Thompson & McCarty, P.C. CPA

Prospective Employees Introduction

Who Else Wants To Join Our Successful Tax Firm?

Over the years we've noticed a trend of the kinds of people who seem to be best suited for working in our tax firm. If you are a HOMEMAKER, an EARLY RETIREE, in the middle of a CAREER CHANGE, or you are a MOONLIGHTING PROFESSIONAL chances are very good you would be a great match for the opportunities available within our growing organization.

The decision that all business owners will eventually face is how to handle their accounting needs. Good accounting is an essential piece of real business management. Accounting is the collection and or capture of financial transactions and the subsequent presentation of that data in the form of an income statement, balance sheet, and statement of cash flows. The very basis for measuring the effectiveness of an entities transactions is present on the statements listed above. Therefore, it is impossible to manage a business without an effective accounting model. There are two basic choices for creating an accounting system. One can outsource the accounting function or it can be set up as in house business activity. This article will cover the advantages and disadvantages of both methods in the hope of assisting business owners with making a decision on what is best for their companies.

My name is Barry S. Thompson and I am a CPA. My office is in Cullman, AL but I have clients as far away as Carson City, Nevada. I have clients that I have never met face to face. How is this possible? First and foremost my relationship with these "long distance" clients started because they found me on this web site. Most asked questions which I promptly answered and they developed trust in me. They requested that I prepare their income tax return and I agreed to perform the service. I directed them to the "Tax Return Check List" which they print and use to organize and collect the data needed to prepare their return. They mailed me their information and I prepared the return. These clients often write that this is much simpler for them and less time consuming than dealing with a local person where they have to visit the office multiple times. That is my shameless plug now on to the "5 Secrets Professionals Usually Don't Share With Their Clients".

I often here the phrase "everybody cheats on their taxes". Well I have never believed this to be true and often debate such statements. I see way too many people that are scared to take advantge of deductions that they have the legal right to take and should be taking. Still others are not getting the dedcutions they deserve becasue they are getting their return done on the "cheap" or they do them themselves and don't have the knowledge needed to take advantage of all legally allowed deductions. Now I have the GAO to back me up. The GAO estimates that 2.2 million lazy people took the standard deduction when itemizing would have saved them an estimated $473 million in taxes.

We are in a global economy and it has come to my attention that many tax preparation firms outsource their tax preparation function these days. They are outsourcing much of the work to India. (exhibit one) Moreover, legal research is being outsourced as well. Check out this article. Honest CPAs, tax preparers, and lawyers are openly disclosing this fact and I have no problem with that. However, evidence suggest that many firms and preparers are outsourcing their work but not disclosing this fact. WE DO NOT OUTSOURCE our tax preparation nor our tax research. I feel that these functions are too improtant to my clients to rely on a third party. We have also just redesigned our internal training for tax preparers and formalized the training program to a level it is actually now a tax school. If you have any concerns about outsourcing please do not hestitate to contact us.

Fraud is something that almost every business owner will encounter. It may be a simple skimming scheme or an elaborate check cashing scheme. There are some important steps that one can take to help prevent fraud.

If you are not engaged in fraud prevention then you are asking your employee to steal and they will. Here are 10 Steps to help prevent fraud. I am a Quickbooks Advisor and the 10 steps below are written from that prospective.  They are pertinent even if you are not a Quickbooks user.

Congress has just enacted a new tax law called the Tax Increase Prevention and Reconciliation Act. The centerpiece of the new law is the extension of several expired or soon-to-expire tax cuts.

The current low tax rates on capital gains and dividends, previously set to expire at the end of 2008, are extended through 2010. The higher exemption amount for the individual alternative minimum tax, which expired at the end of 2005, is extended through 2006 and increased a little. This means fewer taxpayers will be hit with the alternative minimum tax. The current “Section 179” deduction for business machinery and equipment was scheduled to be reduced in 2008. The new law extends the higher deduction through 2009.

I am going to get straight to the point on this one. Use your kids in your business and SAVE TAXES. You can employ your child in your business and if they are under the age of 18, or a full time student under 21, they are not subject to FICA or FUTA. Three test have to be met to take advantage of this tax break.

1. The work must be performed in connection with the parent's trade or buisness. (Parent have a business).
2. The child must actually render the service. (Put the kid to work)
3. The payments must be made. (Write the Check)

This applies to sole proprietors and partnerships and their children. If the earnings are capped at the proper level then the child will not be required to file a federal return and pay taxes but the parent still gets to deduct the expense. Note that the maximum payment may be different at the state level of taxation.

This is a very light discussion about depreciation. For a technical reference click here. Depreciation is the periodic expensing of assets over their useful life. The theory is that some assets (referred to as fixed assets) benefit a business over a greater period of time than just the year that the asset is purchased and placed in service. GAAP (generally accepted accounting principals) requires depreciation of fixed assets. More importantly to most people, the IRS requires depreciation too. The goal is to match the using up of an asset with the associated revenue generated from that useage. Some examples of depreciable assets are furniture, desks, trucks, planes, barns, fencing, computers, tractors, trailers, and buildings.

There are various tax breaks available for victims of multiple hurricanes that occured in the Gulf Coast Area. Three different storms hit the area and the relief that is available depends on the region where one lives. The following are highlights for the GO Zone legislation passed in 2005.

• Expensing for Small Businesses Increased. Certain small businesses affected by Hurricane Katrina can annually deduct up to $200,000 in qualifying property expenditures made in the disaster area. This is double the amount otherwise allowed for small business expensing. In addition, the phase-outs for level of investment
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