several cloud computing options available.

New Method for Calculating the Home Office Deduction (Journal of Accountancy)

Posted on by William A Olson, CPA

Very simply, the new method available for tax years 2013 and after, allows you to calculate your home office deduction by multiplying the square footage of your home office by $5 (max = 300 square feet or $1,500). The qualifications for taking the home office deduction remain the same.

See the full article from the Journal of Accountancy below:

In Rev. Proc. 2013-13, issued in January, the IRS gave taxpayers an optional safe-harbor method to calculate a deduction for expenses of a business use of a residence under Sec. 280A, effective for tax years beginning in 2013.

Individual taxpayers who elect this method can determine the deduction by multiplying the allowable square footage by $5. The allowable square footage is the portion of the dwelling used in a qualified business use, up to 300 square feet; thus, the maximum safe-harbor deduction is $1,500. The safe harbor is elected on a timely filed original tax return (instead of on Form 8829, Expenses for Business Use of Your Home, which is used for the actual-expense method), and taxpayers are allowed to change their treatment from year to year. However, the election made for any tax year is irrevocable.

No depreciation is allowed for the years in which the safe harbor is elected, but it is permitted in years in which the actual-expense method is used. The revenue procedure gives detailed examples of how depreciation is calculated in a year after the safe-harbor method is used.

To use the safe-harbor method, taxpayers must continue to satisfy all the other requirements for a home office deduction, including that the space be used exclusively for the qualified business purpose and that an employee qualifies for the deduction only if the office is for the convenience of the taxpayer’s employer.

The deduction under the safe-harbor method cannot exceed the amount of gross income derived from the qualified business use of the home, minus business deductions unrelated to the qualified business use of the home. Unlike the limitation under the actual-expense method, however, a taxpayer cannot carry over any excess to another tax year; nor can there be any carryover from an actual-expense method year to a safe-harbor year. Taxpayers sharing a home (for example, roommates or spouses, regardless of filing status), if otherwise eligible, may each use the safe-harbor method, but not for qualified business use of the same portion of the home. The revenue procedure contains detailed rules for use of the home for part of the year. Taxpayers who have a qualified business use of more than one home for a tax year may use the safe harbor for only one home and must use the actual-expense method for the other home or homes.

QuickBooks Online: A review from the CPA Practice Advisor

Posted on by William A Olson, CPA

QuickBooks Online is a product more and more of my clients are using. It’s accounting in the “cloud” which allows you to access your accounting records from anywhere you can access the internet. You can give your accountant access to view your file so that there’s a greater opportunity to review your books mid-year.

Here’s the review.

Travel Expense Tracking Made Easy

Posted on by William A Olson, CPA

According to the IRS, deductible travel expenses while away from home include, but are not limited to, the costs of:

  1. Travel by airplane, train, bus, or car between your home and your business destination. (If you are provided with a ticket or you are riding free as a result of a frequent traveler or similar program, your cost is zero)
  2. Using your car while at your business destination,
  3. Fares for taxis or other types of transportation between the airport or train station and your hotel, the hotel and the work location, and from one customer to another, or from one place of business to another
  4. Meals and lodging
  5. Tips you pay for services related to any of these expenses.
  6. Dry cleaning and laundry.
  7. Business calls while on your business trip (This includes business communications by fax machine or other communication devices)
  8. Other similar ordinary and necessary expenses related to your business travel (These expenses might include transportation to and from a business meal, public stenographer’s fees, computer rental fees, and operating and maintaining a house trailer)

Once you have figured out which expenses are deductible, however, the task of keeping track of those items still remains. Luckily many employees and business owners now have access to smartphones and tablets. Here are several iPhone/iPad apps to help simplify the documentation required for deducting business related travel expenses (descriptions supplied from the app creators):

  • Expensify – Use our app to sync with your credit cards and bank accounts to track purchases as they happen. We’ll even pull in eReceipts, digital copies of the paper receipts you normally have to carry around, for most purchases under $75.
    For any purchases that are made with cash or are not eligible for eReceipts, turn your phone in to a receipt scanner by snapping a picture of the receipt! Our app will SmartScan the image and pull out the merchant, date and amount of the transaction. We will use this information to either create a new cash expense or attach the receipt to its matching credit card purchase.
  • Shoeboxed Receipt Tracker and Receipt Reader – Easily store and organize your receipts so you’ll never lose a deduction again. Save time on tax return preparation, expense reports, budgeting and bookkeeping. Snap pictures of receipts, Shoeboxed enters date, total, payment type, store and category. Create and send expense reports from your iPhone/iPad. Export expenses to QuickBooks, Quicken, CSV, FreshBooks and more.
  • ProOnGo Expense Tracker – Real-time employee expense tracker; you and your team’s expenses are always up to date on all of your mobile devices, and the web. Includes: Receipt Reader – auto-extracts Vendor, Date and Total Amount; Mileage Tracking via GPS; Time Tracking by Client; Expense Allowance (Income); Download Credit Card Transactions; eReceipts – Forward them from your inbox; Bulk Receipt Upload from your Email.

How Smartphones Affect Your Business

Posted on by William A Olson, CPA

A new report from eMarketer is predicting that the majority of mobile users will have a smartphone by 2013. In addition, eMarketer predicts that smartphone usage will increase to 192.4 million by 2016, when 58.5% of the total US population will have a smartphone. How will this affect your business? Tara Banda from the ReachLocal blog offers up 5 points to consider:

1) At of the end of 2011, 101 million people in the U.S. were using smartphones.
Why this matters: This is a 60% increase in mobile usage from the end of 2010, which also showed a 60% increase from 2009, demonstrating rapid growth. Incorporating mobile into your marketing can help your small business stay connected to your potential consumers.

2) 61% of smartphone users search for local information.
Why this matters: People are searching for your business type or service when they are on the go. That’s why having a mobile Web presence is so critical for any local business. Having a mobile-optimized site can help you connect with mobile consumers. Claiming your business location on large search engines, local search directories, and social media can help potential consumers find you. And, including mobile in your search advertising can boost your visibility in the search results, generating new leads.

3) 22% of small business owners and decision makers plan to increase their mobile marketing efforts in 2012.
Why this matters: This statistic could also read, “Your competitors are dedicating resources to mobile marketing.” In order to stay competitive, you should too.

4) Between January 2011 and January 2012, mobile access to the Internet doubled.
Why this matters: As mobile Internet usage continues to grow, the importance of mobile marketing will only continue to grow with it. More consumers will look for your business on their mobile devices in addition to their desktops. More opportunities to connect with mobile customers will arise. That’s why right now, you should be investing in your mobile Web presence and in a mobile marketing plan.

5) Of all the mobile searches for local businesses, 52% of search clicks resulted in calls.
Why this matters: It’s one thing to say that more people are using mobile to search for local businesses. However, knowing that these searches generate leads and conversions even further demonstrates the value of investing in mobile marketing.

The full article can be viewed here.