Win or Lose: If You Got Lucky This Summer, Let Your CPA KnowPosted on September 3rd, 2019
Did you enjoy a summer of gambling in Atlantic City? Hit the tables in Vegas? If you had substantial winnings or losses, your accountant may choose to itemize those deductions. If so, you will need proof to back up those claims.
If you were lucky—good for you. Gambling income includes, but is not limited to, winnings from lotteries, raffles, horse and dog races, and casinos, as well as the fair market value of prizes such as cars, houses, trips or other non-cash prizes. Gambling winnings are fully taxable.
Winnings must be reported on the “other income” line on the front page of your tax return. To measure your winnings on a particular wager, just use the net gain on the wager. For example, if a $20 bet at the racetrack turns into a $100 win, you have won just $80, not $100. If you lose $50 on a different race, however, you cannot simply offset this amount against your $80 win.
Losses are only deductible up to the amount of your gambling winnings. That is, for tax purposes, you can use your losses to “wipe out” your gambling income but you can never show a gambling tax loss.
You must separately keep track of losses. They are deductible, but only as itemized deductions. Thus, if you take the new standard deduction, you cannot deduct your gambling losses. Therefore, if a taxpayer does not itemize his deductions, he is unable to deduct gambling losses.
However, if you do itemize, gambling losses fall into the category of “other” miscellaneous deductions. The losses aren’t subject to the 2% of adjusted gross income (AGI) standard. Even better for those reporting losses, they aren’t subject to the overall limitation on itemized deductions.
Did you know that the IRS considers raffles, bingo, lotteries, etc., to be gambling, even if the sponsor of the activity is a charitable organization? So, winnings and losses are treated the same as for any other gambling activity, and the amounts paid to buy raffle or lottery tickets or to play bingo or other games of chance are not deductible as a charitable contribution.
This may change the way you participate in charity fundraisers. We wish you luck this summer, but don’t gamble with your taxes. Keep records and bring those to your Baratz & Associates CPA to report accurately next tax season.
Will the SECURE Act Take Away the Security Blanket?Posted on August 3rd, 2019
413 to 7. Wow. That seems like an overwhelmingly popular vote for ANY bill. And that was the reception for the SECURE Act before the House in May.
Setting Every Community Up for Retirement Enhancement has garnered a huge amount of support, but it is being mulled over in the Senate. So, what is everyone talking about? We wanted to break down the major points for our clients because it currently includes 29 different proposed regulations.
These could be perceived as positive points in the legislation for small business owners or those who work for a small business:
- Possible increase of the tax credit available for 50% of a small business’s retirement plan start-up costs. Currently, the credit is limited to $500 per year. However, if it becomes law, the SECURE Act would increase the maximum credit amount to $5,000.
- It creates a brand new $500 tax credit for a small business’s start-up costs for new 401(k) plans and SIMPLE IRA plans that include automatic enrollment. The credit would also be available to small businesses that convert an existing retirement plan to an auto-enrollment plan.
- Part-time employees who work either 1,000 hours throughout the year or have three consecutive years with 500 hours of service would qualify for a retirement plan.
- Companies would be able to offer annuities and other “lifetime income” options to plan participants by the Act’s elimination of some of the associated legal risks.
- Allows workers in small business to contribute as much as 15 percent of their wages to a safe harbor retirement plan instead of the current cap at 10, except in the first year.
No matter what size company you work for, the following provisions would benefit you as an individual:
- Push back the age at which retirement plan participants need to take required minimum distributions (RMDs), from 70½ to 72 as well as eliminate the contribution age limit.
- Allow the use of tax-advantaged 529 accounts for qualified student loan repayments (up to $10,000 annually).
- The Act would allow $5,000 to be taken out of a retirement plan without 10% penalty when a child is born or adopted. If you’re married, each spouse could withdraw $5,000 from his or her own account, penalty-free.
