Steve Cook is the managing member of Cook, Gola and Company, PLLC, certified public accountants with offices in San Antonio and Austin. www.cookgola.com
If you are like me, you have been following the Big 12 divestiture saga. The political posturing among these institutes of higher learning tops anything out of D.C. The entire chain of events is very interesting and a bit aggravating.
Both the University of Texas (my alma mater) and Texas A&M are above average schools. They both have unique heritages that have proven the test of time. They are, however, different. When I visit with people that are not direct descendents of the institutions, they just do not get the unique character of each institution. They are just two huge schools that cannot get along with each other. In reality, the schools coexist rather nicely. The schools were, however, chartered for different purposes. They were chartered to attract different groups of Texans. The combination of the two schools was designed to accommodate the broad cross section of Texas cultures.
So when A&M says that it wants to move to another athletic conference with schools more closely aligned with their core value, that really isn’t a stretch. At the same time, when UT says that it wants to align with the more academically oriented PAC 12/14, that isn’t a stretch either. The State of Texas is not a rural, one dimensional state. It is a multifaceted mammoth. There is plenty of room for growth from all sides.
From this outsider’s viewpoint, the LHN cracked the door for A&M to move East to join schools with a more agricultural and conservative basis. While I think that their excuse is rather weak given the fact that they could have participated in the network, I do accept that the move will benefit the school and as such is a solid business decision.
I also think that road trips to Phoenix, Los Angeles and Seattle are not all that bad. It sure beats Ames, Iowa and Lawrence, Kansas.
At any rate, OU is going to wait for A&M to announce their move. That will make the OU fans think that they are not UT’s step child. Then UT will follow since there will be no other option available. The politics will have worked out. I only wonder whether this was the “back room” plan from a year ago?
The big winners are Tech and Okie State. As for Baylor, who did you think you were fooling? Welcome to CUSA.
Gotta love politics.
Thursday, September 8, 2011
Thursday, September 1, 2011
Increased Taxes on Small Businesses a Possibility
A simple change of definition could mean increased taxes for small businesses. The Treasury Department is currently considering adopting a new definition for what constitutes a small business. Under the proposed definition, only businesses with less than $10 million in annual gross income or deductions would qualify as “small”.
This change could have a huge impact on closely held businesses such as partnerships, S corporations and limited liability companies. These business types are called flow-through entities because profits flow directly to the owners, who pay personal income tax without first being subject to corporate tax.
A recent study by a former Treasury official revealed that more than 90 percent of businesses are organized as flow-through entities, with their owners paying around 43 percent of all U.S. business taxes on their individual tax returns. If the new definition takes hold, there will be significantly fewer small businesses and fewer owners of these businesses will be included in top income brackets.
Thoughts?
LeAnn Gola, CPA MAcy, is a Member-Assurance Services with Cook, Gola and Company PLLC, Certified Public Accountants, with offices in San Antonio and Austin, Texas. www.cookgola.com
This change could have a huge impact on closely held businesses such as partnerships, S corporations and limited liability companies. These business types are called flow-through entities because profits flow directly to the owners, who pay personal income tax without first being subject to corporate tax.
A recent study by a former Treasury official revealed that more than 90 percent of businesses are organized as flow-through entities, with their owners paying around 43 percent of all U.S. business taxes on their individual tax returns. If the new definition takes hold, there will be significantly fewer small businesses and fewer owners of these businesses will be included in top income brackets.
Thoughts?
LeAnn Gola, CPA MAcy, is a Member-Assurance Services with Cook, Gola and Company PLLC, Certified Public Accountants, with offices in San Antonio and Austin, Texas. www.cookgola.com
Tuesday, August 30, 2011
BRAIN FATIGUE
Steve Cook is the managing member of Cook, Gola and Company, PLLC, Certified Public Accountants with offices in San Antonio and Austin. www.cookgola.com
From the August 30, 2011, Wall Street Journal, “Like a muscle, our brains appear to get fatigued after working for sustained periods of time, particularly if we have to concentrate intensely or deal with a repetitive task, says Michael Posner, an emeritus professor at the University of Oregon who studies attention.”
The article which was very interesting pointed out that sometimes a walk in the park is more beneficial than a big gulp of coffee. The idea is that coffee and other caffeine based products amps up the intensity level which reduces our ability to concentrate. Getting away from the task at hand for a short period both clears and refreshes the mind.
This appears to be sound advice indeed. Generally, I feel more alert after lunch (a small lunch). I probably do my best work between 1:30 and 3:30 each day. But I need my coffee!
I like coffee. I have developed a taste for it over the years. I even have favorites……and it isn’t your favorite grocery store’s brand. Personally I like Costa Rican Peabody and Jamaican Blue Mountain. A little Kenyan roast is also good in the morning. But the best coffee, especially after dinner, is Kona. Real Kona coffee is wooonderful…..and expensive. Don’t get the blends, they are rip-offs!
All this leads me to conclude that a walk in the park with a cup of your favorite coffee may offer the optimal in relaxing pick me up.
From the August 30, 2011, Wall Street Journal, “Like a muscle, our brains appear to get fatigued after working for sustained periods of time, particularly if we have to concentrate intensely or deal with a repetitive task, says Michael Posner, an emeritus professor at the University of Oregon who studies attention.”
The article which was very interesting pointed out that sometimes a walk in the park is more beneficial than a big gulp of coffee. The idea is that coffee and other caffeine based products amps up the intensity level which reduces our ability to concentrate. Getting away from the task at hand for a short period both clears and refreshes the mind.
