As it does annually around the end of the year, the IRS has announced the 2021 optional standard mileage rates. Thus, beginning on Jan. 1, 2021, the standard mileage rates for the use of a car (or a van, pickup or panel truck) are:

• 56 cents per mile for business miles driven (including a 26-cent-per-mile allocation for depreciation). This is down from 57.5 cents in 2020; 
• 16 cents per mile driven for medical or moving* purposes. This is down from 17 cents in 2020; and 
• 14 cents per mile driven in service of charitable organizations.
  
  * For years 2018 through 2025, the deduction for moving is only allowed for members of the armed forces on active duty who move pursuant to a military order. 

The business standard mileage rate is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs determined by the same study. The rate for using an automobile while performing services for a charitable organization is statutorily set (it can only be changed by Congressional action) and has been 14 cents per mile for 23 years).

Important Consideration: The 2021 rates take into account 2020 fuel costs. Based on the potential for substantially higher gas prices in 2021, it may be appropriate to consider switching to the actual expense method for 2021 or at least to keep track of the actual expenses, including fuel costs, repairs and maintenance, so that the option is available for 2021.

Taxpayers always have the choice of calculating the actual costs of using their vehicle for business rather than using the standard mileage rate. In addition to the potential for higher fuel prices, the 100% bonus depreciation deduction and increased depreciation limitations for passenger autos provided by the 2017 Tax Cuts and Jobs Act may make using the actual expense method worthwhile during the first year when a vehicle is placed into business service.

However, the business standard mileage rate cannot be used if you used the actual method (using Section 179, bonus depreciation and/or MACRS depreciation) in previous years. This rule is applied on a vehicle-by-vehicle basis. In addition, the business standard mileage rate cannot be used for any vehicle used for hire or for more than four vehicles simultaneously.

Employer Reimbursement – When employers reimburse employees for business-related car expenses using the standard mileage allowance method for each substantiated employment-connected business mile, the reimbursement is tax-free if the employee substantiates to the employer the time, place, mileage and purpose of the employment-connected business travel, and returns any excess payment to the employer. This reimbursement arrangement is referred to as an accountable plan.

The Tax Cuts and Jobs Act eliminated employee business expenses as an itemized deduction, effective for 2018 through 2025. Therefore, during this period employees may not take a deduction on their federal returns for unreimbursed employment-related use of their autos, light trucks or vans. Since they no longer get any tax benefit, employees with significant job-related auto usage should ask their employers to set up an accountable plan to reimburse them.

Members of a reserve component of the U.S. Armed Forces, state and local government officials paid on a fee basis and certain performing artists continue to be allowed to deduct unreimbursed employee travel expenses, including the business standard mileage rate, because they are deductible from gross income rather than as an itemized deduction. Self-employed individuals continue to be able to deduct use of their personal vehicle for business purposes as an expense of the business if properly substantiated.

Faster Write-Offs for Heavy Sport Utility Vehicles (SUVs) – Many of today’s SUVs weigh more than 6,000 pounds and are therefore not subject to the deduction limit rules for luxury auto depreciation. Taxpayers who purchase a heavy SUV and put it into business use in 2021 can utilize both the Section 179 expense deduction, up to a maximum for 2021 of $26,200, and the bonus depreciation (if the Section 179 deduction is claimed, it must be applied before the bonus depreciation) to produce a sizable first-year tax deduction. However, the vehicle cannot exceed a gross unloaded vehicle weight of 14,000 pounds. Caution: Business autos are 5-year class property. If the taxpayer subsequently disposes of the vehicle before the end of the 5-year period, as many do, a portion of the Section 179 expense deduction will be recaptured and must be added back to the taxpayer’s income (self-employment income for self-employed individuals). The future ramifications of deducting all or a significant portion of the vehicle’s cost using Section 179 should be considered. Generally, for vehicles weighing more than 6,000 pounds, using 100% bonus depreciation is the better option.

If you have questions related to the best methods of deducting the business use of your vehicle or the documentation required, please give this office a call.

The post 2021 Standard Mileage Rates Announced first appeared on Wellman Tax & Business Advisors, Inc..

