Filing Extensions for Business Taxes

20140217If you’re planning to file your business income tax return after its original due date, the below links can be helpful to file an extension.

Remember: an extension extends the time for filing the return, but not for any amount due. Which is why you typically want to make a payment with your extension if you’re expecting to have a tax due — the payment would be for your best estimate of that number.

Here are links to the extension forms for the Baltimore/DC Metro area, with a few related notes:

  • Federal: Form 7004 is used by corporations (Form 1120 filers), S-corporations (Form 1120S filers), and partnerships (Form 1065 filers), to extend the filing deadline for their return. Calendar year corporations and S-Corporations have an original deadline of March 15, and the form extends the filing date six months to September 15. Their partnership counterparts have an original filing date of April 15, and the form extends the filing date five months also to September 15. Form 8868 is used by non-profit entities (Form 990 filers). Calendar year non-profits have an original filing deadline of May 15, and there are actually two extension forms: the first part is for a three-month extension August 15, while the second part is for an additional three months to November 15 (a combined total of six months).

 

  • Maryland: Form 500E can be used by corporations and S-corporations for a six month extension. And Form 510E can be used by partnerships for a six month extension.

 

  • DC: Form FR-128 can be used by corporations, S-corporations, and partnerships for an a six month extension.

 

  • Virginia: Automatically grants a six month extension for business returns, but you should send an extension payment if you expect to have greater than 10% of your tax still due when you finally file.

(Related post: Extensions for individual tax returns.)

2013 Taxes: Organizer and Letters

Welcome to the new tax filing season. We’ve put together the below PDF files as a help to you in getting ready to file your 2013 taxes:

If you’re new to our firm, be sure to check out Are We a Good Fit? to learn more about us, or give us a ring!

A Creed to Live By

20131030Last week I was at the Thriveal Deeper Weekend Conference in Greenville, SC. Not only was it a great opportunity to get together in person again with many of the CPA’s I stay in touch with around the country, it was also an occasion to reflect about our firm’s direction, as well as learn about how to better serve you, our customers. We have a number of new things in store for 2014 that we’re excited to be able to share with you, so be sure to stay tuned!

For the moment, though, I’d like to share with you a poem a friend of mine posted after coming back from Deeper Weekend — her name is Magen Smith, and you can sense the inspiration she and all of us shared from being together in person. The poem is entitled, “A Creed to Live By”, and is by Nancy Sims:

Don’t undermine your worth by comparing yourself with others.
It is because we are different that each of us is special.

Don’t set your goals by what other people deem important.
Only you know what is best for you.

Don’t take for granted the things closest to your heart.
Cling to them as you would your life, for without them life is meaningless.

Don’t let your life slip through your fingers by living in the past or for the future.
By living your life one day at a time, you live all the days of your life.

Don’t give up when you still have something to give.
Nothing is really over until the moment you stop trying.

Don’t be afraid to admit that you are less than perfect.
It is this fragile thread that binds us to each other.

Don’t be afraid to encounter risks.
It is by taking chances that we learn how to be brave.

Don’t shut love out of your life by saying it’s impossible to find.
The quickest way to receive love is to give love.
The fastest way to lose love is to hold it too tightly;
and the best way to keep love is to give it wings.

Don’t dismiss your dreams.
To be without dreams is to be without hope;
to be without hope is to be without purpose.

Don’t run through life so fast that you forget not only where you’ve been,
but also where you’re going. Life is not a race,
but a journey to be savored each step of the way.

We received the highest Peer Review rating!

20130911We’re very happy to share that our firm received the highest peer review rating this year! “Peer review” is a process that all accounting firms who issue financial reports have to undergo — and since we did audits during the period evaluated, we underwent the most thorough review process: a “system review”.

After all was said and done, we got the highest possible of three ratings, which we’re very proud about. For us, it’s a confirmation that our hard work to hold ourselves to the highest standards has been validated.

Go team! :)

The new individual taxes for 2013

20130708In 2013, we’re going to see three new taxes for individuals that weren’t there before:

  • New 39.6% tax bracket. Income over $450,000 for joint filers is now subject to a new top tax bracket: 39.6%. (The new bracket starts at $400,000 for single filers, and $425,000 for head of household filers.)
  • 0.9% increase in Medicare taxes. If your wages exceed $250,000 for joint filers, expect the Medicare tax on the excess amount to go up from 1.45%, to 2.35%. (The higher Medicare tax kicks in for single filers at $200,000 in wages, and at only $125,000 for those married but filing separate.)
  • 3.8% increase on investment income. If your income is over $250,000 for joint filers, and you have income from investments (e.g., interest, dividends, rents, royalties, capital gains, and other non-active sources), all or a portion of that income will be taxed at 3.8%. I say “all or a portion”, because the new tax will be applied to the lesser of: (a) the amount your total income exceeds $250,000, or (b) your actual investment income. (The new investment income tax starts at $125,000 for those married filing separate, and $200,000 for the remaining filing statuses.)

Needless to say, you might have some surprises come 2013 tax filing time. If you’d like to evaluate the impact of these or other changes on your return, just give us a call and we can run a projection for you, walk you through the impact on your return, and also see if you might benefit from some pro-active planning steps.

And for some additional references, check out these quick answer pages on the IRS’ website: Net Investment Income Tax FAQs and Questions and Answers for the Additional Medicare Tax.

What truly matters

Our “why” statement is: “we want to see our customers financially strong, so that they can focus on what truly matters in life”.

For our team, it’s important to recognize that finances are not the most important thing in life. In fact, one of our core beliefs is that “financial decisions are more than an exercise in math, they’re an exercise in values” — once you know what’s important to you, the answers become so much clearer.

