Each January, without fail, millions of people anticipate receiving their W-2 forms from their employers so they can file their taxes. The internet is filled with memes making fun of the tax refund ballers that get excited and splurge using this “free money”. I mean, who doesn’t love a lump sum of free and unexpected money from the government right?? 

Well, in reality, if you get a large refund from your tax return…then you’re not making the best decisions with your money!  

And here’s why… 

#1. Good ol’ Uncle Sam….he’s horrible with money and in severe debt. Each US Citizen has an amount of money that Uncle Sam wants us to pay….but some of us tend to pay a little bit more than necessary. This extra money is like a loan we’re giving to the government with at a 0% interest rate. Luckily, he pays us back that extra money every year at tax time…but not with any interest attached to it. So essentially, a tax return is us getting our money back that we overpaid during the year. So it’s really not free money…it was ours to begin with.  

In fact, the IRS refunded $255 Billion in 2014; which is an average of $3,000 or $250/month for anyone who filed their taxes. Which brings me to #2… 

#2. That extra money we overpaid and are so excited to get in our refund check…should have been ours to begin with. So essentially, you’re missing out on approximately $250 (or more) per month from your paycheck. I recently read a study that said 69% of Americans have less than $1,000 in their savings account. I’m pretty sure $250/mo can make an impact on people’s lives if spent/used/invested wisely. 

#3. Speaking of being wise….we all know that car dealerships and shopping malls are filled with people around tax time. That’s because you’re more likely to spend the whole lump sum because you think it’s “free money” that you can just blow. Hopefully, it’s been established that it’s not free money. Some people would still rather receive their extra money in one lump payment versus in each paycheck. Why is that? Because they aren’t good at saving money! Well, I suggest creating a budget versus having the IRS save for you. I’ll even throw in a free session to get your started on your budget. Click here to schedule a call. 

So how can you avoid overpaying each year? 

The truth is….its complicated. The tax code is over 70,000 pages and they WANT you to be confused so you can over pay. So getting to a break even point with the IRS can take some time…but you can get pretty close! Use this IRS withholding calculator, answer the questions, and you will get an estimate on how much your withholding should be from your paycheck. Each year, identify how much you were over or under, and adjust accordingly.  

Click here for the link to the IRS withholding calculator.

My personal goal is to owe less than $500 to the government and no refund. Because refunds mean we’re losing money…and I am NOT about losing and being dumb with money!! 

If you have questions or need help with your taxes, please feel free to contact me

Pam The CPA

 
 

Get Health Insurance!

A few years ago I was talking to a guy who HATES to wear his seatbelt. He is uncomfortable with it, never puts it on, and is willing to take a chance on his life if he gets into an accident. So needless to say, he also hates the “Click it or Ticket” law. His reasoning for not supporting that law was… ”How can you get fined for something that’s not hurting anyone? If I get in an accident only I will get hurt and I am okay with that risk!” Although I’m an avid seatbelt wearer, he made a valid point.

Well…the government has done it again.

President Obama changed the world of healthcare in the US by passing the Affordable Care Act (better known as Obama Care) in 2010. I won’t debate if that was a good or bad thing…but I will say something for sure – you BETTER get you some health insurance!

Whether it’s through your employer or not, the Obama Care program was implemented so everyone has health coverage year round. If you and members of your household do not comply, then you can be PENALIZED!

Yes, the choice to not have health insurance can cause you a tax fine. And these fines can be significant. (See picture below)

*Photo from www.obamacarefacts.com
The penalties have gone up significantly over the past 3 years. Isn't it worth saving money and your life to get health insurance? Open enrollment starts soon! Do yourself and your bank account a favor - GET HEALTH INSURANCE!
Have any other tax questions? CLICK HERE to submit them to be included in upcoming blog posts or newsletters!
 
 
Back to school season is officially underway. Either you’re a parent who dropped their kid off to college for the first time, a teacher who thinks the summer went by way too fast, or a recent college graduate who just had their last summer break EVER… there are some tax tips that you should know!
1.       Teachers – Did you know there was an Educator Expense Deduction? You can deduct up to $250 of out of pocket expenses you use for supplies in your classroom!

2.       American Opportunity Tax Credit – The AOTC is worth up to $2,500 per year for an eligible student. You can claim this credit only for the first four years of higher education.

3.       Lifetime Learning Credit – This credit can help pay for undergraduate, graduate, and professional degree courses. This credit is worth up to $2,000 on your tax return.

