Monthly Archives: May 2018

Is QuickBooks Online a Better Solution than Desktop?

QuickBooks Online or QuickBooks Desktop: Which is Better for You?

6460660699_f4fdac066d_bIf you are you always on the go or need your accountant to access your financial information in real-time, this just might be the solution for you. QuickBooks Online does not require an expensive computer or network to host your financial data, it can be accessed from a computer with a supported Internet browser or any iOS/Android smartphone or tablet with a data connection.  Even if you never leave your office, QuickBooks Online may still be a great accounting solution for your business.

QuickBooks Online (QBO) is a secure cloud-based application that has many of the features of your existing QuickBooks Desktop Pro or Premiere but with some convenient web-based add-ins.  As an online solution, QBO can be integrated with many top rated add-ins including expense tracking, payroll, appointment scheduling, e-commerce solutions and more.

QBO does not require the investment of an expensive server-based network and backup hardware, only a supported device with Internet access.  For many businesses, that cost savings of subscribing to QBO can be immense when there is no longer a need to maintain an expensive network and costly backup solutions. QBO is automatically backed up and can support multiple users, also, your accountant can be invited to access your QuickBooks without the expense of adding an additional user.

QBO offers monthly plans based on your actual business needs and does not require a subscription to a higher priced plan that may have features you do not necessarily require plus QuickBooks Enhanced or Full Service Payroll can easily be added to your subscription.  QBO includes customer support services at no additional cost – no added support subscription required.

Contact your GKG CPAs QuickBooks Online ProAdvisor to find out if QuickBooks Online is an appropriate solution for your business.

Amy Baumann, Senior Accountant

Key Provisions of the New Tax Act and What They Mean to Your Business


It was a long time coming but the Republican House was able to pass the largest tax overhautax entitiesl this Country has seen since the Regan Era tax code changes of 1986. With these changes come more questions than answers on how the law will affect business of all types. A particular area of concern relates to the types of businesses known as pass-through entities. Most of us run our businesses as one of these types of entities. I am referring to S-Corporations, partnerships, and even those who report their business as a sole proprietorship. Let’s start by briefly discussing the non-pass through entity know as a C-Corporation. Between the higher tax rate and double taxation possibilities, hordes of business owners jumped to convert their C-Corporations to S-Corporations back in 1986. Most entities formed since than have been S-Corporations–until the simplicity of the Limited Liability Company craze began.

I am currently fielding questions from business owners thinking about switching to the C-Corporation tax structure. They have read that C-Corporation tax rates were dropping from the highest rate of 35% all the way down to 21%. However, the point they’re missing is that the C-Corporation still suffers from the cost of double taxation. After profits have been taxed at the corporate level any monies withdrawn by the shareholder will then be taxed as a dividend at a top rate of 23.8%. This combines to an effective rate of 39.8%.

Pass-through entities are usually considered “small businesses,” even though we know that is not very often true. With that reasoning, Congress was determined that the small business owners obtain the tax breaks that they deserved as well. That is why Code Section 199A was created. The main purpose of this code section is to provide a 20% deduction of qualified business income from a pass-through entity to its owners. A 20% deduction on qualified business income (QBI) sounds like a great idea and straightforward but keep in mind, if it is part of a tax code, it is going to be complicated.

The first thing to know is the definition of QBI. QBI is the net amount of income, gain, deduction and loss with respect to a trade or business. QBI does not include investment-related income or loss, such as capital gains or losses, dividend income or interest income. QBI can include income from real estate holdings. QBI does not include any wages you earn as an employee. This is definitely an area that will be scrutinized for those looking to maximize the deduction. Those that are professionals, own service businesses or are in what is termed as a “specified trade or business,” there is a phase out of the deduction for income over $157,500 for single taxpayers and $315,500 for married taxpayers.

The overall intent of the Qualified Business Income Deduction is to have owners of pass-through entities be subject to tax rates that are lower than those of the C-Corporations.

I have barely touched upon what is now a very complicated portion of the new Tax Cuts and Jobs Act. There are many aspects to consider before changing your entity’s tax structure. There will definitely be some technical corrections and pronouncements by the IRS on this Code Section so you should be sure to get strong, well thought out tax advice before committing to any major changes in your current tax structure.

Please feel free to call any of the Partners at GKG if you would like any additional information on this subject or to discuss your specific situation.

Wayne L. Martin, CPA, CGMA

Meals and Entertainment Changes
Under Tax Reform

mealsThe Tax Cuts and Jobs Act of 2017 contains many changes effecting individuals and businesses. A particular area of angst that is going to require proper tracking by businesses is the stricter limits on the deductibility of meals and entertainment expenses. It is more important than ever to understand the difference so you can properly categorize these expenses in you records for 2018 and beyond. The differences are as follows:

Entertainment:
In 2017 and prior, the cost of any activity generally considered to be (1) entertainment, amusement or recreation; (2) membership dues for any club organized for business, pleasure, recreation or any other social purpose or (3) a facility or portion thereof used in connection with any of the above were 50% deductible. Tickets to a qualified charitable event were 100% deductible.

BEGINNING IN 2018 NO DEDUCTION IS ALLOWED FOR THESE ENTERTAINMENT COSTS.

Note that office parties are still 100% deductible.

Meals:
In 2017 and prior, businesses were allowed to deduct 100% of the cost for meals provided to employees for the convenience of the business provided they were excludible from the employees’ gross income as de minimis fringe benefits, otherwise all other meals were subject to a 50% limitation. Meals included meals purchased for in house consumption, business meals with clients or staff – any business related meals were included in this category.

BEGINNING IN 2018 – ALL OF THESE COST ARE SUBJECT TO THE 50% LIMITATION.
Starting in 2018, businesses should be maintaining three separate general ledger accounts as follows:

  • Entertainment – For cost that are now 100% non-deductible
  • Meals Expense – For all cost that are now 50% deductible
  • Travel Cost – All costs related to business travel

All business travel is 100% deductible and should not be included in either the Entertainment or Meals Expense accounts. If you have questions related to the deductibility of specific expenses, please give our office a call.

Wayne Martin, CPA, CGMA