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The Abacus ALIGN Process

Posted by barbie on August 14, 2017

The Abacus ALIGN Process

by John Helms, CPA, CFE

 

I’ve heard it multiple times from new clients: “We felt like we had a closer relationship with the mail man than our CPA.  We would mail in our tax documents and a month or two later get a packet back with a bill to the IRS and a bill to our CPA.  There was no understanding, just a stack of papers”. 

At Abacus CPAs, LLC we want to have long-lasting, mutually profitable relationships with our clients.  We would never want our clients to feel helpless in their financial or income tax situation, so we created the Abacus ALIGN process to make certain that your relationship is with your accountant and not your local mail carrier.

There are four components to the Abacus ALIGN process:

Available:  Abacus CPAs, LLC works diligently to be available to our clients.  We realize that your financial needs may not fit neatly into an 8:00 am -5:00 pm Monday through Friday schedule.  We are available to you by appointment before or after hours and often on weekends.  We also realize that when you have a question you need a quick response.  Your Abacus team is standing by ready to answer your questions when you need them.

Listen:  Most of our meetings begin the same way, “Tell me what is going on.  Tell me about your goals and your concerns in your ability to achieve them.”  The most valuable part of a client-accountant meeting is the input of the business owner or individual, not the preconceived notions of the accountant.  We begin our sessions by letting you talk first.

Innovate:  Accounting has come a long ways since counting beans and recording financial history.  Abacus CPAs, LLC uses innovative strategies to help you achieve your financial goals.

Guidance:  After you have shared your goals, questions, and concerns, your Abacus associate will spring into action by providing you the best possible guidance so you can make smarter decisions.

Next:  So now what?  This year is in the books and now it is time to look ahead.  Your ALIGN session will conclude with a look to the future, and a discussion between you and your accountant on how you can be where you want to be, faster than you expected.

We realize that it is a busy time of year, but there is no better time to hold your Abacus ALIGN session than now.  Feel free to contact Abacus CPAs at 417-823-7171 or www.abacuscpas.com and we would be happy to assist you.


Great Apps for Business

Posted by barbie on June 27, 2017

In the fast paced world of today’s business, sometimes it can be hard to find the time to stay at your desk throughout the entire day. Thankfully, there is no shortage of apps that allow us to conduct business on the go. Here are a list of some the best apps for businesses.

• QuickBooks: Many businesses today use QuickBooks online as their primary accounting software, but many of those users are not aware that there is a phone app that is included in your subscription. This app has the same functionality as the online version, so you can pay vendors, view reports, and even upload pictures of receipts.

• Square: Does your business have a need to make sales remotely? Square allows you to do just that through the use of their app and a small card reader that you can attach to your phone. You just enter the amount to charge your customer, have them swipe their card, and the money will be deposited into your bank account after a 2.75% service fee. Another great feature of this app is that it can be linked to your QuickBooks to automatically post the sales as they are made.

• Trello: This app is great for organizing all of your projects in one place. You can create different cards that can be viewed by yourself, or by multiple members of a team. These cards can be edited with comments, attachments, pictures, and checklists to allow you to keep ideas or track your projects.

• Abacus Access (NetClientCS): This app, along with the version located on www.abacuscpas.com, allows you to safely and securely upload documents, supply payroll information, and even fill out a tax organizer to be sent directly to Abacus CPAs. The app version of Abacus Access also allows you to upload pictures of your documents, so you can quickly and conveniently provide us with all of your required information. Additionally, Abacus uploads your tax returns for you to view and print for your needs.

If you would like to learn more about ways Abacus CPAs can help your business grow, contact us at 417-823-7171 or at www.abacuscpas.com.


Why a Large Tax Refund Might Not be Best

Posted by Abacus on April 3, 2017

Every year millions of Americans rush to file their income taxes as quickly as possible.  For most of them, their excitement isn’t centered on their desire to expedite their civic duty, but to collect their annual income tax refund from the IRS and state taxing authority.  So what’s the harm?  Here are a few reasons why it might not be the best to count on that huge refund at the end of the year.

