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Importing Accountant’s Changes

May 24, 2013

Authored By: CodyWebb, Cody is an accountant in the Logan office of Cook Martin Poulson, PC. He specializes in new business setup, federal and state payroll taxation, workers compensation, QuickBooks consultation, and individual and business taxation.

How do I import the accountant change file back into my QuickBooks? If you are tired of having your QuickBooks display “Accountant’s Changes Pending” in the title bar and have now received an accountant’s change file (.qby) back from your accountant, you can use this file to automatically import your accountant’s changes into your company file.
It is important to note that only the QuickBooks Administrator can do this task. So if you have multiple users set-up within your QuickBooks, you will have to log-in as the administrator to be able to incorporate the changes.

The steps to importing the Accounting Change File are as follows:

1. Open the company file from which you created the Accountant’s Copy.

2. Choose File > Accountant’s Copy > Import Accountant’s Changes From File.

3. Locate the accountant’s changes file (.qby), from your CD, thumb drive, Desktop or wherever you have the file saved, and click Open.

4. Review your accountant’s changes. You can use the [+] or [-] to expand or collapse each change to see the details.

5. (Recommend) Click Print to print a copy of your accountant’s changes, or click Save As PDF to save a PDF file of your changes. This step is recommended so you have a record of your accountant’s changes.

6. After reviewing the changes, click Incorporate Accountant’s Changes.

7. Click OK to close the QuickBooks windows.

By following these simple steps, it will allow you to automatically incorporate the changes made by your accountant into your QuickBooks. The benefit is that your QuickBooks company file will now be up-to-date and accurate to the records and tax returns prepared by the accountant as well as saving you the time from having to make these adjustments manually.

If you have additional questions regarding QuickBooks or QuickBooks files, please feel free to contact me or the professional you work with.

How to Create a QuickBooks Accountant’s Copy

May 16, 2013

How do I create an Accountant’s Copy of my QuickBooks? Why should I create an Accountant’s Copy versus a backup or portable copy? These are two common questions that new users of QuickBooks face at periodic times during the year when they need to send a copy of their QuickBooks file for quarterly reports, accounting adjustments, tax projections, or tax return preparation.

An Accountant’s Copy is a version of your company file that we can use to make changes to your data while you continue to work. When we are done adjusting your file, we can send our changes back to you for easy importing into your working company file. All of the adjustments that we have made to your QuickBooks and all of the work that you have continued to do easily incorporate together after we send the changes back to you. These adjustments can only be incorporated automatically back into your QuickBooks if you send us an Accountant’s Copy.

The steps to creating an Accountant’s Copy are as follows:

1. Choose File > Accountant’s Copy > Save File.

2. Confirm you want to create an Accountant’s Copy and click Next.

3. Choose a dividing date.
• You will be able to work with all transactions dated after the dividing date and we will be able to work with transactions prior to that date. For example, for year-end tax preparation purposes you would select December 31 of the prior year as the dividing date. For quarterly reports or periodic accounting adjustments, you would select the last day of the previous month or quarter.

4. Click Next.

5. (Optional) Change the suggested location for the file and the filename that QuickBooks suggests for the Accountant’s Copy. The file must have a .qbx extension. You need to choose the desired location of where you will save the Accountant’s Copy. I have often found that it is easiest to save it to your Desktop and then move it to your Cook Martin Poulson Sharefile account or to a CD, flash drive, email attachment, or link that you receive from us.

6. Click Save.

7. Give the Accountant’s Copy transfer file (.qbx) to your accountant and continue to work.

After saving the Accountant’s copy, QuickBooks displays “Accountant’s Changes Pending” in the title bar and will remain there until you incorporate the changes back from the accountant or you remove the restrictions. Be aware that if you remove the restrictions before the accountant sends back the changes, you will no longer be able to incorporate any adjustments made by the accountant automatically into your QuickBooks.

