Independent Contractor Or Employee: The Distinction Matters To The IRS

If you’re a business owner, you have financial incentive to want to classify workers as independent contractors rather than as employees. For example, you’re required to withhold and pay taxes on employee wages, and you may need to offer employee benefits such as paid time off and pension contributions. None of these are required with independent contractors.

There may be legitimate reasons and situations to use independent contractors. The facts and circumstances decide the proper treatment – and getting the classification right will help you avoid the prospect of back payroll taxes, penalties, and interest.

So how do you go about getting the classification right? Start by reviewing the degree of control your business has over the worker and the job function. Does your company have the right to control how and when the worker does a job? How do you pay the worker – by the hour or by the job? Who provides the tools and supplies for the job? Is there a written contract between your business and the worker spelling out the division of rights and responsibilities? Is the job for your company ongoing, or does the worker perform services for other customers?

Your answers to these questions can guide you to the proper classification. If you need assistance, give us a call. We’ll help you review the facts and explain your options.

 

Do You Have These Basic Documents?

Can you name basic documents that can ease decision making for your family if something happens to you? Here are four to think about as part of your overall personal financial plan.

Will. As you know, a will lets you, rather than the state, control how your assets will be split among your heirs. If you have minor children, a will allows you to designate the guardian of your choice. Properly written, a will can increase your heirs’ inheritance by including simple tax-saving strategies.

Power of Attorney. A power of attorney allows you to name another individual as your agent. If you become disabled or seriously ill, a power of attorney allows your agent to pay your bills, deposit your checks, and make decisions on your behalf. You can decide whether your power of attorney becomes effective immediately or only upon the occurrence of a disabling illness or injury.

Health Care Directive. This document (also called living will, advance directive, or other similar name) tells your doctor whether to take extreme measures to keep you alive if you are terminally ill or permanently unconscious. In addition to assisting your doctors, your health care directive will lessen the burden on your family by clearly describing your wishes.

Financial Inventory. A comprehensive inventory includes assets, liabilities, a list of insurance policies, where you keep your important documents, who to contact with regard to those documents, and your choices for funeral arrangements. You can find free guides online to use as a framework. Once you have the inventory completed, store it in a safe place and tell your personal representative where to find it.

 

Last-Minute Tax Savers For Individuals

Even though the end of the year is fast approaching, you still have time to trim your 2015 federal income tax bill. Here are suggestions.

State and local income taxes. If you prepay certain state and local taxes, you can claim the deduction on your 2015 return. Caution: Analyze your exposure to the alternative minimum tax before accelerating these deductions.

Charitable donations. When you itemize, you can generally deduct the full amount of charitable donations you make by December 31, 2015, including those you put on your credit card and pay in 2016.

Capital gains. Consider selling appreciated investments if the gain on the sale will be absorbed by prior losses or if you will benefit from the preferential long-term capital gain tax rate available when you own assets for more than a year.

Capital losses. By “harvesting” capital losses from depreciated securities at year-end, you can offset other capital gains plus up to $3,000 of ordinary income.

Required minimum distributions. Verify that you have withdrawn the right amount from your qualified plans and IRAs to avoid a 50% tax penalty.

Dependency exemptions. Review how much support you provided to dependents in 2015. Generally, you can claim a dependency exemption for a qualifying relative if you provide more than half of the financial support for the year.

Medical expenses. When you itemize, you can claim deductions for unreimbursed medical expenses that exceed 10% of your adjusted gross income. Move elective medical and dental procedures, such as routine exams, into 2015 if those expenses will help you clear the 10% threshold.

Higher education credits. If you pay your child’s tuition bill for the next semester, the cost generally qualifies for a federal income tax credit in 2015.

Estimated taxes. Avoid an underpayment penalty by paying at least 90% of your 2015 tax liability or 100% of last year’s liability (110% if your adjusted gross income exceeded $150,000).

Please call us for more ways to save on your 2015 income taxes.

 

Five Year-End Tax Savers For Businesses

The year is nearly over, but you can still take action to lower your business income tax during the final months of 2015. Here are five moves to consider.