Interest Free Loan to the government:  The most obvious reason it is best to limit an end of the year refund, is you are essentially giving an interest free loan to the government.  Think of it this way, you are paying the government through withholdings all year long just to get them back many months later through a refund.  Wouldn’t it be best for you to keep your money all year long?

At the mercy of the government for your refund:  Government agencies do not guarantee a quick turnaround of your refund request.  A perfect example is what happened in Missouri for the 2013 tax year.  As of mid-June 2014, there were over a quarter of a million income tax refunds pending for the 2013 tax year.  Why the delay?  The state did not have the cash to pay the refunds. 

Tax Fraud:  Tax return fraud is a problem that is only getting bigger every year.  Fraudsters obtain the Social Security Number of taxpayers and use it to file fraudulent income tax returns on their behalf.  The income tax return(s) always show a large refund, which is direct deposited into the fraudsters account.  While this normally doesn’t financially impact the taxpayer, it will slow down their legitimate tax refund by months.

For most people, the solution to ending the quest for the annual refund is adjusting their W-4 with their employer.  If you are married with two children, it is not likely that you need the same withholding as a single person with no dependents.  The IRS has created a tool to help you fill out your W-4, the free calculator can be located at:  https://apps.irs.gov/app/withholdingcalculator/.

If you would like to learn more about your tax refund, contact us at 417-823-7171 or at www.abacuscpas.com.

- John Helms, CPA, CFE


It’s the time of year to BE CAUTIOUS!

Posted by Abacus on March 22, 2017

One of an identity thief’s favorite times of year is tax season! This is the time of year we all need to be cautious with phone calls, emails, and mail that we receive. During this time everyone is filing tax returns and waiting on the IRS to be in contact with them about what we owe or what refund we may get. Most of us are afraid of the IRS, so we will do whatever they ask of us to avoid getting in trouble with them. So if they ask, we tend to give them whatever they ask for.  This includes giving bank account numbers, social security numbers, credit card numbers, etc. Criminals know this, so this is the time of year they use to act as the IRS agents and try to get us to give up our information. This doesn’t just extend to individuals, they target businesses as well. Many businesses and accounting firms have received emails that include attachments from a hacker trying to get ahold of information or emails asking payroll employees to give employee names and other information.

Here are a few tips to help avoid the scandals:

  1. Do not open any attachments on an email that you are uneasy about.

    • If you receive and email from a sender that you have never had contact with and there is an attachment…DO NOT OPEN IT! This does not only extend to people that you are not in contact with though. If you receive an email from a coworker or friend but it’s unlike anything that they have ever sent you, be aware also. This is a time to use your instincts and be very cautious. Contact your IT department or contact the sender if you can to find out if the email is real or a scam.

  2. If the IRS emails or calls you it is a scam.

    • The IRS does not email or call. All of their information is through mail. Never give information over the phone or by email. If you do you are giving it to an identity thief. However, this does not mean that if you receive a piece of mail from the IRS you automatically respond without caution. If you receive a piece of mail from the IRS asking for information, make sure you call the IRS about the piece of mail that you have received to make sure they are needing this information. They are happy to let you know if what you have received in the mail is from them or a scam.

  3. If you are a business owner, have an IT department ready to handle scam emails.  

    • If you own a business then the best protection to have is an IT department that will help you shut down hackers if email attachments are accidently opened. This can save you time and money if a hacker is successful, your information can be compromised and then a recovery process will have to begin. This results in losing hours or days of work.

If you follow these tips and your instincts, they can help prevent you from being a victim of the identity theft scandals that are going around our country during this time. If you have any questions or concerns about identity theft during tax season, contact us at 417-823-7171 or at www.abacuscpas.com.

-Bailey Cannon


What is a Like Kind Exchange

Posted by Abacus on February 20, 2017

What is a Like Kind Exchange?

At Abacus CPAs, we often are asked by our clients if there is a way to reduce the tax gains that occur when an asset is sold. They often ask about a like kind exchange. But everyone has a little bit of a different idea as to what that is. Through our team of tax professionals, Abacus CPAs is able to advise our clients on the steps needed to ensure that a like kind exchange is handled properly so that our clients are able to reinvest more of their money back into their company.