4.       Form 1097-T – Starting in 2016, schools will report qualified educational expenses you’ve paid on a Tuition Statement of form 1098-T. You can also add the costs of books that may not be reported on this form.

5.     Recent graduates – If you’ve recently graduated and relocated for a new job, you may be able to deduct your moving expenses on your tax return.

Of course with anything related to taxes, there are eligibility requirements, restrictions, and phase outs. Consult with your tax preparer to see what you qualify for!

Have a great school year!

 
 
A lot of people have goals of becoming wealthy in their personal finances or through growth in their business. However, are you sure you’re paying attention the right things to measure your growth? Often times, people make a plan of what to save, how much they want to make, how to cut back spending, etc. but they don’t know how to track their progress against these goals. Ideally you would use a budget to actual analysis but if you don’t have that no worries…. below are 10 key number (5 personal savings, 5 business) that you should review monthly to ensure you’re on track and growing!
Personal Savings
If you are seriously trying to budget and save money, these are key numbers you should review each month:
1.       Income
2.       Expenses
3.       Variance in Expenses month over month
4.       Income vs. Expense
5.       Savings Total

Business Finances
Every business should have a balance sheet and income statement (also called Profit/Loss Statement). Here are 5 things to review from these 2 key financial reports:
Balance Sheet
1.       Equity
2.       Accounts Payable and Accounts Receivable
3.       Cash month over month
Income Statement
4.       Net Income
5.       Gross Margin

Even though your monthly review should not be limited to these 5 things, I think this is a really good start! If you don’t even know how to develop or access these numbers in your personal finances or in your business, click the button below to schedule a FREE CONSULTATION call!!
 
 
The tax season has come and gone!! Now some people can breathe easier knowing that the inevitable task of filing taxes is over again until next April 15th!

There are others, however, that can’t breathe as freely because after filing their taxes this year, they owe the IRS! Are you wondering why you owe? How can you prevent this? Hopefully the tips below will help you!

Why do you owe?
1.       Changes in your life/tax return – Changes in your life can have an effect on your tax liability. Did you get married/divorced? Get a raise? Have a baby? Buy a house?
2.       Too little withheld from your income – Are your exemptions on your withholding form (W-4) accurate? That determines how much federal taxes are deducted from your pay check.
3.       Extra income with no taxes withheld - Do you work full time and have a part time job or consultant job? Did you receive unemployment or take some money from your retirement? Are taxes being deducted properly from your second job?
4.       Self-employment taxes - There is a self-employed tax rate that people often forget about. Your income is still subject to federal taxes.
5.       Not paying quarterly taxes – Unlike a paycheck where the government automatically withholds taxes, you get to see 100% of your earnings when you work for yourself.. You do, however, still have to pay taxes on that income (as mentioned above). As such, an entrepreneur should be paying quarterly self employment taxes.

How to prevent from owing in the future?
1.       Stay in touch with your accountant – Always stay in communication with your accountant/tax preparer so you can understand the tax implications of things that may change in your life.
2.       Re-figure your paycheck withholding – Recalculate your exemptions on your W-4 with your employer. Changing this will determine the amount of taxes withheld from your check; which will result in a higher or lower tax refund at the end of the year.
3.       Request taxes withheld from other income – If you anticipate getting any extra income as discussed above, be sure to request that federal taxes are withheld.
4.       Plan for small business taxes – Be sure to pay quarterly self-employment taxes. This will prevent a huge tax liability at the end of the year.
5.       Open home based business – Entrepreneurs have so many tax deductions. If time permits, perhaps look into opening a home based business to leverage the tax advantages AND make a few extra dollars!!

I hope these tips helped you and you can use them to prevent you from owing the IRS in the future!

(Note: these are general tips and not specific to any particular situation. Please consult with your tax accountant to consult with for your personal tax case.)

Did you know I discuss tips like this on periscope? For tax tips, entrepreneurship motivation, and small business advice, follow me on Periscope!

 
 
Being in love and married is a beautiful thing (so I’ve heard) …but a couple can benefit from being happily married AND separated. In the tax world, this is known as married filing separately (MFS).

The initial intentions for this filing method was for separating and divorcing spouses who were not willing to file their taxes together. However, there are other reasons people find this filing method beneficial.

One uncommon yet key reason married people file separately is if they suspect their spouse has been involved with tax fraud or evasion (currently or in the past). Filing separately will allow the innocent spouse to avoid any potential tax liability. There are other ways to avoid tax liability than filing separately if the liability isn't as serious as tax evasion. Consult with your tax preparer for these methods.

