How to Protect Your Business from Employee Theft

Employee theft happens frequently enough for it to be a concern of every business. It makes no difference whether your business is a one-employee medical office or a forty-employee retail outlet. Absentee business owners should be even more alert to the problem of employee theft.

Busy managers find it easy to turn the record keeping over to a qualified employee. Don’t do so without proper controls and constant review.

Some examples of employee theft

Consider these examples of the methods by which employees have been known to steal from their employers:

• Opening a checking account in a nearby community under the same name as the employer company.
• Overpaying the payroll taxes or large suppliers and asking for refunds which are then deposited in the employee’s new company account.
• Convincing the employer that the independent accountant is an expensive luxury which the company can do without now that the employee is available to do financial statements.
• Soliciting the help of a supplier’s employee, then overpaying the supplier and sharing the overpayment.
• Opening a checking account with the same name as the employer’s major suppliers and then paying invoices twice. The first payment is sent to the supplier, and the second is deposited in the employee’s “extra supplier account.”

Some small businesses have paid a high price to learn about employee theft. Don’t be lulled into thinking it could never happen in your business.

Learn to spot employee theft

Whether your business deals in products or services and whether you have one employee or many, you should be aware of the signs of employee fraud or embezzlement.

Fraud most often develops over a period of time and will sometimes involve employees with outstanding track records. What would cause a long-term, trusted employee to go bad? Watch for employees who are under new pressures such as:

• Unusually large medical bills
• Living beyond their financial means
• Excessive use of alcohol or drugs
• Large investment losses
• Excessive gambling

Also, watch for a growing disregard for the company in favor of personal gain.

For More information click here: Business Accounting System

You can see Related blog on Tumblr: Accounting Services New Jersey

Save Those Receipts and Documentation!

When it comes to taking qualified deductions on your Federal Tax return three things must happen.

• First, you must recognize that an expense might be deductible on your tax return.
• Second, you must keep a record of the expense in an organized fashion.
• Third, you must have the proper (and timely) documentation to support your deduction.

While this may seem evident to most, here are some typical areas that taxpayers often fall short, costing them plenty during tax filing season and during IRS audits.

1. Cash donations to charity. To deduct and support your deduction to a qualified charity you must have valid support. Donations of cash are no longer deductible if they are not supported by a canceled check or written acknowledgement from the charity. Donations of $250 or more MUST have a written acknowledgement at the time of the donation. A canceled check and bank statement are not sufficient. In addition, if you are audited at a later date you may not then have the charity issue you acknowledgement.
2. Non-cash contributions. You need acknowledgement of these donations as well. This includes creating a detailed list of items donated, their condition, and estimated fair market value. While this level of detail in not required for small donations, it is always a good practice to take photos and create a detailed listing of items donated.
3. Investment purchases and sales. If you bought or sold an investment you will need to know the cost. Today’s regulations require brokers to report the cost of sales to the IRS. Many of these historic costs are wrong. Please review your broker accounts and correct any errors. It is very difficult to defend yourself in an audit when records reported to the IRS are in error.
4. Copies of Divorce Decrees, Alimony, and Child Support Agreements. There are often conflicts between two taxpayers taking the same child as a deduction. Do you have the necessary proof to defend your position? The same is true with alimony and child support. Keep these documents in a safe place and be ready to use them if necessary.
5. Copies of Financial Transactions. Keep copies of documents from any major financial transaction. This includes real estate settlement statements, refinancing documents, and any records of major purchases. These documents are necessary to ensure your cost (basis) in the property is properly recorded. The documents will also help identify any tax related items like mortgage insurance, property taxes, points and possible sales tax paid.
6. Mileage logs. Lack of tracking deductible miles is probably one of the most commonly overlooked documentation requirements. Properly recording charitable, medical and business miles can really add up to a large deduction. If the record is not available, the IRS is quick to disallow your deduction.

If you are not sure whether a document is needed, please retain it. If filed in an organized fashion, you can always retrieve it.

Our team is here to help if you need assistance with tax filing, deductions and audits. Reach out today to schedule a meeting and we can help answer any questions you may have: https://www.bas-pc.com/appointment-center/

Read For More :

Please Click Here : Bookkeeping services NJ

Thanks for reading this blog. You can subscribe for regular update about technology news and tips via RSS Feed. you can also follow us on facebook & twitter.Thanks for visiting!.

Lifestyle Audits. A thing of the past?

The word “audit” is enough to raise anyone’s blood pressure. If the IRS agent then tells you they want to see bank accounts and personal records you may need a heart monitor. Should this happen to you, you could be in a process known as a lifestyle audit.

Background

The lifestyle audit was a tool used by auditor’s to ascertain if the income you claim on your tax return can support how you live.

As an extreme example, perhaps you claim $30,000 in taxable income, but drive a Ferrari and you have a $700,000 mortgage. Most of us would have a hard time believing the income claimed on this tax return could support this lifestyle.