However, for all its positive features, the SECURE Act is no slam dunk. A major negative is:
This is the segment of the legislation that may remove some security for our clients. The Act eliminates the ability of non-spouse beneficiaries to “stretch” the required minimum distributions (RMDs) from an inherited account over their own lifetime (and potentially allow the funds to grow tax-free for decades). Instead, all funds from an inherited IRA would have to be distributed to non-spouse beneficiaries within 10 years of the IRA owner’s death.
Some exceptions are provided. Distributions over the life or life expectancy of a non-spouse beneficiary would be allowed if the beneficiary is a minor, disabled, chronically ill or not more than 10 years younger than the deceased IRA owner. For minors, the exception would only apply until the child reached the age of majority. At that point, the 10-year rule would kick in.
It is this last issue which affects those with significant wealth in retirement plans, and those who planned that wealth as legacies for their children. It will take creative financial planning to adjust, and it will behoove those with IRAs to investigate all the options sooner than later. If you are interested in a seminar regarding the stretch IRA, please click here to let us know. We will be hosting several dates and presentations. If you don’t want to wait for a seminar, feel free to call the office and make an appointment to see your Baratz CPA now—we are here to strategize with you.
Remember that since the SECURE Act has not made it through a Senate vote; any or all of these provisions could change. But as there has been a positive reception thus far, we wanted to get out in front of the issue. Look for more information soon—we are committed to keeping you up to date on this legislation and anything that impacts your financial well-being.
Caring for ClientsPosted on July 3rd, 2019
originally published in our newsletter July 2019
Manager Avani Bharucha, CPA/MBA has been with Baratz & Associates, PA since she left Rutgers over ten years ago. The partners value having Avani in a leadership role and her clients enjoy her high-level insight to taxation and IRS regulations.
Avani is the type of accountant who is always looking to do more for her clients. The partners of Baratz & Associates, PA believe in being trusted advisors and doing that means pushing outside of the walls of accountancy. We partner with attorneys to learn about options and courses of action for our clients. We want to ensure our clients get the service they deserve. As part of that career education, Avani reached out to a local respected elder care attorney. What follows is an excerpt of an interview with Robert Keltos, Esquire. He is with Rothamel & Associates, LLC.
Bharucha, CPA/MBA: What made you interested in a career as an attorney?
Keltos: Even going back to high school, I had always thought I would want to be an attorney. Back then, it was more criminal law. I didn’t know much about it, I just loved police shows like NYPD Blue and seeing the law in action. It was the whole idea of being an attorney, advocating for a client–putting on a good argument on their behalf.
Avani: Funny, it seems like there is always something to get you started. When I was young, I wanted to become a teacher. As I was growing up, I realized that I enjoyed the process of learning new things, helping others, and building relationships. At the same time, I found that I was good at numbers and wanted to focus on adults rather than children.
Keltos: So you made a change from teaching?
Avani: I felt like Accounting was a better career option. I like the idea of being an “expert.” I love that people approach me for help or guidance and getting the respect of a community. Being a CPA allows me to do things that I enjoy the most; and being at Baratz means I still get to teach too. I am a mentor and trainer for the new hires in the office. An honest “thank you” from one of the new accountants makes my day!
Did you have a similar change in career direction? I know you aren’t in criminal law now, so how did you specialize?
Keltos: Well yes, at the end of law school I had a personal experience that changed me and my view of the law. My grandmother had Alzheimer’s for the last 10 years of her life. And because of that and her suffering, my family experienced a lot of stress. My dad and my uncle were Power of Attorney, helping my grandparents make essential decisions. We got through it, but we realized that there were some things they could have done differently. It would have been good if we had had some legal, a little bit more legal help along the way. I was just getting through law school at the time and just realizing there was this idea of elder law.
Avani: So, there was a family need which was not addressed, and it kind of gave a push in your career. I bet clients really value your insight because of that personal experience.