1. Postpone revenue to 2016. If your business reports on the cash basis, delay billing your customers long enough to ensure that payments will arrive after 2015. Does your business use the accrual basis? Consider delaying product shipments or deferring completion of services until 2016.

2. Accelerate deductible expenses into 2015. Stock up on supplies before January and arrange for necessary repairs and maintenance to be completed before year-end.
Alternatively, if you anticipate falling into a higher tax bracket next year, consider reversing the above steps by accelerating revenues into 2015 and deferring expenses into 2016.

3. Write off receivables. Review your accounts receivable for potential bad debts that can be written off before year-end.

4. Put assets to use. Machinery, equipment, office furniture, and software placed in service before December 31 may qualify for a Section 179 deduction rather than being depreciated over a longer term. Total allowable purchases for Section 179 are limited to $25,000 this year, although Congress may increase that amount before year-end.

5. Take advantage of tangible property regulations. If your business owns or leases a building with an unadjusted basis of $1 million or less, you may qualify for an election to deduct payments for improvements made in 2015 that otherwise would be depreciable. Your business must have average annual gross receipts of $10 million or less, and the total amount paid in 2015 for the building’s improvements, repairs, and maintenance may not exceed the lesser of $10,000 or 2% of the building’s unadjusted basis.

Need more year-end tax saving tips? Give us a call.

 

Plan Your Estate To Reflect Your Intentions

If you own assets that you’d like to leave to a loved one, you have an estate. But without a plan, your state of residence will choose your heir — not necessarily the result you intended. How can you ensure your intentions will be realized? Start by understanding the basics of estate taxes.

How estate taxes work. Estate tax applies to the excess of your gross estate over the allowable exclusion and deductions. Your gross estate is the current value (not the cost) of everything you own. The allowable exclusion for 2015 is $5,430,000, and an estate can deduct the following:

  1. Assets left to a surviving spouse, without limitation.

  2. Property left to qualifying charities.

  3. Mortgages, debts, and administrative expenses and losses.

Because property in your estate is valued at current market value, your heirs can benefit from a “step-up” in basis. Here’s an example. Say your home cost $120,000. If the value is $220,000 when the house passes to your heir, your heir’s basis becomes $220,000. That means if your heir later sells the house for $300,000, the taxable gain is limited to $80,000 ($300,000 less $220,000).

Planning steps to take. No matter what the size of your estate, your plan should begin with a will. Your will lets you distribute property to your chosen beneficiaries, designate guardians for your dependents, and make charitable contributions. You can also use your will to establish trusts, another important part of estate planning. Trusts can be used for asset management, distribution timing, and protecting the inheritance of heirs who can’t manage their own affairs. In addition, trusts can be useful to bypass the complexities of probate, the state court system governing distributions.

Another initial planning move is to update your beneficiary designations. Some assets, such as life insurance proceeds and IRAs, bypass your will and go directly to the designated beneficiaries.

Call us to get started on your estate plan. We’ll work with your attorney as well as other members of your financial team to help you achieve the results you intend.

Cash Or Accrual? Do You Know The Difference?

When you start a business, you have many decisions to make. One is the method of accounting your business will use for reporting income and expenses on your tax return.

Two methods generally used are “cash” and “accrual.” The cash method is the easiest to implement. Under the cash method, you recognize income when you receive a payment from a customer. You take a deduction when you pay qualifying expenses.

If you choose the accrual method, you recognize income when you render services or sell your products. That’s true even if you’re not expecting to receive payment for several months. The money your customers owe you is your “accounts receivable.” On the expense side, if you buy something today and pay for it later, you deduct the cost now. What you owe for purchases you’ve made is your “accounts payable.”

The cash method more closely reflects your cash flow — how money is coming in and out of your business. The drawback is that your records may not help you track how much people owe you or how much debt your business owes.

The accrual method better reflects how your business is actually doing because you can match income and expenses in the proper period.

As a new business owner, you’ll want to consider the pros and cons of each method before you decide what works best for your business. The nature of your business may require that you use the accrual method. Keep in mind that if you want to change from one method of accounting to another later, you may need to get IRS approval. For assistance in making this and other decisions for your new business, please give us a call.