This appears to be sound advice indeed. Generally, I feel more alert after lunch (a small lunch). I probably do my best work between 1:30 and 3:30 each day. But I need my coffee!
I like coffee. I have developed a taste for it over the years. I even have favorites……and it isn’t your favorite grocery store’s brand. Personally I like Costa Rican Peabody and Jamaican Blue Mountain. A little Kenyan roast is also good in the morning. But the best coffee, especially after dinner, is Kona. Real Kona coffee is wooonderful…..and expensive. Don’t get the blends, they are rip-offs!
All this leads me to conclude that a walk in the park with a cup of your favorite coffee may offer the optimal in relaxing pick me up.
Thursday, August 25, 2011
NOT FOR PROFIT PRIMER
Steve Cook is the managing member of Cook, Gola and Company PLLC, certified public accountants with offices in San Antonio and Austin. www.cookgola.com
Today I am giving a presentation to a group of Texas Chamber of Commerce executives hosted by the Texas Association of Business in Austin. Apparently, there is some confusion within that group regarding their not-for-profit options. I thought you might find some of the points of today’s address interesting.
The most common not-for-profit is the Internal Revenue Code (IRC) 501.C.3. The purpose of these organizations must be either charitable, religious, educational, scientific, literary, public safety, amateur sports, or the prevention of cruelty to children or animal.
The entity must be organized exclusively for one or more of these purposes. The creating document must clearly limit the purpose of the organization to one or more of these purposes. In addition, the document must clearly state that the organization is not empowered to perform any activities that are contrary to the entity’s stated purpose. Finally, the actual document must clearly state how the assets of the organization will be disbursed should the organization discontinue operations.
The rules are actually even more involved. If you are in an existing organization or are starting a tax exempt organization, we highly recommend engaging an attorney that has experience in these matters.
A 501.C.3 organization may be taxable!
Yes, a tax exempt organization can be taxed at the Federal level. The taxable income is computed and reported on federal form 990T. Any revenue generating events that are not for the explicit purpose of the not-for-profit are taxable. The Internal Revenue Service is getting increasingly more aggressive in auditing these activities. For example, bingo is generally considered a 990T activity. As such those revenues are subject to taxes.
Many directors of local not-for-profits are unaware of the many legal and taxation issues that confront them. They simply want to “do their part.” Please be aware that there are a number of rules and regulations. As a Board member, you assume liability for your organization.
Today I am giving a presentation to a group of Texas Chamber of Commerce executives hosted by the Texas Association of Business in Austin. Apparently, there is some confusion within that group regarding their not-for-profit options. I thought you might find some of the points of today’s address interesting.
The most common not-for-profit is the Internal Revenue Code (IRC) 501.C.3. The purpose of these organizations must be either charitable, religious, educational, scientific, literary, public safety, amateur sports, or the prevention of cruelty to children or animal.
The entity must be organized exclusively for one or more of these purposes. The creating document must clearly limit the purpose of the organization to one or more of these purposes. In addition, the document must clearly state that the organization is not empowered to perform any activities that are contrary to the entity’s stated purpose. Finally, the actual document must clearly state how the assets of the organization will be disbursed should the organization discontinue operations.
The rules are actually even more involved. If you are in an existing organization or are starting a tax exempt organization, we highly recommend engaging an attorney that has experience in these matters.
A 501.C.3 organization may be taxable!
Yes, a tax exempt organization can be taxed at the Federal level. The taxable income is computed and reported on federal form 990T. Any revenue generating events that are not for the explicit purpose of the not-for-profit are taxable. The Internal Revenue Service is getting increasingly more aggressive in auditing these activities. For example, bingo is generally considered a 990T activity. As such those revenues are subject to taxes.
Many directors of local not-for-profits are unaware of the many legal and taxation issues that confront them. They simply want to “do their part.” Please be aware that there are a number of rules and regulations. As a Board member, you assume liability for your organization.
Monday, August 15, 2011
WHAT IS VALUE?
The other night we went out to dinner at a moderately priced Italian restaurant. As I scoured the wine menu, I began to think of the value of certain items. Generally in a restaurant, the wine is marked up three times. For example, a $45 bottle at the restaurant would cost you about $15 at your favorite liquor store. Some restaurants use a larger mark, but most of the eateries in San Antonio seem to use that formula. That, in and of itself, isn’t a real good value, but they do open the bottle for you and that is labor.
There are approximately 25 ounces in a bottle of wine. Depending on the glass size, there are four or five servings. We chose a nice Pinot Noir at $55 per bottle. It worked very nicely with the pasta. We could also buy that wine for $13 per glass. Depending on the serving size of the individual glass, we either made a prudent decision, as we usually have two glasses apiece, or we made the sucker play.
In this case, the difference was small either way. Given other purchases, however the difference may be more significant. In your business dealings, you are always determining value. Evaluation is how we make decisions. The quality of our evaluation determines the effectiveness of our decisions. When determining value, we need to look past the obvious. We need to peel back the layers of the onion. We need to be thorough in our evaluation so we will always receive the best possible value.
Steve Cook is the managing member of Cook, Gola and Company, PLLC, Certified Public Accountants with offices in San Antonio and Austin. www.cookgola.com
There are approximately 25 ounces in a bottle of wine. Depending on the glass size, there are four or five servings. We chose a nice Pinot Noir at $55 per bottle. It worked very nicely with the pasta. We could also buy that wine for $13 per glass. Depending on the serving size of the individual glass, we either made a prudent decision, as we usually have two glasses apiece, or we made the sucker play.