Keltos: Right! From that learning experience, I just I decided to jump in with both feet, learning as much as I could about it. What are the resources that I want to be providing to my clients? I toured assisted living communities, nursing homes, rehab centers, home care, you know, you name it. I met with attorneys who had established practices. I realized I loved it. I loved helping people in this type of planning process. They are in a difficult time, you know, any time a family member needs to go to assisted living or, especially a nursing home…
Avani: Yeah, it’s not easy.
Keltos: It’s not easy. They are giving up some level of independence, or feel like they are, and just acknowledging that you know that they cannot handle things completely on their own. It’s just a lot of stress that families go through, and I found that I’m able to take away some of that stress by practicing elder care law.
Avani: It’s not just you giving the right legal advice, it’s more of you holding their hands and taking them to the right directions. I think that not only your industry, but my industry, that’s what they need sometimes. Clients can get information from friends, the net, but they want someone they trust to go through it step by step and make careful recommendations.
Even though I am not a partner, I value the trust of my clients. I work with them individually with an eye out for planning and the future. Just like legal problems, tax situations can be a huge burden to individuals, families and businesses if you don’t have an expert.
Keltos: Agreed. Agreed. You’re doing a tax return and you want to make sure they’re telling you the whole story.
Avani: Yes, and my job is not only to prepare tax returns; obviously, that’s my job, but also to look out for the client. What makes me better than the Block? I try to figure out any other needs…do they need financial planning, legal guidance, or do they have proper insurance coverages? And they aren’t going to tell me the information that I need to know unless I earn their trust.
So, thank you for doing this interview. I like learning from other professionals and community leaders. I want to have an expert or experience to share for every planning opportunity that arises. That’s the process I’m going through, I’m trying to make myself better in several areas and eventually apply the holistic planning approach in advising my clients.
New Regime for PartnershipsPosted on December 10th, 2018
Centralized Partnership Audit Regime–if it sounds like a military action, you have the right frame of mind. The new guidance has and will affect ALL partnerships, LLCs and joint ventures, even if formed fifty years ago. Indeed, partnerships may now become targets for audits. The CPAs at Baratz & Associates are ready to help our business clients understand the ramification of the changes.
The consequences of these new rules are significant and can adversely affect your partnership, LLC or joint venture should it have an audit which results in a tax liability. We encourage businesses that are taxed as partnerships to begin the analysis of their newly formulated compliance burdens with your CPA.
Under the CPAR, all partnership tax adjustments will be made at the partnership level (not at partner lever as under traditional flow-through principles). The economic burden of an IRS adjustment will be borne by partners (hence need to consider contractual indemnification):
- The CPAR is intended to raise revenue – it will increase partnership audit rates. Partnerships and LLCs are now targets for audits.
- The partnership/LLC tax calculation will be at the highest tax rate levied against the partnership.
- No more “tax matters partner” – new concept “partnership representative” (PR).
- The PR has exclusive power to deal with IRS for audit/appeals/litigation, AND it does not have to be a partner. The PR can be an advisor, so long as s/he has presence in the U.S.
Unfortunately, no grandfather provision applies. The CPAR rules apply to all existing partnerships and new partnerships formed.
This may impact how you conduct business moving forward, as there will be significant impact on partnership transactions in the form of acquisitions of partnership interests, mergers as well as due diligence, representations, and indemnification.
It is recommended to review your partnership agreement as well. It is essential to designate a partnership representative, obtain partner approval of certain decisions made by partnership representative, provide contractual notice/participation rights, and finally, indemnify current and former partners of partnership tax liability under default rule (including method of allocating liability among partners).
Is There a Way Around CPAR?
The CPAR dramatically alters the federal tax treatment of all partnerships except those with a valid election out. And this could be the best option for you or your company. This election is available only if partnership is required to furnish less than 100 K-1s or has all eligible partners. This can result in separate audits at the partner lever (same as under pre-1982 law and for “small partnerships” not subject to TEFRA rules under 1982-2017 law).
Opt-out election for partnerships taxable years beginning after 1/1/2018. If “eligible,” partnership can opt-out of the CPAR; the key is whether the partnership consists of all eligible partners.
