Author Archives: Diana Sheltra

Upcoming Tax Season

As the year draws to a close, now’s an excellent time to review your current tax planning strategies to ensure they’re still meeting your needs and develop plans for 2018. It’s also a good time to take advantage of last-minute planning opportunities that could save you money now and in the coming year.

With all that in mind, please contact me at your earliest convenience to discuss your tax situation so I can develop a customized plan. In the meantime, here’s a look at some of the issues I am recommending clients consider as they begin their end-of-year review.

Tax identity theft is a significant threat. Our firm takes security very seriously, so we want to begin with a reminder that tax identity theft is a growing problem. With fraudsters becoming more sophisticated and large breaches happening so frequently, such as the Equifax incident which affected 143 million American consumers, tax identity theft remains a concern. Unfortunately, it can take many forms, so beware if you:

· Receive a notice or letter from the Internal Revenue Service (IRS) regarding a tax return, tax bill or income that doesn’t apply to you.

· Get an unsolicited email or other form of communication asking for your bank account number or other financial details or personal information.

· Receive a robocall insisting you must call back and settle your tax bill. Your first contact with the IRS will be through official correspondence by mail; they will not call you out of the blue. Also, the IRS does not demand immediate payment over the phone, threaten to arrest you or demand your credit or debit card number or that you use a certain payment method – such as a gift card – to pay your taxes.

If you receive any suspicious communications from the IRS, you can report the contact by filling out this IRS Impersonation Scam Reporting form or calling 800.366.4484. I also urge you to contact my office for advice whenever you receive a communication from the IRS or believe you might be a victim of identity theft.

Though changes may still occur, the ACA remains law for now, and taxpayers must abide by it. The ACA requires individuals to have minimum essential health insurance coverage. In 2017, the penalty for not having coverage is $695 per uninsured adult ($347.50 per uninsured child under 18), or 2.5% of household income during the filing period, with some penalty caps available.

The IRS charges penalties (and interest) if you don’t pay the appropriate amount of taxes throughout the year. We can help you calculate your projected income and required quarterly payments.

The alternative minimum tax (AMT) applies to many taxpayers, requiring them to add back certain non-taxable income and deductions they’ve taken. You’re allowed an exemption that somewhat reduces the AMT’s effects. That exemption rose in 2017 to $54,300 for single taxpayers and to $84,500 for married couples filing jointly.

I recommend you review your retirement situation at least annually and make revisions and adjustments as needed. That includes making the most of tax-advantaged retirement saving options.

With new leadership and strategic priorities, our nation is facing uncertainty regarding details of how our tax system will function in the coming years. The possibility of new tax rates, changes in deductions, credits, etc., creates anxiety for many taxpayers. We’re here to help you navigate any potential change and ensure you receive the most favorable tax treatment.

Please call my office at 802-8778-0990 or email me at diana@sheltratax.com to set up your year-end tax-season review.

Please inform me if you need a tax organizer to prepare your tax information for your 2017 tax return. I will send out organizers when requested. I have found that only a small percentage of you use the organizers.

I will be sending an engagement letter in a separate email. Please send back the letter signed.

Keep in mind our office moved a few months ago. The address is below. We are handicapped accessible and there is plenty of parking.

As always, planning ahead can help you minimize your tax bill and position you for greater success.

Using QuickBooks for Restaurants

Using Quickbooks for Restaurants | Essex Junction VT | Sheltra Tax & Accounting, LLCWhether you’re operating a food truck or running a white tablecloth establishment looking for its first Michelin star, chances are that business accounting is not among your favorite tasks. 

To emphasize the importance of good accounting practices, a survey by restaurantowner.com found

  • 70 percent of owners who received monthly financial statements were profitable.
  • 75 percent who tracked weekly food and labor costs were profitable.
  • 72 percent who tracked inventory at least monthly were profitable.

Fortunately, there’s software for that. In fact, there’s quite a bit of accounting software available, but sooner or later, most businesspeople try QuickBooks.

One of the primary advantages of QuickBooks is its ubiquitous nature. Because so many businesses use it, there’s a lot of information available, including Sheltra’s own training package and a thriving online community

Of course, the caveat is that the attempt to appeal to all businesses means that it’s not perfectly suited to some of the specific accounting and information needs of the food service industry.

