End of year help please

[JessicaLee]

I am working with a commercial property management s-corp, and a automotive repair shop with one employee on payroll sole proprietorship. What would be the best moves before 12/31 to make as far as taxes are concerned?

Also, the business owner is cheap and does not pay for payroll on Quickbooks. Is there another place I can get the 1099 and w-2 forms? Any suggestions would be helpful. Thank you

[nealrm]

All tax form can be downloaded from Internal Revenue Service (http://www.irs.gov).

[Freelancier]

Intuit offers a 1099 and W-2 filing service where you don't need to use their payroll services to get those other services. Otherwise, filing them by hand may be an option.

As for steps to take: assume that capital gains and dividend tax rates will go up next year and lock them in this year. Assume tax rates will go up and lock in year-end revenue this year and push year-end expenses into next year, if you can.

I'm "cheap", but I'm not stupid: he should have an accountant telling him what to do to get his finances in order for next year's tax code changes.

[jamesray50]

Hi Jessica - are these two separate companies with two separate owners, or one owner with two different companies? As for filing the W2's and 1099's most of the bookkeepers and accountants I know use filetaxes.com (http://www.filetaxes.com/Content/StartFiling). They charge per return. If your boss is still too cheap for that you can order the forms from the IRS. The forms available on their website cannot be filed with them, they can't be machine read, although I have never heard of them refusing to accept them. If you have an IRS office in your city you can pick up blank forms there.

I don't do taxes so I really can't offer any suggestions on your tax question. But a couple of thoughts, did the management company make a profit? If so, the owner will need to pay himself a reasonable salary if he is not already paying himself. Make sure all personal expenses are not on the P & L and have been correctly posted to the equity account. If you have anything in a miscellaneous account, reclass it to the proper account. Make sure all capital purchases are recorded to an asset account. The accountant can figure out the depreciation if you aren't comfortable doing this. If you have any loans, make sure that all the principal has been recorded to the liability and the interest expense to an expense account.

If you have any other questions, please don't hesitate to ask. Good luck.

[huggytree]

something i always do at the end of the year is to put retirement into a SEP to get the best bang for the buck

this year i am putting $20,000 into a SEP IRA and it is saving me $10,000 in taxes.....i made 50% on my $20,000 on day 1!

each year i have my accountant figure out various amounts for a SEP....i pick the one that gives me the best tax cut vs amount spent....typically it saves me $6,000 range in taxes....this year its $10,000 and even though i didnt want to put $20k into retirement it would be stupid not to

a SEP only works if its a 1 man company....if there are employees the owner can still do the SEP, but they also have to give the employees the option too

there is another retirement option similar to the SEP (i forget the name)...its almost as good and it doesnt matter if there are employees

i am also writing out my bills 1 week early to clear my bank account

[JessicaLee]

Where should my mortgage payment and credit card payment be classified? Right now the mortgage payment is long term liability and credit card is credit card, so when I pay them it doesn't seem to touch the p&L so I am wondering if they are supposed to be elsewhere. I really think I need a refresher on Quickbooks before I finalize anything for this year.
Also, does it matter if I pay the credit cards down before the end of the year? And I do pay my boss weekly and monthly out of his business accounts as a salary. But neither of those expenses look to be touching the p&l. I am a bookkeeper, not an accountant. I wish he would pay an accountant for end of the year tasks. He pays him for very minimal tasks and leaves me to the rest.

[Evan]

Jessica -- it appears you probably need additional training in order to be able to do this correctly. The mortgage itself is a long-term liability, but your payments consist of interest and principal (the liability). So on a $200K mortgage, you may make a $1,500/month payment, consisting of $1,200 interest and $300 of principal -- you'd have to allocate it to each of those accounts. It's not as easy as that, and typically you'd want to have an amortization chart.

[jamesray50]

Hi Jessica - I agree with Evan that it does seem like you could use with some more training. Is your boss willing to pay for training? The American Institute of Professional Bookkeepers (AIPB) has self study courses, you buy the books and study at your pace. If you are a member there is a discount for the books. And you can buy them as you need them, you don't have to buy them all at once.

If you need help in learning how to use QuickBooks, under the Help tab there is a Learning Center Tutorials. If you can pay for training, you may want to search for a ProAdvisor to train you. They could either come to your office or train you remotely.

When you write checks to your boss for his salary, are you withholding taxes on the gross amount? If so, then you should be debiting an expense for the gross, crediting payroll liabilities for the withholding taxes, and crediting the bank account for the net amount of the check. You would also need to do a journal entry for the payroll expenses (employers portion of social security and medicare), a debit to payroll expense and a credit to payroll liability. If you are not withholding any taxes from the checks you write him, then they are not payroll checks, they are distributions and should not be on the P & L, they will be a debit to an equity account.

If all you are doing when you get your credit card bill is to write a check that debits the credit card liability account, then expenses are not being recorded. Do you have a debit balance for the credit card account on your Balance Sheet? The correct way to record the expenses is on the Home Screen click on Enter Credit Card Charges in the Banking Section - bottom right. Then enter all the expenses that are listed on the credit card and post to expenses. When all expenses have been entered go to Banking > Reconcile. Pick the credit card account to reconcile. Enter the statement balance, ending date, and interest expense. You will reconcile this account just like you do a bank account. When it is reconciled you will get the option to enter a bill for the amount due, write a check, or cancel. I always cancel and just write a check when I'm ready.

Hope this helps. Good luck.