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store_closing-300x150Many people dream of becoming business owners. They want the freedom that comes with being their own boss, the idea that the sky is the limit appeals to them, and they want to do something that they love. The problem is that most people fail to plan accordingly, and most small businesses fail within a few years of starting. Before you take the plunge, and risk failing right off the bat, read these three overlooked costs of starting a business. Then you will want to talk with an accountant in Billings, Montana to make sure that you have everything else in order.

Licenses, Insurances, Registrations, and More

Not all businesses are created the same. Some, by their very nature, have more liability than others. For instance, if you start a business that provides home décor and organizational tips then you are not going to have as much liability as a business that provides physical therapy or roof installation.

Even though not all businesses are created equal, there are some things they all have to do. For instance every business needs to file with the state and the city where they are conducting business. These fees are not expensive, but if you fail to do so then you can end up paying a severe penalty.

Like failing to register your business, failing to maintain the proper insurances can lead to penalties as well. If you don’t have liability insurance and surety bonds in place, and you try to do work on someone else’s house, you could end up in a lot of trouble.

Business consulting services provided by Practical Taxes can help you get everything in place before you start your business.

Employee Costs and Payroll Services

Many businesses can be run without employees. However, there are others that simply need personnel to keep them going. If you are starting a business, you will not only need to find those employees, but you may also need to run background checks on them. Once they are hired, there is a lot of bookkeeping that goes into making sure they are paid on time. It may be tempting to try to do all of this work yourself, but in the long run it is more efficient to enlist the services of an accountant in Billings, Montana.

A+ Accounting & Consulting provides payroll services and online payroll services for those located anywhere in the country.

Self-Employment Taxes

When you work for someone else, and you are on their payroll, they are responsible for paying half of your FICA taxes (about 7.65%) and you are responsible for the other half. When you work for yourself, you pay the entire amount of FICA taxes. This additional 7.65% in taxes are often called the self-employment taxes. Now there is a bit more to it than just tacking on an additional 7.65%, but the bottom line is that your tax bill may end up being quite a bit higher than you realize.

Practical Taxes is a full service accounting firm in Billings, Montana and can help with all of your tax issues that pop up.

Enlisting the Help of Practical Taxes

Starting a business is no small task. Most businesses that are started on a whim don’t last very long. Those that take the time to prepare, plan, and enlist the services of outside professionals tend to fare better. If you are looking to start a business, begin your journey by consulting with an accountant in Billings, Montana.

Practical Taxes can help with payroll services, online payroll services, business consulting, tax preparation and more.

Crowdfunding-300x178Sometimes we have great ideas that we believe could be profitable business ventures. But when it comes down to it we simply don’t think we could manage the capital needed to start the business. That is where companies like Kickstarter and other crowdfunding ventures come into play. By describing your business idea, and offering premier access to the goods, you can accumulate hundreds of small donations to your idea, instead of pitching a few big investors. But when you have thousands of dollars rolling in, what are the tax consequences?

 

Is Crowdfunding Money Income or a Gift?

The answer to this question makes all the difference. If 100 people give you $100 gifts each, then you will have $10,000 in gifts. If they give you the same amount and it is considered taxable income, then you have to add $10,000 onto your taxes. The bottom line is that each are taxed differently, and there is really no set answer at this point.

Taxable Income

Taxable income is defined by the IRS as income (monetary or otherwise) that is not offset by a liability. That last part is the key: not offset by a liability.

When you start a crowdfunding campaign, the purpose of the money coming in is to run your business. You need office space, work space, equipment, supplies and likely personnel. Those costs add up quickly, and if you did your research then you know the exact amount needed. Those costs are also business expenses and they are tax deductible.

So let’s suppose you get $10,000 from your crowdfunding venture, and you use $10,000 to buy equipment etc. Then your tax implication is nothing because you deducted it all. At this point it doesn’t matter (as much) if it is a gift or taxable income.

Keep in mind, however, that some of the crowdfunding money goes toward your salary. You still have to pay taxes on your salary.

Receiving Gifts

If your crowdfunding monies are considered gifts, there are entirely different consequences. Gift taxes may come into play (although there is an exclusion that everyone gets), and keep in mind that gift taxes are almost always the responsibility of the gift-giver.

