By Diana DiBello
In sales and use tax, nexus is one of the most active areas of debate and analysis. Many an unsuspecting company has been caught in the snares of a state's nexus!
Nexus requirements vary by state and often catch a seasoned tax professional unaware. Unlike income tax, PL 86-272 does not offer protection from sales tax. PL 86-272 or Public Law 86-272, prohibits states from imposing a net income tax on an entity whose only activities are solicitation of orders in that state.
Although the litmus test is simple in terms of where a company has "substantial physical presence," specifically defining physical presence is where numerous, complex state laws, rules, and guidelines enter the equation.
Some of the most interesting landmark cases involve nexus. The most frequently referenced is Quill Corp. v. North Dakota, 504US298 (1992), but in order to understand the impact of Quill, we must go back to an even older case, Complete Auto Transit v. Brady. This case outlines four tests that outline a state's ability to require a company to collect tax so that the collection of the tax does not violate the commerce clause of the Constitution. These four prongs cover activities that link an out-of-state vendor to the state, including connected activity, discrimination against out-of-state vendors, fair apportionment of the tax to the presence, and the taxpayer receiving benefits fairly related to the amount of tax paid.
Technology has prompted a number of states to question the validity of a physical presence test. Consequently, many states try to extend their reach. Recently, New York State attempted to get tax revenues from online retailers. The New York Supreme Court recently dismissed Amazon's complaint that the state overreached its authority by imposing a law to require out-of-state sellers to collect the tax, even though they do not have substantial physical presence. The state's law creates the collection requirement for any company that has referral relationships with in-state entities.
Each state's statute defines the minimum contact threshold to require an out-of-state seller to collect the tax, and it is important to understand each state's requirement because they do vary. For example, attending a trade show may be sufficient contact with the state to create nexus, depending on the length of time or frequency of attendance.
Contractors can be another source of nexus. Even though they are not employees, they represent the organization and, therefore, create the necessary connection. Even in-state volunteers can create nexus in some states. This was the case in Scholastic Book-Clubs, Inc. v. California Board of Equalization, where teachers who collected book orders and sent the payment to the company were deemed to be acting as "agents" for the company.
Finally, voluntarily registering and collecting the tax for customers may create nexus and require the vendor to continue to collect the tax. In other words, losing nexus is much harder than you think. In addition, some states require a vendor to continue to collect for 12 months after it has formally discontinued business in that state.
SpeedTax has created a brief questionnaire designed for companies to quickly determine their risk associated with sales tax compliance. As a QuickBooks ProAdvisor, you can pass this information to your clients and help them determine ways to avoid that often-surprising trap, nexus.
About the author: Diana DiBello is director of Product Development for SpeedTax, a provider of sales tax compliance software solutions. She previously was a senior manager in the State and Local Tax Services Group for Grant Thornton. Contact her at dianad@speedtax.com.
Tuesday, April 7, 2009
Tuesday, March 24, 2009
Vehicle Mileage
Just about everyone uses their vehicle in their business. Here is a link to an article from the Journal of Accountancy on the importance of supporting your mileage deduction:
http://www.journalofaccountancy.com/Web/SupportYourAutoExpense.htm
Did you know that QuickBooks can track your vehicle mileage? You can find it by clicking Company and then clicking Enter Vehicle Mileage. You should use this feature in QuickBooks to support your mileage expense deduction. You can even set it up to bill the expense to your customers.
http://www.journalofaccountancy.com/Web/SupportYourAutoExpense.htm
Did you know that QuickBooks can track your vehicle mileage? You can find it by clicking Company and then clicking Enter Vehicle Mileage. You should use this feature in QuickBooks to support your mileage expense deduction. You can even set it up to bill the expense to your customers.
Monday, March 16, 2009
Who is the IRS Targeting?
Take a look at this short video from MSN Money. The best reason to keep absolutely perfect books for the self-employed. And QuickBooks can help you do that.