WHO IS ELIGIBLE?
Only eligible partnerships may opt out of new partnership audit procedures. The partnership required to furnish less than 100 “statements” (i.e., Schedules K-1) or any other partnership with only eligible partners. Eligible Partners (those who can opt-out):
- C corp.
- S corp.
- Deceased partner’s estate
- Foreign entity taxed as a C-Corp
WHO IS INELIGIBLE?
The term eligible partner does not include:
- foreign entities that are otherwise ineligible;
- disregarded entities;
- nominees or others who hold an interest on behalf of another person; and
- estates that are not estates of a deceased partner
It should be understood that the legal exposure of partners has changed and there will be a need for recourse and indemnity under such changed rules on a look back basis. This is not one to be ignored. Consult with your Baratz & Associates CPA or attorney to make any necessary adjustments.
Do You Facilitate or Sell and Why You Need to Know–Sales Tax Regulations Have ChangedPosted on December 4th, 2018
A few weeks ago, things changed for buyers and sellers of goods in New Jersey. Even those without a storefront. The days of “Look Ma! No sales tax” are over. You may be familiar with the recent decision of the U.S. Supreme Court in South Dakota v. Wayfair, Inc., in which the court determined that physical presence within a state was not a prerequisite for the collection of sales tax on purchases of tangible personal property.
Most businesses were not concerned at the time. However, under the law, if a seller does not have a physical presence in the state but has revenue from sales into the state in the calendar year, or prior year, in excess of $100,000, the seller must collect taxes. For it seemed as though the revenue from such sales had to be quite large to affect any seller—like Amazon sized.
However, the same rule will apply to a seller with 200 or more separate transactions into the state in a calendar year or in the prior year. Therefore, if you sell 200 widgets at $.50 a piece, you may not be living the Jeff Bezos lifestyle, but you are bound by the same guidelines as of November 1, 2018.
Indeed, over forty states and the District of Columbia levy taxes on the sale of goods and certain services, including those sold remotely, such as over the Internet. New Jersey has now released TB-83 to help guide you in who’s who and what’s what.
The terms used can be confusing, and we want you to rely on your CPA to help you determine how your business is affected and at what point, but here is a primer on the language included…
A marketplace facilitator is required to collect Sales Tax on sales of tangible personal property, specified digital products, and services delivered into New Jersey, which are made by a marketplace seller through any physical or electronic marketplace owned, operated, or controlled by the marketplace facilitator, regardless of whether they are over or under the thresholds of $100,000 or 200 transactions.
Marketplace sellers are not required to collect and remit sales tax on a sale when a marketplace facilitator is required to collect and remit sales tax on the transaction. If a marketplace seller is registered with New Jersey for the collection and remittance of sales tax an option exists. The marketplace facilitator and marketplace seller are permitted to enter into an agreement with each other regarding the collection and remittance of sales tax.
If this sounds like a lot to account for, you are right. The State of New Jersey agrees and may allow a six-month reprieve to allow businesses to get a system in place. The Division of Taxation may temporarily suspend or delay the registration, collection, and remittance obligations of a marketplace facilitator for a period not to exceed 180 days.
If your CPA recommends this course of action, you’ll need to follow the protocol exactly. Requests for a delay must be marked “Marketplace Facilitator—Request for Delay” and include the following:
– Name and address of the taxpayer;
– The taxpayer’s New Jersey Taxpayer Identification Number (if registered with New Jersey) or Federal Employer Identification Number (FEIN) (if not registered with New Jersey);
– The date the taxpayer expects to be able to comply with the new collection and reporting requirements; and
– An explanation as to why they require additional time in order to meet the new collection and reporting requirements.
Following each retail sale made through the marketplace, the marketplace facilitator must provide the purchaser with a sales slip, invoice, receipt, or other statement of the price paid or payable. The amount of tax due must be separately stated from the sales price of the item(s) purchased. A marketplace facilitator is subject to audit with respect to all retail sales for which it is required to collect and remit sales tax.