Suppose you have $10,000 in expenses. Your net money, if it is all taxable, would be $0 after all is said and done. However, if it is in the form of gifts, and you don’t have to worry about the taxes, your net money is actually negative $10,000.

Practical Taxes Can Help You Sort Things Out

Practical Taxes can not only help you figure out the tax implications of your crowdfunding venture, but we can also help you figure out the best business model and get things registered with the city and the state. Starting a business is not something to take lightly, so hiring an accountant in Billings, Montana is a smart first move.

Practical Taxes is a full service accounting firm in Billings, Montana. We provide all sorts of services over and above tax preparation. From business planning to online payroll services, we are your source for expert guidance.

Taxes3-300x224Whether you do your taxes on your own, or you hire an accountant in Billings, Montana, having your documents organized is the key to making sure that you don’t make errors. There are a number of different ways that you can organize, but sometimes just keeping a folder and a checklist handy are the easiest ways to do so. The best part about this organization is that it only takes about 30 minutes over the course of a year, but it can save you hours when it comes time to do your taxes. Here’s how to stay organized.

 

 

Make a Tax Folder

Each year you should start a tax folder. A simple manila folder will work, and on the tab write “Taxes 2015” or whatever year you are making for your folder. Sounds easy, but you’re not quite done yet.

On the inside cover of that folder is where you will want to write down all of the tax documents that you receive every year. It doesn’t have to be detailed, just something that can keep you on track so that you remember all of your documents.

You will want to make sure to include your W2’s, charitable giving, and all of the other common documents that you remember each year. But make sure to include other documents such as auto registration, student loans, property taxes, thrift store donations, and other items as well.

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Stock Your Folder

Now comes the hardest part. Make sure that you keep your income tax folder somewhere that you can access it easily. Then every time something comes along that would apply to your taxes, such as registering your vehicle, one-time donations to charities, property tax statements, and the like, you stuff it in the envelope. Don’t worry about organization at this point.

The hardest part about making sure your folder has the important documents is that you will often feel a bit lazy. Instead of taking the 60 seconds to pull out the folder, receipts and statements end up getting stuck on the desk, on the kitchen table, and lost. You likely won’t get more than one of these statements each month, so take the time to put them in the right place.

In January and February, however, that’s a different story. Pull the folder out and keep it accessible and visible. Every week or so you will get a tax document in the mail. Just place it inside the folder.

Doing Your Taxes

Before you make your appointment with your accountant in Billings, Montana, go through your folder. Look at all of your tax documents and cross them off the list on the inside cover. When all of the items are crossed off, then you know that you’re ready to have your taxes completed.

The best part about this process is that it is easily repeated next year. Grab a new folder, write “Taxes” and the current year at the top, and then transfer over your list from the inside cover. If you started a new job or anything like that make sure to include that on your list.

Hire Practical Taxes to do Your Tax Return

If you need your taxes done, but you don’t have the time to do them yourself, Practical Taxes is ready to help you out. We are accountants in Billings, Montana. He knows taxes, and can get your taxes prepared for far less than you realize. Call 406-894-2050 to schedule your appointment today!

Practical Taxes is a full service accounting firm in Billings, Montana. We offer payroll services, online payroll services, tax preparation, and more.

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A surprising number of people have their savings accounts spread out over a number of different institutions. For some they just have not taken the time to close one account and move the money into another, for others they are fearful of losing their money if the institution were to fail. There are different reasons for spreading out money, but the bottom line is that it really doesn’t make any sense to do so.

 

 

 

 

FDIC Insurance Protects Your Savings

Most banks and credit unions are members of the Federal Deposit Insurance Corporation. The FDIC protects the deposits at that bank against a variety of factors that could wipe them out. For instance, back when Washington Mutual went under due to stress from the Great Recession, most people were still able to get their savings back without any problems.

FDIC insurance protects your deposits up to $250,000 per person, per institution. What this means is that you can have $250,000 in all of your combined accounts at one bank, and never have to worry about losing that money if the bank is robbed, burns to the ground, or fails financially. If you happen to have over $250,000, you may want to spread it between institutions, or take the risk that anything about the limit won’t be replaced if it’s lost.