Here is the link:
http://articles.moneycentral.msn.com/video/default-ap.aspx?cp-documentid=52d354d1-bda0-41f7-9a28-bea59770aef1
Here is the link:
http://articles.moneycentral.msn.com/video/default-ap.aspx?cp-documentid=52d354d1-bda0-41f7-9a28-bea59770aef1
Thursday, March 12, 2009
Keep Smart Records To "Audit-Proof" Your Return
“Audit-proofing” your return means documenting deductions so that you can prove them if you’re audited. Today’s historically low audit rates make it pay to be aggressive. But you should file your return as if you expect to be audited. That way, if it happens, you can support your deductions and walk away a winner.
The IRS generally doesn’t require records in specific forms (except for travel, entertainment, automobiles, and gifts). To verify expenses, you need to show what you paid and proof that you paid it. Canceled checks (front and back) and credit card slips can verify payments. If you don’t have a check or card slip, you can verify payment with “highly legible” bank statements.
Checks must show the check number, amount, payee, and date it was posted to the account. Electronic funds transfers must show the amount transferred, the payee’s name, and the date the transfer was posted to the account. Credit cards must show the amount charged, the payee’s name, and the transaction date.
If you’re self-employed or you own a business, your real challenge is proving the business purpose of your expense. The solution is to keep detailed written records, which you can do right in your regular appointment book. This verifies deductions for car and truck expenses, meals and entertainment, home office and business property use, and more. Keep records as close to daily as possible.
A common question my clients ask is how long to keep business records. The following information comes from IRS Publication 552, Recordkeeping for Individuals.
1). If you owe additional tax, and situations (2), (3), and (4), below, do not apply - 3 years
2). You do not report income that you should report, and it is more than 25% of the gross income shown on your return - 6 years
3). You file a fraudulent income tax return - No limit
4). You do not file a return - No limit
5). You file to amend a previous return - Later of: 3 years, or 2 years after tax was paid
6). You amend your return due to bad debt deduction or loss from worthless securities - 7 years
7). Employment tax records for your business - 4 years
8). You sell assets used for your business - The period for the year in which you dispose of the property
Julie Morgenstern, author of Organizing From the Inside Out, suggests archiving tax documents in a rotating six-year file: “Outfit a banker’s box with six box-bottom file folders labeled Years 1 through 6 (rather than by the year itself to avoid having to relabel annually). Keep last year’s tax records and related receipts in the Year 1 folder, the previous year’s records in Year 2, and so on. At the end of each year, toss the contents of the bottom folder (Year 6), move each set of records back one folder, and put the records from the year just ended into Year 1.”
The IRS generally doesn’t require records in specific forms (except for travel, entertainment, automobiles, and gifts). To verify expenses, you need to show what you paid and proof that you paid it. Canceled checks (front and back) and credit card slips can verify payments. If you don’t have a check or card slip, you can verify payment with “highly legible” bank statements.
Checks must show the check number, amount, payee, and date it was posted to the account. Electronic funds transfers must show the amount transferred, the payee’s name, and the date the transfer was posted to the account. Credit cards must show the amount charged, the payee’s name, and the transaction date.
If you’re self-employed or you own a business, your real challenge is proving the business purpose of your expense. The solution is to keep detailed written records, which you can do right in your regular appointment book. This verifies deductions for car and truck expenses, meals and entertainment, home office and business property use, and more. Keep records as close to daily as possible.
A common question my clients ask is how long to keep business records. The following information comes from IRS Publication 552, Recordkeeping for Individuals.
1). If you owe additional tax, and situations (2), (3), and (4), below, do not apply - 3 years
2). You do not report income that you should report, and it is more than 25% of the gross income shown on your return - 6 years
3). You file a fraudulent income tax return - No limit
4). You do not file a return - No limit
5). You file to amend a previous return - Later of: 3 years, or 2 years after tax was paid
6). You amend your return due to bad debt deduction or loss from worthless securities - 7 years
7). Employment tax records for your business - 4 years
8). You sell assets used for your business - The period for the year in which you dispose of the property
Julie Morgenstern, author of Organizing From the Inside Out, suggests archiving tax documents in a rotating six-year file: “Outfit a banker’s box with six box-bottom file folders labeled Years 1 through 6 (rather than by the year itself to avoid having to relabel annually). Keep last year’s tax records and related receipts in the Year 1 folder, the previous year’s records in Year 2, and so on. At the end of each year, toss the contents of the bottom folder (Year 6), move each set of records back one folder, and put the records from the year just ended into Year 1.”
