5 Ways a Real Estate Bookkeeper Can Revolutionize Your Accounting & Boost Your Bottom Line
In the realm of business, bookkeeping stands as the cornerstone for maintaining accurate financial records. When it comes to real estate, this practice takes on a whole new significance, encompassing assets, liabilities, and overall capital management. The benefits are manifold, offering streamlined tax tracking, enhanced cash flow, performance analysis, and heightened security.
Real estate bookkeeping not only facilitates easier tax tracking but also empowers businesses to analyze their performance, track profits and losses, and ensure financial security. To delve deeper into the transformative potential of a real estate bookkeeper, let’s explore five key ways they can elevate your accounting practices and bolster your financial prosperity:
- Stay Informed and Ahead: With a dedicated real estate bookkeeper on board, you gain real-time insights into your financial landscape. This proactive approach allows you to identify trends, anticipate challenges, and seize growth opportunities.
- Safeguard Against Losses and Fraud: Vigilant monitoring of financial records is paramount in safeguarding your business against losses and fraudulent activities. A skilled bookkeeper conducts comprehensive audits, ensuring transparency and accountability in all financial dealings.
- Navigate Tax Season with Confidence: Real estate bookkeepers not only track financial transactions but also serve as invaluable allies during tax season. By maintaining meticulous records, they help you accurately assess tax liabilities, minimize risks of penalties, and optimize your tax strategy for maximum savings.
- Provide Accurate Financial Data: In the fast-paced world of real estate, access to accurate financial data is indispensable for making informed decisions. A proficient bookkeeper ensures that your financial records are up-to-date, reliable, and tailored to your specific business needs.
- Maximize Profitability and Efficiency: By harnessing the insights provided by a real estate bookkeeper, you can identify areas for optimization, streamline processes, and ultimately enhance your bottom line. With their expertise in real estate accounting, they offer strategic guidance to help you maximize profitability and achieve your business objectives.
In conclusion, the role of a real estate bookkeeper extends far beyond mere record-keeping. It catalyzes growth, offering invaluable support in navigating the complexities of real estate accounting. To harness the full potential of professional bookkeeping services tailored to the real estate industry, look no further than Loeffler Financial Group. Schedule your consultation today and embark on a journey towards financial empowerment and prosperity. Visit our website for more information: http://www.LoefflerFinancialGroup.com.
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Avoid These Small Business IRS Audit Mistakes
Businesses that are slowly emerging from the COVID-19 pandemic should now keep their eye on another looming obstacle: IRS audits. In late 2020, the IRS announced that it will increase tax audits of small businesses by 50 percent in 2021. Here are several mistakes to avoid if you do get audited by Uncle Sam.
- Mistake: Missing income. A long history of investigating has led IRS auditors to focus on under-reported income. If you’re a business that handles cash, expect greater scrutiny from the IRS. The same is true if you generate miscellaneous income that’s reported to the IRS on 1099 forms. Be proactive by tracking and documenting all income from whatever source. Invoices, sales receipts, profit and loss statements, bank records—all can be used to substantiate income amounts.
- Mistake: Higher than normal business losses. Some small businesses struggle in the early years before becoming profitable. If your company’s bottom line never improves, the IRS may view your enterprise as a hobby and subsequently disallow certain deductions. As a general rule, you must earn a profit in three of the past five years to be considered a legitimate business.
- Mistake: Deductions lacking substantiation. Do you really use your home office exclusively for business? Does your company earn only $50,000 a year but claim charitable donations of $10,000? Do you write off auto expenses for your only car? The key to satisfying auditors is having clear and unequivocal documentation. They want source documents such as mileage logs that match the amount claimed on your tax return and clearly show a business purpose. If you can’t locate a specific record, look for alternative ways to support your tax return filings. In some cases, a vendor or landlord might have copies of pertinent records.
- Mistake: No expense reports. If you use your credit card for business, create an expense report with account numbers and attach it to each statement. Then attach copies of the bills that support the charges. This is an easy place to blend in personal expenses with business expenses and auditors know it.
- Mistake: No separate books, bank accounts or statements. Never run personal expenses through business accounts and vise versa. Have separate bank accounts and credit cards. A sure sign of asking for trouble is not keeping the business separate from personal accounts and activities.