You should be aware that there are some limitations to the things that we can adjust with an Accountant’s Copy file, and thus it may not be suitable for all companies. For example, we cannot add, edit, void or delete payroll, estimates, sales orders, transfers of funds between accounts, or inventory build assemblies.

Your accountant can tell you if they prefer you to upload an Accountant’s Copy or backup file to us but in most cases the Accountant’s Copy will be the preferred option.

If you have additional questions regarding QuickBooks or QuickBooks files, please feel free to contact the professional you work with.

Marginal Tax Brackets and You

May 7, 2013

Authored by David Cash, CPA, MAcc. Dave has worked in the Logan and Salt Lake City offices of CMP. He spent 2 years in the Logan office and has been in the Salt Lake City office for over 5 years. Dave specializes in oil and gas taxation, pension administration and reporting, and individual and business tax planning and compliance.

In meeting with clients for over a decade to assist them with various tax related needs I have noticed that one misconception seems to be very common. In this article I would like to discuss that misconception and hopefully shed some light on the issue of the question, “What tax rate am I in?”

When I meet with clients and let them know that their marginal tax rate is at a particular percentage, say 25% for example, they usually will look at me and ask what they can do to get into a lower tax bracket. The ensuing discussion will usually go something like this:
Client: How can I lower my tax bracket?
CPA: You are in the 25% tax bracket but only $12,000 of your taxable income is being taxed at 25%
Client: What do you mean?
CPA: The tax system that we have is a graduated rate system. For the 2013 tax year if someone is Married Filing Joint then the first $17,850 of taxable income is going to be taxed at 10%.

The taxable income between $17,851 and $72,500 is going to be taxed at 15%, then if your taxable income falls between $72,501 and $146,400 only the taxable income above $72,500 will be taxed at 25%. You are benefiting from the tax brackets that are lower than your marginal tax bracket. The marginal tax bracket just lets us know what rate the last dollar of taxable income is taxed at.
Client: So not all of my income is being taxed at 25%?
CPA: No, not all of your taxable income is taxed at 25%. It is similar to having a bucket for each tax bracket. You start by filling up your 10% bucket with income, then filling up your 15% bucket, then the remaining taxable income starts to fill your 25% bucket. Once the last of your taxable income is in one of 3 buckets, either 10%, 15%, or 25% then we are able to let you know that you are in the 25% marginal tax bracket.

Just in this past filing season, I had variations of this discussion with no fewer than 7 new clients. At Cook Martin Poulson, we strive to help you keep what you earn. Part of what we hope to do for our clients is to help them have a better understanding of the tax system and how it works. A key component to this is to try to take some of the mystery out of the tax system, such as the misconception that exists that just because you may be in the new 39.6% tax bracket for the 2013 tax year, doesn’t mean that all of your income is taxed at that rate.

For those of you who may be interested the 25% bracket includes taxable income from $72,501 through $146,400. The next bracket is at 28% and that has taxable income from $146,401 to $223,050. The 33% tax bracket is taxable income from $223,051 to $398,350. The 35% tax bracket is taxable income from $398,351 to $450,000 (yes that tax bracket only includes about $52,000 of taxable income). Those with taxable income over $450,000 gets that excess taxed at 39.6%. These tax brackets are for those that are Married Filing Joint tax returns. The other filing statuses have different tax bracket floors and ceilings, but the concept is the same.

Are You Ready to Hire Employees?

April 30, 2013

Authored By: Inken Christensen, Bookkeeper Logan office

When a business finds it necessary to hire employees it is important to make sure all the required information about those employees is gathered and the appropriate forms are completed. The employer should make sure they have the complete forms before it is time to issue the new employee’s first paycheck. Many businesses have the new employee fill out the employment forms as a part of their orientation and training on the first day of employment. In Utah, there are three forms that an employee needs to complete and submit to the employer. Those forms are the W-4, the Utah new hire form, and the I-9.