Wednesday, March 11, 2009
Tips to Improve QuickBooks Startup Time
Situation
You find that QuickBooks is taking too long to load and then open a company file.
Background
Accountants, and like professionals with multiple QuickBooks clients, sometimes use QuickBooks in a way that creates opportunities for improving startup time.
Response
How you deal with company files may save you some time when next launching QuickBooks. If you are not already following these practices, try them now and see if they improve future startup time.
Finishing a Task and Closing QuickBooks
Taking the time to close components within QuickBooks before exiting will often improve startup time the next go.
Close All Windows.
Close all windows within the QuickBooks application before closing the file or exiting QuickBooks. Next time you open the same file or launch QuickBooks (with the last file used) it would come up much quicker. You can do it by selecting Close All from the Window menu or by pressing Alt + W and then pressing A.
Close Company File.
If you close the company file before exiting QuickBooks, the next time you launch QuickBooks you will be up and running much quicker. On the next time you launch, QuickBooks will display the No Company Open window, and you can then select the file you want to work on. (This a good general approach, since most ProAdvisors work on many files.) Select Close Company... from the File menu or by pressing Alt + F and then pressing C.
Where You Keep Your Files
Run from Hard Drive (Not Removable Media). Some users run the company file from removable media like a flash drive or a CD-ROM. This helps them keep companies separate and is one way they juggle multiple clients. However, running the company file from removable media is definitely slower than from the hard drive. In the interest of speed, Intuit recommends moving the company file from the CD to the computer's hard drive for faster operation.
Other Tips
Intuit has put together even more tips on improving the speed at which QuickBooks loads and opens a company file. See this related item from the QuickBooks Knowledge Base: Improving System Performance.
Note: If you are experiencing slow startup with QuickBooks in a networked environment, refer your system administrator to the Network Installation Information we have posted for QuickBooks 2008.
Source: Intuit
You find that QuickBooks is taking too long to load and then open a company file.
Background
Accountants, and like professionals with multiple QuickBooks clients, sometimes use QuickBooks in a way that creates opportunities for improving startup time.
Response
How you deal with company files may save you some time when next launching QuickBooks. If you are not already following these practices, try them now and see if they improve future startup time.
Finishing a Task and Closing QuickBooks
Taking the time to close components within QuickBooks before exiting will often improve startup time the next go.
Close All Windows.
Close all windows within the QuickBooks application before closing the file or exiting QuickBooks. Next time you open the same file or launch QuickBooks (with the last file used) it would come up much quicker. You can do it by selecting Close All from the Window menu or by pressing Alt + W and then pressing A.
Close Company File.
If you close the company file before exiting QuickBooks, the next time you launch QuickBooks you will be up and running much quicker. On the next time you launch, QuickBooks will display the No Company Open window, and you can then select the file you want to work on. (This a good general approach, since most ProAdvisors work on many files.) Select Close Company... from the File menu or by pressing Alt + F and then pressing C.
Where You Keep Your Files
Run from Hard Drive (Not Removable Media). Some users run the company file from removable media like a flash drive or a CD-ROM. This helps them keep companies separate and is one way they juggle multiple clients. However, running the company file from removable media is definitely slower than from the hard drive. In the interest of speed, Intuit recommends moving the company file from the CD to the computer's hard drive for faster operation.
Other Tips
Intuit has put together even more tips on improving the speed at which QuickBooks loads and opens a company file. See this related item from the QuickBooks Knowledge Base: Improving System Performance.
Note: If you are experiencing slow startup with QuickBooks in a networked environment, refer your system administrator to the Network Installation Information we have posted for QuickBooks 2008.
Source: Intuit
Tuesday, March 10, 2009
Five QuickBooks Keyboard Shortcuts
It's often the little things that bring the most joy. When teaching Intuit QuickBooks accounting software, I am frequently surprised when I mention a way to do something that I assume everyone knows and find people say, "That's great, I didn't know that." So to help you become more of a QuickBooks expert here are some of my favorite shortcuts for you or for your clients.
Intuit has prepared a PDF version of this article that is client-ready, if that would be of use.
