Your Partner for Bookkeeping Services and Operational Support
Contact Us: 888-631-8922

Mary Sue Renfro


Recent Posts

New Year, New IRS Rules

December 30, 2016 / by Mary Sue Renfro posted in Rochester, Orlando

0 Comments

Mary-Sue-Renfro-for-web-square.jpgFor accounting services professionals, the New Year always brings new regulations. Here's an overview of some of the key ones up ahead.

Mandatory New I-9 Form
This one's coming fast. Employers must start using the new I-9 form, a.k.a. the Employment Eligibility Verification Form, by January 22. The form is designed to verify compliance with the 1986 Immigration Control and Reform Act, which requires employers to confirm each employee's identity. Among the changes to the form, last updated in 2013, are a supplemental page for the preparer/translator.

Access the new form here.

New Filing Deadlines for W-2 and 1099 Forms
Under terms of the Protecting Americans from Tax Hikes Act of December 2015, employers must now submit their copies of W-2 forms to the Social Security Administration by January 31. Previously, employers had until either the last day of February (for paper copies) or the last day of March (for digital copies). In addition, employers can now file for only one 30-day extension, and they must file the required form (8809) by January 31.

The new deadline also applies to 1099 forms covering payments to independent contractors and certain other forms of compensation for non-employees. The current deadline for employers to furnish copies of W-2 forms to their employees, January 31, is unchanged.

According to an agency bulletin, the earlier deadlines "will make it easier for the IRS to verify the legitimacy of tax returns and properly issue refunds to taxpayers eligible to receive them."

New Filing Deadlines for 1065 and 1120C Forms
The filing dates for these two forms have essentially flip-flopped, per the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015. Form 1065, pertaining to partnership income, has changed from April 15 to March 15. Form 1120C, pertaining to C corporations, has changed from March 15 to April 15. (Form 1120S, for S corporations, remains March 15.)

The idea is that putting the partnership filing deadline (including Schedule K-1 "pass-through" taxes) ahead of the C corporation deadline would make it less likely that corporations would be forced to seek extensions for their tax returns.

The American Institute of CPAs has posted this handy guide summarizing original and extended tax return due dates.

One Significant Postponement
A quick reminder: The new revenue recognition standard set by the Financial Accounting Standard Board, originally slated to go into effect on December 15, 2016, has been postponed for accounting periods beginning after December 15, 2017, for most public companies and a year later for nonpublic companies. Among the reasons for the delay cited by the Journal of Accountancy was "a lack of available IT solutions for the new standard."

We haven't covered every change in IRS regulations, of course. Some, like the Transportation Mainline Pipeline Construction Industry Optional 62(c) Expense Substantiation Rules for Payments to Employees under Accountable Plans, cited in the IRS's Revenue Procedure 2016-55 bulletin, are incredibly arcane.

Be sure to stay tuned for an update on other changes going into effect in 2017. And if you're looking for the latest on the new Fair Labor Standards Act overtime regulations, I've also blogged on that topic.

Download our E-book

___________________________________________________________________________________________________________

Legal and Tax Disclaimer
This website is created by Supporting Strategies to provide general bookkeeping and accounting information only. Supporting Strategies does not provide tax, legal or accounting advice, and the information contained herein is not intended to do so. As such, the information provided should not be used as a substitute for consultation with professional tax, legal and accounting advisors, and you should consult with a tax, legal or accounting professional before engaging in any transaction.

Read More

Are You in Compliance with New FLSA Overtime Regulations?

November 18, 2016 / by Mary Sue Renfro posted in Rochester, Orlando

0 Comments

Important Update:

Days before the new FLSA policy was to be implemented, a U.S. District Court Judge issued a temporary injunction blocking implementation.

What should employers do as a result?  ADP posted a helpful article about how to respond to the block of the overtime rule.

Whatever happens regarding this law, it's good business practice to make sure your employees are classified and compensated properly. Read the blog below to learn more.

Mary-Sue-Renfro-for-web-square.jpgOn Dec. 1, 2016, new regulations go into effect under the Fair Labor Standards Act (FLSA) regarding the minimum threshold for classifying salaried employees. The purpose of the threshold is to determine whether or not non-exempt salaried employees should be entitled to overtime pay for working over 40 hours in a week.

Nervous employers are asking questions about the changes. Here are some answers.

This is just a minor tweak, right? Wrong. The basic benchmark that defines a salaried employee is taking a huge leap. As of now, the minimum annual pay for salaried employees is $23,600, a standard set by the U.S. Department of Labor (DOL). On Dec. 1, that figure will jump to $47,476.

