Top 5 tax tips for Individuals

personal tax tips

None of us gets out of filing our taxes and dealing with the IRS – it’s one of life’s certainties. Taxes can be complicated and intimidating, so here are five expert personal tax tips to make them a little easier to manage.

1. Never ignore the IRS

People who ignore the IRS do so at their peril. If you don’t file or pay your taxes, or do either of these after the stipulated deadlines, you could face hefty penalties and the IRS can seize assets. If you receive any communication from the IRS, pointing out any errors or missed deadlines, respond immediately. The worst thing you can do is ignore it.

2. “Bunch” your deductions

To ensure you can take the maximum deductions applicable in a particular year, you can “bunch” them together. What this means is that you time your deductible expenses into the same calendar year. You can achieve this by moving forward certain deductions from the current year into the next, assuming that you meet the thresholds for the current year.

3. Max out your retirement plan contributions

Whatever you are paying into your 401k or other tax-deferred retirement scheme, do your best to increase your payments if you can. The money you pay into these accounts reduces your tax liability. You won’t have to pay taxes on it until you withdraw it. This excellent saving incentive is also a great way to lower your tax bill.

4. Be careful of tax scams

If you start getting phone calls or emails claiming to be from the IRS or the U.S. Treasury, do not respond to them. It is quite common for scammers to try these tactics as tax season approaches. Be careful not to fall into their trap. Don’t worry though; it’s pretty easy once you know that the two government institutions will never contact you in this way; they will only reach out to you by mail when necessary.

5. Get the help of a certified public accountant

Tax laws and procedures seem to get more complicated by the year. Even if you successfully manage to file your own taxes, you may very well not be getting the full benefits of the various deductions and tax breaks that might be available to you. Get the help of a professional when it comes to filing your taxes. It takes the burden off your shoulders, ensures that it gets done correctly, and may help you get more money back into your pocket.

Georgen Scarborough CPAs is based in Vienna, Virginia. Aside from offering expert personal tax tips, we can help you with your tax preparation and filing. Contact us today.

How using a CPA can save you money

CPA

Most businesses are happy to let their in-house accountants run their financial affairs alone. However, a CPA can help you optimize your business and tax matters with a level of professional service that your accountant may not necessarily be able to deliver. Most importantly, the services of a CPA could potentially save you a lot of money. 

One of the reasons why a business owner might avoid hiring a CPA is the cost involved with securing this service. The truth is that, while a CPA may increase your costs in upfront fees, they will also offset those fees to a large extent through the savings they are able to create for you. 

The cost-saving benefits of CPAs

Having a professional tax practitioner on your side will offer you several benefits, including, but not limited to, the following:

  • They can help reduce your tax liability. 
  • They can do your tax planning in an efficient and timely manner to avoid any surprises.
  • They help you set up deferred savings programs to enable your business to maximize tax advantages.
  • They can advise on changes and improvements to help you increase your business’s profitability.

The financial situation is constantly in flux, with both your business circumstances and the legal frameworks changing regularly. A simple mistake or failure to keep up with the changes can lead to problems with the IRS, possibly resulting in penalties, interest, even legal trouble. If you bring a certified public accountant onto your team, you can either avoid such issues or have the means to deal with them most efficiently and with the least possible damage when they do arise. 

Georgen Scarborough CPAs is based in Vienna, Virginia. Contact us for more information on how we can help you save money.

Top 5 small business tax tips

Every small business wants to find the best ways to reduce their tax liability and better conduct their affairs with the IRS. Also, in 2021, as many companies face reduced income due to the COVID-19 pandemic, business owners will be looking for ways to cut costs wherever possible. Here are five key small business tax tips to help you do so.

1. See if your business is eligible for different tax treatment

Many small businesses can deduct 20% of their qualified income in calculating their taxes. This deduction generally applies to pass-throughs (companies where the owners pay the taxes themselves). The Tax Cuts and Jobs Act of 2017 reduced C-corporations’ tax rate to a flat 21%. Your tax practitioner can advise you as to whether it is better to stay a pass-through business or make the transition to a C-corporation.

