Fernandez - Bergnes Blog

E-commerce and Sales Taxes

Angel Fernandez - Tuesday, April 25, 2017

For most new business owners, the last thing on their minds while dealing with the day-to-day work is accounting. There are so many aspects to running a business – sales, operations, marketing, etc. – that bookkeeping often takes a low priority, being pushed to the end of the quarter when there is no choice but to get it all sorted out before the filing deadlines. If your business includes an e-commerce component, there are some sales tax details you should be aware of.

Where Is Your Customer?

The basics of collecting sales tax on e-commerce transactions can be tricky. In fact, sales tax questions are the most common questions on the Small Business Administration’s “Filling and Paying Taxes” discussion boards.

The basic rule is that you must collect sales tax on any transactions with customers in any state where your business has a “nexus.” A nexus is defined as a company’s physical presence. This can vary from state to state but includes a store, warehouse, office, employees or inventory. For instance, if you use a drop-shipping service that stores your products and ships them out when ordered, you would charge sales tax for any orders coming from the state where the inventory is located. There are a handful of states that do not have a state sales tax. However, there may be jurisdictions within those states that impose their own sales taxes. If selling to one of the listed states, research to find out if there are any local sales taxes that must be collected. The states with no sales tax are:

  • Alaska
  • Delaware
  • Montana
  • New Hampshire
  • Oregon

Sales Tax Rates

You likely know the sales tax rate in the state where your business is located, but the tax rate paid on e-commerce transactions corresponds with the state where the purchaser is, not the seller. State sales tax rates are easy enough to find online, but there are thousands of tax jurisdictions in the United States, and determining those can be more challenging. One way to approach this issue is to use an online shopping cart service to handle your online sales. Do some research as the better ones will calculate the sales tax rate for you automatically.

How you file your state sales taxes largely depends on the structure of your business. Sole proprietorships follow the simplest rules with things getting more complicated for LLC’s and S-Corporations. As a sole proprietor, you should be able to handle filing sales taxes on your own, even in multiple states. If you manage an LLC or S-Corporation, consider getting help from an accountant. Also note that in most cases sales tax filings are due quarterly and there are fees for filing late.
More companies are selling their goods and services online every day. If you are taking your first steps into the world e-commerce, we can help. The certified public accountants at Fernandez-Bergnes have expertise in sales tax issues and can ensure that you are filing your sales taxes properly and on time. Call us today to schedule a consultation.

Angel Fernandez is an experienced Miami CPA that has been helping South Florida individuals and companies manage their accounting and tax services for more than 20 years. If you need expert accounting or tax advice, contact Angel at afernandez@affbcpa.com.
The information in this blog is general in nature. Your situation may or may not apply. Be advised that there are ongoing changes to tax laws and this blog is not necessarily updated to reflect these changes. Always seek personalized and appropriate professional advice regarding your tax matters. Nothing in this blog constitutes legal advice.

Your Kids Can Save You Money During Tax Season

Angel Fernandez - Tuesday, March 28, 2017

While you settle in, surrounded by forms and receipts, faced with a quickly approaching deadline, to finally file your taxes, are there children in the other room causing a distraction? Maybe it is the noise they are making that is keeping you from concentrating on the task at hand, or maybe you just cannot resist wanting to join them for some quality time. Take heart in the fact that your children, due to the care that you provide them (which the federal government recognizes costs a lot of money) are likely to greatly reduce your tax bill.

So, before you get started on those tax forms, take a moment to review this list of deductions that you may be able to claim.

Dependents - The majority of tax payers can claim a $4,050 exemption for each dependent child they have. At higher income levels, this exemption is reduced. And don't forget, when your kids start working and filing their own taxes, only one of you should be claiming them as dependent, not both.

Child Tax Credit - While the Dependent Exemption mentioned above allows you to exclude the amount from your taxable income, the Child Tax Credit comes right off of your tax bill. Part of the Working Families Tax Relief Act, the Child Tax Credit can reduce your tax liability by up to $1,000 per child.

Child and Dependent Care Credit - If your work, or job search, requires you to pay for child care for a dependent child that is less than thirteen years old, this credit is for you. Once the child turns thirteen, the credit no longer applies.

Education Tax Credits - If you are paying for your child's college education, the IRS offers two different tax credits to potentially reduce your bill. The American Opportunity Tax Credit and the Lifetime Learning Credit can both be claimed on IRS Form 8863.