• Income
• Expenses (excluding tax, interest, depreciation and amortization)
• Interest
• Taxes
• Depreciation of operational assets, such as equipment
• Amortization of intangible assets, such as patents

With those numbers in hand, the formula is:

EBITDA = Revenue – Expenses (excluding tax, interest, depreciation and amortization)

Or, more simply, EBITDA equals net income plus interest, taxes, depreciation and amortization.

Whichever way you approach it, it is important to know that, as useful as EBITDA can be, it is only one way to gauge an organization’s financial health and potential.

Making the decision to invest in or purchase a business requires a comprehensive view that ensures that you are well informed.

If you need additional assistance calculating a small business EBITDA or other accounting ratios, give us a call to set up a consultation.

The post Accounting Terms: Understanding the accounting term EBITDA and how to use it. first appeared on Wellman Tax & Business Advisors, Inc..

In order for the IRS to allow these deductions, documentation is required and should include the following items:

• The amount
• Date, time and place
• Business purpose
• Names of guests and business relationship

In addition, the surroundings must be conducive for a business meeting, and any discussion before, during or after any meal should be business-related for it to be considered for a deduction. An intimate and quiet location would be appropriate for a business discussion. Refrain from going to places with loud and distracting events that can interfere with the main objective: to talk about business. And note that merely going out to lunch with a co-worker and discussing events at work won’t qualify.

A 50% deduction on entertainment expenses is allowed by the IRS if the purpose of the business is to conduct a specific business agenda. The 50% rule also covers the cost of meals during away-from-home business travel. In addition, deductions for expenses related to the meals (e.g., taxes, tips and cover charges) are also limited to 50% of cost; however, this is not true for costs of transportation to and from the meal or entertainment location.

If your employer would otherwise reimburse you for business meals but did not because it was felt that the expense was not warranted, or if you simply chose not to seek reimbursement, the expense is not deductible.

Meal and entertainment expenses are deducted directly on the business schedule of a self-employed individual, but for an employee they are a miscellaneous itemized deduction; the total of this deduction category is reduced by 2% or your adjusted gross income. So the benefit will be reduced or possibly eliminated by the 2% reduction. In addition, miscellaneous itemized deductions are not deductible at all to the extent a taxpayer is taxed by the alternative minimum tax.

There are other important guidelines to consider, so please call our office for assistance.

The post Audit-Proofing Your Meal & Entertainment Expenses first appeared on Wellman Tax & Business Advisors, Inc..

Correspondence Audits – Employers, banks, lending institutions, schools, brokerage firms, escrow companies and others all feed data to the IRS, which the IRS, in turn, matches by computer the information reported on your tax return.  If there is a significant discrepancy, the IRS will correspond with the taxpayer.  Sometimes these discrepancies will result in additional tax liability, while other times a simple explanation will satisfy the IRS and make the problem go away.  Here are some examples of typically-encountered discrepancies:

• Unreported Pension Income – Whenever a taxpayer takes money out of one IRA account and rolls it over within the 60-day statutory limit into another IRA or qualified plan, the income is not taxable.  However, the financial institution from which the funds were withdrawn will issue a 1099R and report to the IRS that you made a withdrawal.  To show the rollover, a taxpayer must report on their tax return that the distribution was in fact rolled over.  All too frequently, taxpayers will fail to bring the distribution to their return preparer’s attention thinking that they have met the 60-day rollover requirement.  Because the rollover is unreported, it will result in a correspondence audit.  Generally, when moving an IRA from one institution to another, making arrangements for a direct transfer will avoid these types of audits.  However, that is not universally true, because some institutions will still issue a 1099R, which must be reconciled on the tax return.
• Gross Proceeds of Sale – When real estate, stock or other securities is sold, the IRS computer knows what it sold for.  Even if there is no gain or loss, it still needs to be reported on the tax return.  Otherwise, the IRS will assume the entire sales price (gross proceeds of sale) is taxable profit.  By reporting the sale on the return, the taxpayer is able to show what he or she paid for the sold investment, thus minimizing or even reporting a deductible loss.
• Alimony Paid or Received – A taxpayer who pays alimony is able to deduct the amount he or she paid.  On the other hand, the recipient of that alimony must report that amount as taxable income.  The IRS computer checks to make sure the amounts match; otherwise, a correspondence audit will be initiated by the IRS.  This is an area of frequent mismatch because there is a lot of confusion with what constitutes alimony, child support and property settlements.
• Home Mortgage Interest – Each of your mortgage lenders will report to the IRS the interest paid on your mortgage for the year and issue you a 1098 for the same amount.  If these amounts don’t reconcile, expect a correspondence audit.  Where this frequently becomes an issue is when the loan is from a private party and the paying taxpayer must report on his or her tax return the name and social security number of the individual to which the interest was paid, thus allowing the IRS to make sure the private lender is reporting the income.  Another frequently encountered area of mismatch is when two or more individuals are on the same loan, but lenders report the interest paid only under one of the borrower’s social security numbers.  Here again, a notation must be made on the return showing the individual who actually received the income, so the IRS can make sure that they are not claiming 100% of that interest and that the total reported paid by all parties does not exceed the total reported paid on the loan.
• Tuition Paid – Because of the American Opportunity, Hope and Lifetime education tax credits that can be claimed for paying tuition to a qualified education institution, the IRS requires those institutions to report the tuition received to the IRS and issue the 1098-T to the taxpayers.  Thus, the IRS has the ability to verify the tuition paid during the year, and any mismatch could result in a correspondence audit.
• Interest and Dividends – The IRS allows many financial institutions to issue substitute 1099s, i.e., forms that are not in the traditional standard 1099 format.  These substitute forms can often be misinterpreted by an untrained eye, with various types of interest and dividends reported separately and spread throughout lengthy annual account statements.  To make matters worse, many brokerage firms have been issuing amended 1099 statements late in the tax filing season, due to their errors in determining the allocation of a taxpayer’s earnings between dividends, qualified dividends, capital gains dividends, and original issue discount interest.  Thus, if the taxpayer has already filed, but the changes are significant and the taxpayer does file an amended return, he or she will probably receive a correspondence audit.
• Non-Taxable Interest – Interest from municipal obligations are tax-free for purposes of computing federal tax.  However, tax-free municipal interest income is added to income for purposes of computing taxable social security income.  It is also counts as income for purposes of determining whether a taxpayer qualifies for earned income credit (EIC).  Thus, payers of tax-free municipal interest must report the interest paid to the IRS and issue a 1099 to the taxpayer so that the IRS can match the tax-free income to the computation of taxable social security and EIC disallowance.
• Cash Charitable Contributions – Regardless of the amount of cash contributed, a charitable contribution must be backed up with either a bank record or written communication from the donee organization showing the: (1) name of the donee organization, (2)  date of the contribution, and (3) amount of the contribution.  The recordkeeping requirements may not be satisfied by maintaining other written records.What this means is that unless the charitable organization provides a written communication, cash donations put into a “Christmas kettle,” church collection plate, and pass-the-hat collections at youth sporting events will not be deductible.  Donations by debit or credit card can be substantiated by bank records.  These rules will give the IRS the ability to audit taxpayer’s charitable contributions via correspondence audits since all contributions must be backed by written receipt or bank record.

Don’t assume that just because you received a notice that the IRS is correct.  They are frequently wrong.  Please call us before responding to any IRS notice. Tax laws are complicated, and the notices are not always easily understood.

Face-to-Face Audits – The more demanding face-to-face audit is rarely encountered by wage-earning taxpayers who report all their income and have deductions that are within the general norms.  Self-employed, high-income taxpayers, those who have omitted substantial income, or those who repeatedly fail to show income to support their lifestyle are more likely to be subject to these types of audits.

You can appear for the audit yourself, but that is probably a bad idea since you are not trained in the rules and regulations regarding audit procedures and what limits the IRS’s incursion into your private life.  You can authorize this office to handle it for you.  Often, this is the best way to prevent the audit from escalating beyond the original areas that attracted the IRS’s interest in the first place.  Practitioners experienced with IRS audits are less likely to become emotional or to make statements that would lead to additional IRS questioning.

Caution: It is strongly recommended that you notify Wellman Tax & Business Advisors immediately upon contact from an IRS agent or the receipt of any inquiry from the IRS.  Don’t procrastinate! That only leads to further action on the part of the IRS.

The post Tips to Avoid a Tax Audit first appeared on Wellman Tax & Business Advisors, Inc..

Conscientious daily work habits—including a constant eye on tax issues—can help prevent this painful scenario. QuickBooks offers many built-in tools to help you minimize the tax-time terrors.