Form W-4 – Employee’s Withholding Allowance Certificate:

The purpose of this form is to notify the employer of the employees exemption allowances so that the employer can withhold the correct amount of federal and state income tax from the employees paycheck. The new employee reports their full name and address, their marital status, and most importantly, their social security number. The individual answers a series of questions in a worksheet format to arrive at the number of allowances they should claim. The employer either enters the allowances in their accounting system or uses the number of allowances and the withholding tables to calculate the amount of federal income tax to be withheld from the paycheck. This form is kept on file by the employer and is NOT submitted to the Internal Revenue Service. It is suggested that this form also be completed at the beginning of each calendar year, particularly if the employee has had any personal or financial changes. This form is available at www.irs.gov

Utah New Hire Registry Reporting Form:

The new hire form is required by federal law. The main purpose of this form is to aid states in identifying individuals who owe child support. The employer can complete this form using the information gathered on the Form W-4 (above). The employer information is reported at the top of the form including the business name, address and employer identification number (EIN). The new employee’s information is reported next, also including name, address and Social Security Number (SSN) and date of hire. This form must be submitted to the state either by mail, fax or online within 20 days of the employee’s first day of work or the employer is subject to a $25 penalty for each missing new hire form. Should an employee take a leave of absence, the employer should submit a new form within 20 days of the date the employee begins to work again. The form is available at https://jobs.utah.gov/UI/Employer/Public/TaxForms.aspx

Form I-9, Employment Eligibility Verification:

The Form I-9 is required by federal law and is used to verify an employee’s identity and to verify that they are authorized to work in the United States. Both the employer and the employee complete this form. The employee must also present various documents to the employer to support their identity and establish their employment authorization. According to the USCIS website, “the employer must examine the employment eligibility and identity document(s) an employee presents to determine whether the document(s) reasonably appear to be genuine and to relate to the employee and record the document information on the Form I-9.” The documentation provided by the employee must be original and unexpired. The list of allowable documentation is included with the Form I-9. Many employers photo copy and attach the items of documentation presented by the employee. The I-9 Form is NOT submitted but retained by the employer “for either 3 years after the date of hire or 1 year after the date employment ended, whichever is later”. Google “Form I-9” to find a copy of the form.

It is imperative that the employer gather these forms within the first few days of hiring a new employee. Doing so will ensure that the employer is in compliance with employment laws and also that the employer has the information they will need to file subsequent payroll reports, including federal employment returns, state withholding returns, unemployment reports and the year-end W-2s.

If you need help finding the forms or have any questions, please contact us at one of our locations.

Your Social Security Statement

March 19, 2013

Authored By: Sheri Lewis, Staff Accountant, has worked at Cook Martin Poulson since November 2011. She recently received her Master of Accounting Degree and is in the process of taking the CPA exams.

Have some of you wondered what happened to “Your Social Security Statement” that you used to receive in the mail on an annual basis? The Social Security Administration used to mail out a copy of “Your Social Security Statement” each year around your birthday. This statement offers useful information to assist you in planning for your retirement. The statement provides the following:

a) Whether or not you have earned enough credits to qualify to receive social security benefits
b) Your estimated social security benefits when you retire based on ages 62, 67 and 70.
c) Estimated benefits if you become disabled
d) Family survivor benefits in the event of your death
e) Whether you have earned enough credits to qualify for Medicare
f) A description of how your benefits are estimated
g) A record of your lifetime earnings by year
h) Other helpful information about social security

Due to budget restraints, this statement is no longer being mailed each year. Only those people who have reached age 60 will receive a statement in the mail until they retire and apply for social security. However, you can still access “Your Social Security Statement” by going online to www.socialsecurity.gov and creating an account with a username and password. Upon accessing the website you would click on “New Get your Social Security Statement online” and follow the directions to create an account with an username and password. You will be asked to provide your name, social security number, birth date, mailing address and primary phone number. Additional screens will ask questions to verify your identity such as the name of your banking institution, what kind of car you recently purchased or what county you live in. Once you have created an account you can access “Your Social Security Statement” and use the information provided to assist you in planning for your financial future.