Self-employed Health Insurance Deduction - If you are self employed and paying for your child's health insurance, you may be able to deduct the premiums you pay. This applies to grown children under 27 even if you no longer claim them as dependents.

Adoption Credit - If you recently adopted a child you are eligible for this tax credit that aims to help with the costs of the adoption process.

In every case, ensure that you are actually eligible for the deduction or credit you are applying for to avoid any fines or penalties. At Fernandez-Bergnes and Associates one of our priorities is to stay up to date with the ever evolving tax code. Our certified public accountants can help you determine which credits and deductions - child related or otherwise - you are eligible for. Call us today to find out how we can help you during tax season.

Angel Fernandez is an experienced Miami CPA that has been helping South Florida individuals and companies manage their accounting and tax services for more than 20 years. If you need expert accounting or tax advice, contact Angel at afernandez@affbcpa.com.

The information in this blog is general in nature. Your situation may or may not apply. Be advised that there are ongoing changes to tax laws and this blog is not necessarily updated to reflect these changes. Always seek personalized and appropriate professional advice regarding your tax matters. Nothing in this blog constitutes legal advice.

Home Office Deductions: Traditional or Simplified

Angel Fernandez - Friday, February 24, 2017

If your primary place of doing business is a home office, you are eligible to include a deduction for that space in your income taxes. There are some questions to consider, but know that the IRS provides two methods for claiming home office expenses. The traditional method requires more calculations as well as more paperwork. The simplified method, on the other hand, is exactly what it sounds like. It provides an easier way to calculate your home office expenses, but sometimes at a literal cost. The decision of which method to use often comes down to time versus savings.

What Qualifies as a Home Office?

Generally, a room or area of your home must be used exclusively for work on a regular basis to qualify as a home office for tax purposes. It must also be your primary place of business or be the place where you see clients, customers or patients.

If you do most of your work on the road - like a salesperson, for instance - your home office qualifies for tax deduction if it serves as your business headquarters and you do substantial work there like billing or other bookkeeping tasks. In this case there must be no other place where these tasks can be performed.

A home office qualifies as an expense if you are required to work from home by your employer, but you may not charge your employer rent for that use. Also, the home office must be maintained at your employer's convenience. If you are working at home on nights and weekends because it's easier than going into the office, your home office space cannot claimed.

Traditional Method

Using the traditional method entails carefully calculating the actual expenses associated with a home office and subjecting that to a percentage based on the square footage used. This method provides the actual cost of using a home office. To use the traditional method you must first calculate the proportion of the home's overall square footage devoted to the office. As an example, a 300 sq. ft. office in a 3,000 sq. ft. home takes up 10% of that homes space. In this case you could deduct 10% of your mortgage as a business expense as well as 10% of your utilities, property taxes and a number other home related expenses.

Simplified Method

The simplified method is just that, a simpler way to make the calculations. There may be a tradeoff, however. This method requires you to multiply the square footage of your dedicated home office (to a maximum of 300 sq. ft.) by $5. That's it. There is no need to keep records of utilities, property taxes and interest or anything else for your calculations.

The tradeoff mentioned above is due to the fact that you are likely to get a larger deduction if you take the time to use the traditional method. At $5 per square foot, and with a maximum of 300 claimable square feet, the largest deduction the simplified method will yield is $1,500. The IRS says the average home office deduction is $3,000.

For this reason, which method to use should come down to which will yield the largest deduction. If you have the time and resources, calculate your deduction both ways. If that is not feasible then the simplified method is probably the way to go.

The certified public accountants at Fernandez-Bergnes and Associates are ready to answer your home office expense questions. We can help you decide which route will pay you more in the long run. Call us today to schedule a consultation to review your home office questions or any other tax and accounting issues you may have.

Angel Fernandez is an experienced Miami CPA that has been helping South Florida individuals and companies manage their accounting and tax services for more than 20 years. If you need expert accounting or tax advice, contact Angel at afernandez@affbcpa.com.

The information in this blog is general in nature. Your situation may or may not apply. Be advised that there are ongoing changes to tax laws and this blog is not necessarily updated to reflect these changes. Always seek personalized and appropriate professional advice regarding your tax matters. Nothing in this blog constitutes legal advice.

