Video Blog

  • Real Estate Conversions

    05 November 2013 / Video Blog / Comments Off on Real Estate Conversions

    Welcome to another edition of Tuesday Tidbits where we make tax and accounting simple. I'm your host Charles D. Shapero, CPA with Widget Bookkeeping & Tax and we're going to talk about some pro-tax payer provisions today. IRS Code Section 1031 and 1033. Both of them deal with gains in real estate. What's that you say? We haven't had gains in real estate in some time. Hopefully that's changing! What 1031 allows you to do is sell real estate whether it be land, apartment building, house or any other US real estate, and you can take the proceeds from that real estate, and directly invest them in other pieces of real estate. The thinking behind Congress, in passing this code section is, that you never got the cash from that sale, so you really shouldn't have to pay the tax on that sale at that time. All that cash got put into another real estate. So maybe you sell one strip mall and invest in a bunch of apartment buildings. That cash is tied up, you don't have the wherewithall to pay that tax. So 1031 allows you if you follow it's provisions, to not pay tax until that second piece of real estate is sold. 1033 is a very similar code section but it deals with involuntary conversions That's if you didn't sell a house but what if your house burns down, the insurance company comes in writes you a big check, you have gains! But you want to use that insurance check to bring that house back, or maybe buy another one. Therefore, the IRS Code Section says if you have a gain on that piece of property, you don't have to pay it until you sell the replacement property. With the 1031 I have 45 days from the time I sell my first property to pick out my replacement property, and then I have six months to consummate the deal. WIth 1033, obviously I didn't think about buying a replacement property, I didn't even know my first property was going to be destroyed. I have full two years to reinvest those proceeds, and not pay taxes. Both those provisions are really not tax saving provisions they are tax deferral. The IRS is eventually going to get their money, unless you pull a Houdini trick and you die before you pay taxes. If you do that you can use 1031 and 1033 to escape tax, but it's not advised. This concludes today's Tuesday Tidbit, see you next Tuesday. Widget Bookkeeping & Tax: Know More, Keep More!

  • How to account for losing real estate on your taxes

    22 October 2013 / Video Blog / Comments Off on How to account for losing real estate on your taxes

    Welcome to another edition of Tuesday Tidbits where we make tax and accounting simple. I'm your host Charles D. Shapero, CPA with Widget Bookkeeping & Tax and today we're going to talk about the unfortunate topic of losing real estate. We've heard it a lot, short sales, foreclosures does it have a tax impact? Well there's a lot of IRS forms that you've been seeing lately. The 1099-A, the 1099-C and how does that affect your tax return? Well the 1099-A really deals with the abandonment of a property, all it tells the IRS is that you lost a property, it doesn't really tell the IRS if the bank is going to come after you for the loan balance, or what gain or loss can be calculated on that transaction. So really with a 1099-A its what's called an open transaction, you can't really do anything with it, except know that something is on the horizon. The 1099-C however, is a totally different animal, 1099-C's as it relates to real estate means that the bank is going to forgive the loan on that piece of property. They are not going to come after you and sue you for the deficiency. That's a good thing. We don't want to repay that loan. Could it have tax impact? Yes it could, but generally it won't. Because you did pay something for that property. 1099-C's are also issue when a bank forgives a credit card loan. That is entirely taxable for the most part, unless...there is an exception one of the best tools in our arsenal to pull that income off your return is Form 982, it allows us to exclude forgiveness of debt in certain circumstances: bankruptcy, insolvency and there's a couple of other exceptions as well. So 982 can be very helpful in pulling that income off your return and lowering your tax bill. All those forms that I described can be found on our resources tab on the Widget website. This concludes todays Tuesday Tidbits, see you next Tuesday Widget Bookkeeping & Tax; Know More, Keep More.