- Mistake: Treat the auditor as an enemy. Auditors have a job to do, and it’s in your best interest to make their task as painless as possible. Try to maintain an attitude of professional courtesy. If you’re called to their office, show up on time and dress professionally. If they come to your place of business, instruct staff to answer questions honestly and completely.
Please call Loeffler Financial Group if you either need help preparing for an upcoming IRS audit or would like to know how to audit-proof your financial records.
With millions of Americans working remotely for the first time this year, the Federal Trade Commission is warning people about work-from-home scams.
Our Loeffler Financial Group accountants have provided some common work-from-home offers to be careful of according to the FTC:
At-Home Medical Billing Businesses. Many medical billing business opportunities are worthless. Their promoters don’t tell the truth about earnings potential and fail to provide key information.
Envelope-Stuffing Schemes. Offers that promise quick and easy income from stuffing envelopes at home virtually never pay off.
Telemarketing Resale Scams. Selling brand-name merchandise from home can be a great way to work-at-home making some extra money. But fraudsters sometimes call to lure you into a resale proposition. They’re the ones who make the money – and they make it from you.
Work-at-Home Businesses. Many work-at-home opportunities are promoted by scam artists. If you pay in, it’s likely that you will spend more than you can earn.
How to Protect Yourself
- Do your research. Talk to other people and read reviews about the work-from-home opportunity you are considering. Also consider checking out a company with your local consumer protection agency, your state’s Attorney General or the Better Business Bureau.
- Request the FTC’s one-page disclosure document. Sellers of work-from-home opportunities are required by the FTC to give you a one-page disclosure document that offers key pieces of information about the opportunity. Click here to see what the document looks like.
- Ask follow-up questions. In addition to reviewing the disclosure document, ask the sellers follow-up questions such as the following: What tasks will you have to perform? Will you be paid a salary or be on commission? What is the basis for the company’s claims about what you can earn? When will you get your first paycheck?
Reporting a Scam
If you have spent time and money on a work-at-home program and now believe it may not be legitimate, contact the company and ask for a refund. If you can’t resolve any disputes with the company, file a complaint with the FTC at ftc.gov/complaint or call 877-FTC-HELP.
Also file a complaint with your state’s Attorney General’s office or the state where the company is located.
And as always, feel free to reach out to Loeffler Financial Group with any questions you may have. Our team of expert accountants and financial planners are always here to help assist with any questions or concerns you may have.
The importance of a CPA
Life is often viewed as a series of stages – childhood, graduation, parenthood, and retirement, to name a few. Like the points on a clock, time moves us from one stage to the next. No matter what “time” it is in your life cycle, you probably share a common worry: money. Managing money for today is one thing; making decisions to ensure adequate funds for the next stage is quite another.
The CPA commitment. As trusted advisors, CPAs across the country have made a commitment to increase financial literacy. How? By volunteering to educate the public about financial issues and the decisions that must be made at every stage of life. Americans are faced with significant financial concerns, but often have insufficient financial literacy. Bright and even highly educated people sometimes have trouble speaking the language of money, often to their economic detriment.
To combat this trend, the CPA profession has united around a cause to educate Americans, rich and poor, young and old, on how to better handle their finances. With the life cycle “clock” as a model, CPAs have taken a full, 360-degree view of the challenges Americans face. For each milestone, the profession has solid, practical advice to share. You might say CPAs are once again emphasizing the term “public” in their title.
Call on us. Which brings us to our firm, Loeffler Financial Group. We, too, have accepted the call to educate our community. Our team of experts would be pleased to speak to your organization about life’s financial challenges. We can also speak to students or provide classrooms with timely, interesting material on money and financial issues.
If you would like to find out more about the accounting profession’s drive to improve financial literacy, give us a call. Life’s financial clock is ticking. Let us help you before the alarm goes off. Call Loeffler Financial Group today at 717-393-7366!
Be aware that important tax consequences are often associated with some fairly common events involving your home. Here are some handy things to know.
Home purchase. When purchasing a home, you may pay a portion of the mortgage interest in advance. This loan origination fee, or “points,” is a percentage of the total amount borrowed.
If points are paid for a principal residence, you generally can deduct the full amount in the year paid, even if the points were paid by the seller. One caution: you must reduce your home’s tax basis (cost) by the amount of seller-paid points.