Tax Refunds Feel Good, but are They Good for You?

Angel Fernandez - Tuesday, January 24, 2017

Probably the only thing that holds any excitement for most people during tax time is the prospect of receiving a tax refund. It is not only the idea of having some extra money, but it can feel a little like a reward for the process of filing your taxes with the IRS. You gather your receipts, hunt for possible deductions and fill out the Byzantine forms, and then you are rewarded with a check for your efforts. It feels good, but is it really the best way to go about it? The answer depends on your situation as well as your money managing skills.

When you take a moment to consider what is happening, waiting to get your money back during tax season may not be in your best interest. In essence, the IRS is getting an interest free loan. Instead you could invest the money, save it, pay bills with it, treat yourself every paycheck, etc. Of course, that may not be the right approach for everyone. The average tax refund is $2,900. That would mean an extra $111.50 every paycheck (assuming you are paid biweekly). Each individual must consider if they will actually put the smaller amount to good use. It is much easier to fritter away $111.50 than $2,900.

Over Withholding

Paying too much towards your tax bill each paycheck is the norm, but as mentioned before, it is the equivalent of lending interest free money to the IRS. Consider adjusting what is withheld from each of your paychecks in order to keep more of your money up front, then increase the contribution to your 401K. The benefit to this is that the money will not be instantly available for you to spend (or squander). If you do not have a 401K, or some other deferred compensation account, most banks offer savings accounts that will have the money deposited directly from your paycheck before it reaches your checking account. To adjust your withholding rate you only need to submit a new W-4, either to your employer’s human resources department or accountant. In fact, a new W-4 should be submitted with every major life event like a new child, or a child moving out.

Under Withholding

Withholding too little for taxes each paycheck will have you receiving larger paychecks throughout the year, but your tax liability will not go away. Furthermore, paying too little could lead to penalties. Worst of all, you will have a tax bill come tax season. If your withholding rate is just about right, you may end up owing (or receiving) a small amount, which, in most cases, is ideal.

In the end, how much to withhold is a personal choice, but it should not be assumed that getting a refund is the best way to go. The certified public accountants at Fernandes-Bergnes and associates came help you make an informed decision on your tax withholding rate. Call us today to schedule a consultation.

Angel Fernandez is an experienced Miami CPA that has been helping South Florida individuals and companies manage their accounting and tax services for more than 20 years. If you need expert accounting or tax advice, contact Angel at afernandez@affbcpa.com.

The information in this blog is general in nature. Your situation may or may not apply. Be advised that there are ongoing changes to tax laws and this blog is not necessarily updated to reflect these changes. Always seek personalized and appropriate professional advice regarding your tax matters. Nothing in this blog constitutes legal advice.

Payroll Accounting Basics: Wages, Salaries, and Overtime

Angel Fernandez - Thursday, December 08, 2016

Any business owner or employer who has even one employee must deal with payroll accounting. Payroll accounting can become complex and includes concepts like withholdings, taxes and benefits. In this article we will review the basics of salaries, wages and overtime pay.

Wages

A wage refers to compensation paid to an employee that is calculated at an hourly rate and dependent on the hours worked by the employee in a pre-determined time period. This amount is stated as a gross rate, like $15 per hour. The gross rate is the amount the employer pays before things like taxes or benefit contributions are withheld. More often than not, wages are associated with non-management and production employees.

Wages are usually paid to employees on a weekly, biweekly or monthly basis. Determining the gross wage is as simple as multiplying the employee’s gross hourly rate by the number of hours worked in the prescribed time period. Although the process is simple, it is common for wage employees to be paid on a staggered schedule to give the employer time to make calculations and prepare checks.

Salaries

Salaries, on the other hand, are most often associated with executives, professionals and employees in management positions. Employees paid salaries are paid a fixed amount each pay period regardless of the number of hours worked. Salaries are most often stated as a gross annual amount, like $63,200 per year, and paid semi-monthly or bi-weekly, although other pay schedules are not uncommon.

Since salaries are a specific yearly amount, a salaried employee can expect the same amount of pay on their recurring payday. For instance, if an employee’s salary is $52,000 per year, they will be paid $2,000 every two weeks, or $4,333.33 monthly. Often, salaried employees are paid on the day the pay period ends since there are no calculations to be made, but that may differ from company to company.