2. Increase your business savings plan – or get one started

Small businesses have the option of running a variety of retirement plans for their employees, such as 401k, Simple IRA and SEP IRA. The contributions the company makes to these funds are tax-deductible. If you already have one of these plans in place, it might pay off to increase your contributions. If you don’t have one, you should definitely get one going this year.

3. Invest in new equipment

If you buy new or used equipment and put it into service before the end of the tax year, you could be entitled to a federal tax deduction of up to $1.05 million. The cap on this expenditure is $2.62 million. If you spend on new equipment within those limits, you could claim back a considerable amount of money.

4. Contribute to charity

 Charity contributions are a well-known method of reducing tax liability. You can usually deduct the equivalent of the fair market value of the assets you donate. Consult your certified public accountant to find the best way to make this method work for you.

5. Make the most of your losses

If, like many business owners, you have seen a significant reduction in income during 2020, you can use the provisions of the CARES Act to apply a net operating loss to income from the past five years for a potential immediate refund. Speak to a tax practitioner to see if this applies to you and how to make the claim.

Georgen Scarborough CPAs is based in Vienna, Virginia. For more small business tax tips and professional help filing your taxes, contact us

Reasons you need a CPA to do your taxes

Filing your taxes can be stressful, especially if your tax return is any more complex than a standard individual W-2. Getting a CPA to do your taxes, rather than doing it yourself, can save you a lot of hassle and possibly some money. Here are five reasons why you may want to hire a certified public account to take your tax filing burden off your shoulders.

1. You have a small business or additional income streams

If you run a small business, you may not be aware of the numerous tax write-offs you can claim to save you money. If you have a side hustle or are working in the gig economy with several income streams, your return becomes a lot more complicated, but a professional can help you complete it without too much fuss.

2. The IRS asks for specific information

Many people find it very stressful if the IRS reaches out to them to ask for substantiation of income or expenses or other documentation. If you get a professional tax practitioner on your side, you can eliminate this stress. They will know how to deal with the IRS and help you comply.

3. You’re self-directing your retirement

If you have other investments to fund your retirement, aside from your 401k, that’s called self-directing. Filing for personal investments such as cryptocurrency or real estate can get a little tricky for the layperson. That’s why you may need a CPA to do the filing for you.

4. You have a rental property

If you are earning income by charging rent on one or more of your properties, you should seek the advice of a tax practitioner to see where you can make deductions.

5. You want to send your children to college

If you are planning on filling out a Free Application for Federal Student Aid (FAFSA), you would do well to seek out the help of a CPA. Unwanted assets or income in your child’s name could adversely affect the application, even if it works from a tax planning perspective. Let a professional help to make the right adjustments in this regard.

Georgen Scarborough CPAs is based in Vienna, Virginia. Contact us to find out how we can make your tax filing much easier.

How the CARES Act affects Charitable Donations and Their Tax Implications

Charitable donations

2020 has been a tough year and COVID-19 has affected all individuals. Earlier this year the US government stepped in with the passing of the Coronavirus Aid, Relief & Economic Security (CARES) Act. The aim of the Act was to stabilize the US economy and offer relief to businesses and individuals adversely affected by the Coronavirus. The Act includes a provision that encourages taxpayers to increase their charitable giving during the pandemic.  How does the CARES Act affect charitable donations and tax implications for you? We have all the info you need!

Charitable Donations and Tax 

Standard deductions 

If you take the standard deduction in 2020, you can deduct up to $300 of charitable contributions to an eligible organization of your choice. Below are the standard deductions for 2020:

  • Single: $12,400
  • Head of household: $18,650
  • Married jointly filing: $24,800
  • Married filing separately: $12,400

For those who are over 65 and/or blind, this amount can increase by $1,300 per taxpayer. 

Itemized deductions

For itemized deductions, the adjusted gross income (AGI) for cash contributions was increased with the CARES act and affects individual donors. The limit has been increased from 60% to 100% for 2020 only. This means that any cash contributions you make can be deducted up to 100% of your AGI. 

Corporate giving 

The AGI limit for corporate donors was increased from 10%, meaning that corporations can now deduct up to 25% of taxable income for 2020 only. 