Even a happily married couple can benefit when filing separately. 
The main reason people chose to and benefit from filing separate is in a childless marriage when one spouse has a higher income while the other spouse has substantial potential for itemized deductions. For example, if one spouse has a lot of medical bills and a low income, this partner will likely meet the threshold required to be able to deduct these medical expenses on their tax returns. The partner with the higher income will have a higher threshold to start deducting these expenses and filing jointly will eliminate the chance for the lower income spouse to claim these deductions.

It must be noted that when married filing separately, both spouses must choose the same method of recording deductions. So if one spouse itemizes their deductions, the other spouse must do so as well even if their standard deductions are higher and will result in a greater return. In some cases, this can be seen as a con to filing separately. Some other limitations include the inability to claim the following: Earned Income Credit, Child Tax Credit, Child and Dependent Care Credit, Student loan interest deduction, any type of education credit, and elderly/disabled credit.

There are a lot of factors that goes into married filing separately. If the couple is unsure, it may be best to calculate the return both ways to see what will result in a lower tax bill. In general, couples with no dependents or no education expenses can benefit under certain situations. As always, consult with your tax preparer if you have questions.

 
 
Do you have a great idea for a product or service?  Are you ready to become an entrepreneur but have no idea where to start? And money….are you concerned that you don’t have the funds to launch your idea? Starting a business is a lot easier (and cheaper) than you think! Below is a starter’s guide to launching your own business.

  • Think of a name and check with your state for availability - Choosing a business name is an important step in the business planning process. Not only should you pick a name that reflects your brand identity, but you also need to ensure it is properly registered and protected for the long term.
  • Chose business entity structure – The business structure you chose will have different legal and tax implications. Below is a quick overview, but check with your accountant or attorney to help you select the most advantageous business structure for you. (However, my opinion would definitely be to incorporate your business!)
  •  Sole proprietor - most basic type of business to establish. You alone own the company and are responsible for its assets and liabilities. You also assume all liability for your company.
  • DBA – if you’re a sole proprietor but don’t want to run the business under your legal name, you can file a Doing Business As (DBA) name.
  • Partnership – single business where two or more people share ownership. There are 3 general types of partnerships but essentially, each partner contributes to all aspects of the business, including money, property, labor or skill. In return, each partner shares in the profits and losses of the business. The liability of each partner varies based upon the partnership agreement.
  • LLC - A limited liability company is a hybrid type of legal structure that provides the limited liability features of a corporation and the tax efficiencies and operational flexibility of a partnership. The company is held liable and your personal assets are protected. This is the most common form of business structures.
  • C- Corp – A corporation (also known as C-corp) is complex and mainly for larger businesses with multiple employees. This entity is owned by shareholders and the company is subject to double taxation. 
  • S-Corp – An S-Corp is similar a C-corp but is taxed on a personal level (similar to an LLC) where the profits and losses pass through to a personal tax return.
  • Register with the state (if applicable) – Fees vary by state and by entity structure (as discussed above) but can start as low as $50. Check with your local secretary of state office.
  • Obtain EIN – An Employer Identification Number (EIN) is also known as a Federal Tax Identification Number, and is used to identify a business entity. Free of charge on www.irs.gov website.
  • Check with state for other licenses or business – Depending on the type of business you have, additional licenses, registration, and zoning may be required. Check with your state to ensure you are in compliance and for application fees.

It’s just that simple! You are now a registered business and can begin operation!
A few other cost saving tips are listed below to get you started with marketing your brand!
  •  Business cards – Utilize vistaprint.com to design and print business cards until you get a budget to hire a graphic designer. Costs as low $16.
  • Website – Buy a domain name to start building a website. Godaddy.com often has sales for domain names starting at $12
  • Social Media pages – It is absolutely free to use social media to market your business. The power of social media is huge!
  • Blog – Blogging is a free tool to market yourself as an expert in your field.

If you have any questions about entrepreneurship, tax implications of business structures, or tax benefits from the IRS, please feel free to contact me!

I hope this was helpful and gave you some of the tools you’ll need to launch your great idea!

“The way to get started is to quit talking and begin doing”
-Walt Disney


 
 
I really can’t believe how fast this year has gone! And now it’s the most wonderful time of the year…it’s the holidays!! It’s a great time where people are happy, enjoy friends and family, and getting ready for the joys of a new year. There is one event, however, that people don’t think about and are usually unprepared for….tax season!