Overtime Pay

The term “overtime” refers to any hours in excess of 40 worked in a single week. Exemption status determines if an employee is eligible to receive a higher rate of pay (or any compensation) for the extra hours worked. A non-exempt employee will receive overtime pay. The overtime pay rate is set by the federal government at 1.5 times the employee’s gross hourly rate, so an employee earning a wage of $15 an hours is paid $22.50 for each hour over 40 worked in a single week. Exempt employees are not paid extra for overtime worked. Most often exempt employees are paid salaries. The idea is that a salaried employee may work more or less than 40 hours in any given week, and, more importantly, their pay tends to be higher, so those extra hours have been “worked into the equation.” A salaried employee earning a lower wage, say $24,000 a year, will likely be non-exempt from overtime pay. Although they are paid a fixed amount, the law is designed to protect an employee from working excessive hours for low pay.

Exemption status rules may be changing soon because of new rules that the Department of Labor is due to implement soon. Watch this page for more information when those rules are put in place and, turn to Fernandez-Bergnes and Associates for all of your accounting needs, including payroll accounting.

Angel Fernandez is an experienced Miami CPA that has been helping South Florida individuals and companies manage their accounting and tax services for more than 20 years. If you need expert accounting or tax advice, contact Angel at afernandez@affbcpa.com.

The information in this blog is general in nature. Your situation may or may not apply. Be advised that there are ongoing changes to tax laws and this blog is not necessarily updated to reflect these changes. Always seek personalized and appropriate professional advice regarding your tax matters. Nothing in this blog constitutes legal advice.

Do Not Ignore the Business Side of Your Business

Angel Fernandez - Monday, October 31, 2016

There is a moment many new small business owners experience when they realize that doing what they are passionate about is very different from running a business based on that passion. The realities of managing revenue, paying bills and taxes, marketing, supervising employees and all of the other details involved with running a successful business may be far removed from the product or service a business offers. Entrepreneurship and financial savvy do not always go hand in hand. In fact, some of the traits needed to be an entrepreneur, like enthusiasm and creativity, will not necessarily help when it comes to the more logical and numbers focused side of running a business.

A recent study showed that only 40% of small business owners believe they are financially literate. Unfortunately, ignoring or avoiding the money management side of a business will lead to failure more often than not. It is easy to set aside those tasks that may be considered tedious to focus on other parts of the business, but as weeks and months slip by, you may find that your business is struggling. Here are some thoughts on how the other 60% can approach the “boring stuff.”

Use Finance Software

There are a number of easy to use financial software programs designed to help small businesses manage their money and that provide many ways to monitor the venture’s financial health. Some software packages are all encompassing, acting as a point of sale while also managing invoicing, expenses, payroll and more. The reports provided can help a business owner forecast the future and make decisions for growth.

Hire People to do What You Cannot

The surest road to success is to have a solid business plan and surround oneself with a strong, well rounded, team. Nobody is great at everything. Take some time to consider and decide what it is you want to spend your time on at work and what you do not. Find and hire employees with skills and knowledge that you lack. As far as finances are concerned, this may mean hiring a bookkeeper or accountant, or possibly outsourcing your billing operations. This will allow you to do what you excel at what you’re are god at while a group of experts guides you in the decision making in other areas.

Keep Learning

Like it or not, it is in your best interest to learn as much as you can about the different aspects of your business, finances in particular. One great resource is other business owners in your field. Your local chamber of commerce is a good place to meet and consult with other members of your industry. Their input can be invaluable to a growing business and you probably have something to offer as well. Chambers of Commerce and the Small Business Administration also offer seminars and conferences on a number of business topics. Take advantage of learning opportunities as they can only strengthen your business.

At Fernandez-Bergnes and Associates we can help you manage the money side of your business. Our CPA’s have years of experience servicing businesses of all sizes in South Florida and have a wealth of useful information at their fingertips. Call us today to learn how we can help.

Angel Fernandez is an experienced Miami CPA that has been helping South Florida individuals and companies manage their accounting and tax services for more than 20 years. If you need expert accounting or tax advice, contact Angel at afernandez@affbcpa.com.

The information in this blog is general in nature. Your situation may or may not apply. Be advised that there are ongoing changes to tax laws and this blog is not necessarily updated to reflect these changes. Always seek personalized and appropriate professional advice regarding your tax matters. Nothing in this blog constitutes legal advice.