Shortcut One: Keyboard Tips Working with Dates
When in a date field there are many ways to change the date. Of course you can type the date or you can pull up the calendar but there may be faster ways to get to a specific date.
Changing by a Few Days. If you only want to change a few days try using the Plus (+) or Minus (-) key to move forward or backwards. You can hold the key down and change dates quite quickly but I generally recommend this for a change of a few days.
Changing by Weeks. You can go back to the first day of the week by using the letter W and forward to the last day of the week by using the letter K.
Note: Recognizing that these are the first and last letters of the word WeeK gives you a clue as to how you can move forward or back within the week.
Changing by Months. You can go back to the first day of the month by using the letter M and forward to the last day of the month by using the letter H.
Note: Recognizing that these are the first and last letters of the word MontH gives you a clue as to how you can move forward or back within the month.
Changing by Year. You can go back to the first day of the year by using the letter Y and forward to the end of the year at a time by using the letter R.
Note: Recognizing that these are the first and last letters of the word YeaR gives you a clue as to how you can move forward or back within the year.
Today. By now you will probably not be surprised to learn that you can return to today's date at any time by pressing the letter T.
Shortcut Two: Saving Transactions from Keyboard
When working in a transaction and tabbing from field to field, you eventually get to the point where you want to save the transaction.
If you do not wish to take your hands off the keyboard to move the mouse to the Save & New Button, try holding down the CTRL key while pressing the Enter key. This combination will execute whatever is highlighted, almost always the Save & New Button.
Shortcut Three: Calculations on the Fly
How often have you worked in QuickBooks and needed to add up numbers? Windows and QuickBooks both have calculators that you can pull up, but you really don't need them.
If you are in an amount field on a check or other transaction, just pressing the number keys followed by a mathematical symbol (+, -, /, *) you will pull up the calculator. You can continue to enter numbers and math functions until you are done.
Note: Just remember to press the Enter key to enter the amount into the number field. If you press the tab key you will lose the amount.
Shortcut Four: Working with Check Numbers
Many people don't realize you can enter something other than a check number in the check number field.
I like to use the word Debit for all transactions that I do online. Then I put the online confirmation number in the memo field. This makes it easy to track the transactions and they show up grouped together on the bank statement reconciliation screen.
Note: Just be sure to be consistent with the word and the spelling, including capitalization or they won't be grouped together.
Shortcut Five: Making the Icon Bar Work for You
Last but not least, you can customize the icon bar at the top of the screen to hold the functions you use most often. Just right click on the icon bar and click on Customize.
I hope these tips make using QuickBooks a little easier as you go through the day.
Source: AccountingWeb.com
About the author
Caren Schwartz, Advanced Certified QuickBooks ProAdvisor, founded Time & Cents Consultants, LLC, a Southport, Connecticut firm, to help professionals select, install and get the most out of their software. Her philosophy is that companies can save time and money when they can better manage their time and money. Prior to establishing the company, Schwartz spent over 14 years as an executive with IBM, accountable for marketing support, quality development and training, and multi-million dollar revenue planning.
Intuit has prepared a PDF version of this article that is client-ready, if that would be of use.
Shortcut One: Keyboard Tips Working with Dates
When in a date field there are many ways to change the date. Of course you can type the date or you can pull up the calendar but there may be faster ways to get to a specific date.
Changing by a Few Days. If you only want to change a few days try using the Plus (+) or Minus (-) key to move forward or backwards. You can hold the key down and change dates quite quickly but I generally recommend this for a change of a few days.
Changing by Weeks. You can go back to the first day of the week by using the letter W and forward to the last day of the week by using the letter K.
Note: Recognizing that these are the first and last letters of the word WeeK gives you a clue as to how you can move forward or back within the week.
Changing by Months. You can go back to the first day of the month by using the letter M and forward to the last day of the month by using the letter H.
Note: Recognizing that these are the first and last letters of the word MontH gives you a clue as to how you can move forward or back within the month.
Changing by Year. You can go back to the first day of the year by using the letter Y and forward to the end of the year at a time by using the letter R.
Note: Recognizing that these are the first and last letters of the word YeaR gives you a clue as to how you can move forward or back within the year.
Today. By now you will probably not be surprised to learn that you can return to today's date at any time by pressing the letter T.