Stay on Top of Your Receivables in QuickBooks 2011

Even if your sales are up, slow customer payments may be damaging your cash flow. If you often come up short when it’s time to pay your tax obligations, it may be that you’re not chasing down your receivables adequately.

QuickBooks Pro and Premier 2011 added a number of features to help with this. The new Customer Snapshot gives you instant access to key customer information; things like open balance, number of days to pay, and recent invoices and payments.

A new vertical pane next to transaction forms displays an overview of your interaction with the customer or vendor. Beyond saving the time you used to spend looking up historical information, this feature can alert you to collection opportunities. A new Collections Center also automates e-mailed collection notices.

Figure 1: QuickBooks Pro and Premier 2011 display vertical panes next to transactions to help you catch unbilled items and open balances.

If you’ve got any questions about these newer versions of QuickBooks, give our office a call.

Older Versions’ Cash Flow Tools

Previous versions of QuickBooks also help you maximize customer payments. Enter an invoice for a customer who has outstanding time charges and/or costs, and a dialog box reminds you of that.

Figure 2: If you’re invoicing a customer who already owes you money, QuickBooks will remind you – and include the past due balance in your current form.

Also, QuickBooks’ integration with Microsoft Word makes short work of collection letters. Open theCustomer Center, then click Word | Prepare Collection Letters and follow the wizard. The Payment Snapshot (Company Snapshot | Payments) is a page you should visit daily; its tables and graphs spell out who needs nudging.

Intuit also offers solutions that let you accept payments online, so you don’t have to wait for checks to arrive in the mail. Talk to us about which one might be best for you and how to get started with it.

Keep Documents Close

However you store receipts and other tax-related paper, it can be frustrating to match paper to QuickBooks data. QuickBooks 2010 introduced the ability to attach scanned documents to any screen that has theAttach icon. Using this tool faithfully will reduce the time and frustration associated with your tax preparation. Prices start at $9.95/month for one attachment per list item or transaction; 30-day free trial.

Figure 3: Click on this icon to attach a scanned paper document to a QuickBooks item.

Use “Classes”

QuickBooks uses the accounts assigned to your transactions to categorize your tax-related data. You can also slice your data in additional ways by using classes to break out account balances by filters, like by departments, consultants, or locations.  You must use it faithfully for it to be effective.  You should also check with us before embarking on this new classification system.

First, make sure that QuickBooks is equipped to handle classes. Click on Edit | Preferences, then click the Accounting tab and Company Preferences. Click on the box next to Use class tracking if it isn’t already checked, and on Prompt to assign classes if you want QuickBooks to remind you before you save an unclassified transaction.

Figure 4: Make sure your Company Preferences are set to accommodate class tracking.

Go to Lists | Class List,  and then click the Class tab in the lower left corner. Select New.  Type your new class name in the field that appears and check the Subclass of box if you want to make this a subclass. Assign these classes in transactions where appropriate, and you’ll have neatly categorized data for theProfit & Loss by Class, Profit & Loss Unclassified, and (new in 2011) Balance Sheet by Class reports. Classes can also be displayed in other reports.

Built For Tax Reporting

QuickBooks can’t prepare your taxes for you, but these tools and more help shape your data to make tax deadlines less stressful and your returns more accurate than the days of pencil and paper.

It does so in the background by, for example, assigning your transactions to the appropriate accounts, so your reports tell the right story. Other assistance is more obvious; QuickBooks helps you print 1099s, W-2s and W-3s.

QuickBooks’ design encourages you to look at tax-related issues every day, which can be a very good thing come filing time. Take advantage of this—along with the expert advice of our offices—and you can be more confident and less frantic during your periodic interaction with the IRS.

The post Taxes 24/7/365 first appeared on Wellman Tax & Business Advisors, Inc..

Pro footballers enjoy high profiles in society, so they tend to make headlines when they misbehave. (Cincinnati Bengals owner Mike Brown has apparently made a specialty of hiring miscreants, with at least a half-dozen accused or convicted offenders currently wearing his team’s jersey.) So it’s no surprise that former Kansas City Chiefs quarterback Joe Bruner made headlines last week as he was sentenced for battery. The real surprise here is just who Bruner assaulted — namely, his accountant!