In this case, the difference was small either way. Given other purchases, however the difference may be more significant. In your business dealings, you are always determining value. Evaluation is how we make decisions. The quality of our evaluation determines the effectiveness of our decisions. When determining value, we need to look past the obvious. We need to peel back the layers of the onion. We need to be thorough in our evaluation so we will always receive the best possible value.
Steve Cook is the managing member of Cook, Gola and Company, PLLC, Certified Public Accountants with offices in San Antonio and Austin. www.cookgola.com
Tuesday, August 9, 2011
BEWARE OF FAKE IRS LETTERS
Steve Cook is the managing member of Cook, Gola and Company, PLLC, Certified Public Accountants with offices in San Antonio and Austin. www.cookgola.com
Today’s topic is very short, but very important. I recently had a client walk into the office paralyzed with fear. In hand, they had a letter that looked very similar to an IRS letter.
The letter talked about liens and levies. It was a ‘Second Notice’ letter. If this was a real IRS letter, the client had better take it seriously. This letter was not from the IRS. It was from some entity that wanted to represent our client in an IRS matter. There was no company name or contact on the letter, only a phone number.
Please note that any debts to either the Federal or State government are public information.
These letters at worst are fraudulent and at best immoral. Any correspondence that you receive from the IRS will be clearly marked. It will have case numbers, identification numbers and contact information. Pitch anything else.
Do not fall for these low class solicitations. If you have any doubt, contact the IRS.
Speaking Engagement: We are speaking to the Texas Association of Businesses on non-profit issues on August 25th in Austin. Phone 512-637-7711 for information.
Today’s topic is very short, but very important. I recently had a client walk into the office paralyzed with fear. In hand, they had a letter that looked very similar to an IRS letter.
The letter talked about liens and levies. It was a ‘Second Notice’ letter. If this was a real IRS letter, the client had better take it seriously. This letter was not from the IRS. It was from some entity that wanted to represent our client in an IRS matter. There was no company name or contact on the letter, only a phone number.
Please note that any debts to either the Federal or State government are public information.
These letters at worst are fraudulent and at best immoral. Any correspondence that you receive from the IRS will be clearly marked. It will have case numbers, identification numbers and contact information. Pitch anything else.
Do not fall for these low class solicitations. If you have any doubt, contact the IRS.
Speaking Engagement: We are speaking to the Texas Association of Businesses on non-profit issues on August 25th in Austin. Phone 512-637-7711 for information.
Thursday, August 4, 2011
ON THE LIGHTER SIDE…..
I am fascinated by statistics. The last few blogs have served as an update on IRS hot buttons. There are a few more in the offing but today I want to pass on some interesting statistics, if not alarming statistics, that appeared in the July 29, 2011 edition of the San Antonio Business Journal.
The July 29 edition was dedicated to health care. One section presented the following statistics from the Bexar County Health District:
The largest hospital is Baptist Medical Center. I always assumed that University Hospital would be the largest.
30% of 216,935 kids in Bexar County that were tested were overweight! There were 15,058 sexually transmitted diseases reported in 2009. Further, 24 out of every 1,000 was the number of Bexar County residences diagnosed with diabetes.
I suppose the logical conclusion is that we enjoy our sweets and personal companionships.
Finally, the leading causes of death in the County were heart disease, vehicle accidents, diabetes and throat/lung cancer. All of this leads to our final conclusion that we must have smoked a cigarette as we drove home from our night of indulgences.
Steve Cook is the managing member of Cook, Gola and Company, PLLC, certified public accountants with offices in San Antonio and Austin. www.cookgola.com
The July 29 edition was dedicated to health care. One section presented the following statistics from the Bexar County Health District:
The largest hospital is Baptist Medical Center. I always assumed that University Hospital would be the largest.
30% of 216,935 kids in Bexar County that were tested were overweight! There were 15,058 sexually transmitted diseases reported in 2009. Further, 24 out of every 1,000 was the number of Bexar County residences diagnosed with diabetes.
I suppose the logical conclusion is that we enjoy our sweets and personal companionships.
Finally, the leading causes of death in the County were heart disease, vehicle accidents, diabetes and throat/lung cancer. All of this leads to our final conclusion that we must have smoked a cigarette as we drove home from our night of indulgences.
Steve Cook is the managing member of Cook, Gola and Company, PLLC, certified public accountants with offices in San Antonio and Austin. www.cookgola.com
Monday, July 25, 2011
The Accounting to English Translation: SO YOU DON’T WANT TO PAY THOSE PAYROLL TAXES…part ...
The Accounting to English Translation: SO YOU DON’T WANT TO PAY THOSE PAYROLL TAXES…part ...: "Steve Cook is the managing member of Cook, Gola and Company, PLLC, certified public accountants with offices in San Antonio and Austin. www...."
SO YOU DON’T WANT TO PAY THOSE PAYROLL TAXES…part III
Steve Cook is the managing member of Cook, Gola and Company, PLLC, certified public accountants with offices in San Antonio and Austin. www.cookgola.com
As we have noted in our previous blogs, there is a real temptation to delay payroll tax payments. Frankly, this is not a good cash flow solution. The failure to file payroll tax returns and/or pay payroll taxes in a timely fashion will result in substantial penalties.
Please note that interest is charged on both unpaid taxes and assessed penalties.
Generally, interest is charged on any unpaid tax from the due date of the return until the date of payment. The interest rate on unpaid Federal tax is determined and posted every three months. It is the federal short–term interest rate plus 3 percent. Interest is compounded daily.
There are two components of payroll taxes. Component one is the deposit. Component two is the actual report. Each is subject to a failure to comply penalty.