Of course, one of the greatest tax benefits of home ownership kicks in during the early years of the mortgage, when most of your payments go toward tax-deductible interest.
IRA withdrawals. The tax law allows penalty-free IRA withdrawals, up to a lifetime limit of $10,000 for the purchase of a first home for you or members of your family. Withdrawals from Roth IRAs for qualifying first-home expenses can be both penalty- and tax-free after the Roth is five years old.
Refinancing. What happens if you refinance? If you pay points, the general rule requires that you prorate deduction over the life of the loan. But if some of the refinance proceeds go toward home improvements, you may be able to take a current deduction for the portion of the points related to those improvements.
Improvements. If you take out a loan to make substantial improvements to your principal residence, and the loan is secured by that property, the interest is generally deductible. Remodeling often increases the value of your property. Remodeling costs also increase the property’s basis, potentially reducing capital gains tax if a future sale is partially or fully taxable.
Other home improvement costs generally are not deductible, but if you upgrade your home for medical reasons – say, to add a wheelchair ramp or stair lift – you may be able to deduct a portion of the cost as a medical expense.
Home office. The home office deduction can be another tax break of home ownership. If you use part of your home regularly and exclusively as a principal place of business, you may be able to deduct costs associated with that part.
Home sale. When you sell a home that you have owned and used as your principal residence for at least two of the five years before the sale, you can generally exclude from taxation up to $250,000 of profit if you’re single and up to $500,000 if you’re married filing jointly. Profits in excess of those amounts are subject to regular capital gains rates and rules.
The definition of “principal residence” includes not only the conventional single family house, but also such homes as house trailers, mobile homes, houseboats, condominiums, cooperative apartments, and duplexes.
Selling at a loss. Unfortunately, if you sell your home for less than you paid for it, you may not take a tax deduction for your loss.
Taxes often come into play for homeowners, and it’s important to be aware of potential benefits and pitfalls.
Contact Loeffler Financial Group today to learn more about your personal tax planning as a homeowner, 717-393-7366.
The holidays are here, and most small business owners are in the thick of what is for most the busiest time of the year. It’s easy to feel overwhelmed and move typical accounting tasks to the bottom of an already long to-do list. To help, we’ve compiled a list of ways to manage your accounting so you can enjoy the holiday season and start 2021 with ease.
DON’T WAIT. START NOW.
The best advice we can give any small business owner is not to put off until tomorrow what should be done today. Start preparing early. Do an inventory check and make sure your books are up-to-date.
TECHNOLOGY IS YOUR BEST FRIEND
Technology is not only the hottest gift during the holiday season but it could be your solution to keeping on top of your accounting tasks. Accounting platforms such as QuickBooks Online can help categorize business transactions in a single platform. Making it easier for you to keep a handle on your inventory and keep customers satisfied. You can also count on Loeffler Financial Group to keep track of your accounting and bookkeeping needs.
PREPARE FOR THE EXTRAS
Your employees work hard all year, reward them. Year end bonuses and zoom holiday parties are great ways to thank employees for all they do. Embrace the holiday festivities, but understand what needs to be done in order for everyone to have a happy new year. If you plan on providing year-end bonuses, make sure you document it accordingly. Research what the tax rate will be applied to the bonus and if you have questions, reach out to your tax accountant or payroll provider for assistance.
DEVELOP AN ORGANIZATION PLAN
The holidays are stressful. With the demands on inventory and working to keep up with customer demands, try to find a way to keep your business operations organized. Develop a plan that has clear guidelines that reference when invoices need to get paid, how to handle late fees, and inventory checks and balances. A great way to get started is to complete one accounting task each day; this will keep your to-do list from piling up and keep you up-to-date and organized as you finish up the holiday season.
ASK FOR HELP WHEN NEEDED
There is no shame in asking for help. Hiring during the holiday season is one of the best ways to handle the influx of customers your business is likely to see. Consider hiring an accounting firm to give yourself more time to focus on other areas of your business.
SO, WHY DOES ALL THIS MATTER?
Believe us when we say there is a reason we are so focused on numbers and financial statements this time of year. While you’re focusing on marketing campaigns and promotions, we understand that numbers matter, and without a vast understanding, those holiday campaigns and promotions can go unfunded.