Bruner joined the Chiefs in 1976 after playing quarterback for Northeast Louisiana State University. After his pro career ended, he wound up back in his childhood home of northwest Florida, where he eventually wound up owning a local waterpark called Big Kahuna’s in Destin. While Bruner may have delighted his customers, he apparently didn’t delight the accountants who helped him manage his business.

Bruner’s accountant, Wayne Montgomery, testified that Bruner punched him in the eye, pushed him face down into a recliner, and hit him repeatedly in the head, neck, and back at a meeting at Bruner’s house last July. Bruner was apparently “upset” with the size of his refund, and accused Montgomery of working for a previous accounting firm that Bruner was suing at the time. Months later, Montgomery reported Bruner calling him at 4:38am and threatening him with the following words: “Battery, battery, battery. You just think battery. Next whipping I’m giving you real battery. I’m going to destroy you and your property in Alabama and Tennessee.”

Bruner was convicted of felony battery in August, but acquitted of retaliating against a witness. (Sort of like confessing “I shot the sheriff — but I did not shoot the deputy, oh no . . . .”) Unfortunately for Bruner, this wasn’t the first time he fought the law — and this time, the law won. Circuit Court Judge John Brown cited five previous incidents where Bruner faced violence-related charges, then sentenced Bruner to 11 months and 29 days in Okaloosa County Jail. Brown also ordered Bruner to take anger management classes, submit to drug and alcohol tests, give up any weapons in his possession, and avoid contact with his former accountant.

The obvious lesson here is that hitting your accountant won’t get you more money from the IRS! The less obvious lesson, of course, is that if Bruner had the right proactive plan to save taxes, he would have been happier with his refund in the first place — and therefore wouldn’t have lost his temper with his accountant. So call us when you’re ready for your plan, and you won’t have to risk doing time to minimize your taxes!

The post After Further Review, the Penalty Stands first appeared on Wellman Tax & Business Advisors, Inc..

Create Discount Calculations

Studies have shown that it’s far easier to get additional sales out of existing customers rather than from new customers. Targeted discounts are just one way to try to encourage your customers to buy more.  However, if you do offer a discount, don’t just type over your standard prices on the QuickBooks invoice, but instead create a discount calculation. This accomplishes two things:

• Your customers see on their invoice exactly how much of a break you’ve given them.

• You can track how successful your campaign was.

It’s easy to set up a discount calculation:

1. Choose Lists, and then Item List.

2.  Click the Item button, and then choose New from the menu (or press Ctrl N).

3. As shown in Figure 1, Choose Discount from the Type list.

4. Assign an item name, complete the description field, and then enter an amount or a percentage.

5. Choose an account from the list—you may wish to create a separate account so that you can easily track the amount of discounts that you’ve offered.

6. Choose Tax or Non-tax to indicate whether the discount is applied before or after sales tax, and then click OK.

Figure 1: A discount item allows you to create and track percentage or amount based discounts.

Keep in mind that discounts only apply to the previous row of the invoice or sales receipt. To apply the discount to multiple items, you must create a Subtotal item:

1. Choose Lists, and then Item List.

2. Click the Item button, and then choose New from the menu (or press Ctrl N).

3. Choose Subtotal from the Type list, and then assign an Item Name and Description, as shown in Figure 2.

Figure 3 shows a multi-line invoice, along with a subtotal and a discount on all of the items.

Figure 2: A subtotal item allows you to apply a discount to multiple items on an invoice or discount.

Figure 3: Include a subtotal on your invoice when you wish to discount multiple items.

Use Price Levels

Price negotiations are becoming more prevalent, and you may find that you have to offer a standard discount to one or more customers in order to keep their business. In such cases, you might find the price level feature helpful, so that you don’t have to remember to include a discount item on each invoice:

1. Choose Lists, and then Price Level List.

2. Click the Price Level button, and then choose New (or press Ctrl-N).

3. As shown in Figure 4, assign a name to the price level, such as 10% Discount.

4. QuickBooks Pro users can only establish Fixed % price levels, which are applied globally to all products. QuickBooks Premier and Enterprise users also have the option to create Per Item discounts, where you can selectively discount only certain items.

5. Specify whether to increase or decrease item prices, and optionally choose a rounding method.

Figure 4: Price levels allow you to apply automatic discounts to everything a customer purchases.

Note: You can use price levels to increase or decrease prices.

