The Virtual CFO

Five Tax Obligations Startup Business Need to Know About

My practice is built around the needs of small businesses. Often, I met with startup client’s right after they have opened their doors for business to discuss the state and federal tax obligations they have. On the opposite end of the spectrum are startup clients who call me for help right after they have just found out the hard way that they have federal and state tax obligation.

When I owned a startup logistics company, I fell into the later category (see my blog post, A Call from the IRS is How I Learned About W-2’s, for details on this).

Over the next week or so, I am going to post about the federal and state taxes that most startup businesses have, including:

1. 941 Employer’s Quarterly Federal Tax Return
2. 940 Federal Unemployment Tax (FUTA/FUI)
3. State Unemployment Tax (SUTA/SUI)
4. Personal Property Tax
5. Estimated Taxes for Business Owners

I hope you find this series informative.

Now It’s Finals Time

So the hustle and bustle of tax season ended last week, and now I’ve moved on to the final assignment is Analytical Decision Making.

I’ll be back posting once I get this out of the way.

Thank you for reading my blog! I really appreciate it!

Thank You to My Wife Linda

As many readers of this blog know, I am working on my MBA with an emphasis in MIS (management information systems) at Tennessee Tech University. I can now see the light at the end of the tunnel since I am set to graduate in December of this year.

When I began the MBA program three years ago, I was working in private industry. My circumstances changed when the company I was the CFO of was sold to a publicly traded company and I lost my job after the transition to the new owners was complete. This is when I made CPA for Small Business my full-time job.

Before I began taking MBA classes, my wife and I agreed that "B’s" would be acceptable grades for me to earn. As I’ve worked through the program, I’ve really enjoyed learning the material that has been covered because virtually everything I’ve learned I can relate to because of my professional experience. As a result of this, I have earned a 4.0 GPA through eight of eleven classes in the MBA program.

Last week, I was inducted into Phi Kappa Phi, the national honors society (which is one of the top three honors societies, including Phi Beta Kappa and The Mortar Board) and last night I was inducted into Beta Gamma Sigma, the business honors society. These two honors mean a lot to me. Membership in Phi Kappa Phi is offered to the top ten percent of all graduate students at Tennessee Tech and Beta Gamma Sigma to the top ten percent of business school graduate students.

I would have not been able to do this without the love, help, and support of my wife Linda. She has allowed me to put aside home improvement projects as well as watched over and entertained our daughter during nights and weekends so I could study. Linda has also been my number one supporter and fan while I have been in TTU’s MBA program.

Linda, thank you!!!

Tax Season Isn’t Really Over

I was going to post today that tax season was over. But I started thinking about this and realized that April 15 has passed but the 2007 tax season is far from over of me and CPA for Small Business.

In the next few weeks, I will be meeting with clients to discuss their 2007 tax returns and tax reduction strategies for 2008, work on a few late returns, and prepare returns for those who filed extensions.

So for me, tax season really isn’t over.

It’s Great to be a University of Memphis Tiger

As a Memphis State graduate, I would like to say that I am extremely proud of the accomplishments of this year’s team.

Last nights game was one of the best NCAA finals I have ever witnessed and the Tigers represented the school extremely well.

Hopefully, next year we’ll get over the hump and bring home Tennessee’s first NCAA Men's Basketball Championship.

$100 a Month Bookkeeping Services, You Get What You Pay For, Part 3

In my last post, I related how a construction company’s year-to-date income went from a $3,000 profit in October to a $7,000 loss year-to-date through November.

When I reviewed the documents he gave me, I quickly determined what the problem was. The bookkeeping service had been reporting the company’s financial progress using the cash method of accounting. Under the cash method, revenues are reported when cash is received and expenses are booked only when invoices are paid. Unpaid invoices are not reported in financial statements prepared using the cash basis of accounting.

In November 2006, the owner of the company had paid all of the outstanding material and subcontract invoices for the projects completed through October. It was the act of paying these invoices that reduced the year-to-date income by $10,000.

When I explained this to the owner of the company, he told me that he had provided the bookkeeping service with all of his unpaid invoices each month and was surprised that they hadn’t done anything with them. Unfortunately, the owner of the company wasn’t familiar with accounting so he didn’t know the questions to ask the bookkeeping service when he grew uncomfortable with the statements they were providing him.

As an accountant, I was able to ascertain very quickly what the problem was. Unfortunately for the construction company owner, the bookkeeping service was not able to do the same when he repeatedly questioned the income statement they were providing him.