Why Consolidate Your Savings Accounts

Nearly all savings accounts offer interest. This interest is taxable. Because it is taxable the institution where you have your savings account must issue you a 1099-Div each year. Even if you only earned $20 in interest, you get a tax form. If you have 10 different savings accounts, then you will get a tax form from each of them. Every added form makes your taxes that much more complicated, and your accountant in Billings, Montana has to do even more work.

Simplifying your taxes is a huge reason to consolidate your savings accounts. But there are other reasons as well. Many savings accounts, especially those online, give you a bonus if you maintain a certain balance. For instance, if you have over $20,000 in your savings, you might get an additional .25% interest every quarter you have the higher balance. By consolidating your savings accounts, you get the opportunity to earn more interest.

Aside from the monetary reasons to consolidate, there are organizational reasons as well. Moving all of your savings accounts to the one that pays the highest interest rate will let you get rid of a lot of paperwork from your life. Each account you close is one less thing to worry about. Imagine simplifying from 10 to just 1. Even if it only saves you an hour per account per year, that’s 9 hours of less stress.

Contact Practical Taxes

Tax season is approaching, and if you are looking for an affordable way to get your taxes prepared, you need an accountant in Billings, Montana. Practical Taxes is a full service accounting firm. We can handle your tax preparation needs, business consulting needs, online payroll services needs, and more. Call 406-894-2050 to schedule your appointment today.

Refinance-300x200Recently the government announced that the premiums on FHA loans would be cut by half a percentage point. While that doesn’t seem like a big deal, it can mean the difference of hundreds or thousands of dollars each and every year that you have a loan on your house. To take advantage of this millions of people are refinancing their homes, causing the biggest gains in mortgage applications in six years. If you do decide to refinance, how does that affect your taxes? Are there tax implications, good or bad, for refinancing your home?

 

 

Tax Breaks for a Refinance

The answer is not a straight, “Yes, refinance and collect on all of these great tax benefits!” Instead there are benefits to buying a home or refinancing your home. Here are just a few of the tax implications.

Prepaid Interest – In order to drop your interest even lower, you can prepay some of it. What means is that a large portion of your closing costs go toward this prepaid interest, as a result your monthly payments are lower. The good news is that prepaid interest is deductible from your taxes.

Property Tax – If you are refinancing, then you have already paid your property taxes. If you are buying a new home, you will likely need to pay some of the property taxes. This payment is likely to be wrapped up into your closing costs, or settlement fees. Property taxes can be deducted from your income taxes.

Mortgage Interest – Every year that you pay on your mortgage, you can write off the interest charges. However, if you refinance, you are going to be paying less in interest charges than before. This means that each year you will have less that you can write off, and you may need to start donating money elsewhere in order to keep your deductions above the standard deduction rate.

PMI – If you buy a house and your loan covers more than 80% of the value of the house, you will likely need to pay for private mortgage insurance. This protects the lender in case you default on your loan. The good news is that PMI payments are deductible. The bad news is that it’s an extra $60 – $150 per month that you get no benefit out of. A refinance could help you drop the PMI which saves you money, but also reduces your deductions.

Buying or Refinancing Your Home

Buying a house is likely the biggest financial commitment that you will ever make. The government has made the burden a little easier by offering a variety of tax deductions and breaks for those who are home buyers or refinances. As an accountant in Billings, Montana Practical Taxes knows and understands all of the tax implications of buying or refinancing a home. It may be in your best interest to have him do your taxes this year.

Practical Taxes is a full service accounting firm in Billings, Montana. If you need tax preparation work, nationwide online payroll services, business consulting services, or more, we can handle all of your needs!

Payroll-300x200If you are a small business owner, you know that payroll can be a hassle. You have to make sure time cards are turned in, you have to calculate out taxes and withholdings, and you have to double check all of your work to make sure that you didn’t make any mistakes. In the end, you spend a lot of time doing payroll when you could have been spending all of that time building your business and increasing your bottom line. But maybe you have looked into payroll services and found that they are too expensive. It may be time to go with online payroll services from a more affordable accountant in Billings, Montana.