Change Item Prices

Competitive or other pressures may mean that you need to globally change all of your prices at once. Fortunately, you can use the Change Item Prices feature to do so:

1. Choose Customers, and then Change Item Prices.

2. As shown in Figure 5, select an Item Type from the list, and then select the items you wish to change, or click the Mark All checkbox.

3. Indicate a percentage or dollar amount to increase prices by. This can be based on the current price or current cost of the item. Enter a positive number to increase the price, or negative number to decrease the price.

4. Click the Adjust button to see the impact of your changes in the New Price column, and then click OK to make the changes permanent.

Timesaver: You can also manually fill-in the New Price column if you prefer to make targeted adjustments to selected items. This is easier than manually opening each item one at a time.

Figure 5: The Change Item Prices feature allows you to adjust multiple prices at once.

Add a Surcharge

We’re fortunate that gas prices are currently far less than were they were just a few months ago. However, who knows how far they may go this summer during peak driving season. At some point you may need to consider adding a fuel or other type of surcharge to help recover costs beyond what you’ve factored into your existing prices:

1. Choose Lists, and then Item List.

2.  Click the Item button, and then choose New from the menu.

3. As shown in Figure 6, choose Other Charge from the Type list.

4. Assign an item name, complete the description field, and then enter an amount or a percentage.

5. Choose an account from the list, and then click OK. As shown, you may wish to create a separate account so that you can easily track the amount you earn from the surcharge.

Important: As with discounts, Other Charge items only apply to the preceding row on an invoice or sales receipt. Be sure to add a Subtotal item to your invoice if you want the surcharge to apply to multiple rows of your invoice or sales receipt.

Figure 6: The Other Charge feature allows you to compute fuel and other surcharges.

The post Use QuickBooks to Manage Prices in a Down Economy first appeared on Wellman Tax & Business Advisors, Inc..

Three long awaited improvements

Some users have been stymied by the fact that QuickBooks would not allow numbers of $100 million or above to be entered. QuickBooks 2009 extends this limit to numbers just shy of $100 billion. So, instead of being limited to 8-figure numbers, you’re now limited to 11-figure numbers. This increased limit is particularly helpful now that QuickBooks supports multiple currencies. As shown in Figure 1, you can configure QuickBooks to process transactions in just about any currency. Records will show both the foreign and converted amounts, plus Intuit now offers an international payment service that allows you to initiate wires and drafts for more than 100 foreign currencies from within QuickBooks.

Figure 1: QuickBooks 2009 supports multiple currencies.

A more universal improvement that you’ll appreciate involves the Bank Reconciliation window. Until now you couldn’t sort transactions, which meant you could spend a lot of time looking for a specific item when combined with the seemingly arbitrary grouping of transactions. As shown in Figure 2, you can now click on any column heading and sort the bank reconciliation columns any way you wish.

Figure 2: You can click and sort based on any column heading in the Bank Reconciliation window.

Multiple User Improvements

You may also have been frustrated in the past that you had to switch QuickBooks into single-user mode in order to back-up your company. For many offices, this involves tracking everyone down, getting them to log out of QuickBooks, and then letting them know when to get back in. Or, because of the hassle, some users just wouldn’t get around to backing up their data. QuickBooks 2009 addresses both of these issues:

• You’re now able to back-up QuickBooks while other users are logged into the company.

• The new Messenger feature allows you to instantly communicate with other users currently logged into the software.

The multi-user improvements don’t stop there: now one user can create an invoice while another is running a report.

Accountants Copy Improvements

You’ll also be glad to know that you can now reconcile your bank account at any time while the accountant’s copy is out. Previously you couldn’t carryout reconciliations after the dividing date until the accountant’s copy had been returned. In addition, accountant’s copy users can now map Form 1099 fields, as well as modify and merge classes. Further, accountant’s copy users can access both QuickBooks 2008 and 2009 companies, which simplifies the review process.

Other new features

QuickBooks 2009 also includes a potpourri of other new features:

• The new Company Snapshot provides an instant overview of your business, as shown in Figure 3.

Figure 3: The new Company Snapshot serves as an executive dashboard.

• Online banking has been improved, meaning that QuickBooks should automatically match more transactions, resulting in less work for you to do by hand.

• The Item List window has a new search feature that makes it easier to find inventory items, as shown in Figure 4.