I know normal people don’t think about taxes until it’s forced upon us by the IRS. Well lucky for you….I’m not normal! (LOL) Taxes are something I think about daily so I can provide the most updated and tax advantageous methods to my clients.

With the tax season rapidly approaching, I have compiled a list of the top 8 tips to help you prepare for the tax season. This will make life easier on you and your tax preparer (if you chose to use one).
  1. Determine how you'll prepare your taxes - Are you going to paper or e-file yourself or hire a tax preparer?
  2. Think about and discuss changes in your filing status - Did you get married (...or divorced)? Did you have a baby? Did a child leave the house?
  3. Have a tax savings plan in mind - Are there additional tax deductions/credits that you qualify for that you always overlook?
  4. Gather all documents and file them while waiting on final documents to send to preparer - Documents include, but not limited to: W2s, 1099s, mortgage payments/interest paid, student loan interested paid, child care expenses, business income/expenses, mileage/auto expenses, etc.
  5. Take advantage of last minute deductions/credits to decrease taxable income or tax liability
  • Charityclean out your closets and garage and donate gently used items to a charity of your choice. A few bags full of clothes and household items can create hundreds of dollars of tax deductions (beneficial only if you itemize). 
  • Retirement money that you contribute to your 401(k) or similar employer based retirement plans is excluded from you income, thus, lowering your tax bill. If you’re not maxed out to your annual contribution, use the last few pay periods of the year to direct some money to your savings. You can also apply any year-end bonuses to your retirement plan as it will also be taxed as income.
  • Insurance if you have a flexible spend account that does not offer a grace period nor is eligible to rollover to the next year (up to $500 if your employer elects that option), then it’s time to clean out that account!
    6.   Small businesses: defer revenue, expedite expenses -  You pay taxes on money that you              earned for the year. If you have any last minute clients, allow them to pay early 2016 and              defer those taxes to next year. Similarly, expenses are deducted in the year you paid 
          them. If you know you'll need something for your business in 2016, buy it now if feasible.
    7.   Small businesses: send out W2s/1099s
    8.   Start planning for next year - Create a tax savings plan, adjust your W-4 withholding,                     create better organization/tracking methods, projection of quarterly taxes for small                         businesses.
I hope these tips were helpful and will prepare you for the upcoming tax season. If you have any questions, please post them in the comment section or private message me using the Contact page.

 
 
While I was in undergrad at Michigan State University (GO GREEN!), whenever I told someone my major was accounting, about 80% of the time, their response was, “oh, you must be good at math”. Although this was an accurate statement, and I initially presumed the same thing as a freshman; it was my second week in my first accounting class that I realized accounting isn’t about math at all!! Although we are good at numbers, we are also good with people! Long are the days where accounts are socially awkward boring people who wear suspenders and pocket protectors and just do taxes. Our profession is essential to the finances of people as well as the continuity and efficiency of businesses.

Yes, some accountants do taxes, but not all. As a CPA, I am an auditor, accountant, consultant, and tax preparer. My goal is to not only provide tax advice and preparation for individuals; I also want to help improve the processes and efficiencies of businesses, report their financials, and focus on what I love (accounting) while they focus on what they love (their business).  People don’t go into business to focus on accounting, but accounting is a major piece of every business. Most people have a love/hate relationship with accounting. Why spend time on doing something you hate, don’t understand, or don’t have time for when you can outsource it someone who loves doing accounting and that’s why they want to help?!

So I want to share some of my top 5 myths about who accountants are and what we do for individuals and businesses!

Pam’s Top 5 Myths about Accounting/Accountants:

1. Accounting is about math Like I mentioned before, this could not be further from the truth but this the myth I hear the most! Yes, I love math and yes, accountants use math…but so does an engineer, salesman, marketing person, lawn man, hair stylist, etc. If you want to get paid, you will have to calculate the amount you are owed, the change if paid in cash, your commission percentage, etc. Accountants use math similarly. The core of true accounting is research and storytelling. Accounting is like a puzzle; when you look at the numbers, you are looking for holes and patterns that fit together properly. You have to use those numbers to tell the owner of a business, shareholder, bank, or manager what they mean, how they can use them, and what to expect in the future. Also, accountants are excellent at risk management, process improvement, and creating efficiencies and controls in the workplace. This is more of a consultative role which I enjoy most, and there are very few numbers involved.
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 2. Accountants are introverted or boring and really don’t like working with people - Even a tax accountant (another myth mentioned above…we don’t all do taxes!) has to be a people-person. Regardless what kind of work we do, all accountants have to work with clients, employees, vendors, client’s customers, etc. We build trusted relationship with our clients not only based on our knowledge, but also our personality! I love this field because of the people interaction and relationship building.