  • Keeping a mileage log

    27 August 2013 / Video Blog / Comments Off on Keeping a mileage log

    Welcome to another edition of Tuesday Tidbits where we make tax and accounting simple. I'm your host Charles D. Shapero, CPA with Widget Bookkeeping & Tax and today we're going to talk about what goes in your mileage log. In order to prove your deduction to the IRS we have to be able to show the IRS a log of your business miles. What we can't prove, we lose. So in a business mileage log, it needs to have several columns, the one that I recommend. It has a date column, it has a destination column to let the IRS know where you went, it also has a business purpose column, so that we can tell the IRS why we incurred this business expense, very important because deductions are not deductions until we can prove it had a business purpose. There is also a column for expenses. So if we are paying tolls, as we're driving to places, we can make notes in the mileage log. Now we talked previously about how we should never pay cash for expenses, a lot of people pay cash for tolls. If you're doing that you're going to need to keep the receipt you get from the toll booth, and write the business purpose right on that receipt. What we'd recomend is to sign up with your states toll provider. For example in Florida, it's called SunPass, it's a little transponder that we put on our car that tracks our tolls as we go through the toll booths. So at the end of every month, we can download the amount of toll expenses we have and we can expense the business ones, and we can ignore the personal ones. Your mileage log is the only way to prove these deductions to the IRS and like I said previously what you can't prove, you lose. So no matter which method you're using: actual expenses or mileage, the mileage log is critical to surviving an audit. This concludes today's Tuesday Tidbits, see you next Tuesday! Widget Bookkeeping & Tax, Know More, Keep More!

  • Deducting auto expenses

    20 August 2013 / Video Blog / Comments Off on Deducting auto expenses

    Welcome to another edition of Tuesday Tidbits where we make tax and accounting simple. I'm your host Charles D. Shapero CPA with Widget Bookkeeping and Tax, and today I want to talk to you about deducting auto expenses. When you're deducting auto expenses, there are two methods to deduct your auto you can use the standard mileage rate, with the IRS approved standard mileage, or you can deduct actual expenses. WIth the standard mileage rate, it's very easy, you simply track your business miles that you spend during a given year, multiple it by the standard mileage rate, which for 2013 is 56 and a half cents per mile and you have your auto deduction, what that includes is gas, oil, repairs, depreciation on the vehicle, and everything except tolls and parking. which you can add on to the standard mileage rate That's pretty simple, with the actual expense method, we have to save all our receipts for our our gas, our insurance, our repairs, plus we need to calculate depreciation on the purchase price of the vehicle, again we can deduct our tolls and our parking. In this method, the actual expense method, we have to track two sets of mileage personal and business. Why? Because all of that bucket of expenses needs to be split between this the personal portion of your gas, and this is the business portion of your gas This method, when you use actual expenses, people like it because they think they don't need to keep a mileage log, but it actually ends up being almost twice the amount of work. and in a lot of cases, it results in an inferior deduction. Standard mileage is a very nice deduction, now there's factors such as mileage rate and the age of the vehicle that come into play. But by and large, you should takl to your CPA to find out which method works for you. In next week's Tuesday Tidbits, we're goinna talk about what needs to go into your mileage log. This concludes today's tidbit, see you next Tuesday. Widget Bookkeeping & Tax, know more, keep more.

  • Simplify your accounting system

    13 August 2013 / Video Blog / Comments Off on Simplify your accounting system

    Welcome to another edition of Tuesday's Tidbits where we make tax and accounting simple. I'm your host Charles D. Shapero, CPA with Widget Bookkeeping & Tax, and today I want to you talk to you about simplifying your accounting system. What I recommend to all my clients is that we do business out of one bank account and that we have one credit card set aside for business only use. I further recommend that we never pay cash for expenses Those three items taken together allow whoever's doing your accounting and your tax work to look in two places for all of your business expenses your bank account or your credit card. Because we never pay in any expenses in cash We don't have to worry about tracking cash, or worrying about that a cash receipt is going to get lost. destroyed, it's gonna fade. Have you ever had a thermal receipt turn totally black? That proves nothing about where that expense went. So if we never pay cash for expenses, we use once bank account and one credit card, nothing can fall through our accounting system cracks. Everything is accounted for, except for one thing, your auto mileage. For that we recommend that you keep an auto mileage log, in a later Tuesday Tidbits we will talk about how to account for auto expenses. I'd also recommend using online bill pay, automatic payments and quickbooks whenever possible, once you start training QuickBooks and you link it up to your bank account, and your credit cards, you can download that activity directly into QuickBooks All of these tips saves the business owner time so they can spend less time doing their accounting and more time running their business and bringing in profits. This concludes today's tidbit, thank you very much, see you next Tuesday! Widget Bookkeeping and Tax Know More, Keep More

  • Which accounting system should I use?