• A new Duplicate command allows you to replicate existing inventory items and certain transactions. As shown in Figure 4, this command appears when you right-click on an inventory item. It also appears when you right-click anywhere in a transaction window, as shown in Figure 5. Although QuickBooks enables you to duplicate existing transactions, the Memorized Transaction feature is a much safer way to do so. Duplicating a transaction means an exact duplicate, including invoice or check numbers and dates.

Figure 4: A new search feature helps locate items, while the new Duplicate command eliminates redundant keying.

Figure 5: It’s possible to duplicate transactions, but use this feature with care.

• QuickBooks 2009 users can have a free business web site—comprised of three pages—hosted for twelve months.

• QuickBooks 2009 is Windows Vista-certified by Microsoft, although previous versions should also work within without issue in Windows Vista.

• Converting from Peachtree 2008 and Microsoft Office Accounting 2008 to QuickBooks is easy via the free QuickBooks Conversion Tool available at www.quickbooks.com/converttoquickbooks.

• Adobe Acrobat Form templates can be imported into QuickBooks. Keep in mind that this requires that you purchase Adobe Acrobat Pro in order to do so, but this allows other employees or sales reps to generate invoices, sales orders, or estimates that can be imported into QuickBooks. This allows you to push accounting tasks out to the field, without granting direct access to QuickBooks.

• QuickBooks Enterprise Edition now supports up to 30 users, so you can stay with QuickBooks as your business grows.

• The Administrator password now uses stronger, 2048-bit encryption. Make sure that you don’t lose this password, as you’ll have a much tougher time revealing it through password recovery tools.

• A new Live Community feature allows you to see questions and answers posted by other QuickBooks users, as shown in Figure 6. You can even post questions on your own for free, but keep in mind that there’s no guarantee of a response to your question. If you find that Live Community takes up too much screen space, you can turn off the feature by choosing Edit, Preferences, and then clear the checkbox for Show Live Community in the Desktop view, as shown in
Figure 7. You can then activate Live Community at any time by choosing Help, and then Live Community.

Figure 6: The Live Community feature allows you to see what questions others are asking about QuickBooks.

Figure 7: You can disable Live Community if you don’t find it helpful.

A worthy upgrade

Quickbooks 2009 offers solid improvement over previous versions. With new features like 11-digit number support, multiple currency support, and advanced sorting options, you’re sure to increase your productivity enough to more than offset the cost of the upgrade. Add usability features like enhanced security and multi-user support and Quickbooks 2009 looks like a winner.

The post First Look:QuickBooks 2009 first appeared on Wellman Tax & Business Advisors, Inc..

1. Profit & Loss Summary Prev Year Comparison: To access this report, choose Reports, Company and Financial, and then Profit & Loss Summary Prev Year Comparison. Most business owners rely on the Profit & Loss Summary report, but comparing your results to last year can provide quick insight into whether your revenue is growing or contracting—as well as how fast expenses are rising.

2. Balance Sheet Prev Year Comparison: You’ll find this report also within the Company and Financial section of the Reports menu.  As with your income statement, it’s important to compare where certain balances stand now versus last year:
• Cash
• Accounts Receivable
• Inventory
• Accounts Payable
• Other Liabilities, such as lines of credit or short term loans

3. Statement of Cash Flows: As with the two preceding reports, you’ll find the Statement of Cash Flows in the Company & Financial section of the Reports menu. Profit & Loss reports enable you to see what you earned, while Balance Sheet reports help you determine what you have—as well as what you owe. However, neither report necessarily provides a clear picture of where cash is coming from, or going to. As shown in Figure 1, you’ll be able to see:

• How much cash you’ve taken in from sales and spent on expenses

• Cash inflows or outflows from borrowing, repayment, or investing activities
In short, this report shows you exactly what caused your bank balance to increase or decrease during a given report period.

Figure 1: The Statement of Cash Flows report explains changes in your bank account balance.