Component one is the Deposit Penalty. It applies to amounts not properly or timely deposited, the penalty rates are as follows:
Days Late & Penalty
1-5 2%
6-15 5%
More than 16 10%
Upon IRS Notice 15% Begins 10 days after notice
Component two is the Late Filing Penalty. This applies if you owe tax and don't file on time. The late–filing penalty is usually 5% of the tax owed for each month, or part of a month, that your return is late up to five months (25%).
If your return is over 60 days late, the minimum penalty for late filing is the smaller of $100 or 100 percent of the tax owed.
You may be liable and not even know it. A responsible person can be an officer or employee of a corporation, a partner or employee of a partnership, an accountant, a volunteer director/trustee, or an employee of a sole proprietorship. A responsible person also may include one who signs checks for the business or otherwise has authority to cause the spending of business funds.
At any rate, your best cash flow management tool may not be passing on this week’s payroll tax deposit.
Thursday, July 14, 2011
Hotter than Hell’s Waiting Room
It’s hot outside. Really, really hot. It’s hotter than Hell’s Waiting Room. Okay, you get the picture. Throughout all this extreme heat, my husband and I have been running the AC hard. We’ve been more willing to take a punch to the pocket than suffer through a house that was hotter than 76 degrees.
Unfortunately (but not surprisingly), all this intense pressure on our AC unit caused it to go kaput…on a 102 degree day. Joy! The second kicker came when we found out the AC guy couldn’t make it out until two days later. Were we really going to have to sleep, cook, shower, dress, eat, or even sit in a house that was already at 92 degrees?
Thankfully, my sister lives a block away (there are some benefits to living close to family!), so we were able to stay with her during The Wait From Hell. Forgive me for my dramatics as I’m currently sitting in the 90 degree house *patiently* waiting for it to cool down enough so that I can take a shower to get clean rather than to just cool off.
The AC guy was here for 4 hours. During that time, I did some work, but I also ruminated over this unexpected cost we were facing. I don’t know about you, but I’d much rather use my savings on a vacation than a home repair. Nevertheless, it’s out of my hands and I’m okay with it (or maybe it’s the blessed relief of cool air on the back of my neck making me say these things).
Getting to the point. How does this have anything to do with accounting or business? During my rumination, I realized that we would be eligible for an Energy Tax Credit on our 2011 return. While it’s not a huge amount, it’s enough to make me feel slightly better about this sudden expense.
So if you find yourself in Hell’s Waiting Room, 1) don’t waste your time showering in your own house…you’ll just have to do it again 5 minutes later, 2) find a nearby relative to impose on, 3) breathe – some of your money will likely come back to you in the form of a credit.
To see what products qualify and how much credit you could receive, go to: http://www.energysavers.gov/financial/.
LeAnn Gola, CPA, MAcy is a member, assurance services with Cook, Gla and Company, PLLC, certified public accountants with offices in San Antonio and Austin, Texas. www.cookgola.com
Unfortunately (but not surprisingly), all this intense pressure on our AC unit caused it to go kaput…on a 102 degree day. Joy! The second kicker came when we found out the AC guy couldn’t make it out until two days later. Were we really going to have to sleep, cook, shower, dress, eat, or even sit in a house that was already at 92 degrees?
Thankfully, my sister lives a block away (there are some benefits to living close to family!), so we were able to stay with her during The Wait From Hell. Forgive me for my dramatics as I’m currently sitting in the 90 degree house *patiently* waiting for it to cool down enough so that I can take a shower to get clean rather than to just cool off.
The AC guy was here for 4 hours. During that time, I did some work, but I also ruminated over this unexpected cost we were facing. I don’t know about you, but I’d much rather use my savings on a vacation than a home repair. Nevertheless, it’s out of my hands and I’m okay with it (or maybe it’s the blessed relief of cool air on the back of my neck making me say these things).
Getting to the point. How does this have anything to do with accounting or business? During my rumination, I realized that we would be eligible for an Energy Tax Credit on our 2011 return. While it’s not a huge amount, it’s enough to make me feel slightly better about this sudden expense.
So if you find yourself in Hell’s Waiting Room, 1) don’t waste your time showering in your own house…you’ll just have to do it again 5 minutes later, 2) find a nearby relative to impose on, 3) breathe – some of your money will likely come back to you in the form of a credit.
To see what products qualify and how much credit you could receive, go to: http://www.energysavers.gov/financial/.
LeAnn Gola, CPA, MAcy is a member, assurance services with Cook, Gla and Company, PLLC, certified public accountants with offices in San Antonio and Austin, Texas. www.cookgola.com
Monday, July 11, 2011
SO YOU DON’T WANT TO PAY THOSE PAYROLL TAXES…..part II
…….Or, beware of what you seek
I have been out of the Blog circuit for a couple of weeks. We moved our San Antonio offices to 45 N E Loop 410, Suite 210. San Antonio National Bank is the anchor tenant. Moving was a bear. The actual move went off relatively well save a broken picture frame and a dropped table. Getting everything setup and operational took two weeks. Finally, after a full weekend of hanging pictures, relocating desks and tinkering with the computers, we are good to go.
As I noted in my last blog, the IRS is the largest, most powerful collection agency in the world. The monster is alive and well. The Service has become very active in the auditing and monitoring of businesses that do not pay their payroll taxes and properly report their contract labor.
We have just completed a payroll tax audit with one of our clients. A client, I might add that tries very hard to comply with every rule, no exceptions. Most businesses really don’t understand payroll taxes so even if they try to comply, there are still issues. Typically, they don’t know what “pay items” are subject to payroll taxes. Every year small business owners bring in their work, usually on Quickbooks, for us to prepare their tax returns. I will scan the general ledger and find checks labeled “Bonus” or “Commission”. The business owner generally will treat these as separate checks. They don’t take any payroll taxes out, nor do they pay TWC (Texas) taxes. For some unknown reason, business owners think that by renaming an item that you change its character. This is not true. Any moneys paid to an employee are considered compensation.