Yikes! So let's say I'm paying my salaried employees $40K a year. The government is making me give them each a $7,476 raise? No — although that might not be a bad idea in some cases. It all depends on a) if the employee is considered non-exempt (see FLSA duties test for exemption), and b) how much overtime your salaried employees put in.

If they are non-exempt and all work 40 hours a week (or less), then you're fine. But if any of your non-exempt $40K salaried employees work overtime, you'll have to pay them the equivalent of time-and-a-half for every hour beyond the 40-hour threshold. So it's a simple math problem. If you end up paying a salaried employee $15,000 a year in overtime, then suddenly that $7,476 raise doesn't look so bad.

Further, you need to be aware that commissions and bonuses paid less than quarterly are not included in the minimum annual pay calculation. So if you're an employer who pays $10,000 in commissions and bonuses annually to a non-exempt employee who makes $40,000 per year, you may be required to pay overtime.

Do I have any other options? Maybe, but you need to tread carefully. You might be able to reclassify some salaried employees as hourly employees — but either way, you have to document hours and pay time-and-a-half for anything over 40 hours a week. So that could amount to six of one, half a dozen of the other. It could also have unintended consequences that lead to morale problems.

You might also be tempted to shift salaried employees to "independent contractor" status. However, that's extremely risky. If it's obvious that you made the switch just to circumvent the law and you continue to treat those "independent contractors" as if they were salaried employees, you may open yourself up to serious consequences

Here's how complicated these compliance issues can be: The DOL itself was hit with a $7 million judgment involving unpaid overtime for its own employees. So this isn't something to mess around with. Consult a professional.

Why do we need these changes, anyway? Basically, they're designed to bring the salary threshold in line with the times. (It has increased just once since the 1970s.) The current minimum salary, $23,600, works out to about $11.35 an hour for a 40-hour week.

More to the point, the so-called "white-collar exemption" means employers don't have to pay salaried employees overtime. So a salaried employee at the current minimum threshold who worked a 50-hour week would make just $9.08 per hour. Clearly that's not the scenario Congress had in mind when the exemption first went into effect.

Anything else I should know? Of course! This is a government regulation, after all. We've barely scratched the surface. Get a broader overview here or check out this video.

And be sure to set up an appointment with your accounting services provider today. Don't wait until Dec. 1 to discover you're not in compliance.

Contact Us

Read More

Law Firm Bookkeeping Services | How to Handle Client Trusts

December 21, 2015 / by Mary Sue Renfro posted in Rochester

0 Comments

Mary-Sue-Renfro-for-webAny bookkeeping services professional familiar with law firms will tell you that bookkeeping for a law firm is subject to its own set of rules and guidelines. One important thing to understand, as a legal professional or a bookkeeping services professional working with a law firm or practice, is how to handle client trust accounts. Set up properly, QuickBooks is very well suited for handling client trust accounts. If you’re wondering how to do it, here are some tips:

Know What an IOLTA is and How it Works

An IOLTA account is used by lawyers to transfer client funds when they are to be held for a short period of time, and/or they are too small to generate income for the client independently. This is a trust separate from the firm’s own money and all interest is transferred to the state. This system generates income to provide legal services to the financially disadvantaged at no cost to the client, lawyer or taxpayer and has proved to be very successful program.

Understand the Details

Rules and regulation surrounding IOLTA client trusts vary from state to state. Mishandling these regulations could lead to serious fines and, at worst, disbarment. It’s always a good idea to check with both your bookkeeping services provider and your local Bar Association to make sure you’re up to date on the local regulations.

Set Up Your QuickBooks Chart of Accounts Properly

In QuickBooks you’ll have to set accounts not just for tracking revenue and expenses, but also for client trust activity. Make an account in your Chart of Accounts for each IOLTA trust connected to your firm or practice. It can be helpful to set-up two Accounts Payable accounts to differentiate disbursements due for firm operations vs.client activities. You can set-up an "Operating Accounts Payable" account and a "Client Trust Accounts Payable" account to help you in the process of segregating these transactions.

Bank Accounts & IOLTA Tracking

You should also create a bank account and title it “Client Trust Checking” to monitor deposits of client funds into the IOLTA accounts. When accounting for these transactions in QuickBooks, record these against an "Other Current Liability" account called "Client Trust Account". The balance in the “Client Trust Checking” must always equal the balance in “Other Current Liability.” It’s important to remember that most states do not allow overdraft protection or ATM access for IOLTA trusts.

Remember also that you can check in with your bookkeeping services provider to make sure that your chart of accounts and business processes has been set-up for success in following these guidelines. Also, make sure that they are reconciling both the IOLTA bank accounts, as well as the associated liability accounts on your firm's balance sheet for accuracy.

Contact Us

Read More