Shortcut Two: Saving Transactions from Keyboard
When working in a transaction and tabbing from field to field, you eventually get to the point where you want to save the transaction.
If you do not wish to take your hands off the keyboard to move the mouse to the Save & New Button, try holding down the CTRL key while pressing the Enter key. This combination will execute whatever is highlighted, almost always the Save & New Button.
Shortcut Three: Calculations on the Fly
How often have you worked in QuickBooks and needed to add up numbers? Windows and QuickBooks both have calculators that you can pull up, but you really don't need them.
If you are in an amount field on a check or other transaction, just pressing the number keys followed by a mathematical symbol (+, -, /, *) you will pull up the calculator. You can continue to enter numbers and math functions until you are done.
Note: Just remember to press the Enter key to enter the amount into the number field. If you press the tab key you will lose the amount.
Shortcut Four: Working with Check Numbers
Many people don't realize you can enter something other than a check number in the check number field.
I like to use the word Debit for all transactions that I do online. Then I put the online confirmation number in the memo field. This makes it easy to track the transactions and they show up grouped together on the bank statement reconciliation screen.
Note: Just be sure to be consistent with the word and the spelling, including capitalization or they won't be grouped together.
Shortcut Five: Making the Icon Bar Work for You
Last but not least, you can customize the icon bar at the top of the screen to hold the functions you use most often. Just right click on the icon bar and click on Customize.
I hope these tips make using QuickBooks a little easier as you go through the day.
Source: AccountingWeb.com
About the author
Caren Schwartz, Advanced Certified QuickBooks ProAdvisor, founded Time & Cents Consultants, LLC, a Southport, Connecticut firm, to help professionals select, install and get the most out of their software. Her philosophy is that companies can save time and money when they can better manage their time and money. Prior to establishing the company, Schwartz spent over 14 years as an executive with IBM, accountable for marketing support, quality development and training, and multi-million dollar revenue planning.
Saturday, March 7, 2009
Welcome!
Welcome to QuickBooks Buzz, the tips, tricks and news blog about financial reporting with QuickBooks Software. I am a CPA and I specialize in QuickBooks, and I write about how to use QuickBooks more effectively. Most of my posts come directly from things that I run across in consulting engagements that I think other users would benefit from.
Oh by the way, these posts are primarily for current QuickBooks users and presume a passing familiarity with the QuickBooks user interface.
New to QuickBooks? Or At Capacity? Lost and overwhelmed? Need some help? Some companies just get help from their CPA, but others have industry-specific or unusual requirements, and want to carve out the setup or financial reporting piece with a QuickBooks specialist’s attention.
Consulting
If you want information about consulting engagements, see QuickBooks Consulting. QuickBooks is all I do. And I’m always happy to hear about an upcoming QuickBooks project.
Location
I’m in San Antonio, Texas which is where I do most of my work, but I can also work on your computer with you anywhere in the world using GoToAssist and a telephone connection using VOIP (voice over internet protocol). It's just like me sitting next to you in your office, except that I'm in my office in San Antonio and you are wherever your office is.
Experience
Besides being a CPA, I am a Certified QuickBooks ProAdvisor and have been consulting with QuickBooks since 1995. Time flies!
Cheers!
Gerry
Oh by the way, these posts are primarily for current QuickBooks users and presume a passing familiarity with the QuickBooks user interface.
New to QuickBooks? Or At Capacity? Lost and overwhelmed? Need some help? Some companies just get help from their CPA, but others have industry-specific or unusual requirements, and want to carve out the setup or financial reporting piece with a QuickBooks specialist’s attention.
Consulting
If you want information about consulting engagements, see QuickBooks Consulting. QuickBooks is all I do. And I’m always happy to hear about an upcoming QuickBooks project.
Location
I’m in San Antonio, Texas which is where I do most of my work, but I can also work on your computer with you anywhere in the world using GoToAssist and a telephone connection using VOIP (voice over internet protocol). It's just like me sitting next to you in your office, except that I'm in my office in San Antonio and you are wherever your office is.
Experience
Besides being a CPA, I am a Certified QuickBooks ProAdvisor and have been consulting with QuickBooks since 1995. Time flies!
Cheers!
Gerry
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