Tag Archives: taxes

Accounting

The Difference Between Bookkeeping And Accounting

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To some people, the role of bookkeepers and accountants are pretty much the same. People in both professions can track the way individuals and businesses spend their money. They can both tell you whether you’re in the black or the red. Those are pretty simple functions though. Once you need more than that, an accountant is the way to go.

One thing and accountant can do is tell you about your taxes. An accountant can tell you whether you need to make quarterly payments and how much. An accountant will find ways to minimize your tax liability if possible. It’s possible you can get that from a highly trained bookkeeper, but it would be uncommon.

An accountant can consult you on business purchases and other taxable expenses that you can save on. Bookkeepers might know some of that, but there’s no way they would know as much as an accountant will know since it’s their job to know that. If you needed to spend a particular amount of money to offset your income, an accountant can tell you that. If there are certain trips that you take which you can write off on your taxes, an accountant will know that as well.

This is not to negate bookkeepers by any means. A good bookkeeper can help you figure out how to budget your money so that you can get your bills paid. A good bookkeeper will know how to categorize your spending and your income so that your records are clean when you have to give them to an accountant to do your taxes. There should be a great symbiotic relationship between bookkeepers and accountants, while realizing that an accountant’s skills and knowledge have to go beyond those of a bookkeeper. It’s like the relationship between a doctor and a registered nurse. Registered nurses know a lot about medicine, but doctors have to know more and spend more time learning it.

T. L. Wall Accounting works with both companies and their bookkeepers when it’s tax time. Bookkeepers understand how to keep expenses as well as receipts in a proper format so that accountants don’t have to spend more time than necessary getting taxes completed. Of course it doesn’t hurt having an accounting firm that does your taxes also handle your books, but this decisions should always come down to the comfort level of the consumer.
 

Tax Preparation

The Four States Of Taxpayers

How do you prepare for your taxes? Strange as this may seem, it’s not necessarily true that people who are expecting big refunds are always the people who file their taxes fast and early. It’s also not true that people who feel that they might have to pay something are always waiting until the last minute either.

Dealing with taxes is a much more mental process than that. As it is with business and employees, you find that not everything concerning taxes has to do with money. It has a lot more to do with personality and the perception of it all. Let’s take a quick look at the four states of taxpayers.

1. Energetic. Those people who are energetic are ready to get things out of the way, no matter if they’re getting a refund or not. Those who are getting refunds look forward to their return and how they’re going to spend the money. Those who aren’t sure or know they’re not going to get a refund want to know what their liability is and also want everything to be over so they can get on with life. There’s no hiding with these folks; good for them.

2. Distracted. Distracted people mean well, but they keep putting things off because they have other pressing matters to deal with. Sometimes those pressing matters are as minor as getting something to eat, but who doesn’t think eating is more important than taking care of their taxes?

3. Stressed. Just like the energetic people, it doesn’t matter whether they’re getting a refund or not. They see the entire process of taxes in the first four months of the years as a major challenge. Numbers are confusing to them, or maybe past history has put them on edge. If you’re married, you might have had problems getting refunds so many times that this is an unpleasant time of year, no matter how much in taxes you paid out.

4. Laid back. These folks don’t really care one way or another; they’re just not in the mood to be bothered by any of it. I’ve known people who didn’t file their taxes for a couple of years in a row who, if they had, would have reaped thousands in refunds, and even after they eventually file and learn about the penalties, they’re not bothered by any of it. I know others who haven’t filed taxes, ended up owing money, and set up payment plans and got on with life.

For all of these states, it can help to have an accountant who knows you and is prepared to get you through the process. Accountants obviously prefer to get everything early, and if they know your pattern they’ll work with you for your benefit and theirs as well. Many people need the extra boost, and they like knowing that their accountant cares about their needs. It’s something to think about at tax time when you have to decide between one of those tax agencies or an accountant you’ve worked with before.
 

Budgeting

Claiming Dependents On Your Weekly Or Biweekly Paycheck

How many dependents do you claim on your taxes? I’m not talking the once a year tax-preparation, but the daily or weekly or biweekly taxes that are deducted from your paycheck.

Most people across the country will claim the same number of dependents that they do on their yearly tax form. What this is supposed to do is remove enough tax so that when you file your income taxes for the year you’ll either have paid everything that you owe or will either owe a little bit more or get a very small refund.

What some people do is claim fewer dependents on their paycheck so that more money is taken out at every pay period. What this does is guarantees them a refund when their taxes are done, and many people plan around that refund. However, it might not be the best use of their money. Let me explain.

Getting a refund from the government is nice. However, by taking more money out of your check it’s the government that gets to use that extra money to build interest on than you. If you have no problems with the government using your extra money then that’s fine. But if you’d like to use that extra money you might think about claiming one less dependent and then rolling that money over into some kind of investment. Not only would you be growing money for yourself, but because you’re investing it you get that extra bit tax-free for a while, which means you won’t have to pay much more on your yearly taxes, if you have to pay anything at all.

Did you know that you can claim anywhere up to nine dependents for your pay checks whether you have that many dependents or not? This is not a recommendation by the way, but it’s something you should probably know.

Every once in a while if you need a little bit of extra cash, it might not hurt to look into claiming more dependents for a pay period or two. What you’re doing in essence is borrowing against yourself instead of having to take out a loan or asking someone else for money. If you claim 9, for instance, you might not have any taxes taken out of your check or very little, and you can roll that money into something else. You could even roll it over into some kind of investing, but the tax amount that you’ll owe on it at the end of the year will still be higher than what you might want to deal with if you decided to do it more than a couple of pay periods.

That’s the main thing you needs to think about if you decide to claim more dependents than you actually have. You will still owe the government its money, and if you don’t plan for that then when you do your taxes at the end of the year you might be shocked to find out how much money you owe. Of course you could probably keep doing the same thing and borrowing against yourself, but that’s not a wise thing to do. Still, if you ended up having to make a deal with the government to pay back outstanding taxes, it will cost you a lot less than the interest on a credit card.

This is just something to think about if you’re ever in a spot where you need a little bit more money, or maybe want to take some of the money and invest it so that you’re making money rather than allowing the government to make money off of you. Of course you’ll want to talk to your accountant or money manager to see how this type of thing will work for you if you’re going to invest it, as well as talking to your accountant if you’re planning on upping your dependents for a short period of time so you can be warned as to around how much that might end up costing you if you don’t catch back up later on.