Conditions to qualify for tax benefits 

To qualify as a tax deduction, corporate taxpayers and individuals need to follow the guidelines below: 

Conditions that do not qualify include:

  • Property contributions
  • Marketable securities
  • Real assets
  • Corporate foundations
  • Private non-operating foundations
  • Family foundations
  • Charitable contributions made into a donor-advised fund

Do not forget, to qualify for the latest deduction limits of 100% for itemizing individual taxpayers and 25% for corporations, all charitable contributions must be made during 2020. Our team of expert accountants at Georgen Scarborough serves individuals, corporate businesses, and families with charitable donations and their tax implications. 

If you are focused on your charitable goals, we hope our guide helps you understand how the CARES Act affects charitable donation. 

Reasons to Choose Georgen Scarborough

Georgen Scarborough Associates takes the time to help you achieve your personalized financial goals. Some of the services we offer include:

  • Electronic filing (e-filing) for all tax returns
  • Income tax planning
  • Estimated tax preparation
  • Equipment depreciation, pension, 401K, and other tax services

For more information on government and tax implications, contact us today!

Best Practices for Tax Preparation for Small Business

Small business tax

It is not easy to run a small business! You have to ensure that you follow all regulations as well as satisfy all small business tax requirements. This can be particularly stressing during tax season and at the end of the financial year. Good business practice is important to manage and grow your business. Good practices can lead to more income if you want to sell your business in the long term or if you need to secure financial assistance. We have a checklist to ensure your tax preparation for your small business goes smoothly.  

Ensure your financial records are up-to-date 

It’s important to ensure all of your financial  records are kept up-to-date so that you reduce stress on yourself and your staff at the end of the financial year. Ask for regular reports and statements of all activity that occurs in your business. These include all tasks and their due dates, financial statements which include profit and loss statements and balance sheets. These financial statements will also help the quality of your business by helping you evaluate where your business needs improvement so that you implement the necessary changes. 

Monitor your payroll

It doesn’t matter what system you use for payroll, as long as it is done correctly and timely, preferably by a professional. You need to ensure that your payroll is up-to-date as the IRS requires filings every quarter. It also gives your business a good credit record which is advantageous to you in the long term with potential investors or banks. 

Properly classify your business 

Is your small business a Limited Liability Company (LLC), Corporation or Sole Proprietorship? Each classification has different regulations and tax requirements. Ensuring that your business falls under the correct category, and is classified by this, can save your business from paying extra on taxes. A good accountant can help you out with classifying your business and saving you the money you deserve. 

Sort out any personal affairs 

This is where the importance of adequate record keeping matters the most! Make sure any personal affairs are taken care of and that you are not leaving out deductions before filing for taxes. This will help you to avoid putting yourself at risk for an audit at the end of the financial year. It may be difficult for you or your staff to keep track of deductions throughout the year, especially if you have falling behind. This stresses the importance of an accountant to help you track your finances and to make your business life so much simpler. 

Hire the best accountant 

When it comes down to your small business tax preparation, you need to be sure that your forms are accurately filled. An expert accountant can help you to track your income and expenditure throughout the year so that your small business is prepared when tax season arrives. This reduces stress and time on you and your staff, as well as fulfilling your business’s statutory requirements. A good accountant should be one that specifically listens to you and your business needs, makes use of the best accounting software and has expert knowledge on the latest regulatory tax requirements. 

Georgen Scarborough Associates makes your small business tax preparation easier 

Good business practice ensures that your small business is a success and that everything runs smoothly when it comes to tax season, without legal implications. You are going to need a professional accountant to guarantee your business is a success and that your tax preparation is promptly taken care of. 

Our expert accountants at Georgen Scarborough Associates give each client the personal attention they deserve by providing quality service. We provide tax preparation for small businesses, help with your financial statements and audits, payroll services and analysis for your business. There is nothing we can’t handle! 

Using the latest technology and best accounting software for your small business tax, we can keep track of your financial position, properly classify your business and balance your accounts. This will help your small business to save money, prevent any legal issues from arising, and evaluate any weak points in your small business that needs improving. We do not just help you with your accounts, we help you to grow a legacy! 

For more information on tax preparation and practices for small business, contact us today! 