The Affordable Care Act: Know The Terms

Are you still unclear about your responsibilities as an employer under the Affordable Care Act (ACA)? Do you find the definition of ACA terms confusing? Here’s a plain English guide to selected terms employers are likely to hear.

Applicable large employer. A large employer is defined as an employer with at least 50 full-time employees or 50 full-time equivalent employees. If you are an applicable large employer, you must offer affordable health coverage to employees and their dependents.

Full-time equivalent employee (FTE). This is an employee who has on average at least 30 hours of employment per week or 130 hours in a calendar month. The number of FTE employees is computed by dividing the total hours of service of all part-time employees for a month by 120. This FTE amount is then added to the number of full-time employees to determine if the grand total is at least 50.

Minimum value. A health plan is deemed to provide essential value if it covers at least 60% of the total allowed cost of benefits that are expected to be incurred under the plan. Be aware that this differs from minimum essential coverage, which is the coverage applicable large employers are required to offer to avoid the employer shared responsibility payment.

Employer shared responsibility payment. The shared responsibility payment is made up of two nondeductible excise taxes assessed against applicable large employers who do not offer qualified health coverage to a specified percentage of employees. These excise taxes apply for 2015 when you employed on average 100 or more full-time employees during 2014. The penalty starts in 2016 if you employed between 50 and 99 full-time employees on business days during 2014.

ACA definitions are complicated but one thing is clear: Getting a correct count of the number of employees working for you is very important. Please give us a call. We’ll consult with your insurance advisor to help assess the ACA’s impact on your business.

Plan Today For Future Long-Term Care Costs

According to the U.S. Department of Health and Human Services, nearly 70% of people turning age 65 will require long-term care, such as assistance with basic personal activities during their lifetimes. With costs of this care ranging from $6,000 to $10,000 a month or more, planning to address that risk is a smart move.

One solution is long-term care insurance. A policy can protect your estate against the impact of extended medical or rehabilitation services. However, the cost of insurance may have you considering “taking your chances” and letting Medicare or Medicaid step in once your resources are depleted. But what happens when either you or your spouse requires nursing home care while the other is healthy and living independently?

Purchasing long-term care insurance has drawbacks. For one, if you never need long-term care, the premiums you paid are wasted. You may be able to mitigate this somewhat by choosing a flexible policy with life insurance benefits.

Another drawback: You face the risk that the insurance company you select will go out of business. Choosing an insurer that is highly rated for financial strength can ease your mind.
On the plus side, long-term care insurance offers tax benefits. When you itemize, all or part of the premium for qualified plans are deductible as health care costs. Depending on the type of policy you buy, benefits paid are generally not considered taxable income.

If you think long-term care insurance is right for you, remember that coverage costs less when you’re younger. Premiums are based on your age and health, and tend to increase past age 60. Another cost-saving move to consider is a “shared-care” policy with a combined pool of coverage that you and your spouse share.

Contact our office before making the final decision to buy long-term care insurance. We’ll help you do a cost-benefit analysis.

 

Starting A Business? Avoid Three Common Mistakes

According to the Small Business Administration, a third of small businesses fail within the first two years. Over half fail in the first five years. So if you’re thinking about starting a small business, it pays to take an honest look at yourself, your business idea, and the marketplace. You can increase the odds that your business will survive by avoiding three very common mistakes.

Mistake # 1: Not enough cash. If you’re starting out, it’s a good idea to accumulate – before you enter the marketplace – a cash reserve that’s about three times your estimated need. Small businesses often face down times, when sales aren’t exactly stellar and revenues slow to a trickle. Also, unforeseen expenses for insurance, staff, buildings, advertising, taxes (the list goes on and on) can cripple your business and shut it down before it’s out of the starting block. Extra cash can make the difference between a survivor and a statistic. A reserve fund provides an extra bit of cushion to keep the business operating as you work toward the next sales goal.