What is a like kind exchange? What does a like kind exchange do?

When someone mentions a like kind exchange, they are generally referring to exchanging old business property for new assets of similar use as allowed by the IRS Code, Section 1031. A § 1031 like kind exchange defers the taxable gains that an owner would receive if they sold the property by reducing the basis of the new property by the amount of the taxable gain.  The old property is not sold tax free; rather, the taxable gains are deferred until the new asset is sold.

What property qualifies? What are asset classes? What does like kind mean?

To be eligible for a § 1031 like kind exchange, the old and new property must both be tangible property held for use in a trade or business or for investment.  This applies to both real and personal property.  Items that are inventory or held for resale are not eligible for a like kind exchange.   Once the old property is sold, there is a 45 day window to identify the replacement property of like kind, and then a total of 180 days from the day of the sale to acquire the replacement property.

The relinquished and replacement property must be of the same kind of property.  Like kind property is defined as being either of the same Asset Class or Product Class.[1]  An asset class is best defined by the IRS through Revenue Procedure 87-56 as having the same depreciable life, depreciation method, and depreciation convention.  Revenue Procedure 87-56 has detailed lists of asset classes that help categorize just about any property that a regular business would come across.  However, there are times when a particular piece of property does not fit into any of the asset classes mentioned; that is when the North American Industry Classification System (NAICS) is used to determine the Product Class for the piece of property.  If the two pieces of property can be shown to both fit in the same four digit business activity, then the properties are generally considered to be of like kind.  To qualify for a like kind exchange, the assets only have to be of the same asset class or the same property class, not both.

Why would I want to do a like kind exchange?

A § 1031 exchange would allow you to use the pre-tax proceeds from selling a business asset to purchase another business asset, allowing you to immediately reinvest more money back into your trade or business. 

For example, what if Company A sold a fully depreciated machine for $100,000 and wanted to use the proceeds to help purchase a new like-kind machine that cost $200,000? Without a § 1031 like kind exchange, Company A would have to pay income tax on the gain of $100,000.  At a maximum corporate income tax rate of 35%, Company A would have to pay tax of $35,000 on the gain as part of the current year income taxes.  That new machine now cost Company A $235,000, of which they could only depreciate $200,000.  Consider this instead: Company A sold the fully depreciated machine for $100,000 to help purchase a $200,000 new machine through a § 1031 like kind exchange.  The gain, instead of being recognized in the current year, would be used to reduce the basis of the new machine and not trigger a taxable event in the current year.  This gain is not erased, simply deferred to when this new machine is sold in the future.  Now cost of the machine to Company A is $200,000, with a depreciable tax basis of $100,000.

Why would I not want to do a like kind exchange?

Not all property is sold for a gain. If the property is sold for a loss, then it would benefit the company to have the loss recognized in the current year to reduce taxable income.  Also, the cost of ensuring that a § 1031 like kind exchange is done properly might outweigh the benefit of deferring the gain and paying the tax. 

What would disqualify a like kind exchange?

There are several rules and guidelines that must be followed when you are conducting a like kind exchange and if they are not followed precisely, could disqualify the entire § 1031 like kind exchange.  

The most common mistakes are:

  • Not using a Qualified Intermediary to hold the proceeds from the sale of the relinquished property and purchase the replacement property,

  • The entity selling the old property and purchasing the new property not being the same entity.

  • The two pieces of property not being of the same general asset class or NAICS property class.

  • Not identifying the replacement property in 45 days or the exchange taking longer than 180 days.

  • The seller taking possession of the proceeds from the sale before the new property is acquired.

  • Selling the replacement property too soon after the exchange, creating doubt as to the property being used in a trade of business or being held for investment.

Due to the complex nature of § 1031 like kind exchanges, professional legal services should be obtained to assist you during the process.  If not, you could inadvertently trigger a taxable event that adds a large tax liability to your current year taxes that you were not planning on. Contact our tax professionals at Abacus CPA’s to help you with any future § 1031 like kind exchanges you have!

- Sam Shafer 

 

 



[1]Reg § 1.1031(a)-2. Additional rules for exchanges of personal property


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