A marketplace facilitator will be relieved of liability for the tax on a retail sale if it demonstrates that it made a reasonable effort to obtain accurate information from the marketplace seller about a retail sale, and the failure to collect and pay tax was due to incorrect information provided to the marketplace facilitator by the other party. When the marketplace facilitator is relieved from tax liability for this reason, the marketplace seller is liable for the tax.
The goal of TB-83 and other regulations like it is to put all marketplace sellers (internet or brick and mortar) on the same playing field. While this may be a lot for your local five and dime to figure out, the CPAs at Baratz & Associates will help. It’s the time of year when you need to rely on your trusted advisor, start planning for 2019 now.
401 (k) AuditsPosted on September 26th, 2018
As auditors we are occasionally surprised that some responsible employers don’t realize that with company growth and success comes new responsibilities. You may not realize that the number of participants in your 401(k) plan dictates whether you have a large or small plan.
The Department of Labor regulations require that an employee benefit plan filling as a “Large Plan” submit audited financial statements with its annual form 5500. A large plan is defined as a plan with 100 participants at the beginning of the plan year. Employees become includable as “participants” on the date which the employee becomes eligible to participate – regardless of whether they elect to participate. This is an important distinction and could potentially increase the number, bumping you into a large plan status.
Accurate census data will assist your firm in properly counting your participants, and ensure that your plan files its form 5500 under the proper category. The participant count must include (1) actively participating employees, (2) retired, deceased, or separated employees who still have assets in the plan and (3) all eligible employees who have yet to enroll or have elected not to enter the plan. When this count reaches 100, your plan is now a “Large Plan” and is subject to the audit requirements of the Department of Labor.
This is where an established relationship with a firm is crucial to planning and reporting. The more a third-party administrator knows, the better. With expertise comes creativity, and at Baratz & Associates, PA we use our expertise in auditing to help keep your costs down.
Some good news for those who are reaching the next level…There is some relief allowed by the Department of Labor in the form of the 80/120 rule. This rule allows plans with between 80 and 120 participants, as of the 1st day of the plan year, to file the Form 5500 in the same category (“large plan” or “small plan”) as indicated on the prior year Form 5500 filing. This allows a growing business whose plan was under 100 participants to continue to file as a small plan until the plan reaches 120 participants.
The table below illustrates most possibilities:
|Top of Form
# of eligible participants on 1st day of the plan year
Bottom of Form
|Financial schedule filed with prior year Form 5500||Options for current year Form 5500||Audit Required?|
|<80||Does not matter||Small Plan – Schedule I||No|
|80-99||Small Plan – Schedule I||Small Plan – Schedule I||No|
|Large Plan – Schedule H||Either – Schedule H or Schedule I||Optional|
|100-119||Small Plan – Schedule I||Either – Schedule H or Schedule I||Optional|
|Large Plan – Schedule H||Large Plan – Schedule H||Yes|
|>120||Not applicable||Large Plan – Schedule H||Yes
Bottom of Form
In addition to that, there are some options available that can assist your plan in staying under 100/120 participants. The expertise of the right auditing firm helps you plan ahead and take advantage of the rules.
- Automatic rollover of terminated employees with small accounts, typically 5,000 or less.
- Using multiple plans
This last option is more complicated, but if there is a legitimate business purpose to separate employees of a certain class–such as employees covered under collective bargaining agreement, it could be best to take advantage of this possibility. Again, full disclosure to your auditing firm like Baratz & Associates will allow us to determine how to best help you and remain in compliance with the law.
If you think you may be on the cusp of a new status, you need an expert on your side. For more information on understanding the audit requirements of 401k plans and other employee benefit plans, please consider the CPAs at Baratz & Associates, PA. We have a dedicated staff for employee benefit plan audits, with CPAs educated in single-employer 401k plans, multiemployer Taft Hartley plans, health and welfare plans, and more. We have been awarded by SJ Biz magazine for our auditing work. Contact us today to see what we can do for you.