Applying for Tax-exempt Status Under Section 501(c)(3)

Angel Fernandez - Wednesday, September 28, 2016

If you have formed a non-profit organization under section 501(c)(3) of the Internal Revenue Code, you will definitely want to take advantage of the tax-exempt status afforded to such organizations. Some of the benefits of tax-exempt status include tax-deductibility of donations, income and property tax exemption and access to grant money.

The process is not too complicated, but you will need to gather some information and documents to apply. The IRS will want to know a number of details about your organization’s activities and structure. The state government is the entity that governs non-profit status, but it is the IRS that will provide the organization with tax-exempt status.

Tax-exemption Requirements

The organizations covered under section 501(c)(3) of the code are considered charitable organizations. In order to qualify for tax exemption, none of its earnings can go to an individual or private shareholders. That is not to say that a 501(c)(3) organization cannot include paid employees, rather, the purpose of the organization must be charitable and not to enrich any person or group. Furthermore, 501(c)(3) organizations may not be action groups that try to influence legislation – such as lobbyists – or campaign in support or against a political candidate. A 501(c)(3) organization must also be careful not to excessively benefit a person that has influence over it. That may prompt to IRS to impose an excise tax on the beneficiary and the 501(c)(3) organization.

Before You Apply

To apply for tax-exemption for your organization you should begin with these steps:

  • Determine what type of organization you have. It will either be a trust, a corporation or an association. This will have been established when the organization was formed.
  • Gather all documentation related to your organization. As mentioned above, the IRS will want to know some specifics (they will be discussed further below).
  • Obtain a federal employer ID number (EIN) for your organization. You will need this whether your organization has employees or not.

After taking these steps you will be ready to complete IRS Form 1023, Application for Recognition of Exemption Under Section 501(c)(3). Not all of the parts of Form 1023 are designed for laymen. If you find that a particular section is beyond your comfort zone, consider obtaining the services of a tax attorney or CPA to assist you. The form should be filed within 27 months of the date that the nonprofit articles of incorporation are filed. If you have a smaller organization, you may be eligible to file Form 1023-EZ, Streamlined Application for Recognition of Exemption Under Section 501(c)(3). The 1023-EZ is a shorter and simpler form that can be filled out online. The IRS website has information about eligibility for Form 1023-EZ.

What the IRS Wants to Know

Form 1023 basically assists the IRS in determining if your organizations activities qualify it for tax exemption. It is divided into 11 part, some of which are described below.

  • Identification of Applicant – basic organization information such as its name, contact info and date incorporated.
  • Organizational Structure – asks for a copy of articles of incorporation and the organization’s bylaws.
  • Required Provisions – the articles of incorporation should include clauses that state the purpose of the organization and how assets will be distributed if the organization is dissolved.
  • Description of Activities – a narrative description of the organization’s activities listed in order of importance.
  • Financial Arrangements – information about proposed compensation to directors, officers, trustees, etc.
  • Financial Data – five years’ worth of statements of revenue and balance sheets.

After you file Form 1023 there are three possible outcomes. The IRS can grant your organization tax-exempt status, request more information or deny your application. If you are denied, a tax attorney or CPA can help you appeal the decision. The CPA’s at Fernandez-Bergnes and Associates are well versed in tax-exemption laws and the requirements for no-profits. If you have a non-profit organization and are getting ready to apply for tax-exempt status, we can help. Call us today to find out how.

Angel Fernandez is an experienced Miami CPA that has been helping South Florida individuals and companies manage their accounting and tax services for more than 20 years. If you need expert accounting or tax advice, contact Angel at afernandez@affbcpa.com.

The information in this blog is general in nature. Your situation may or may not apply. Be advised that there are ongoing changes to tax laws and this blog is not necessarily updated to reflect these changes. Always seek personalized and appropriate professional advice regarding your tax matters. Nothing in this blog constitutes legal advice.

What to Look for in a Financial App

Angel Fernandez - Tuesday, August 23, 2016

We are now in an age where most of us literally have tiny computers, connected to the internet, on us at all times. Looking back just ten years there is no denying that smartphones and tablets have fundamentally changed the way we live. While at times these devices can eat away at our precious time (Facebook, Candy Crush, etc.) their potential to help us be productive is boundless.