Sometimes part of the compensation is not taxable. This would be the case when an employee is being reimbursed for out-of-pocket expenses. There also could be retirement contributions that are not subject to federal payroll taxes. It doesn’t take an IRS examiner long to find “Bonuses” and “Commissions”.
The big thing that came out of the audit, however, was the Service’s aggressive position on “Contract Labor”. Briefly, contract labor is a service provided by an independent entity that works without your direct supervision and is paid for the completion of the contracted service. A good example would be calling a plumber to unstop your drains. You don’t do the work, you don’t supervise, you just write the check when the water goes down.
The examiner scoured the general ledger for any potential contract services. The examiner was looking for services that were rendered but a form 1099-Miscellaneous was not generated. They asked to see form W-9 for each of these vendors. Needless to say most of us do not get a completed W-9 for each vendor. Each unfiled 1099-Miscellaneous is subject to a “per form” penalty.
So this week’s IRS lesson is simple. Be sure you know what constitutes taxable wages. And, get a completed W-9 from every vendor or trade that provides personal services to your company.
In our next blog, we will outline some of the penalties associated with both payroll and contract labor reporting.
Steve Cook is the managing member of Cook, Gola and Company, PLLC, certified public accountants with offices in San Antonio and Austin, Texas.
I have been out of the Blog circuit for a couple of weeks. We moved our San Antonio offices to 45 N E Loop 410, Suite 210. San Antonio National Bank is the anchor tenant. Moving was a bear. The actual move went off relatively well save a broken picture frame and a dropped table. Getting everything setup and operational took two weeks. Finally, after a full weekend of hanging pictures, relocating desks and tinkering with the computers, we are good to go.
As I noted in my last blog, the IRS is the largest, most powerful collection agency in the world. The monster is alive and well. The Service has become very active in the auditing and monitoring of businesses that do not pay their payroll taxes and properly report their contract labor.
We have just completed a payroll tax audit with one of our clients. A client, I might add that tries very hard to comply with every rule, no exceptions. Most businesses really don’t understand payroll taxes so even if they try to comply, there are still issues. Typically, they don’t know what “pay items” are subject to payroll taxes. Every year small business owners bring in their work, usually on Quickbooks, for us to prepare their tax returns. I will scan the general ledger and find checks labeled “Bonus” or “Commission”. The business owner generally will treat these as separate checks. They don’t take any payroll taxes out, nor do they pay TWC (Texas) taxes. For some unknown reason, business owners think that by renaming an item that you change its character. This is not true. Any moneys paid to an employee are considered compensation.
Sometimes part of the compensation is not taxable. This would be the case when an employee is being reimbursed for out-of-pocket expenses. There also could be retirement contributions that are not subject to federal payroll taxes. It doesn’t take an IRS examiner long to find “Bonuses” and “Commissions”.
The big thing that came out of the audit, however, was the Service’s aggressive position on “Contract Labor”. Briefly, contract labor is a service provided by an independent entity that works without your direct supervision and is paid for the completion of the contracted service. A good example would be calling a plumber to unstop your drains. You don’t do the work, you don’t supervise, you just write the check when the water goes down.
The examiner scoured the general ledger for any potential contract services. The examiner was looking for services that were rendered but a form 1099-Miscellaneous was not generated. They asked to see form W-9 for each of these vendors. Needless to say most of us do not get a completed W-9 for each vendor. Each unfiled 1099-Miscellaneous is subject to a “per form” penalty.
So this week’s IRS lesson is simple. Be sure you know what constitutes taxable wages. And, get a completed W-9 from every vendor or trade that provides personal services to your company.
In our next blog, we will outline some of the penalties associated with both payroll and contract labor reporting.
Steve Cook is the managing member of Cook, Gola and Company, PLLC, certified public accountants with offices in San Antonio and Austin, Texas.
Monday, June 20, 2011
SO YOU DON’T WANT TO PAY THOSE PAYROLL TAXES…..
…….Or, beware of what you seek
The IRS is the largest, most powerful collection agency in the world. The monster is alive and well. The Service has become very active in the auditing and monitoring of businesses that do not pay their payroll taxes.
I have always been amazed by the number of businesses that think the solution to their cash flow problems is to not pay the payroll taxes. Business owners and anyone that signs checks or reports, or is responsible for payroll preparation in any form are liable! That is correct. If you are the trusted bookkeeper that prepares the payroll, you are liable for the taxes. If you are the owner that just assumes the taxes are being paid, you are liable.
We have clients that owe back taxes for extended periods of time. Essentially there are very few options. You may pay the taxes in full and get on with life. You may do an installment plan. This exercise very seldom retires the liability since the interest continues to be applied.
Or, you may attempt to do an “Offer In Compromise.” This choice allows you to pay less than you actually owe. These are the guys that you see on TV with the big smile. The problem with this approach is that very few businesses qualify. This is not a negotiation. It is begging at the highest level. An overwhelming number of offers are rejected. If you have any assets either personal or business, the chance of an offer being accepted is remote. The Service will simply attach those assets and keep on billing.
The penalty for non-payment is very high. It is not unusual to see penalties that double the tax amount. In the old days, the IRS was very lenient on collections. It was rather easy to get both penalties and interest charges waived. Those days are over. The Government is aggressively seeking compliance with the payroll laws. They are in no mood to negotiate. They have allocated significant resources to perform the task.