William C. Smitheman Jr., CPA
Blending Accounting and Financial ServicesPosted on July 9th, 2018
Whether you are in the process of organizing your financial records or trying to establish a succession plan, it pays to work with professionals that can help guide you through intricate tax records and accounting processes. While the help of one firm can help ensure your long-term success and peace of mind, the additional help of an expert advisory group can further guarantee your personal success. Our team of CPAs at Baratz and Associates regularly works with CORA Capital Advisors to provide our clients the comprehensive approach they deserve.
The Value of Collaboration and Special Services
At Baratz and Associates, we pride ourselves on responsiveness and developing effective solutions for unique problems. To this end, we collaborate with CORA Capital Advisors to offer service packages which encompass diverse solutions, provided in a timely manner. With our combined expertise, we recommend innovative forms of guidance, including:
- Asset Management
- Retirement Planning
- Estate Planning
- Risk Management
- Tax Planning
- Executive Compensation
The world of accounting and finance is filled with intricate paths that can easily dissuade you from moving forward with plans. But with expert guidance, you can overcome these hurdles and develop an effective strategy that considers your past, present, and future. Whether this involves the development of a succession plan or you need help outlining a living will, our large team of advisors oversees each step and makes sure that you are aware of obscure obligations and tax laws. Those who need help with estate planning, for example, would benefit from a meeting with our team if they are concerned about the distribution of their assets.
Schedule Your Comprehensive Consultation Today!
On our own, we at Baratz and Associates can help you establish processes that organize your assets while planning for the future. But with the added assistance of CORA Capital Advisors, we are able to ensure that all of your needs and goals are accounted for. For more information on our services or to schedule a consultation, contact our Marlton firm today!
Mergers and Acquisitions – What to Look ForPosted on June 25th, 2018
Knowing what to look for when selling, buying, or merging your business is crucial for company owners. Because of the numerous factors to consider, many entrepreneurs have turned to outside CPA firms to assist them throughout the process.
A qualified accounting professional can offer you the support necessary to successfully navigate the mergers and acquisitions process. Below are some examples of what CPAs look for to ensure the most beneficial result.
Why Do I Need a CPA’s Help?
When looking to expand your business, merging and acquiring another company are ways to increase your presence and make an impact in your particular industry. However, there is a significant amount of due diligence required for all parties involved. The buyer has the great responsibility of ensuring the venture they’re interested in acquiring is worth their investment. Accounting professionals verify this by examining the business’ records and back-office practices, so they can discover any inaccuracies or risk factors that could complicate the deal.
It’s important for your CPA to take a thorough approach when examining the financial records and operating processes of the acquisition prospect. They can organize and advise improper bookkeeping, ensure tax implications are considered, and ultimately whether or not the transaction will benefit the long-term growth and profitability of your business after taking this new direction.
During the sale an effective accounting firm will also collaborate with legal professionals so the ownership change process is a smooth transition.
Providing Comprehensive Recommendations and Valuation
Business owners tend to have enough responsibility on their plate that spending the time necessary to prepare for mergers or acquisitions isn’t feasible. A CPA firm’s qualified financial and accounting professionals have the savvy to efficiently research company financials so they can recommend strategies and point out any red flags that could potentially derail the purchase.
Whether combining forces, or taking over operations, obtaining a valuation to determine the company’s worth is an important step to take. CPAs provide this estimate to clients involved in the M&A process to give them the full scope of their financial undertaking.
Schedule a Consultation in Marlton Today
At Baratz and Associates, our trusted accounting team has decades of combined experience, so we’ve seen the ways nearly every scenario has played out during mergers and acquisitions. If you are looking for a Marlton CPA firm with the expertise to navigate the M&A process successfully, call us today to set up a consultation.
The Importance of Tax Planning vs. PreparationPosted on June 6th, 2018
Having a tax plan in place, to many business owners, amounts to setting a calendar reminder on January 1st to organize the paperwork for their accountant. This is a perfectly reasonable approach if the end goal is filing returns in a timely fashion. Yet, compliance isn’t why most entrepreneurs started their company.
