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Top 7 Most Frequently Asked Tax Questions

Top 7 Most Frequently Asked Tax Questions

Top 7 Most Frequently Asked Tax Questions

Here at Interactive Accountants We get asked a lot of questions about taxes. Whether they be from just the past tax season or tax advice relating to an ongoing business we have heard it all. In an effort to save you some time and effort and hopefully endorse your support in the future, we have compiled a list of some of our most frequently asked questions that clients come to us with. We strongly encourage you to take a look at what each question has to offer in terms of the answers we have regardless of whether or not they might apply to your business because you never know. That being said, let's get into it.

Do I really need to keep all those pesky receipts?

The answer to this question is both yes and no. The easy part comes with the no part of the equation. You do not have to keep receipts from personal expenses in daily spending. You do have to keep receipts that are from business transactions at your business if you are a business owner. Most importantly you must keep receipts of purchases that you plan to deduct from your income tax, especially the large ticket items! To summarize in one sentence, you need to keep receipts relating to your business and expenses that you plan to deduct. Any receipt for a purchase that does not fall into that category can go straight into the trash and out of your hair. And remember, if you’re an Interactive Accountants client, you can upload those receipts to your Quickbooks Online using the mobile app!

How do I track all my sales tax collections from my online store?

Whether you’re running a Shopify store or other platform, sales taxes get complicated. Once you’ve figured out what items you sell are subject to tax, and in what jurisdictions they are taxable, then you have some awesome options. At Interactive Accountants (IA), we use Avalara combined with a plug in connector to have your Quickbooks Online ™ accounting connected to your online store. With these two tools, extracting sales tax collections is a breeze…as well as reliable. Having IA manage this all for you with either our Fast Lane or Focused plan is the best way to make sure all your sales tax responsibilities are being managed. The truth of the matter is, that a lot of the time there is no magic answer besides good accounting.

Is A2X really worth it to connect my accounting and website sales?

From answers collected in research we have conducted the simple answer is yes, A2X is really worth it. Most people that use it find it simple, fast and reliable, and in the world of business there's not many things you need beyond that. It is also worth noting that A2X also connects with a lot of other pre-existing online softwares so it is not as difficult of a transition as you may expect to be. There are other options of course that don’t cost as much, but for the do it yourselfer, A2X works well!

How should I set up my banking structure in terms of client trust, payroll accounts, checking, savings, etc.?

At Interactive Accountants, we strongly recommend that first and foremost you shop banks. Find either a local or national bank that you can get great customer service at. It might not be needed but more than a few times a year, but when you have a problem, you really want to be able to speak to someone that understands your needs.

Next we generally suggest the following accounts; Operating, Payroll and Savings. Operating accounts are used to pay the bills and deposit revenue. Payroll accounts are just for that, payroll, and should only be funded to the extent needed out of the operating account. This limits exposure to fraud, as most employers can’t control where employees will cash a payroll check. Lastly is a savings account. This account can be used to fund your strategic reserve, or as a placeholder for upcoming capital expenditures.

Such benefits of using these three accounts include having a more acute awareness of your finances, and saving time and confusion when you may need to search for an expense.

Should I set up a line of credit for my law firm? If I do, how often should I make payments?

Whether or not you should set up a credit line for your Law Firm depends on the volume of expenses you expect your firm to take. If your firm operates on a basis where there is a high level of labor expense put out before for an expected pay day, then you may want to consider a line of credit. The frequency of which you refill your line of credit also depends on the frequency of cases and expenses related. It is important to remember that other expenses do come up with law firms besides just winning or losing a case and the payouts associated with those scenarios. Keeping that in mind, having some type of rhythm to your payment is advisable like most things in business. A regular routine is the best way to stay on top of things and banks like when you use the credit line, and then pay it down. It’s not meant to be used just to fund something that would be better suited for a term loan. It’s also not advised to just let it sit there idle forever, as a bank may not renew it for lack of use.

What are the best tools out there for paying my bills fast?

There are many Bill managing apps and websites out there that allow people to plug in all of their bills and Link all of their accounts under one easy to use software that will essentially do direct deposits for you. As it went with the world of production the same holds true for the world of finances, and that is that automation is the future. Making transactions as smooth and effortless as possible so that more can be processed quicker is one of the end goals of almost every business. At Interactive Accountants, we tend to be a Quickbooks Online™ focused firm and one of the great tools that is free with your account is Melio™ which allows you to pay bills right from your Quickbooks™ account.

What's a three way trust reconciliation?

A three-way trust conciliation balances 3 things, your internal private books, your trust account bank statements, and client ledger balances. The next steps to take regarding this matter is to make sure that your deposit records are complete. This one should go without saying, but make sure that you know where every transaction deposit is located. A third step would be to confirm your disbursement records of the transactions. And finally if you are identifying a mistake , reconcile it as quickly as possible. Interactive Accountants are masters at the three way trust reconciliation and pride ourselves on making this service available to all our Law Firm clients. As always we are more than willing to answer any questions you may have.

What is the next step for my accounting needs?

Individually we would love to consult with you and your business to help create an effective business strategy to address your individual concerns and help you succeed. Here at Interactive Accountants, assisting businesses to grow and succeed financially is our number one goal. We are here to help because the better you do, the better we all do! If you're still not convinced yet to give us a call, feel free to look at our other blogs regarding the help we offer various businesses and offices.

If you are a professional in any field that these tips apply to or are simply curious about a topic touched upon in this article, please feel free to schedule a free 30 minutes consultation with our owner Matthew Shiebler, CPA. He's been practicing accounting for over 25 years now and is a business owner, just like you!