The four areas you will want to focus on are:

  • Recording sales. Not as simple as you might think. You need to set up your software so that a single sales receipt presents data to the right accounts for food, liquor, deposits and sales taxes.
  • Paying vendors. When set up properly, QuickBooks gives you reports on unpaid bills, the amount owed, and their due dates. You can also sort by each vendor to give you a record of your transactions with a specific supplier.
  • Payroll. QuickBooks is well positioned to help your unique payroll issues when it comes to recording wages and tips and the tax liability that will occur.
  • Reconciliation. After the daily sales are recorded, the credit card and cash accounts need to be moved to a deposit account so that you can reconcile those amounts with your bank account.

As with most software, time spent learning and implementing the program will be rewarded with accuracy and ease of use afterward. Sheltra Tax & Accounting, LLC specializes in Restaurant accounting as well as other specialized industries.  Sheltra can train your office manager or bookkeeper or handle all of the accounting functions for you.

Last, but not least, your year-end tax sessions with your preparer will be much less stressful when all you have to do is present a file.

For more information on business accounting or tax preparation for your restaurant, contact Sheltra Tax & Accounting, LLC at (802) 878-0990.

QuickBooks Software and Training at No Cost to You!

Holistic School of BusinessI am so excited to announce that I am now working as a QuickBooks and Accounting trainer at the Holistic School of Business! I accepted this position because it presents a truly outstanding opportunity for my clients to work with me at NO-COST!
Please allow me to explain…
You can apply for a $2,500 grant to get the training needed to set up a QuickBooks financial system for your business! Grants are available to eligible Vermont residents only and they’re based on financial need. Your grant would pay for your tuition in a “Business Accounting Mentorship” at the Holistic School of Business. There would be no application fee, and you would NEVER have to pay this money back!
And…
FREE QuickBooks Software as a Bonus – Expires 12/31/16! Once your grant is approved, you’ll get a licensed copy of QuickBooks as a bonus!
When you become a one-on-one student of mine in the School’s Business Accounting Mentorship, you will work directly with me and receive the following benefits:
 
  • QuickBooks Setup: Utilizing the instructor’s in-depth background in accounting and QuickBooks company setup, you’ll learn how to set up your accounting system using QuickBooks, then you’ll learn how to use the software to keep your bookkeeping up-to-date! You’ll experience great relief and satisfaction in knowing that your Accounting System is finally set up for your business.
  • Individual, One-On-One Sessions: Your one-on-one mentorship sessions will be customized to meet the unique needs of you and your business.
  • Greater Ease: You’ll no longer feel stressed out come tax season because you’ll be prepared well in advance.
  • Financial Clarity: You’ll enjoy a much better understanding of your financial situation, and you have the knowledge you need to make more educated decisions regarding your money and spending.
  • Training in Small Business Accounting: You’ll learn all the fundamentals of accounting and budgeting. You’ll also develop skills to complete all basic level accounting tasks not only for your business, but for any business using QuickBooks software.
  • Budgeting: You’ll learn how to develop a budget for your business so that your spending and other financial decisions are always optimized for maximum effectiveness.
Sound too good to be true?  Well, it is true!

But, it’s urgent that you act NOW, and here’s why…

➔   The grant fund is limited and is almost out of money!  Once the money is gone, it will be gone until July 2017.  And…
➔   The FREE QuickBooks Software Bonus ends on 12/31!

The best way to get started is to schedule a free QuickBooks Consultation with me so we can make sure you will be a good match for this program. Your consultation can be by phone, Skype, or in-person in my Essex office.
Please email or call me at (802) 878-0990 to schedule your consultation NOW so we can get the process started.
I look forward to hearing back soon to get you on track to greater peace and ease with your business finances!

Diana Sheltra Earns Elite Fellow Designation from NAEA

For Immediate Release

Vermont Tax Practitioner Completes Rigorous National Tax Practice Institute™

Diana Sheltra Earns Elite Fellow Designation from NAEADiana Sheltra, EA Earned Elite Designation

Washington, DC – November 14, 2016, Diana Sheltra, EA, has earned the prestigious Fellow designation from the National Association of Enrolled Agents (NAEA) for completing the three levels of the National Tax Practice Institute (NTPI®). This achievement demonstrates Diana Sheltra, EA’s dedication to protecting taxpayer rights and attests to her expertise in tax.