In our next blog, we will let you know some of the things that came out of a recent payroll tax audit by the IRS. You will be shocked at the things that they look for and the things that you, as a business owner, are liable for.
Steve Cook is the managing member of Cook, Gola and Company, PLLC, certified public accountants with offices in San Antonio and Austin, Texas.
The IRS is the largest, most powerful collection agency in the world. The monster is alive and well. The Service has become very active in the auditing and monitoring of businesses that do not pay their payroll taxes.
I have always been amazed by the number of businesses that think the solution to their cash flow problems is to not pay the payroll taxes. Business owners and anyone that signs checks or reports, or is responsible for payroll preparation in any form are liable! That is correct. If you are the trusted bookkeeper that prepares the payroll, you are liable for the taxes. If you are the owner that just assumes the taxes are being paid, you are liable.
We have clients that owe back taxes for extended periods of time. Essentially there are very few options. You may pay the taxes in full and get on with life. You may do an installment plan. This exercise very seldom retires the liability since the interest continues to be applied.
Or, you may attempt to do an “Offer In Compromise.” This choice allows you to pay less than you actually owe. These are the guys that you see on TV with the big smile. The problem with this approach is that very few businesses qualify. This is not a negotiation. It is begging at the highest level. An overwhelming number of offers are rejected. If you have any assets either personal or business, the chance of an offer being accepted is remote. The Service will simply attach those assets and keep on billing.
The penalty for non-payment is very high. It is not unusual to see penalties that double the tax amount. In the old days, the IRS was very lenient on collections. It was rather easy to get both penalties and interest charges waived. Those days are over. The Government is aggressively seeking compliance with the payroll laws. They are in no mood to negotiate. They have allocated significant resources to perform the task.
In our next blog, we will let you know some of the things that came out of a recent payroll tax audit by the IRS. You will be shocked at the things that they look for and the things that you, as a business owner, are liable for.
Steve Cook is the managing member of Cook, Gola and Company, PLLC, certified public accountants with offices in San Antonio and Austin, Texas.
Wednesday, June 1, 2011
NEVER UNDERESTIMATE THE HEART OF A MOUSE…
….OR: Your Texas Legislature at Play
The Texas Legislature did not quite reach a budget accord. It seems that one gal had the tenacity to stand up to the establishment. I guess that means that all of those legislative folks will be spending part of their summer in Austin and not at their home.
In the end, I suspect that the establishment will win. I hope none of them have kids or grandkids in school, need any Medicaid, or want a new road because it isn’t happening! Our boys in Austin just plan to punt on first down.
The no new taxes mantra has gotten a little out of hand. As a taxpayer, I do not want any more taxes. That would cut into my fun money. As a citizen that dearly loves Texas, I am appalled at the legislature’s approach to our financial issues. Everything in the world has increased in price over the years. Government is not exempt from this trend. Simply put, if a trip to Office Depot cost me more today than yesterday, it also costs the State more. I remember when a burger at Whataburger was $ .50, gas was $ .20 per gallon, etc. The cost of life has increased. One legislator –a man whose claim to fame as a sportscaster in Houston that painted himself blue on Oiler game days - suggested that the solution was for government to just “tighten their belt.”
I am sure that there is some waste. I waste money. But, as a CPA that audits government entities, I will tell you that local governments bargain harder and watch their spending far closer than any of us civilians. Government entities pay their employees less, have fewer benefits, and older equipment than any of our non-governmental clients. ….and that’s a fact Jack!
At some point we have to increase revenues and trust that each entity will use the money wisely. We can do that and create new taxes. All that we need to do to increase revenue is apply the sales tax laws equally and re-set the Texas Margin Tax back to its original level.
There are too many exemptions from sales taxes. Let’s just tax all services except food and medical as the original sales tax law was designed. Why should professional services like attorneys, CPA’s, engineers and the like not collect sales taxes? Why should “packaged purchases” pay less sales tax than individual item purchases? The answer to these questions is simply special interest groups. Why not just treat everything the same?
When the Texas Franchise Tax calculation changed several years ago, companies that had always paid the state franchise tax were exempted.
We don’t need new taxes. We just need to put the existing taxes to work. Seems simple enough.
Steve Cook is the managing member of Cook, Gola and Company, PLLC, certified public accountants with offices in San Antonio and Austin.
The Texas Legislature did not quite reach a budget accord. It seems that one gal had the tenacity to stand up to the establishment. I guess that means that all of those legislative folks will be spending part of their summer in Austin and not at their home.
In the end, I suspect that the establishment will win. I hope none of them have kids or grandkids in school, need any Medicaid, or want a new road because it isn’t happening! Our boys in Austin just plan to punt on first down.
The no new taxes mantra has gotten a little out of hand. As a taxpayer, I do not want any more taxes. That would cut into my fun money. As a citizen that dearly loves Texas, I am appalled at the legislature’s approach to our financial issues. Everything in the world has increased in price over the years. Government is not exempt from this trend. Simply put, if a trip to Office Depot cost me more today than yesterday, it also costs the State more. I remember when a burger at Whataburger was $ .50, gas was $ .20 per gallon, etc. The cost of life has increased. One legislator –a man whose claim to fame as a sportscaster in Houston that painted himself blue on Oiler game days - suggested that the solution was for government to just “tighten their belt.”
I am sure that there is some waste. I waste money. But, as a CPA that audits government entities, I will tell you that local governments bargain harder and watch their spending far closer than any of us civilians. Government entities pay their employees less, have fewer benefits, and older equipment than any of our non-governmental clients. ….and that’s a fact Jack!