    06 August 2013 / Video Blog / Comments Off on Which accounting system should I use?

    Welcome to another edition of Tuesday Tidbits where we make accounting and tax simple. I'm your host Charles D. Shapero CPA from Widget Bookkeeping and Tax, and today we're going to talk about accounting systems and whether you choose Excel, Quicken or Quickbooks. That's a question we get a lot. I like Quicken, can I use that for my business? The answer is typically is no. Quicken is not robust enough, it's really a glorified checbook. It's something you can use for your personal finances, when you really need just loose information. What we need from our accounting system is we need is an income statement and balance sheet. Because if we ever have to go out for a loan that's what they're going to ask for. If we ever have to sell our business or we want to sell our business, they're going to want to see our financial statements, and Quicken is not robusst enough. It can't produce the reports necessary to satisfy those requirements. Neither can Excel, but at least Excel is better than having no accounting system. We have to be able to tell what your profit and loss is. For estimated tax purposes, for tax return purposes, for you to gauge how your business is going. So if you're using nothing at all, Excel is better than nothing because at least we can get some reliable information, Quicken is really almost worse than nothing, because you have to learn how to use it and then it's really not giving us the information that we desire. Bottom line Quickbooks is the best option for a starting business to set up their accounting system because it's robust enough to handle accounts receivable, accounts payable and all the reports we talked about. At Widget, we eat, drink and breathe Quickbooks We can help you install is, we can help you learn how to use it, and if you decide you don't want to do it, we can maintain it for you monthly. This concludes today's Tuesday Tidbit, see you next Tuesday. Widget Bookkeeping & Tax: Know More, Keep more

  • Using an Accounting System

    30 July 2013 / Video Blog / Comments Off on Using an Accounting System

    Welcome to another edition of Tuesday Tidbits where we make accounting and tax simple. I'm your host Charles D. Shapero CPA, with Widget Bookkeeping & Tax. Today we're going to talk about why you should be using an accounting system. An accounting system really is used by a business owner to see how your business is performing. Am I on pace with my goals? If you have a goal to reach $100 grand in revenue this year, how do you know if you're reaching it? If you're comparing this year to last year, without an accounting system, that is impossible. With an accounting system in place, like Quickbooks or even Excel for that matter, you can look at this year's performance compare it to last years and say 25%, I'm meeting my goals, that's fantastic. OR, the other conversation, wow, I'm about even with last year, I really wanted to grow 25% I better run out and do some more marketing or I need to hire some staff to take away some of this work so I can focus on billable type events, that's what a business owner should use your accounting system for. What your CPA wants to use your accounting system for is that we have a tax return to prepare at the end of the year. How are we going to prepare that return without numbers that we can trust? Not only that, but the IRS requires that we make 4 payments to them during the year. Your estimated tax payments. Every quarter I call my clients and ask them, what's your profit looking like this quarter? We need to look and see if you're going to be able to make a bigger estimated tax payment, a smaller one or if you just want to make the ones we talked about at the beginning of the year. Without using an accounting system we have no idea we have no idea what your business performance is, and we have no idea if you're paying the IRS more or not as much as you should. So accounting systems are valuable for both the business owner and your CPA. And that my friends concludes this Tuesdays Tidbit, see you next Tuesday. Widget Bookkeeping & Tax Know More, Keep More!