One type of productivity app that you should consider adding to your smartphone is a financial management app. The convenience of being able to input data on the spot is immeasurable. There are apps available to help you with all kinds of financial tasks from balancing you bank account, budgeting your expenses, tracking your investments and more. Financial apps typically focus on either business or personal finances. Let’s take a look at a couple of points to consider when choosing a financial app for your needs.

Ease of Use

There is a wide range of software user experiences, and financial apps are no different. Some are designed for the layman, asking for basic input and taking over from there. Others are geared to more knowledgeable users and will require more work on your part. Generally, the easier an app is to use, the less customization it will allow.

Before settling on a financial app, look at screen shots to determine if the user interface is well organized and easy to understand or cluttered and unintuitive. Read a list of features to insure that it does what you need without including too many features that you will never touch. Read user reviews to get a sense of other users’ experiences with the software. Determine if the app syncs with other financial software you might use or with your bank account online as this can save you from having to enter data twice. Do this all before you download the app and input your data, because that will be the most time consuming part of setting up the app for your use.

Protect Yourself

As mentioned above, in order for some of these apps to work properly – and do all they are designed to – they must link with your bank account and credit card accounts online. Obviously, security should be a major concern. Understand that you are giving the app access to your financial information, usually by providing your bank account login credentials. Before linking any software to your accounts online verify that it comes from a reputable company.

Additionally, it is best to make these links at home and not on a public wi-fi network. This is very sensitive information you are are providing and it is difficult to determine the level of security of public wi-fi networks. Also, make sure that your phone is pass word protected so that if it is ever misplaced, you won’t have to worry about someone accessing your information, financial or otherwise. Finally, look into your smartphone’s ability to be wiped remotely. Most smartphones have security features that allow you to erase its contents if it is lost or stolen. This is added protection from prying eyes.

While they are great for entering transactions on the fly and instantly providing account information, no smartphone app is a substitute form sound financial planning. The certified public accountants at Fernandez-Bergnes and Associates are ready to help you with your overall financial picture. Call us today to learn about the many services we offer.

Angel Fernandez is an experienced Miami CPA that has been helping South Florida individuals and companies manage their accounting and tax services for more than 20 years. If you need expert accounting or tax advice, contact Angel at afernandez@affbcpa.com.

The information in this blog is general in nature. Your situation may or may not apply. Be advised that there are ongoing changes to tax laws and this blog is not necessarily updated to reflect these changes. Always seek personalized and appropriate professional advice regarding your tax matters. Nothing in this blog constitutes legal advice.

Are You Drowning in Debt?

Angel Fernandez - Tuesday, July 26, 2016

If your monthly budget includes a large allocation to credit card debt, you are not alone. About four out of every ten American have credit cards with revolving debt. The Federal Reserve has estimated the average household credit card debt is over $16,000. Add to that an average of $32,000 in student loan debt and a mortgage of almost $160,000 and it is easy to see why some families struggle.

It can be overwhelming, but there are some steps that anyone can take to see a discernible reduction of their credit card debt, even when paying large balances with limited funds. Reducing or eliminating credit card debt will, in turn, allow you to also reduce your student loan and mortgage amounts and payments. Some of the most effective strategies to bring down credit card debt include:

  • Negotiating existing interest rates
  • Shopping for lower interest rates
  • Consolidating debt
  • Making extra payments

Lower Interest Rates

If you are current on your payments and paying more than the minimum each month, you may be surprised to hear that some credit card companies are be willing to help. Call your credit card company and try to negotiate a lower interest rate. Many credit card companies have policies in place that will lower your interest rate after a period of responsible credit use (paying more than the minimum owed, paying on time, keeping your balance well below your limit). It won’t hurt to call them and see if they will let you skip the waiting period.

Failing that, you should shop for lower interest rates with other cards. There are always great introductory rates available if you have a good credit score. Once you are approved for a card with a lower interest rate, it is time to transfer your balances. If possible, consolidate all of your credit card debt to one low interest card. That way you will be paying the lowest interest possible and will only have one payment and balance to worry about.

High Rate or Low Balance, Which Should you Pay First?

If lower interest rates are not in the cards for you, how should you proceed? Most financial experts will tell you to pay your highest interest rate cards first. This makes great sense as high interest rates will hurt you the most in the long run. Try to put as high a payment as possible toward your high interest debt each month while being sure to pay the minimums on the rest of your cards. Once that balance is zero, roll those payments over to your next highest interest card, and so on.