How a government contractor qualifies their accounting systems with Defense Contract Audit Service

Accounting systems

A government contract can be a welcome source of income for your company, but it also comes with a few stringent regulations and auditing requirements that need to be adhered to. The biggest of these is DCAA Compliance–and you may need the assistance of a reputable accounting company for this. Being able to successfully complete a DCAA audit helps to ensure not only the legality of your business but also that you get additional government contracts in the future. 

What is a DCAA compliant accounting system?

Being DCAA compliant means that your company has the systems and procedures in place to comply with the DCAA audit process. You won’t get any formal certifications for this, instead, the DCAA audits will check if your company meets the Cost Accounting Standards, Federal Acquisition Regulations, and various other government policies and rules. There are no specific accounting systems that are formally approved by the DCAA, so saying that an accounting system is DCAA compliant simply means that they meet the requirements of various audits.

Here are 3 things every government contractor needs to know about DCAA compliance.

  1. The whole company needs to follow the same standards whether they are working on a government contract or not. This compliance pertains to every single employee and includes daily time entries, accurate project-level time allocations and a clear record of both unpaid and paid time. 
  2. Accurate time and labour tracking are key,  so software tools that can record and classify information precisely can help in this regard. Nearly 75% of DCAA compliance requirements are related to time tracking.
  3.  In the past, DCAA compliance was graded, and government contractors could fall short in a few areas but still be deemed compliant as long as they addressed the issues where they fell short. These days, however, it’s either a PASS or a FAIL. You will not be given time to address any issues and you simply won’t make the cut if your systems are not up to scratch.

DCAA compliance is not always easy to acquire and maintain but using the right accounting software coupled with frequent employee training will help qualify your accounting process with the DCAA’s stringent standards.

For further assistance with accounting services and queries to get your organization’s accounting systems DCAA compliant, get in touch with us via our website. Here at Georgen Scarborough Associates, we are always happy to share our expertise. 

Guide to non-profit accounting

non-profit accounting

When you started your non-profit organization your zeal for ‘the cause’ may have outweighed the headaches associated with administrative and bookkeeping tasks that are crucial for your organization to function optimally. Many executive directors and board members are not trained accountants and may not know where to begin with sorting out their finances and budgets. Non-profit accounting is also very different from for-profit accounting, but if you set the following 6 basic structures in place, it will be a great start to running your non-profit accounting system successfully.

6 basics for non-profit accounting

  • Find a good non-profit accounting/bookkeeping solution
  • Get an accounting solution that can do fund accounting 
  • Find a method to create and analyze financial statements
  • You will need a way to record in-kind donations 
  • Open a separate bank account for your non-profit
  • Start with bank reconciliation and set up some budgets

Bookkeeping for non-profits

You will need to appoint a treasurer or financial officer to keep track of your organization’s financial records. Your treasurer will need a good bookkeeping system and invest in some non-profit friendly accounting software. Here at Georgen Scarborough we use Quickbooks Non-Profit Edition. This will make your treasurers’ life that much easier in keeping track of your organization’s finances.

Budgets

A budget is vital to make sure that your non-profit is on the right track financially. Budgets usually cover one fiscal year and have 2 main categories: Expected income and expected expenses. Creating a budget is easy if you keep in mind the following 4 steps:

  • Set goals – assess what you want your non-profit to achieve in the year ahead
  • Develop doable estimates for how much money it will cost to realistically achieve these goals
  • Estimate your income sources for the year
  • Alter budget to align expectations with reality

Your non-profit friendly accounting software should ultimately allow you to track how your income and spending for the year align with your annual budget goals.

Whether you are a new non-profit organization or not, let Georgen Scarborough Associates take the headache out of administrative tasks. For more information on accounting services for your non-profit get in touch with accounting company George Scarborough Associates today.

How Financial Statements help you plan for 2021

financial statements

Creating financial statements can seem tedious and complicated, but preparing these documents is a vital part of planning for the year ahead. Financial statements make up a large part of the projections and planning for your business’s future and can give you strategic guidance on crucial changes to make to ensure sustained success. 