 

Payroll Services vs. Online Payroll Services

There are a lot of accountants out there that offer payroll services. You go in and meet with them, they get all of the accounts set up, and every two weeks they need a time card from each employee. They then charge a lot of money to do a simple service for you.

With online payroll services you don’t even have to live in the same state as the accountant that is preparing your employee’s paychecks. Everything can be set up over the phone, email, and paper copies through the mail, and after that all you have to remember to do is get time sheets in on time.

Submitting time sheets has never been easier. There is no need to mail in a paper copy. In fact, there is no need to even fax a paper copy. Snap a quick picture with your phone and text or email it over, scan the page and email it, or get it in via whichever method is the easiest for you.

With online payroll services you don’t have to worry about making mistakes on your taxes. Your business likely has little to do with accounting, so there is a chance you could make a small error on your payroll that has huge consequences.

Online payroll services let you relax and focus on your business instead of worrying about getting paychecks delivered on time. Sure you might not worry about getting paid a few days late, but your employees are likely counting on that check coming through at a certain time.

Unless you read books about the tax code in your spare time, you probably don’t know about all of the regulatory changes when they happen. However, as an accountant in Billings, Montana, Practical Taxes has to keep up with those things. Utilizing online payroll services means you get access to top-of-the-line knowledge.

Most importantly, to you at least, is the fact that online payroll services from Practical Taxes are incredibly affordable. After using our services you will wonder why you ever tried to do payroll on your own.

Contact Us Today

If you want to learn more about online payroll services, call A+ Accounting & Consulting at 406-894-2050. We are a full service accounting firm in Billings, Montana. If you need accountant services like payroll, business consulting, tax preparation, and many others, we can handle your needs.

Lottery-Ticket-300x198People dream of winning the lottery. They make big plans on what they would do if they were to win millions of dollars, and they talk about how many people they would help. Of course they complain that the government would take approximately half of their winnings in the form of taxes, but overall they would still be happy with the huge surplus of money that they are left with. So how is it that about 70% of those who win the lottery will go bankrupt?

 

 

The Curse of the Lottery Winner

Unfortunately a sudden influx of money does nothing to help improve financial sense. So when people suddenly win millions upon millions of dollars, they simply stick with their same foolish spending habits. Only now those habits are at a much larger scale.

Winning the lottery could help someone out tremendously. And the economic impacts of the lottery can’t be argued with. After all, those who win the lottery spend a considerable amount of it right away. They buy new houses, new cars, give to charities and family members, they pick up the tab at a restaurant… for every customer there. Lottery winners seldom have a problem finding ways to spend their money.

However, without a set plan on how to spend the money, most will make foolish money mistakes that ultimately reduce them right back to where they were before they won their millions of dollars. If you don’t believe me that winning the lottery brings some unnecessary hardship, check out these 10 people that couldn’t handle their winnings.

Make a Plan before You Win

There is really no financially sound reason that you should even try to win the lottery in the first place. In fact, the odds of winning are astronomically high. But you can take this advice and apply it to other financial windfalls like receiving an inheritance, getting a large tax refund, or maybe even an unexpected bonus at work.

Before any money actually comes in, make a sound plan to use it appropriately. For instance, you might want to pay off all of your debt, buy a new car, give a little to your family members, and take a vacation. Depending on your situation, that should only take up a few hundred thousand of your winnings. After that, invest the rest in a trust, preferably an irrevocable trust that has detailed information about who can take money out and how much they can access.

Without a plan, we as humans are likely to overspend. Whether it is on ourselves, giving to charities, or all around just wasteful use of money, the lottery winnings will disappear quickly.

If You’re Lucky

If you have been lucky enough to win the lottery, you will want to enlist the help of an accountant in Billings, Montana. With the help of Practical Taxes, you can be sure that your money will be put to the best use, and your taxes will be minimized. Have you seen a sudden influx of money? Did that money disappear a lot faster than you care to admit?

Practical Taxes is a full service accounting firm in Billings, Montana. While tax preparation is a huge part of our business, we also love to help with payroll services. One specialty is online payroll services; no matter what part of the country you live in, we can get your payroll done.