Mistake # 2: Inadequate planning. Building a business is like building a house. You need a foundation, clear goals, and an implementation strategy. Where do you want to be a year from now and beyond? If people built houses with as much foresight as many start-up businesses put into planning, you’d see a lot more folks camping in their basements. Developing a sound business plan means doing solid research. It means understanding the marketplace, knowing what sets your product apart, and getting a grip on the costs to implement your plan. An idea is not a business plan. You need to flesh out the idea and get down to specifics.

Mistake # 3: Inflexibility. Once you’ve developed your business plan, be willing to adapt it to changing conditions. More than a few businesses have started with a great business model, but failed to modify that model when market conditions evolved. If your customers or competitors change (and they will over time), don’t be afraid to change with them.

If you’re considering starting a small business and would like assistance, give us a call.

Bogus IRS E-Mails Are On The Rise

The IRS reports that even though the April 15th tax filing deadline has come and gone, fraudulent e-mails purporting to be from the IRS are still running rampant. Here is what you need to know to protect yourself.

The typical scam starts with an e-mail message, complete with IRS logo and official-looking format, asking for information to fix a problem with your tax return. Scam artists, who are no dummies when it comes to IRS rules and lingo, will try to obtain your social security number, bank log-in information, or other personal data. With these items, they might re-direct your refund to themselves, access your bank account, or file a bogus tax return in your name and fraudulently claim a refund. And spotting a fake IRS notice is not as easy as it sounds. Scams such as these utilize sophisticated techniques and seemingly authentic tax forms to steal from people of all levels of financial sophistication.

But for all this trickery, protecting yourself is fairly simple. Don’t respond to any unexpected IRS e-mail. Ever. IRS agents will never initiate taxpayer contact by e-mail, and neither will they ask for your bank account password or ID number. Also, never click on any link or attachment until you know for a fact that it is from the IRS. If in doubt, you can call the IRS at 1-800-829-1040 or forward the e-mail to phishing@irs.gov.

You should also be on your guard against fake phone calls from the IRS. Don’t immediately accept that the caller is legitimate, and certainly don’t divulge personal information to the caller. Our best advice for any IRS-initiated contact is to call our office before you do anything. We can quickly determine if the problem is for real, and if it is, help you respond appropriately.

Have Foreign Assets? Check These Filing Requirements

If you own financial assets in foreign countries, you may be required to file the “Foreign Bank Account Report” (FBAR). The form is filed separately from your federal income tax return and must be received by the Treasury Department by June 30 each year. (June 28 this year since June 30 is a Sunday.)

The filing requirement applies to accounts with a combined value of $10,000 or more at any point during the calendar year. Be aware it’s the value of the accounts that matters, not how much income, if any, that you receive.

You may also have to file an FBAR if the bank or brokerage holding the account will dispose of the assets based on your signature – even if you never use this power.

In addition to your personal accounts, FBAR regulations extend to estates, trusts, corporations, partnerships, and other businesses.

If you own foreign investments, you may also have an additional federal tax filing requirement. Form 8938, “Statement of Specified Foreign Financial Assets,” is filed as part of your individual tax return. You use Form 8938 to disclose interests in certain foreign financial accounts when your ownership exceeds the reporting requirements.

What are the reporting requirements? They vary depending on where you live and your filing status. For example, say you’re married and live in the United States, and you file a joint tax return for 2012. You must include Form 8938 with your tax return when the total value of your reportable assets on the last day of 2012 was more than $100,000, or if the value exceeded $150,000 at any time during the year.

Form 8938 is attached to, and due with, your federal income tax return. If you filed an extension, you have until October 15, 2013, to complete Form 8938 for 2012.

Give us a call for assistance with your foreign asset reporting requirements.

Charity Scams Are A Gateway To Identity Theft

There were over 10 million cases of stolen identity reported this past year, and the business of identity theft is on the rise.

One of the most popular and successful forms of theft is the use of fake charities. Don’t be taken in by fake charities. If you are duped into contributing, you may have given more than just money to the scam artists. You may have given them enough of your personal financial information to allow them to steal your identity.

Once the thief has your identity (name, address, phone number, account numbers, security codes, etc.), he or she is free to set up new accounts and make purchases in your name. Such activity can be financially devastating to you, and it could take months to straighten the problem out.