  • Steps to Forming an Entity

    23 July 2013 / Video Blog / Comments Off on Steps to Forming an Entity

    Welcome to another edition of Tuesday Tidbits where we make tax and accounting simple. I'm your host Charles D. Shapero CPA with Widget Bookkeeping and Tax and today we're going to talk about the steps to form an entity. One of the best ways is to go see a professional to form your entity. That way the work is taken out of your hands. It may cost you $300-500 but at least you don't have to do the legwork. If you want to do the legwork yourself, the question comes what do I do first? Do I get a bank account, do I get a federal ID number? I can walk you through that process. It's really a 3-step process. The first step: We're going to go to Sunbiz.org and we're going to file the articles for a Florida profit corporation or the articles of organization for an LLC. It's a very simple document to fill out online a few forms, you've got to tell them who the officers are, who the agents are what the purpose, what business you're going to be doing for the entity. And then, you pay your fee and a day later they post those articles online. After the articles are posted you're ready for step 2, you need to go to www.irs.gov The Internal Revenue Service right on the front page, you're going to see a link that says apply for an EIN online, that stands for Employer Identification Number, very easy form to fill out you give them a little information about your business, what it's going to be doing and they will issue a federal ID number on the spot, the third step: Let's open those bank accounts so your corporation can have a place to deposit its revenue and a place to write business related checks. What the banker is going to need from you are the articles that formed in step 1, and the federal ID number that you got in step 2, you take both of those over to your banker and open a business account. One business account is really all you need. That concludes today's Tuesday Tidbit, see you next Tuesday. Widget Bookkeeping and Tax, Know More, Keep More!

  • What kind of entity should I form?

    16 July 2013 / Video Blog / Comments Off on What kind of entity should I form?

    Welcome to another edition of Tuesday Tidbits, where we make tax and accounting simple. I'm your host Charles D. Shapero CPA, with Widget Bookkeeping and Tax and today we're going to talk about when you form an entity: S Corp or LLC? You really need to go talk to your CPA to find out what your personal situation warrants As far as the legal protection every lawyer I've ever talked to says that the LLC and the S-Corp convey almost identical legal protection, so really it comes down to an accounting and tax decision. Here are some guidelines on what we should think about: Are you going to have debt in the entity? You can deduct losses in an LLC, easier than an S-Corp if you're going to have debt, so that's one consideration What type of activity are you going to have in this entity? Is it an ordinary income activity, where self-employment tax is a concern? The S-Corp might be a better answer. Because LLC's still convey self-employment tax. Is it a rental? Are you going to be holding real estate in this entity? Real Estate is almost always held in an LLC, because you can pull property in and out of an LLC with no tax. With an S-Corp if you try to pull a piece of property out of an S-Corp, you're going to be taxed on the fair market value increase in value while that S-Corp held that asset. Another factor would be are you going to give ownership stake to your employees? Or maybe to your kids one day. With an S-Corp if you convey S-Corp stock to one of your employees you're going to have to add that to their W-2, an LLC you can do that as well, or we can structure it so that it's not a taxable event for your employee or for your children. Are you going to have any foreign partners? There are several restrictions on the S-Corp and who can own it. If you're a foreign individual, in other words non-US, you can't even own an S-Corporation, so you may be forced to go to the LLC route. I would highly recommend you meet with your CPA to discuss your personal situation to find out which is right for you. That concludes this Tuesday Tidbit, see you next Tuesday! Widget Bookkeeping and Tax Know more, keep more.

  • Why form a business entity?

    09 July 2013 / Video Blog / Comments Off on Why form a business entity?

    Welcome to another edition of Tuesday Tidbits, where we make tax and accounting simple. I'm your host Charles D. Shapero, CPA with Widget Bookkeeping and Tax, and today we're gonna talk about why you might want to form a business entity. A lot of people when they start their own business they do a little thing on the side. And that little thing grows and grows and pretty soon it's big enough where the question arises, maybe I should form an entity. Should I have an LLC or an S-Corp? And why would I want to do that? Well the single biggest reason that you might want to form an entity is liability protection. WIth business, comes risk, your clients could actually sue you for something. I'll give you an extreme example: Let's just say that your business is renting houses, you own those houses in your personal name, god forbid you invest in a house that has a pool or is upstairs, because if somebody falls down those stairs or somebody drowns in that pool that could be a multi million dollar lawsuit and if you don't have that property in an LLC they can take everything you own. So it's a serious issue In that instance we probably want to have the LLC own that rental propery. In that situation if you have that multi-million dollar event. They'll be able to collect on your homeowner's insurance that you have on that property and then once they eat up all the assets that are sitting in the LLC, they can't come get your personal house, your personal car, your boats, that kind of that is protected. That's the single biggest reason you'd want to have an entity. And that concludes today's tidbit. See you next Tuesday! Widget Bookkeeping and Tax, Know more, keep more.

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