Poor-Credit-Loans-300x122

There are some purchases that require loans. Some people may be able to save up in order to make those larger purchases, but often the goals are just too large, or the need is immediate. However, poor credit choices in the past can come back to haunt you in the form of a low credit score. There are ways to get the loan you need, even if your credit score is less than desirable. Here are a few of the things to keep in mind.

Put More Down

Credit scores are a measure of risk. A lower credit score means that you are more likely to default on the loan, and the lender will suffer a financial loss. A higher score means that you are more likely to make on-time payments, and the lender will get their money back. If you pay more for your down payment, then you are able to reduce the risk to the creditor. This means that they will be more likely to give you the loan.

For instance, suppose you want to buy a car for $15,000. You decide to put $5,000 down, but the lender won’t give you the loan. So you increase the amount down to $8,000. If you still default on your loan, the lender can have the vehicle repossessed, and likely be able to sell it quickly to recoup the remaining $7,000 loss.

Pay More in Interest Charges

Higher credit means the lender is more likely to get their money back. So they want to encourage those with better credit to take out more loans. In order to draw them in, lenders offer lower interest rates for those with a high credit score. This is not good news for those suffering from poor credit.

Instead of waiting, you can get that loan now, and pay the higher interest rates. After a year or two, take a look at refinancing. You may be able to get the interest rate down to something that is more appealing after your score has gone up over the past two years of making on-time payments.

Build Your Poor Credit to Good Credit

If you have a low credit score (which is defined as having a score of less than 640) then you may be better off waiting on the big purchase while you increase your credit score. There are a few ways to get your score up that will not require a lot of work on your part.

Increase your credit card limit: Believe it or not, increasing the limit on your card can actually boost your score. Your credit card reports each month how much you owe on it (even if it’s paid off every month), and what your limit is. So if your limit is $5,000 and you charge $4,999 every month, you are using basically 100% of your limit (and posing a risk of going over or missing a payment). However, if you raise that limit to $10,000, and you still charge $4,999 every month, you are only using about 50% of your limit and you are seen as though you are in better standing.

Take out a credit card: If you don’t have a credit card yet, then you should get one. If the bank gives you trouble about it, ask for a secured card. This means you put $500 (or whatever the bank requires) into a CD or savings account. This is your collateral on the card which will have an equivalent credit limit. If you miss a payment, the bank has the right to dip into your savings to pay your bill. Just don’t let that happen; instead spend $10 or $20 each month and pay it off right away.

The bottom line is make timely payments on your credit, and over time your score will go up.

Getting a Loan with Poor Credit

If you need to make a big purchase this year, and you suffer from poor credit, then 2015 is the time to get that back on track. After you have an accountant in Billings, Montana prepare your taxes, and you have received your refund, then use that money as the down payment on the loan. That may be all it takes to secure it. If not, follow the above tips to help get your credit to a better status.

Practical Taxes is a full service accounting firm in Billings, Montana. If you need a simple tax preparation, then make an appointment to come on in. If you need payroll services, business consulting services, or other finance related services, give us a call and set up an appointment.

Finances-300x225The New Year is upon us, and now is the perfect time to get your finances in order. There are some things that just about every single person needs to be financially fit. Without those pieces, your overall finances will never be complete. Here is a list of the most important parts of your financial plan, if you are lacking in an area, use this year to get it fixed up.

 

 

 

 

Emergency Fund and Other Savings

Ask any financial expert, and they will tell you that an emergency fund is one of the most fundamental components of a healthy financial plan. This fund can look different depending on the person, but it has a few key features that make them all similar. First, the money has to be easily accessible. This means you should not be using home equity as your emergency fund. Second, it should be safe; that means no risky stock ventures or buying bitcoins. Instead, most people opt for a high-yield savings account to stash their money in case something happens and they need a boost. After have your tax return prepared by an accountant in Billings, Montana (you can do so by utilizing the services of Practical Taxes, you should have a refund that you can use to get a jump-start on your savings.

Insurances Protect Your Financial Health

We live in a world where we can protect ourselves from the unknown. While the premiums may not be something you really want to pay, they are always much lower than the out-of-pocket costs if tragedy hits. There are ways to protect your income and finances through insurances such as:

Life Insurance: Leave your legacy, provide for your family, and cover final expenses all after you are gone. Utilizing permanent life insurance can help you meet savings goals as well as protection goals.