How does one keep from becoming a victim? Be especially cautious of those who contact you by telephone or e-mail. You could receive an e-mail from a charity with a name you think you recognize. Many scam artists are very clever at making up names that make you feel you might already know them. Their causes always sound good, such as save the whales, help poor kids in Africa, help abused animals. Once they have hit your hot button and you reply, they are on the road to easy money.

Here is an example of what might take place. Let’s say you get an e-mail from “Doctors Across Africa” which you mistake for the legitimate “Doctors Without Borders.” The e-mail does a good job of convincing you that this charity assists thousands who would have no medical help except for generous people such as you. The e-mail has a link to their Internet site which looks very professional and official. It may contain photos of all the excellent work being done by these non-existent doctors. But most important, the site will ask you for your credit card number, maybe even the three-digit security code, and your name and mailing address so they can mail you a receipt for your tax deduction. You can be sure that by the time you push the “Submit” button, you will have given them all they need to steal your identity.

Stay alert for charity scams, or your desire to help just might result in having your identity stolen.

The New Estate Tax Rules Bring Calm After The Storm

Some individuals were in a panic late last year as the favorable estate and gift tax rules were set to expire in 2013. With Congressional action uncertain, no one knew how their plans might be affected.

To the relief of taxpayers and planners, most of the estate rules changed only slightly. The estate and gift tax exemptions will be $5,250,000 in 2013, up from $5,120,000 last year, and adjusted for inflation going forward. The top tax rate for estates and gifts exceeding these amounts will be 40%, up from 35% last year, but better than the 55% rate that would have been the law had Congress not acted. And a surviving spouse will still be able to access the unused portion of the estate exemption of the deceased husband or wife.

It’s important to note that the exemption applies to both inheritances and lifetime gifts. The cumulative combined “transfer” exemption will be $5,250,000 whether the money is given away before or after you die. In addition, you can give away up to $14,000 annually to as many recipients as you like without tapping into your lifetime transfer tax exemption.

Average folks with estates far under $5 million might wonder how any of this applies to them. But the reality is that everyone needs an estate plan. The backbone of your estate plan, a will, is an essential legal tool intended to ensure that your final wishes are honored. A will can also indicate who will take care of your children should you pass away, and how the children can access their inheritance. If you want to include your favorite charity in your estate plans, there are strategies available to benefit both family and charity alike.

Estate planners might be breathing a sigh of relief, but don’t let the current rules lull you into complacency. Contact us and your attorney for a review of your estate plan today.

Five Financial Tips For Singles

Financial advice for married couples abounds, but you may be hard-pressed to find comparable information if you’re single. Keeping your status in mind, here are five practical suggestions.

1.  Work out a budget. Spending more than you earn can lead to financial disaster. Before you can figure out how to cut back, assess your overall situation. Then make the necessary adjustments. Stay within the budget boundaries, but also give yourself reasonable leeway.

2.  Maintain health insurance coverage. When you’re young and single, you might think you’re invincible, but a lengthy hospital stay could quickly erase your savings. It’s important to remain insured even if it’s limited to catastrophic coverage. If you’re changing jobs, you might continue coverage from an ex-employer’s plan under COBRA.

3.  Look into DI insurance. Similarly, you might opt for a disability income (DI) insurance policy for added protection in the event of a severe illness or accident, especially if you’re paying off a mortgage or have a high monthly rent obligation. Because you don’t have another salary to fall back on, you’re at greater risk than most married individuals.

4.  Start saving for retirement now. Once you’re working full-time, begin to salt away money in a qualified retirement plan, or an IRA, or both. Take advantage of employer-sponsored plans like a 401(k), especially if the company offers matching contributions. Avoid a common mistake of singles: If you switch jobs, roll over plan assets to another plan or IRA instead of cashing in the funds.

5.  Create a will. Wills aren’t just for married couples. A will allows you to designate beneficiaries for specific bequests. If you have any young children, you can appoint a guardian in the will. Finally, the will may coordinate other aspects of your estate plan.

Plan For The New Surtaxes In 2013

As you calculate your estimated federal tax for 2013, be sure to take into account two new surtaxes: the net investment income tax and the additional Medicare tax. Here’s how to tell if they’ll affect you and what you can do to blunt some of the impact.