3. I pay business expenses out of my own pocket. It’s really no big deal. - WRONG. If you own or operate a business…you should treat it like a business and not a shopping day at the mall. You need to note when you have paid an expenses out of your own pocket towards your business. This is money that could be returned to you tax-free.

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4. Small businesses don’t need accounting or it can just wait until it becomes too much for me to handle myself. -  I do believe that non-accountants have the ability to do create their own budget, forecasts, financial statements, and research trends in their industry. However, if you really don’t have to generate monthly reports or read through the tax codes to learn the greatest tax advantages for your business, then you shouldn’t have to. Also, at the end of the year when tax time comes, it’s easier for an accountant who looks at your financials on a regular basis to prepare you return versus coming in with a shoe box (or trash bag) of receipts. The latter method will cost you more as you have to pay for the tax preparer’s time to learn your business and sort through receipts. And without that trusted relationship, they may not take the time to be sure they have every nickel and dime that can use to lower your tax liability. 

Your accountant will be following your financials the entire year and everything should be neat and clean come time to file your taxes. Also, your accountant should be able to give you monthly financials that tell you where you can improve in an area, have reports ready for possible loans, help you make financial decisions, help you make the most of recent tax advantages, and tell you if your business will trend towards lower or higher revenue in certain months based on history. This is all needed information to help grow your business.

5. I can handle my accounting myself. I have QuickBooks. – Quickbooks is a great program that many people, including myself use, on a daily basis. Although it’s simple to learn, it still takes someone who has the time and a little bit of accounting knowledge to use the software at its maximum capacity. As a matter of fact, most open QuickBooks only to become overwhelmed and confused. Having this program is very good and can become an awesome tool; but your accountant should help you set it up, educate you on how you can and should use it, and come in periodically to be sure everything is in order, run reports, and fix problem areas. You can be wonderful in business but unless you know how to operate the accounting side of your business perfectly, you should really do yourself a favor and at least get advice from an accountant on this process.

Of course there are myths about every profession that are endless. However, these are the ones I hear the most and I just wanted to bust the myths and show the benefits that accountants really have. Accountants, CPAs in particular (how I got that designation is worthy of its own separate post…) play a vital role in helping businesses make better use of their resources and increasing efficiencies and profitability. With careful planning and help from an accountant, you can learn how to start, manage, and successfully grow your business. Accountants are trained to look at businesses with an objective eye. They can help you identify weaknesses in your organization and offer suggestions for improvements. A CPA/accountant can be your most valuable business partner!

Additionally, accountants can help individuals become tax advantageous, prepare and save in their taxes, create and maintain budgets and meet their financial goals.

If you have any questions or are inspired and feel like you need an accountant now, feel free to contact me. I love meeting new people, building new relationships, and improving and growing businesses!

These myths are exactly how I feel and were also inspired by an article I’ve read while doing research: “Top 10 Accounting Myths – Busted!” by Mindy Viteri.


 
 
Someone presented me with the idea of creating a blog for my business. At first I thought it was an awful idea. Who in their right mind (besides me and my accounting friends) would want to read a blog about accounting?! But the more questions I received from friends, clients, and even random people about business startups, accounting, entrepreneurship, taxes, budgeting, etc. it dawned on me that there is in fact a need!

About me – My name is Pam Balentine and I am a CPA (certified public accountant) from Flint, MI, and I currently live in Atlanta, GA. I am the owner of Viking Financial Services where I provide individual and business tax, accounting, payroll, and consulting services in ALL states. I also partner with myEcon which is a company that provides people with a personal financial success system to help them minimize taxes, build business income, eliminate debt, and acquire assets. To learn more about the services offered, click here

In addition to operating my business I work full time as an Internal Auditor and Interim Plant Controller. I also volunteer and serve as the Student Member Services Director for the National Association of Black Accountants, Inc. (NABA) - Atlanta Chapter. I have over 10 years of accounting and auditing experience. The drive for starting my business is to take what I’ve learned and what I do for major corporations and bring the benefits, efficiency, and growth techniques to an individual and small business level. 

In my blog posts, I will provide tips, resources, motivation, and knowledge for the individual tax payer who wants to focus on saving and minimizing taxes and the business owner/entrepreneur who wants to grow their business and have the most efficient processes.

So stay tuned! If you have any questions or specific topics you would like me to cover in my blogs, contact me today!!