Historically, tax returns that have a history of cash transactions would be a target for lifestyle audits. So if you ran a small business (schedule C) or worked in an industry like construction, fishing, and retail you could experience this lifestyle audit.

Reason first

As you might imagine, being the subject of a lifestyle audit is stressful. It could be a more involved process than responding to a letter from the IRS questioning part of your tax return. The best defense for this type of review is good record-keeping. Here are some tips:

• Understand your lifestyle risk. Do you think you can substantiate how you live with the level of claimed income on your tax return? Most of us can, but if you inherited money that allowed you to buy a new house, car or other luxury items it might raise questions. If this is the case, keep copies of documentation that supports the event.

• Awareness of gift limits. Remember, you may receive up to $15,000 in gifts from any individual in any given year without tax consequences. If you receive gifts from someone, please keep record of the event.

• Sales receipts. For every small business deposit in your bank account have a supporting document that substantiates the deposit’s source.

• Separation. Keep separate business and personal bank accounts and credit cards. It is easier to substantiate your lifestyle spending when you do this.

• Ask why. The passing of the 1998 IRS Restructuring and Reform Act limits the ability of IRS agents to conduct lifestyle audits. In current practice, a lifestyle audit may only be undertaken if the IRS agent has a reasonable cause to conduct the review. The cause might be based on information provided on your tax return or based upon information reports it has received from others. It is reasonable for you to ask for clarification from the auditor as to why they believe a lifestyle audit is in order. Perhaps proper documentation may be all that is required to answer the auditor’s questions.

• Ask for help. Remember, should you receive notice by the IRS with questions regarding your tax return, ask for assistance. The same is true with notices from any other taxing authority. You are not going to be as well versed in the tax code as your auditor, so why not ask for help from someone who is.

If you are being audited and need assistance, our team is here to help. Our team and the knowledge and experience to guide you through your audit. Reach out today to schedule a meeting: https://www.bas-pc.com/appointment-center/

Read For More :

Please Click Here : Bookkeeping services NJ

Thanks for reading this blog. You can subscribe for regular update about technology news and tips via RSS Feed. you can also follow us on facebook & twitter.Thanks for visiting!.

Tax Tips to Aid in Retiring Early

Wouldn’t it be nice to check out of the workforce early and not have to worry about having enough for retirement? While good financial planning can help you get there, leveraging the tax code as part of your retirement plan is also a good idea. Here are some tax tips that could help you reach your early retirement goal.

• Maximize tax advantaged retirement accounts. Retirement accounts like Traditional IRAs and 401(k)s allow qualified taxpayers to save pre-tax money, invest the funds, and not pay taxes until the funds are withdrawn during retirement years. The IRS still receives their tax on your income and earnings, but they delay receiving the funds until you withdraw them in the future. In other words, the IRS allows you to invest their potential tax receipts along with your money and will take their share of your investment earnings at a later date.

• Leverage the “catch-up” provisions within retirement accounts. Most retirement accounts allow older taxpayers to invest even more money in these retirement savings accounts.

• Consider Tax Free Retirement Choices. Roth IRAs and Roth 401(k)s are an interesting alternative to other qualified retirement plans. Within Roth accounts you invest money in your plan with “after-tax” dollars, but any earnings are tax-free as long as you follow the withdrawal rules. While this lowers your potential initial investment, you have created a source of funds that can earn money without being taxed in the future. If you expect tax rates to go up during your retirement years, perhaps a Roth IRA should be included in your retirement portfolio.

• Roth Rollovers. You may also roll money from most qualified retirement accounts into Roth retirement accounts. When you do this, you must pay the tax on the funds rolled over, but the rollover makes any future earnings within this account tax-free as long as you follow the distribution rules. In the past, you were unable to do this type of rollover if your income exceeded $100,000.

• Consider Health Savings Accounts and their “catch-up” provisions. Health Savings Accounts allow you to set aside money to pay for qualified health expenses in pre-tax dollars. To be eligible to set up this type of savings account, you must be in a qualified high deductible, medical insurance plan. The good news is that unused funds can be invested and carried forward to future years. These funds can then be used to augment your retirement plan.

• Consider state taxes. Part of your retirement plan should be understanding where you wish to live. It is important to note that states are not created equal on this front. Many states have no state income taxes, while others like Hawaii, are in excess of 10 percent. And you must project where your chosen state might be in the future. In Minnesota, for instance, recent proposals would make that state’s taxes among the top taxed states in the nation. Many states are also trying to take the position that you must pay them state taxes on all retirement plan withdrawals from money earned while you lived in their state, even though you moved ten years ago! This problem will not go away as long as governments continue spending programs in excess of tax collections read more...

Read For More :

Please Click Here : Bookkeeping services NJ

Thanks for reading this blog. You can subscribe for regular update about technology news and tips via RSS Feed. you can also follow us on facebook & twitter.Thanks for visiting!.