NTPI Fellows® have completed a demanding three-part curriculum that has uniquely prepared them to effectively represent their clients before all administrative levels of the IRS. Having successfully completed coursework covering all variances of examinations, audits, collections and appeals, and having studied best practices and role-playing, Fellows know the entire process from both the client and IRS perspective. Earning the EA license denotes competence and the right to represent taxpayers. Fellows have made the commitment to a higher level of knowledge and excellence. The course, open only to enrolled agents, CPAs and tax attorneys, was developed to prepare licensed representatives to protect their clients’ rights by disseminating the most recent information about IRS laws and procedures critical to representation.

Enrolled agents (EAs) are a diverse group of independent, federally-authorized tax practitioners who have demonstrated a high level of technical competence in tax and are licensed to practice by the Internal Revenue Service. The only federally-authorized tax practitioners with unlimited rights of representation before the IRS, EAs advise and represent taxpayers who are being examined by IRS, are unable to pay taxes or are trying to avoid or recover penalties. EAs also prepare tax returns for individuals, partnerships, corporations, estates, trusts and any other entities with tax-reporting requirements. Unlike tax attorneys and CPAs, who may or may not choose to specialize in taxation, all EAs specialize in taxation and are required by the federal government to maintain their professional skills with continuing professional education. Enrolled agents are “America’s Tax Experts!”

Diana Sheltra, EA is a member of the National Association of Enrolled Agents (NAEA) and the Northern New England Society of Enrolled Agents.

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About NAEA

The National Association of Enrolled Agents (NAEA) is a professional society whose members are dedicated to honest, intelligent and ethical representation of the financial position of taxpayers before the IRS. Its efforts are supported nationwide through a network of affiliated state and local chapters. Members of NAEA must fulfill continuing professional education requirements that exceed the IRS’ requirements. NAEA membership also entails stringent adherence to a Code of Ethics and Rules of Professional Conduct, as well as compliance with the Treasury Department’s Circular 230 regulations. NAEA members are experienced, well-trained tax professionals who effectively represent their clients and work to ensure the tax code is fairly applied and reasonably enforced.

Improving Your Business Credit

Improving Your Business Credit by Sheltra Tax & Accounting, LLC of Essex JunctionCredit may be the lifeblood of small business, but it’s particularly vulnerable to toxins. And once you’re infected, those credit scores bring a triple-whammy of higher interest rates for loans or a possible loan denial, potential increases in insurance costs, and difficulty in securing favorable terms with suppliers. Vermont accounting firm at Sheltra Tax & Accounting, LLC explain the differences between personal credit and business credit and how to improve them.

Business credit is more difficult to get a handle on than personal credit. More companies provide business credit reports, and getting those reports isn’t free. Also, correcting bad information on your credit report is more difficult because it requires contacting the reporting agency and working through the problem with them.

Another difference between business and personal credit is that anyone can take a look at your business rating. That means vendors and suppliers are using those numbers when they’re considering transactions with your company.

But there are some simple steps you can take to allow your startup or ongoing business to create a stellar rating.

First, build a good business base.

That means doing the things that will make people take your company seriously. First of all, create a workable business plan. Lenders and vendors will want to see your goals and how you intend to get there. Then, incorporate your business and set up a business address, even if you’re operating a home-based business.

Next, create a company website. This is where people are going to go first when they want to evaluate you. Finally, establish a company credit card. This will keep your business transactions separate from your personal finances and allows you establish a solid record of payments.

Second, pay your bills on time and early if you can manage it. Some credit reporting companies will give you a boost for paying invoices more than 30 days early.

Third, try to use lenders and suppliers who report to credit bureaus. Not all of them will, so make sure that’s one of the questions you ask before you enter into a business relationship. The most sparkling payment performance doesn’t do you any good if no one can find it.

Fourth, keep your information current with all the credit reporting firms. Perform an annual review of your information with at least the major firms to make sure that all the information is correct and up to date. There’s no one better than you to spot outdated or incorrect reports.

Finally, keep your debt ratio low. A company with credit that’s nearly maxed out will raise a red flag. Keep your business expenses lean and periodically request increases in your line of credit to keep those numbers looking good.

An additional challenge in establishing and improving your business credit is that the three major agencies all have different methods of calculating your score.

Equifax, for example, relies primarily on bank loan and credit card data reports. Dun and Bradstreet’s Paydex relies on reports from your vendors and suppliers. And Experian combines both. And those are just the top three in a crowded field of credit reporters.