For these professionals, moving forward means pursuing opportunities as soon as they appear. Often, this flexibility comes from reducing how much income goes toward fulfilling yearly tax obligations. This is easier to do with a strategic tax plan in place and the guidance of supportive financial experts along the way.
Plan or Prepare — What’s the Difference?
Both tax preparation and planning are important, especially as the IRS and state tax boards dedicate more time to reviewing returns line-by-line. Avoiding compliance issues is why many business owners enlist the help of CPA firms for return preparation. Tax planning allows you to tackle issues that go beyond the past year’s earnings, not by managing the amount owed but ethically reducing it.
The strategies that make up a tax plan start well before tax season begins. After December 31st, the ways to adjust liability are few and far between. Comprehensive tax services help clients identify valuable deductions early, so no opportunity falls by the wayside. Where the scope of preparation is limited to current and past returns, the benefits of planning come from making projections for the future and anticipating concerns.
The Value of Keeping Your Tax Strategy Relevant
Without organized records, it is impossible to have an actionable tax plan. Out-of-date or, worse, altogether absent documentation would tie the hands of even the most talented accountant. Fortunately, the same professionals that help entrepreneurs plan for their obligations can also set up a system that makes viewing and interpreting financial data easy to do. Since the most beneficial tax strategies take changing economic realities into consideration, accurate year-round bookkeeping becomes all the more essential.
Prepare Your Business for the Future, Today – Contact Baratz & Associates, P.A.
At our firm, we help clients make the proactive, well-informed decisions that improve wealth and well-being. More than offering support during tax season, we work alongside business owners throughout the year. The strategic approach we take encompasses ongoing obligations and steps for gaining a stronger foothold in the marketplace.
To discover more about how Baratz & Associates, P.A. provides tax planning in Marlton and throughout the greater Evesham Township area, schedule a consultation today.
Healthcare Accounting: Top Tips for CompliancePosted on May 22nd, 2018
Operating a healthcare business requires attention to detail and a commitment to generating routine, accurate financial reports. If you operate a healthcare enterprise, you can’t afford to be lax in your accounting methods. The following tips help you understand why it’s important to maintain an organized accounting process and how can you achieve efficient reporting and data entry:
Establish a QuickBooks Accounting System
Setting up a digital bookkeeping and reporting system is crucial. With accounting software, you can easily add, track, and filter data for organizing into the necessary reports at tax time. When implementing QuickBooks for your medical practice, be sure to use the right platform – some business owners may be better off with the online version, as this allows real-time access for both the business owner and any professional accountants. It’s also advisable to reconcile accounts monthly to ensure accuracy. QuickBooks’ reporting tools help you separate data by office location or specific services rendered.
Create a Relevant Chart of Accounts
Operating a medical practice is different than managing a business in any other field; you may have to invest money in purchasing larger or more advanced equipment or in maintaining malpractice insurance. You should meticulously record your income and expenses, including leasing your office space and patient record storage and maintenance. By closely monitoring the various ways your business makes and spends money, you can fine-tune operations to improve profitability. Your chart of accounts can be created and customized in QuickBooks.
Perform Accurate Cost Reporting for Medicare
Practices that work with Medicare patients must submit separate reports for funding purposes. If you expect reimbursement by Medicare for services provided, financial statements and cost reports must demonstrate accurate and on-time data tracking with the appropriate accounting method. In many cases, this method is accrual-based accounting, which allows healthcare companies to provide transparent financial data, where expected costs are matched to profits.
Hire a Professional Accountant
Even with the right software and tools, you may still need insight from a financial professional. A CPA with experience in healthcare accounting can help you establish an accrual-based system, provide you with access to a QuickBooks online account, and troubleshoot any issues with recordkeeping. If you’re looking for assistance in operating your healthcare venture, contact Baratz & Associates’ business consultants for additional tips!