Net investment income tax. This 3.8% tax applies when you have investment income such as dividends, interest, and capital gains, and your modified adjusted gross income (MAGI) exceeds $250,000 (for married filing jointly). When you’re single, the MAGI threshold is $200,000.

Mitigating the impact. Some types of income are not considered when computing your investment income for purposes of this tax. One example is tax-exempt interest. Depending on your overall investment goals, purchasing municipal bonds may be an option to consider.

Retirement plan distributions, including withdrawals from your IRA, are not counted as investment income when figuring the tax, either. However, taking money from your accounts does increase your MAGI.

Income from passive activities such as rental real estate is generally subject to the new tax. Depreciation deductions and a one-time opportunity to revise the way you group income from your rentals can offer some relief.

Additional Medicare tax. This 0.9% surtax applies to wages, tips, and self-employment income when your earned income exceeds $250,000 if you’re married filing a joint return ($200,000 when you’re single).

What to watch out for. Your employer is required to begin withholding the additional tax once you’ve earned $200,000, regardless of your filing status. Other earnings, including wages earned by a spouse or from a second job, are not considered. Depending on your total income, you may need to revise your W-4 or make quarterly estimated tax payments.

Give us a call for an analysis of your exposure to these new taxes. We’re here to help with personalized planning advice.

Charitable Donations From IRAs Can Still Be Made

From your IRA to the charity of your choice — the option to make a qualified charitable distribution from your Roth or traditional IRA is once again available. The American Taxpayer Relief Act of 2012 included a provision that again allows taxpayers age 70½ or older to make donations of up to $100,000 directly from their regular or Roth IRAs. Should you take advantage of the new tax rule?

Charitable IRA distributions are penalty-free withdrawals that are neither included in, nor deducted from, your taxable income. Better yet, such payments qualify as required minimum distributions (RMD) from your retirement account. Thus, if you do not need the IRA distribution to live on, and you wish to make a donation, a charitable IRA rollover might be a win-win strategy.

Charitable rollovers also make sense when the inclusion of the IRA distribution in your income would result in the phasing out of other deductions, such as personal exemptions or itemized deductions. Non-itemizers also benefit since the donated amount is excluded from their taxable income.

Keep in mind that there are unique restrictions on this type of gift. The IRA rollover cannot be contributed to a donor advised fund or supporting foundation. Also, if any benefit is received in exchange for the gift, such as dinner tickets, the entire distribution becomes taxable. As with any donation, the charity needs to provide you with a tax receipt containing all the proper substantiation for your contribution. Without it, the gift is disqualified. Also be aware that the donation must be made directly from the IRA to the charity and not paid to you first.

The charitable IRA rollover is a powerful new tool for tax and gift planning. Please call if you’re thinking of donating money from your IRA to charity. We’ll be happy to help you make sure the transfer stays within the rules and to assist you in analyzing whether this option makes sense for you.

Irs Offers New Simplified Home-Office Deduction

 

For tax years beginning on and after January 1, 2013, you may be able to use a simplified method of claiming deductions for your home office. The new procedure won’t replace the current actual cost method, but it will offer a “safe-harbor” alternative.

To claim a home-office deduction under the current method, you have to compile your actual home expenses such as depreciation, property taxes, and mortgage interest (or rent expenses, if you’re a tenant). You then compute the ratio of the square footage of your home office to that of your entire home and apply the ratio to your home expenses to determine the deductible amount.

Under the optional new method, you would simply multiply the square footage of your home office by $5.00 to arrive at your deduction. The maximum allowable area for this purpose is 300 square feet, which caps the deduction at $1,500.

The following considerations apply to either method:

The area claimed must be used regularly and exclusively for business. This means it must be either your principal place of business or a place where you meet or deal with customers in the ordinary course of business. If you’re an employee, the use of your home must be for your employer’s convenience.

For each year, the deduction is limited to the net business income remaining after all other deductions have been subtracted.

Business expenses that aren’t connected to the use of your home (such as supplies, advertising, and wages) remain fully deductible.