Disability Insurance: Most disabilities are caused by illness rather than major accidents. And you don’t have to be in a wheel chair to be disabled. If you are young, you have a lot of years left before you will be done working. Protect that income with disability insurance.

Financial advisors will tell you that insurances make up the foundation of your financial plan. Without protection against the “what ifs” there is no real way to plan for the future. Review your insurances over the next couple of months and make sure they are adequate.

Investments Build Your Financial Health

There is essentially no way that you can retire comfortably without investing some of your money. Social Security was never designed to cover all of your retirement goals, so you need to put money away on the side as well. Those investments can be in a tax qualified plan, like a Roth or Traditional IRA. Or they can be invested in non-qualified accounts. If you do choose the non-qualified option, your accountant in Billings, Montana can help you to determine the best way to report the gains on them. There are ways to minimize the taxes that come as a result.

Get Rid of Your Stuff to Increase Financial Health

Our culture shows us that people are prone to collecting stuff. We buy a house, and we have to fill it. We buy things we think that we need, and after using them a few times, they sit idle in the closet. You can use 2015 to help get your home organized, and build your net worth at the same time. More expensive items can be sold on Ebay or Craigslist, and smaller items can be filler for a garage sale. If you choose to just donate things that you don’t need any more, that is great too. You will be able to deduct the value off of your taxable income.

Revamp Your Financial Health, and End the Year in the Green

Let’s make 2015 the year where we get the most out of our finances. Starting with getting your taxes prepared by a professional accountant in Billings, Montana, and ending the year with money coming in on the side, make this the year that your financial picture looks great.

Practical Taxes is a full service accounting firm. If you need online payroll services, this is your place to be. If you need business consulting services, then look no further. Of course if you just need a professional to do your tax preparation for a cost that is affordable, we can do that as well.

 

Selling-Your-House-300x203

A great way to build wealth is to own a house. Now keep in mind that buying a house just because you think it’s the perfect investment is actually not the way to go. A house is a good investment, but there are better ways to invest that will earn a bigger return.

But what happens when you want to sell your house? Suppose you want something bigger, or maybe smaller. Perhaps you’re sick of maintaining your home and you want to move into a rental. Or you have been transferred out of state for your job. No matter what the reason for selling, there are tax implications of selling your house that you need to be aware of (don’t worry, your accountant in Billings, Montana will know the specifics; you just need to be aware).

Avoiding Taxes when Selling Your House

In 1997 the Taxpayer Relief Act was passed. This law provided a big relief to those who were selling their home and making a bit of a profit on it. Before the law was passed you had to reinvest those profits into another home (a bigger home) within a certain time period. Now you get a big break.

2 of the last 5 – The law states that if you have lived in the house, as your primary residence, for at least two of the last five years, then you can claim the capital gains exclusion when selling your house.

$250,000 to $500,000 – If you file your taxes as single, then you can profit $250,000 on the sale of your house and not have to pay taxes on the gains. If you are married, then you can profit up to $500,000 on the sale of your house.

Age is Just a Number – You can claim the capital gains exclusion no matter how old you are. You don’t have to be over 55 to get this.

Before 1997 it was pretty hard to sell a house, make a profit, and get away without paying the taxes. Now it is pretty easy to sell a house, make a profit, and not have to worry about paying taxes on the gains. But there are times when you still might owe.

When do You Pay Taxes when Selling Your House?

Not everyone can get away without paying taxes on the sale of their house. But you almost have to try hard to pay those taxes.

If you profit more than the exclusion allows, then you will owe taxes when selling your house. But the good news is that you don’t owe taxes on the full amount. For instance, if you are married, and you sold your house and made a profit of $500,100, you would only have to pay taxes on the $100 over the exclusion amount. There is more though. If you make over $200,000 per year, there is a Medicare tax imposed on the gains over and above the exclusion.

Keep in mind that you can only claim the exclusion for one house at a time. So if you sell your primary residence, you can claim the exclusion. But then if you sell your vacation home, you cannot claim the exclusion (because you weren’t living there for 2 of the last 5 years).

Taxes when Selling Your House

Still have questions about the tax implications when selling your house? Contact Practical Taxes today!