Two videos I’ve run across in the past few months have helped me understand what I value even more, and though I’ve shared them previously through our Facebook page, I also wanted to post them here:

From time to time, we’ll be sharing things like this we’ve found to our Facebook page or Twitter feed, and here too — they help us all as reminders, to be about what truly matters. And if you run across something that inspires you to remember what truly matters, please send us link, we’d love to see it – thanks, and hope you’re having a great day!

Happy Money


A year or so ago I came across the work of Dan Airely, a fascinating man who is a behavioral economist and professor at Duke University. Behavioral economics is essentially about how humans are not the pure rational creatures that economists sometimes like to think — and that we can even be predictably irrational (affiliate link).

At any rate, just this week I was listening to a podcast episode where he interviewed Mike Norton, co-author of a new book entitled, Happy Money: The Science of Smarter Spending (affiliate link). The crux of the book is that many of us don’t know how to spend our money in a way that makes us happy. We’re typically set on buying things (gadgets, cars, houses, etc.), but the novelty of things quickly wears off. We actually get a lot more happiness-for-the-buck by buying experiences, like vacations, a good meal out, a music concert, etc. And we get even more happiness when we buy things for our friends — it helps create social connections, shared experiences, and more.

So next time you go to spend that $5 in your pocket, or even set savings goals, let happiness factor into your decision making, and consider these pointers as a guide. Because happiness truly matters.

Independent contractor forms

20130513Independent contractors are important members of your team who may have their own business, or simply operate outside the normal structure for employees. That corresponds to less required forms as well, but there are still a couple that you should have on hand:

  • Form W-9: Request for Taxpayer Identification Number and Certification. This form provides you with the basic identification information for a contractor so that you can issue them a 1099-MISC at the end of the year if they meet the requirements. It also lets you know if they have any IRS tax debts which require you to send a portion of their pay to the IRS first.

Be sure to keep copies of these forms in your company files (either paper or digital), and then you’re ready to get your contractors up and running for easy payments in our online payroll system. Simply give us a ring if you have any questions, or for help in getting started!

 

New employee payroll forms

20130430Bringing a new member onto your team is exciting for everyone. In between the process of acquainting them with fellow team members, issuing login credentials, and inspiring them with the team values, there’s a few bits of payroll paperwork that must be handled as well. Here’s a quick recap of the main forms that should be filled out and kept in the official personnel file so everything’s on the up and up:

  • Form I-9: Employment Eligibility Verification. As an employer, you’re required to confirm that your team member is legally permitted to work in the United States.

 

  • Form W-4: Employee Withholding Allowance Certificate. This form is what authorizes you to withhold amounts from the employee’s paycheck for federal income tax.

 

  • State withholding: Same idea as the W-4, but for state income taxes. Here are links for Maryland’s Form MW507, DC’s Form D-4, and Virginia’s Form VA-4.

 

 

  • Electronic Paystub Authorization: And Maryland requires an added authorization for those employees receiving electronic paystubs, so they know they can get paper copies if needed at any time.

Once the forms are done, you’re ready to go, and we can get you setup on our simple-to-use online payroll system. Just contact us if you have any questions, and go team!

 

Book Review: Simple Numbers by Greg Crabtree

20130417I recently finished reading a book called Simple Numbers (affiliate link) by fellow CPA, Greg Crabtree. I’m sort of split on my opinion of the book: part of me really enjoyed seeing another CPA’s take on things, and gained some truly useful nuggets of wisdom. And the other part of me found myself disagreeing with certain ideas he presented, and getting lost in the weeds of lingo and comments that weren’t fully explained (even for a CPA). If my Kindle statistics are any indicator: I had 273 highlighted passages, and 52 margin notes (some of them quite long, where I held debates or developed ideas further). Here are a few of my “goods” and “bads”.

 

The “goods”:

 

  • Mr. Crabtree speaks from the voice of experience: he counsels small business owners in his business, he teaches at an entrepreneur academy, he has been there and done that many times over. From that comes a very practical, down-to-earth, nuts-and-bolts take on things — less accounting theory, and more business reality.
  • One of the many good nuggets of wisdom I liked was his concept of the “four forces of cash flow”: taxes, debt, core capital, and profits. The four forces must be paid in order (e.g. be sure you’ve paid your taxes, before removing profit from the business). A certain amount of money needs to be left in the business to ride out the normal ebb and flow (the “core capital”). And that profits should really only be taken out if you don’t have a way to earn a better return on them inside the company.
The “bads”:

 

  • One concept he introduced is that of a salary cap: applying a similar approach from the NFL, the idea is that you have only a set amount of compensation that will let you reach your target profit percentage, so you need to cap at that. This can be very critical, as some small business owners will let compensation get on a runaway train. But in my opinion, Mr. Crabtree doesn’t balance it with the reality that the value a company creates comes from its people, and the only real cap is the limits of their creativity. His approach also assumes the non-compensation costs are fixed, while the compensation costs are the first to be cut– not a healthy approach.
  • Another trap accountants are prone to fall into, is that of the “management” mindset rather than the “entrepreneur” mindset. (See a short video I did a couple years ago.) The gist is that the focus becomes cost control and efficiency, rather than innovation and effectiveness. I’ll be releasing materials on this hopefully over the next year, but the danger is that a business can be so focused on eeking profits out of the thing it’s always done, that it loses sight of its customer, and the call to create something new to help that customer. (An example my friend Ron Baker likes to use, is buggy whip manufacturers — it might be the best buggy whip ever made, and at such a low cost, but it just didn’t matter after a while.)
So would I recommend this book? Yes. Just be aware of some of its assumptions, and don’t let it get you thinking like a traditional accountant.