At some point we have to increase revenues and trust that each entity will use the money wisely. We can do that and create new taxes. All that we need to do to increase revenue is apply the sales tax laws equally and re-set the Texas Margin Tax back to its original level.
There are too many exemptions from sales taxes. Let’s just tax all services except food and medical as the original sales tax law was designed. Why should professional services like attorneys, CPA’s, engineers and the like not collect sales taxes? Why should “packaged purchases” pay less sales tax than individual item purchases? The answer to these questions is simply special interest groups. Why not just treat everything the same?
When the Texas Franchise Tax calculation changed several years ago, companies that had always paid the state franchise tax were exempted.
We don’t need new taxes. We just need to put the existing taxes to work. Seems simple enough.
Steve Cook is the managing member of Cook, Gola and Company, PLLC, certified public accountants with offices in San Antonio and Austin.
Wednesday, May 25, 2011
PAY ME NOW, OR PAY ME LATER
Believe it when I tell you, everyone pays taxes. Some pay sooner, some pay later, but ultimately we all feed the machine.
Richard Hatch of Survivor fame is back in jail for the third time for tax evasion. In 2006, Mr. Hatch was sentenced to three years in prison and three years of suspended release. The IRS believes that the taxpayer owes $1.7 million in back taxes from earnings in 2000 and 2001. Penalties and interest have increased the amount to close to $2 million.
Whether the Internal Revenue Service will ever collect this amount is anyone’s guess. This time of year most of us in the CPA world are just plain tired of taxes. Everyone wants services but no one wants to pay the government. I, too, am in this group. The one thing that I have learned after 28 years is that dealing with the IRS on collection issues can be very difficult. The other thing that I have learned is that usually, somewhere down the line, Uncle Sam catches up with the taxpayer.
My advice to those that think they won’t be found, don’t be surprised if you get a letter from the IRS. It is considerably easier to pay each year and move on than it is to pay five years with penalties and interest. Take all the legal deductions. Be aggressive where possible. Pay now and don’t worry later.
Steve Cook is the CEO of Cook, Gola and Company PLLC, certified public accounts with offices in San Antonio and Austin. www.cookgola.com
Richard Hatch of Survivor fame is back in jail for the third time for tax evasion. In 2006, Mr. Hatch was sentenced to three years in prison and three years of suspended release. The IRS believes that the taxpayer owes $1.7 million in back taxes from earnings in 2000 and 2001. Penalties and interest have increased the amount to close to $2 million.
Whether the Internal Revenue Service will ever collect this amount is anyone’s guess. This time of year most of us in the CPA world are just plain tired of taxes. Everyone wants services but no one wants to pay the government. I, too, am in this group. The one thing that I have learned after 28 years is that dealing with the IRS on collection issues can be very difficult. The other thing that I have learned is that usually, somewhere down the line, Uncle Sam catches up with the taxpayer.
My advice to those that think they won’t be found, don’t be surprised if you get a letter from the IRS. It is considerably easier to pay each year and move on than it is to pay five years with penalties and interest. Take all the legal deductions. Be aggressive where possible. Pay now and don’t worry later.
Steve Cook is the CEO of Cook, Gola and Company PLLC, certified public accounts with offices in San Antonio and Austin. www.cookgola.com
Monday, May 16, 2011
VALUE-ADDED ACCOUNTING – INCORPORATING PAST, PRESENT, AND FUTURE
Our firm recently expanded into the Austin market by acquiring two existing firms with a good reputation and good clientele. We had been considering this option for a while, and decided to pursue it vigorously this past fall. While my partner and I were both extremely excited about this new venture, we also realized that buying a new firm (in our case, TWO new firms!) was a huge risk and would take some serious dedication, hard work, and good old fashioned schmoozing.
Essentially, we would be shaking up the foundation of a firm and expecting clients to transition to new operating procedures and new owners. While we wanted to maintain many of the previous owner’s ways of communicating and doing business, we also wanted to add our own flair and introduce some new ways of doing business. The key to introducing this change was by showing our clientele that we would be providing a value-added service.
Five months down the road, I can say that the transition was just as much work as we expected, but also just as fruitful. Here’s why: VALUE-ADDED SERVICES.
Of course we provide quality work, good customer service, and a fair price. But so does every other CPA on the block. What we’ve done is become a trusted advisor to our clients. Rather than focus solely on financials and historical data, we provide our clients with a look into their future.
Most business owners are more concerned about day-to-day operations and future growth and potential than they are about their prior year tax return. Sure, where you’ve been is important, but getting you to where you could be is invaluable. Our goal is to help you understand your financial situation and then help you improve it.
For instance, one of the clients we acquired is a rather large operation in the area. This client had been operating at a loss for the past twelve months and was at a loss for what to do. After visiting their offices, touring their operations, and reviewing their prior year financials, we were able to pinpoint the problem. The company had too many employees. Essentially, they had 10 employees working at a 40% productivity rate due to a decrease in demand. By cutting back to 5 employees, the potential for profit would be within reach. Needless to say, this was one happy client!
This is just one of many ways we have been able to provide a value-added service. Next time you’re in the market for a CPA, look for one who goes above and beyond the call of duty. It’s not just about reviewing your prior year tax return – it’s about looking at where you are today and where you could be in the future.
LeAnn Gola is the partner of the Austin office of Cook, Gola and Company, PLLC.
Essentially, we would be shaking up the foundation of a firm and expecting clients to transition to new operating procedures and new owners. While we wanted to maintain many of the previous owner’s ways of communicating and doing business, we also wanted to add our own flair and introduce some new ways of doing business. The key to introducing this change was by showing our clientele that we would be providing a value-added service.