It’s not easy, but understanding and maintaining your business credit rating is critical to keeping your business vital and healthy.

For more information:

SBA credit reporting guide

Equifax

Dun and Bradstreet

Experian

Understanding your credit report

For more information on improving your credit or to schedule an appointment with an enrolled agent, contact Sheltra Tax & Accounting, LLC at (802) 878-0990 today.

Reasonable Cause Penalty Abatements for Delinquent Taxes

Reasonable Cause Penalty Abatements for Delinquent TaxesIf your request for the First-Time Penalty abatement fails the next course of action is Reasonable Cause Penalty Abatement.

The taxpayer or Enrolled Agent would submit a written request for penalty relief based on a reasonable cause.

Accepted Reasons for Penalty Abatement:

  1. Natural or man-made disasters.
  2. A taxpayer’s death, serious illness, incapacitation.
  3. Tax preparer errors.
  4. Bookkeeper/accountant fraud or embezzlement of funds.
  5. Erroneous oral or written instructions or advice furnished by the IRS.
  6. Financial hardship.

Even if any of these situations have occurred you could still be turned down by the IRS. In that case you would have the option of filing an appeal.

When a taxpayer owes a substantial amount of money, it is a very stressful situation. This could affect your family, marriage and friendships. Dealing with the IRS in these situations can be stressful and intimidating.  

This is where Enrolled Agents come in handy. We are enrolled to practice before the IRS. We take the stress away and handle the situation for you. We understand all the available options in these situations.

You may see the famous commercials that state “pennies on the dollar.” Sounds great, doesn’t it? This is not reality. The only time that can possibly happen is if the taxpayer is insolvent.  

These firms have you pay them at least $5K, insist you pay them first and not pay the IRS. They tell you they can settle your case for little or no payment. It very rarely happens that way!

IRS Penalty Abatements for Delinquent Taxes

IRS Penalty Abatements for Delinquent TaxesIt is not uncommon for a taxpayer to fall behind in their taxes. They may have started a new business did not pay estimated taxes during the year, or self-employment income has increased substantially from the prior year. Or, one spouse was unaware that the other spouse had not been paying the taxes.

Whatever the reason for delinquent taxes, there is always a remedy to alleviate the situation. Some or all of the penalties may be abated and in most cases the taxpayer will be on a reasonable payment plan.

The first line of defense is having your Enrolled Agent request first-time penalty abatement from the IRS. This is an administrative waiver of failure to file/failure to pay penalties assessed against individual income taxes, business taxes and payroll taxes.

The first-time penalty abatement can only be received once for each type of qualifying tax, and only for one tax period. The taxpayer must have a clean record for three years to be considered for this type of penalty relief. In addition, all of your tax filings must be current.

Your request must be made within two years of the date that the balance was paid on the requested tax period or within three years (including extensions) of the date that the tax return was due.

The types of penalties that are not eligible for the first-time penalty abatement are: failure to pay estimated taxes, accuracy-related penalties, fraud penalties, civil penalties, or bad check penalties.

In a later article, I will discuss Reasonable Cause Penalty Abatement.

Stay tuned.

Tips for Choosing a Payroll Service

Tips for Choosing a Payroll ServiceWhen business owners talk about the excitement of running their company, the joy of doing payroll almost never comes up.

Payroll is meticulous, labor intensive, and riddled with the chance to make costly mistakes.

That’s why more and more owners are outsourcing the task. In addition to buying the increased expertise in an atmosphere of complex regulations and tax situations, they are paying for that burden to be lifted from their shoulders.

Having decided to use a provider, the next step is choosing which provider to use. There are a lot of providers and culling the list is not a simple task.

First, check with your circle of advisers. If your company has a financial officer, regular legal counsel or a regular tax provider, they may have some helpful insight. Then expand to business owners in your network. See who loves the provider they’re using or who has a horror story.

Finally, you can go online and narrow your search through comments and consumer reports about the firms you are considering. Once you’ve whittled the candidates to a manageable number, it’s time to start asking some specific questions.

First, how much you can afford to pay for a service? Costs vary widely and, like automobiles, there are a lot of additional options that can increase the sticker price. Will they bill you monthly or by the pay period?

Second, figure out what services you want to outsource. Make your list and then compare it against the services being offered to find your best fit.