4. Collections Report: Tricky economic times mean it is more important than ever to keep track of your collections.  Fortunately QuickBooks makes it easy to contact customers with overdue invoices: choose Reports, Customers & Receivables, and then Collections Report. As shown in Figure 2, the report provides a phone list and shows all overdue invoices. However, you can also use this report to quickly e-mail copies of overdue invoices to your customers.  To do so, double-click on a transaction within the Collections report to view the invoice, and then click the Send button at the top of the invoice form to display the Send Invoice form shown in Figure 3. You can modify the wording shown to be more direct, such as a subject line of “Overdue Invoice”or perhaps e-mail text along the lines of “I’ve attached a copy of your overdue invoice. If there’s a problem with our products or services, please let me know immediately, otherwise I trust that you’ll remit payment promptly.” To change the default e-mail text, choose Edit, Preferences, and then choose Send Forms. Select Invoice from the Change Default For list, make your changes, and then click OK.

Figure 2: The Collections Report gives you a jump start on dunning overdue customers.

Figure 3: You can adjust the wording of an overdue invoice e-mail for one customer at a time or change the default text.

5. A/P Aging Summary: Although it’s key to make sure that your customers are paying in a timely fashion, it’s just as important to pay your vendors, too. Unpaid bills can result in phone calls, e-mails, and other unnecessary interruptions. Choose Reports, Vendors & Payables, and then A/P Aging Summary to display the report shown in Figure 4. As with most reports in QuickBooks, you double-click on amounts to ultimately drill down to the original transaction.

Figure 4: The A/P Aging Summary helps you determine when bills are slipping into overdue status.

6. Trial Balance: Many business owners overlook the Trial Balance report, since it’s one of the few reports in QuickBooks that uses the terms Debit and Credit. However, it’s a helpful report, as it shows you all account balances in a concise format. If anything looks out of order, simply double-click on the amount to view the underlying detail. Choose Reports, Accountant  & Taxes, and then Trial Balance to view this report.

7. Voided/Deleted Transactions Summary: It’s no surprise that small businesses are much more prone to fraud than large businesses. Small business employees usually wear multiple hats, so it’s often impossible to separate financial duties (bigger businesses can do this with ease). Fortunately QuickBooks makes it hard for perpetrators to cover their tracks: choose Reports, Accountant & Taxes, and then Voided/Deleted Transactions Summary. As shown in Figure 5, you’ll be able quickly identify any transactions that have been deleted from QuickBooks. Granted, this isn’t an end-all solution by any means, but it is a helpful management tool. Plus, if a transaction ends up “vanishing” from QuickBooks, you can use this report to see who deleted it!

Figure 5: The Voided/Deleted Transactions Summary enables you to find transactions that appear to have vanished.

8. Audit Trail: The audit trail was an optional feature in earlier versions of QuickBooks, but is permanently enabled in recent versions of QuickBooks. This provides a complete record of every entry made in QuickBooks, as shown in Figure 6. The downside to that is that you can end up with a massive report. Don’t worry, as it’s easy to filter this report and narrow your search. To do so, choose Reports, Accountant & Taxes, and then Audit Trail. Once the report appears, click the Modify button, and then click on the Filters tab. You can filter by date range, amount, or dozens more fields.

Figure 6: The audit trail shows every transaction—including modifications—in QuickBooks.

9. Previous Reconciliation: It’s a good practice to always print at least the summary report once you’ve reconciled a bank or credit card account. Someone else could edit a reconciled transaction, which could cause the reconciliation to be out of balance. A printed copy of the report shows that the account reconciled as of the report date, although you will still have to untangle the edited transaction. However, if you close out the reconciliation screen, you have a second chance to print your report: choose Reports, Banking, and then Previous Reconciliation. As shown in Figure 7, you can choose from multiple reports.

Figure 7: The Previous Reconciliation report option allows you to reprint missing account reconciliation reports.

10. Transaction History: Think of this as a “report within a report”, as you can only run it in certain circumstances. As shown in Figure 6, you must have a transaction open on the screen or single-click on a transaction within a report. You can then choose Reports, and then Transaction History. As shown in Figure 8, QuickBooks will display a report that shows the entire history for a given transaction.

Figure 8: The Transaction History report provides shows all activity related to a given transaction.

Did You Know?

The Microsoft web site offers hundreds of free spreadsheet and word processing templates. Options range from timesheets to analysis tools to contract documents. Visit http://office.microsoft.com/templates, and then search for a template by use (home, office, school), collection (real estate, small business, wedding), or keyword. Indeed, if you’ve created a template that you rely on, you can submit it to the site and share your work with others!

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