Five months down the road, I can say that the transition was just as much work as we expected, but also just as fruitful. Here’s why: VALUE-ADDED SERVICES.
Of course we provide quality work, good customer service, and a fair price. But so does every other CPA on the block. What we’ve done is become a trusted advisor to our clients. Rather than focus solely on financials and historical data, we provide our clients with a look into their future.
Most business owners are more concerned about day-to-day operations and future growth and potential than they are about their prior year tax return. Sure, where you’ve been is important, but getting you to where you could be is invaluable. Our goal is to help you understand your financial situation and then help you improve it.
For instance, one of the clients we acquired is a rather large operation in the area. This client had been operating at a loss for the past twelve months and was at a loss for what to do. After visiting their offices, touring their operations, and reviewing their prior year financials, we were able to pinpoint the problem. The company had too many employees. Essentially, they had 10 employees working at a 40% productivity rate due to a decrease in demand. By cutting back to 5 employees, the potential for profit would be within reach. Needless to say, this was one happy client!
This is just one of many ways we have been able to provide a value-added service. Next time you’re in the market for a CPA, look for one who goes above and beyond the call of duty. It’s not just about reviewing your prior year tax return – it’s about looking at where you are today and where you could be in the future.
LeAnn Gola is the partner of the Austin office of Cook, Gola and Company, PLLC.
Wednesday, May 4, 2011
THE SPURS ARE DEAD…….. BUT ARE THEY BURIED?
This was the headline and first part of my blog on 05-11-2010…… It seems that little has changed in the last 12 months.
The million dollar question in San Antonio these days is “What is the state of the Spurs?” I guess that really should be the multi-million dollar question judging from the size of these quy’s contracts.
Professional sports are big business. It is high stakes poker at the highest level. As a businessman, I certainly don’t envy Peter Holt and staff’s current dilemma. They have invested millions of dollars over the next three years in a pair of 34+ past-their-prime superstars. They have a 6-10 point-center that hasn’t gotten a rebound in two years while making a few million. Throw in a worn out, unmotivated guard that also rakes in millions and Mr. Holt has some issues. Worse yet, the chances of getting a “difference maker” in the number 20 spot in the upcoming draft is rather remote.
Wow, what a tangled web!
That was directly from my blog of one year ago. Not much has changed. Our center would rather shoot three pointers. Our shooting forward won’t shoot. Our ace guard would rather play for France. The coach appears to be in denial. But this blog, like last year’s blog, is not about the Spurs. It is about business management. It is about managing your assets and allocating those assets in their highest and best use. It is about making the very tough choices that all managers face regarding their personnel. It is about managing the company’s financial resources in the most efficient manner.
Last year was very good for our CPA firm. Unlike the previous year, our sales were up. Better yet, our profitability was up. All of this was due to a plan that we placed in motion as the end of a poor 2009.
At the end of 2009, we reduced staff. We also graded our clients and eliminated those clients that didn’t pay their bills on a timely basis or who were undercharged. We did what we felt was best for the longer term.
At the end of 2010, we had enough cash to allow us to open an Austin office and upgrade some of our older equipment. Not too bad considering the general economy.
We analyzed our assets taking a longer term approach.As the manager, we must understand our position and the responsibility that accompanies it. Don’t forget to open the box. Good luck.
Steve Cook is managing member of Cook, Gola and Company, PLLC, a full service Certified Public Accounting firm with offices located in San Antonio and Austin. Follow us on Facebook at ez.com/CookGolaFB or Twitter at SABestCPAs or our website at www.cookgola.com
The million dollar question in San Antonio these days is “What is the state of the Spurs?” I guess that really should be the multi-million dollar question judging from the size of these quy’s contracts.
Professional sports are big business. It is high stakes poker at the highest level. As a businessman, I certainly don’t envy Peter Holt and staff’s current dilemma. They have invested millions of dollars over the next three years in a pair of 34+ past-their-prime superstars. They have a 6-10 point-center that hasn’t gotten a rebound in two years while making a few million. Throw in a worn out, unmotivated guard that also rakes in millions and Mr. Holt has some issues. Worse yet, the chances of getting a “difference maker” in the number 20 spot in the upcoming draft is rather remote.
Wow, what a tangled web!
That was directly from my blog of one year ago. Not much has changed. Our center would rather shoot three pointers. Our shooting forward won’t shoot. Our ace guard would rather play for France. The coach appears to be in denial. But this blog, like last year’s blog, is not about the Spurs. It is about business management. It is about managing your assets and allocating those assets in their highest and best use. It is about making the very tough choices that all managers face regarding their personnel. It is about managing the company’s financial resources in the most efficient manner.
Last year was very good for our CPA firm. Unlike the previous year, our sales were up. Better yet, our profitability was up. All of this was due to a plan that we placed in motion as the end of a poor 2009.
At the end of 2009, we reduced staff. We also graded our clients and eliminated those clients that didn’t pay their bills on a timely basis or who were undercharged. We did what we felt was best for the longer term.
At the end of 2010, we had enough cash to allow us to open an Austin office and upgrade some of our older equipment. Not too bad considering the general economy.
We analyzed our assets taking a longer term approach.As the manager, we must understand our position and the responsibility that accompanies it. Don’t forget to open the box. Good luck.
Steve Cook is managing member of Cook, Gola and Company, PLLC, a full service Certified Public Accounting firm with offices located in San Antonio and Austin. Follow us on Facebook at ez.com/CookGolaFB or Twitter at SABestCPAs or our website at www.cookgola.com
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