You’ll be permitted to switch back and forth between the simplified and actual methods from year to year, but an election to use either procedure will be irrevocable for the particular year selected. Therefore, you’ll need to review your home office situation annually to determine which option is better for you.

Five Steps To Ward Off Business Fraud

Business fraud is everywhere. It can range from employees pilfering small items from the office to embezzling hundreds of thousands of dollars. And crimes may be committed by anyone from the lowest-paid clerk to a long-time officer. All too often, business owners are oblivious to wrongdoings, or they simply refuse to acknowledge the possibilities – until it’s too late.

Don’t make the same mistakes as countless other victims. Here are five practical suggestions for thwarting workplace fraud.

1. Keep your eyes wide open. View your operation like an outsider and identify the areas that appear ripe for fraud. If a security problem persists, don’t ignore it and simply hope it will vanish. Confront the toughest issues head-on.

2. Review and adjust internal controls. Accountants often pinpoint this area as a main culprit. Install a system of checks and balances and regularly monitor activities. Note that employees may be deterred from theft if the process is well-documented. Otherwise, they may think they won’t be caught.

3. Develop reporting and investigation procedures. Encourage your employees to come forth about suspicious activities, but keep matters confidential. When it’s warranted, respond promptly and decisively. You will also discourage fraud by showing that actions have consequences.

4. Don’t become complacent. Even if no fraud is detected after an initial sweep, you must remain vigilant. Continue to adhere to the procedures you’ve established. Also, make sure that you follow through on any unresolved issues to their completion.

5. Rely on your professional advisors. For instance, an attorney’s services may be required if you decide to seek legal damages, while an  accountant can help implement and update internal controls.

Of course, there are no guarantees, but these five proactive steps should, at the very least, minimize risks to your company.

It's Tax Day... Last Minute Filing Or Extension?

It's April 15... Tax Day!  And if you have not filed then you are probably in a frenzy trying to pull your return together for a last minute filing.  But that may not be the best approach. 

Many times mistakes are made when you attempt to rush something.  So be careful that you are thorough and accurate if you are trying to file a last minute return.  Leaving off either income or deductions could cost you dearly in either penalties or lost tax savings.

A better approach would likely be to file an extension.  This is done by completing Form 4868 and submitting it with a payment for your expected balance due.  Notice I said with a payment!  Form 4868 grants you additional time to file, but your tax bill is due TODAY!

Regardless of the approach you take, be sure that you have your return or extension filed today.  Otherwise you will receive a not so pleasant surprise from the IRS as penalties and interest can be quite costly.

Five Steps To Ward Off Business Fraud

Business fraud is everywhere. It can range from employees pilfering small items from the office to embezzling hundreds of thousands of dollars. And crimes may be committed by anyone from the lowest-paid clerk to a long-time officer. All too often, business owners are oblivious to wrongdoings, or they simply refuse to acknowledge the possibilities – until it’s too late.

Don’t make the same mistakes as countless other victims. Here are five practical suggestions for thwarting workplace fraud.

1. Keep your eyes wide open. View your operation like an outsider and identify the areas that appear ripe for fraud. If a security problem persists, don’t ignore it and simply hope it will vanish. Confront the toughest issues head-on.

2. Review and adjust internal controls. Accountants often pinpoint this area as a main culprit. Install a system of checks and balances and regularly monitor activities. Note that employees may be deterred from theft if the process is well-documented. Otherwise, they may think they won’t be caught.

3. Develop reporting and investigation procedures. Encourage your employees to come forth about suspicious activities, but keep matters confidential. When it’s warranted, respond promptly and decisively. You will also discourage fraud by showing that actions have consequences.

4. Don’t become complacent. Even if no fraud is detected after an initial sweep, you must remain vigilant. Continue to adhere to the procedures you’ve established. Also, make sure that you follow through on any unresolved issues to their completion.

5. Rely on your professional advisors. For instance, an attorney’s services may be required if you decide to seek legal damages, while an  accountant can help implement and update internal controls.

Of course, there are no guarantees, but these five proactive steps should, at the very least, minimize risks to your company.