Third, check into support and security. When things go wrong, how quickly will your provider step up and make things right? When are they available? Good customer service should be one of their primary concerns. Also, because many payroll companies are online, what is their security record? Have there been breaches? What are their solutions? Is there a backup plan in case of internet outages?

Fourth, how long have they been in business? How many clients to do they have? Do they handle other companies in your line? Do they handle payroll for your blend of full-time, part-time and contract employees?

And finally, does the company have the resources to meet a growing payroll as your business expands?

Once you’ve made your decision, every payday will be a reminder of the work you’ve put in.

Additional resources:

IRS list of services that have passed the Assurance Testing System

IRS employer tax guide

Gifts for Clients and Tax Deductions: What you Need to Know

Tax deductions for client giftsYou foster strong relationships with your customers through exceptional service and value. But a thank-you gift never hurts. In addition to the goodwill you earn as a gift-giver, you also earn a small tax deduction from the IRS.

A very small tax deduction, which is limited to a maximum of $25 for each client. The amount may seem miserly but it was generous when it was set more than 50 years ago. Here are a few things you should know about the tax benefits of your gifts:

  • One customer, one deduction. The IRS allows only one deduction to a customer. So if you give gifts to a customer, the customer’s spouse and each of their children, it’s still capped at $25. Also, you and your spouse are treated as one taxpayer for that client, even if you have independent business relationships with the client and work for different companies.
  • The IRS doesn’t consider incidental costs to be part of the gift, and so those costs are not capped. The service says incidental costs include packaging, gift-wrapping, shipping and personalized engraving on pens or jewelry.
  • Small-value giveaway items are not considered gifts for the purpose of the $25 limit. Anything that costs less than $4 per unit, has the name of your business on it, and is widely distributed is considered a promotional item. Those can be written off as a business expense.
  • Always document your gifts completely. Your records should include the description of the gift and the receipt to verify its cost, the purchase date, the business purpose and the relationship between the gift giver and the client.

Some items fall into a hazy area between gift and entertainment, such as concert, theater or sporting event tickets. If you give these items to a client, they are subject to the $25 limit. However, if you attend the event with the client, the tickets become an entertainment expense, and 50 percent of the face value is deductible.

For example, if you give a client two $15 theater tickets, it could be a $25 gift expense or a $15 entertainment expense. If the two tickets cost $200, you get the $25 deduction if you don’t attend, and a $100 deduction if you do.

Check out the full IRS chapter on the gift deduction.

Windfalls

WindfallsDid you know that a windfall refers to a piece of fruit that is blown from a tree? You get all the benefits of a nice snack with none of the climbing or stretching and picking.

Most of us know about windfalls in connection with money—that unexpected good fortune that puts a large sum of money into your hands. Turns out, it’s unexpected good fortune for the IRS too, which will want its portion.

In fact, it’s likely that today’s income reporting setup means the government will probably know about your (legal) largesse before you do. When you’re making your celebratory telephone calls, make sure to include one to your tax consultant, who will have strategies to help you to hold on to more of the fruit.

Let’s look at that ultimate stroke of good luck, the lottery. You’re never going to win it, but let’s say you do. Along with a check, the lottery winner gets a form W-G2  reporting  the winnings. Just for fun, you can take a look at it here: https://www.irs.gov/pub/irs-pdf/fw2g.pdf

You’re going to owe a substantial amount in state taxes, unless you live in one of the seven states without a personal income tax (Florida, Iowa, South Dakota, Tennessee, Texas, Wyoming and Washington), or in one of the three states that don’t tax lottery winnings (California, Delaware and Pennsylvania). You can check your state’s rate here: http://taxfoundation.org/blog/what-percentage-lottery-winnings-would-be-withheld-your-state

Writing that tax check can be painful, but if you do it before the end of the year it will help you when federal tax season rolls around. State tax is deductible, and if you make that payment before Jan. 1, 2017, it will work for you in the 2016 tax year. Presumably you’re not going to win the lottery in consecutive years, so a tax deduction for the 2017 tax year won’t do you nearly as much good.

Now for the federal bite. There will be a 25 percent withholding from your lottery prize. That may seem like a lot, but it gets worse. You’ll wind up paying the top tax rate of 39.6 percent on what the government considers “ordinary income.” That means you’ll have to set aside an additional 14.6 percent to cover that bill.

The rule is, always: you’ll pay for good advice but you’ll pay more without it.