FAQ: Do I need to upgrade my QuickBooks software? What about compatibility?

A: There is no absolute need to upgrade your QuickBooks software each year as the annual new version is released, however, each new version has enhancements which may be helpful to your business.

However, compatibility issues will force you to upgrade if:

If you are running QB 2007 and are processing payroll. This version will not be supported after May 2010. If you are processing payroll, you will not receive updates and may not be able to process payroll.
If you have Windows Vista, you must use QB 2007 or newer.
If you have the recently released Windows 7, you must use QB 2010 or newer.

If you have further questions about upgrading or compatibility, contact the QuickBooks experts at Raak and Associates PC!

FAQ: What are the most common errors made on tax returns?

A: Each year, the IRS compiles a list of the most common errors they find on tax returns submitted by individuals.

In 2007, the most common errors found on tax returns include:

Incorrect Social Security numbers, especially for dependents.
Earned Income Credit computed incorrectly.
Child tax credit or Child care credit computed incorrectly.
Dependent/spouse’s name did not match Social Security records.
Taxable portion of Social Security benefits computed incorrectly.
Taxable income or tax liability figured incorrectly.
Itemized deductions figured incorrectly or not limited as required.

Watch for these errors on your tax return so you can avoid delays in processing and receiving refunds. If you need assistance in preparing a complete and accurate tax return, contact the tax professionals at Raak and Associates PC.

FAQ: What is the chance my tax return will be chosen for an audit?

October 12, 2009

A: The IRS released the latest “odds of getting audited”, which unfortunately are higher than in the past years. Here are some audit statistics:

4 out of 1000 partnerships and S corporations (0.4%)
4 out of 1000 farmers (0.4%)
20 out of 1000 Schedule C’s with Gross Income between $25,000 and $100,000 (2%)
62 out of 1000 Schedule C’s with Gross Income between $100,000 and $200,000 (6.2%)
19 out of 1000 Schedule C’s with Gross Income above $200,000 (1.9%)

Your best defense is complete and detailed records. If you receive a notice of audit, it can be very helpful to have professional assistance to help resolve the issues, or to represent you before the IRS. Our first recommendation is “DON’T PANIC” — most issues can be resolved adequately with proper preparation and assistance.

If you need help resolving an audit or other IRS issues, please contact our office.

FAQ: My personal tax return is extended, but I haven’t finished it yet. How much time do I have?

A: The extended due date for Individual tax returns for 2009 is October 15, 2010.
Remember, this is only an extension of time to file, not an extension of time to pay any tax due. Interest and penalties will be charged on the amount of tax due to either the IRS or the State of North Dakota which was not paid by April 15.

If you have not filed your tax return yet and need help completing it correctly and filing it on time, give us a call! We can help you save time and stress, and help you stay on track for next year.

FAQ: Are there new tax breaks for energy-efficient improvements to my home?

September 25, 2009

A: Yes, the American Recovery and Reinvestment Act (ARRA) of 2009 contains a number of either new or expanded tax benefits on expenditures to reduce energy use or create new energy sources.

ARRA provides for a uniform credit of 30 percent of the cost of qualifying improvements, such as adding insulation, energy-efficient exterior windows, and energy-efficient heating and air conditioning systems.

The new law also raises the limit on the amount that can be claimed for improvements placed in service during 2009 and 2010 to $1,500, instead of the $500 lifetime limit under the old law.

FAQ: Is this a good year for my small business to buy more equipment?

September 25, 2009

A: The American Recovery and Reinvestment Act (Feb 2009) includes several helpful provisions regarding small business treatment of property and equipment

The 50% bonus depreciation option is extended through 2009; 50% of the cost of qualifying property can be deducted in the first year, in addition to a usual depreciation deduction on the remaining 50%.
The Section 179 deduction allows businesses to deduct up to $250,000 of the cost of qualifying machinery, equipment, vehicles, and furniture purchases.
The $25,000 limit still applies to sport utility vehicles.

These and more favorable tax provisions were enacted this year; for information and assistance in tax planning for your small business, contact the professionals at Raak and Associates PC.

FAQ: The year is nearly half over. Can QuickBooks software help me see if my small business is doing well?

A: Absolutely. If you are using QuickBooks correctly for your small business, you can extract reports that present profitability and asset vs. liability analysis, and can give a small business owner a wealth of information to use in planning the rest of the year.

However, if your QuickBooks file is not updated or if the entries are incomplete or incorrect, you have not gained anything, and cannot trust the information your Quickbooks file yields.

At Raak and Associates PC, we can provide you with a quick review or troubleshoot your QuickBooks file issues, we can train you to better manage your QuickBooks information, or we can help you catch up with entering transactions too! Call one of the QuickBooks experts at Raak and Associates PC today to help you get your financial records back on track!

FAQ: What should I be doing for my small business in September?

A: The best thing you can do for your business is assess where you are in relation to your budget and business plan. At the end of September, you will be 75% through the year You have one quarter left to make any needed changes to maximize profitability and keep up with your business plan.

Can you easily tell how profitable your business is? Are you current in recording your business bookkeeping transactions? If you are using QuickBooks® software, is it up to date with all the accounts reconciled?

If you answered “no” to these questions, you need help from the professionals at Raak and Associates PC.. We can help you catch up with your accounting and show you how to determine your profitability, as well as to assist you with a plan to help you stay on track through the end of the year.