How financial statements can help you plan for the year ahead 

While you are preparing your financial statements, you will become more aware of the status of your business’ finances, the progress you are making towards your goals, and will give you a clear view of any issues you might face down the road. 

Financial status overview 

Keeping close tabs on the financial status of your business is a must. The financial statements offer a summary of your business’s financial position. They can provide you with the information you need to help you set goals and understand where you might need to change your budget. If you regularly work through your financial statements, you will pick up any issues at an early stage, and you can make small changes before the finances go off the rails. 

Relating business goals into specific business targets 

The financial status overview is a powerful tool to help you create specific targets that will drive your business strategy towards achieving the goals you have set out for any given year. The adage goes that failing to plan means planning to fail, and it holds true in a business context. 

Measured targets will help to keep your business on track and will provide employees with structured outcomes to work towards. By creating specific targets, you can practically set out a roadmap that will lead your business to its goals, instead of making decisions on the fly without proper planning to back up actions. Through specific targets, you will be able to create a sustainable pace for the business while leaving room for direction changes necessitated by external factors that influence the business strategy. 

Measuring progress

Your financial statements contribute to most planning and strategic decisions and can help you measure the progress within your set of goals. If you have carefully set out specific business targets, the progress measurement process will be easier to manage. The business’s financial statements can give you a higher-level overview of the progress, even if you do not measure specific targets. When comparing the financial statements across several years, you can track how the business is progressing towards its goals on a year-by-year basis, giving you valuable insights into the overall development of the company. 

Identifying potential issues 

When you study the financial statements for the previous years, you can compare the financial situation to your business forecast to see if you might run into problems relating to cash flow and inventory, among others. It is especially important to use your financial statements when planning the goals you want to achieve in the business to identify shortfalls and plan out budgets to cover the activities you plan to undertake for the following year. 

If you need assistance from our accounting service experts on your financial statements, taxes, and other financial planning activities, contact Georgen Scarborough Associates, PC, for more information. 

Five Accounting Tips for Startups

Accounting tips

Business accounting does not have to be a daunting process with these practical and straightforward accounting tips. At Georgen Scarborough Associates, PC, we have helped small businesses to get their financial statements, tax preparation, and payroll off to the best start. Here are our top accounting tips for startups:

Top accounting tips for managing a startup  

There are countless resources online with tips and plans for getting your start up’s accounting in order. Not all of these tips have been created by accounting service experts, and the wrong advice can cost you time and money and get you into a lot of trouble with the law. Here are the tips you need to keep your books in tip-top shape.

Keep business and personal finances separate

You might be tempted to put everything together in the same account and treat your business accounting like your personal accounting. Mixing the two is a quick way to create a lot of trouble in the long run. We recommend opening a dedicated business account from day one. The little bit of extra effort, in the beginning, will help you to keep everything in order and will save you a lot of frustration as your business grows.

Record expenses, income, and payments meticulously

Now that you have a dedicated business account, it will be much easier to keep a thorough record of income, expenses, and payments you make for the business. If you deal with a lot of physical paperwork, you should invest in a filing system to keep your records organized and safe. We recommend that you read up on record keeping requirements in your industry and area so that you don’t unknowingly expose sensitive information to unauthorized parties. 

Stay on top of financial matters

If your records are in order, it will be a reasonably simple task to stay on top of your finances. Remember to stay updated on regulations, legal requirements, and developments that might impact your business accounting. For business owners, this requirement is especially critical when it comes to taxes and payroll matters that affect employees.

Use professional software tools

Modern digital accounting tools can make the accounting process incredibly simple for startups. We recommend using a cloud-based accounting tool that will help you organize your accounting process and access your information anywhere. We recommend that you research a few different options and reach out to an accounting service expert before investing in a paid plan for your business. 

Hire an expert

Suppose you are unclear about your business accounting, or you don’t want to spend your time managing your accounting. In that case, we recommend reaching out to one of our accounting service experts. We have the knowledge, experience, and resources to assist you with all your business accounting needs. Our professional staff members provide a variety of services for your startup, from payroll to taxes. 

For more accounting tips or help with your startup accounting, contact Georgen Scarborough Associates, PC, in Virginia for more information.