While this is the most common sense approach, it may not actually work for everyone. This approach can be slow and disheartening for someone living paycheck to paycheck. To see more progress quickly, consider paying your smallest balance card first. Eliminating credit card balances from smallest to largest provides the fastest visible results and the psychological effect of that alone should not be underestimated. The process is the same but in reverse. Once you zero out one balance, put that money into payments for your next smallest balance. By the time you get to your highest balance card, you will be making large payments toward it.

One piece of advice to never forget is to pay all of these credit card bills on time. Late payments will only exacerbate a bad debt problem with late fees, higher interest rates, and negative reporting to the credit agencies. Consider what will work best for you, come up with an attack plan, and stick with it. Before you know it, you will see those balances diminishing and the light at the end of the tunnel will become brighter every day.

Angel Fernandez is an experienced Miami CPA that has been helping South Florida individuals and companies manage their accounting and tax services for more than 20 years. If you need expert accounting or tax advice, contact Angel at afernandez@affbcpa.com.

The information in this blog is general in nature. Your situation may or may not apply. Be advised that there are ongoing changes to tax laws and this blog is not necessarily updated to reflect these changes. Always seek personalized and appropriate professional advice regarding your tax matters. Nothing in this blog constitutes legal advice.

Is it Time to Outsource Your Small Business Payroll?

Angel Fernandez - Wednesday, June 22, 2016

Maybe when you started your small company it was just you and a couple of part-time employees. At that point it made sense to process payroll on your own. As a company grows, payroll becomes more complicated, especially when considering tax and labor laws as well as requirements at the local, state and federal levels for each employee. So when is the time to hand over payroll to an outside company? It is definitely before the whole process grows out of your control and you make a dreaded payroll tax mistake. Let us take a look at some points to consider regarding the timing for such a move.

Crossing the 50 Employee Threshold

Once a company employs fifty or more full-time employees there is an entire new set of reporting details to contend with. The Affordable Care Act (ACA), commonly called Obamacare, requires companies with fifty or more employees to offer them affordable health care coverage. There are complicated eligibility rules, rules regarding the offer of coverage, as well details about hours worked and months covered. The fifty employee threshold is a great time to consider outsourcing payroll if you haven't already.

Out of State Employees and Other Complications

If your company has crossed state lines it is time to look at a payroll service provider. The laws regulating tax and labor vary from state to state. Learning the details of another state's rules can take more man hours than you are likely willing to assign. Having even one employee that works in another state is a good reason to investigate outsourcing payroll.

There are various other reason to consider outsourcing payroll, but it in general the decision will usually be tied to some change in our employee makeup. If your company experiences a major change in payroll - bringing in full time employees, employees with variable hours, introducing benefits - it is time to look at the feasibility of hiring a payroll firm. In each case the ideal time to make the change is at the beginning of the fiscal year when the previous years finances are closed out. Take this time as an opportunity to look at your options and consider if it is time to outsource.

Benefits of Outsourcing Payroll

Outsourcing your company's payroll has an associated cost, but you will find that cost offset by the payroll hours freed up by the move. Here are some other benefits of outsourcing payroll.

Save Time and Money - Calculating payroll, processing payroll taxes, producing and distributing checks - each of these is repeated every payroll period. This takes man hours and cost you more in payroll. A good payroll company will take all of these concerns off the table and reduce your cost in the process.

Compliance - Business owners are legally responsible for accurately reporting employment taxes. Failure to so correctly can lead to penalties and even an audit. Outsourcing payroll to professionals removes this concern.

Fernandez-Bergnes and Associates offers affordable payroll services for small to mid-size businesses. You can save time and money by trusting this complicated and time consuming work to our experts. Call us today to learn more about our payroll services.

Angel Fernandez is an experienced Miami CPA that has been helping South Florida individuals and companies manage their accounting and tax services for more than 20 years. If you need expert accounting or tax advice, contact Angel at afernandez@affbcpa.com.

The information in this blog is general in nature. Your situation may or may not apply. Be advised that there are ongoing changes to tax laws and this blog is not necessarily updated to reflect these changes. Always seek personalized and appropriate professional advice regarding your tax matters. Nothing in this blog constitutes legal advice.


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