Implementing the tips referenced above can not only prevent a massive headache at the beginning of 2021, but help you avoid accounting and bookkeeping issues during tax time. Not only will these tips help you keep your sanity during the holiday season, but they will also help you keep your eyes on your business! Contact Loeffler Financial Group today to learn how we can help your business grow!
717.393.7366 | info@loefflerfinancial.com
As 2020 comes to an end, companies across the country are working diligently to close out their books so that tax returns can be filed on time and you can review insight into the year’s performance. As work stacks up, it is easy to miss a step in this process, which could cost you time and money. Loeffler Financial Group has created a comprehensive checklist to help you adapt to your end of year closing process.
RECORD AND RECONCILE
This is the first step to ensure all transactions are up-to-date, and complete for the end-of-year close. This includes all current bills and invoices, even if they still need to be paid. Review all past documentation to make sure everything has been recorded and nothing is missing.
It’s vital to ensure all transactions you’ve recorded in your bookkeeping software match what’s on your bank and credit card statements. To do this, you will need to perform a bank reconciliation. Our QuickBooks staff member can help make completing this task less strenuous.
COLLECT W-9S
If you pay a vendor $600 or more for services, you may need to issue Form 1099-MISC. The information on this form is used to create the 1099s you will use to report the total amount paid to the IRS. Best practices state when hiring a contractor, freelancer, or vendor, it is always best to have them fill out a W-9S before beginning any work or issuing their first payment.
CHECK YOUR ACCOUNTS RECEIVABLE AND INVOICES
Reviewing your receivables regularly to make sure you’re getting paid is a good idea. Review your outstanding invoices and note whether the invoices are marked paid or not. Look into any missing invoices. Reviewing these invoices will provide you with a better understanding of where you stand, and let you know if some customers are behind in paying their invoices. Don’t be afraid to call them, and let them know their status – as you need to mark their invoices as paid to close the books.
PAYROLL ESSENTIALS
Verify all employee information before issuing Form W-2. A missing or incorrect name or Social Security number can lead to penalties. Make sure all paychecks from the year have been recorded. Be sure to include all payments for commissions and bonus pay.
Planning is essential when it comes to bonus payments. Lead time will ensure timely delivery and the opportunity to review the accuracy of the checks before the check date. Remember, a bonus will often push an employee’s pay into a higher tax bracket for that pay period. Consider the tax implications for the employee on a local, state, and federal level before running the bonus payroll.
CHECK WHAT’S IN HOUSE
Year-end inventory counts can be a significant undertaking. However, it can make things clear if there are problems, such as bad inventory management or errors in stock. If there’s a considerable discrepancy between the inventory count and your bookkeeping, it should be corrected promptly.
Once you’ve completed your inventory counts, and have reconciled your point-of-sale system, ask yourself, Is there any room for improvement? Can you make your counts more efficient? Record your thoughts, review them with your accountant, and apply them in the new year.
YEAR-END ACCRUALS
Accruals are adjustments for revenue that have been earned but not posted to the general ledger accounts, and expenses that have been incurred but are not posted to the general ledger accounts. Year-end accruals are adjusting entries to make sure revenue and costs are recorded in the correct fiscal year.
Record year-end accruals, if you are not already recording monthly depreciation, payroll, and payments made for services not yet received.
REVIEW YOUR FINANCIAL STATEMENTS
Once your bookkeeping is complete, it’s a good idea to look through your income statement and balance sheet – make sure everything appears correct. Look for dollar amounts that don’t seem to match. Catching these mistakes now can save you time and trouble later.
Remember to look for things like:
- Negative account balances
- Balances that differ (seem too high or too low)
- Substantial differences in last year’s account balances
LOCK THE PERIOD
It’s so easy to type in a wrong date, especially when January hits, and you have to type 2021 and not 2020. Remember, numbers are the single source of truth for every business, providing your results and how your company is performing. If you are continuing to change things after the fact, you won’t have a good handle on how your business is performing.
NEXT STEPS
Don’t be overwhelmed if you are not ticking all of these boxes. Take it one step at a time, and work through these tasks. If you’re still confused on where to start, reach out to our team of accounting experts at Loeffler Financial Group to help you make sense of your accounting and year-end. We’re here for you!
717.393.7366 | info@loefflerfinancial.com