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Linda Keith Tells Us What Lenders Are Looking For In Business Loan Requests

Access to the right funding is key to the survival of many small businesses. Therefore, if you don’t know What Lenders Are Looking For in Business Loan Requests click on over to hear Linda Keith CPA give the right answers to the right questions.

Inspired Ideas For CPA’s – By Michelle Baca

Michelle Baca over at ConvergenceCoaching LLC provides Inspired Ideas for CPA’s and IT professionals. Michelle’s latest post The Top 3 Business Uses for Twitter, is certainly inspired. If you are interested in learning more about social networking – why wait – join the throng. Michelle indicates that one of her most popular training courses this year has been “Embracing Social Networking in Your Firm.” If you would like to learn more, click on over to ConvergenceCoaching LLC.

A Tax Blog Throw Down – I Dished it Out – Now it Looks Like I Will Have to Take It.

By Stacie Clifford Kitts, CPA

* Deep breath, Heavy sigh*

Where to begin?

Until recently, I was happily posting little tidbits of tax stuff, mostly gleaned from the IRS’s tax tip releases and some original posts written when I could get time away from the tax practice.

Then an old friend, who is also a writer, publisher, editor, and internet-marketing expert, pointed out that I should use my blog posts to boost my internet presence and market myself online. [Frankly, I always thought people just stumbled onto blogs by accident or found you by some miracle. I really didn’t think much about it. However, that is another blog on another day.]

In addition to following some of her great tips, I also began looking for other tax blogs and quickly realized that there was a whole tax blogging community. They appeared to be a supportive group too, re-tweeting posts, linking to each other’s blog pages, writing flattering posts about each other, generally a very pleasant blogging experience.

That is, until I read a post by June Walker. Now, to be fair, June did not strike first. No, she was set off by a couple of bloggers, The Wondering Tax Pro, aka “Sammy Segar, CPA” and The Tax Lawyer’s Blog aka “Attila Attorney” to be specific. Each of these bloggers disagreed with her post, You Do Not Need a Business Checking Account.

Now, if you have ever thought that accountants were docile number crunchers, you were wrong, at least as it applies to Ms. Walker. You can check out her retaliation here.

In addition, as this saga drags on, it appears that I am soon to be the target of Ms. Walkers rants as I might have been a bit harsh in my comments to her retaliation post. I am not going to go into the whole thing here since you can click on the link and page down to my post. Mine starts “OMG -I can’t believe what I am reading. Is this how tax bloggers behave?”

Although I risk being the target of her mean spirited rants, I stand by my “chick think” statement. I believe some of her comments were snide, belittling, unprofessional, and unnecessary – In the same way a bunch of women might stand around the water cooler and gossip about the pretty girl in the office next door. . However, that’s just my opinion.

So here you go Ms. Walker, rip me apart. It certainly won’t take a genius to find flaws in my blog posts. I definitely need an editor. LOL. However, it will be interesting to see how many mistakes she was able to find in my comment posted on her blog…kind of like a Where’s Waldo exercise.

Oh…do I get a “composite figure?” How exciting. I cannot wait to find out. 🙂

Now off to take care of the important things in life, like putting my granddaughter to bed.

Oh and yes, that’s me and the grandbaby right after we finished this evenings bath.

Is it a Hobby or a Business?

From the IRS summer tax series. I really love these tips.

Summer is a time many Americans take their fishing poles and gardening tools out of storage. Hobbies – such as woodworking, stamp collecting and scrapbooking – are often done for pleasure, but can result in a profit.

If your favorite activity does make a profit every year or so, there may be tax implications. You must report income to the IRS from almost all sources, including hobbies.

Here are eight questions that will help determine if your activity is a hobby or a business.

Is the purpose of your activity to make a profit? Generally, your activity is considered a business if it is carried on with the reasonable expectation of earning a profit.

Do you participate in your activity just for fun? Hobbies – also called not-for-profit activities – are those activities that are not pursued for profit.
Do you depend on income from the activity? If so, your activity is likely considered a business.

Have you changed methods of operation to improve profitability? If so, your hobby may actually be a business.

Do you have the knowledge needed to carry on the activity as a successful business? People who carry out hobbies just for fun, often don’t have the business acumen to turn their not-for-profit activity into a profitable business venture.

Have you made a profit in similar activities in the past? This may indicate your activity is a business rather than a not-for-profit hobby. An activity is presumed carried on for profit if it makes a profit in at least three of the last five tax years, including the current year – or at least two of the last seven years for activities that consist primarily of breeding, showing, training or racing horses.

Does the activity make a profit in some years? Even if your activity does not make a profit every year, it still may be considered a business.

Do you expect to make a profit in the future from the appreciation of assets used in the activity? This indicates your activity may be a business rather than a hobby.

If your activity is not carried on for profit, allowable deductions cannot exceed the gross receipts for the activity. If you are conducting a trade or business you may deduct your ordinary and necessary expenses.

More information about not-for-profit activities is available in Publication 535, Business Expenses, available on the IRS.gov Web site or by calling 800-TAX-FORM (800-829-3676).

Link: IRS Publication 535, Business Expenses

Wowser – A Tax Blog Throw Down – Why Keeping a Separate Business Checking Account Can Save Your Clients Money.

By Stacie Clifford Kitts, CPA

I must say, the business life of a tax accountant isn’t exactly a mardi gras. Moreover, it’s no wonder that we don’t see movies of the week about the accountant who couldn’t balance his or her ledger – borrrrring.

Therefore, I certainly look forward to the occasional lively debate, something stimulating and thought provoking, you know to spice it up a bit . But gees, I sure was stunned to read the comments made by June Walker over at her blog post There’s no shortage of bad advice out there. I suppose I don’t need to go into the details, since you can head over to her blog and read it yourself. But suffice it to say, she was a little miffed when a fellow blogger seamed to diss her blog post You Do Not Need A Business Checking Account.

But, hello, what do you expect to happen when you give that type of advice? Come on -you do not need a business checking account? What? Are you serious?

Regardless of all the important reasons to have a separate business account, you can check those out here at The Wondering Tax Pro’s blog, the extra cost that would be incurred by many clients to have an accountant or bookkeeper wade through business and personal expenses to pick out the proper deductions is not something I would readily advise to any client. And I know this from personal experience. Thank you.

I want my clients to focus on the important aspect of managing their businesses – you know – the revenue generating part, not the “Oh crap, I forgot to pull that business expense out of my co-mingled account” part.

So if you want to save your clients some frustration and some accounting fees, please advice them to open a separate banking account for their self-employed business.

In my opinion, advising a client NOT to open a separate business account would undoubtedly increase the accounting fees for those clients. So unless that is your intention, better stay away from that type of advice.

Small Businesses – Don’t Miss Out on Your Expanded Refund Claim. Time Is Running Out!

WASHINGTON — Time is running out for many small businesses wishing to take advantage of the expanded business loss carryback option included in this year’s recovery law, the Internal Revenue Service said today. Eligible individuals have until Oct. 15 to choose this expanded carryback option. Eligible calendar-year corporations have until Sept. 15.

This carryback provision offers small businesses that lost money in 2008 an excellent way to quickly get some much needed cash if they were profitable in previous years. This option is only available for a limited time, so small businesses should consider it carefully and act before it’s too late.

Under the American Recovery and Reinvestment Act (ARRA), enacted in February, many small businesses that had expenses exceeding their income for 2008 can choose to carry the resulting loss back for up to five years, instead of the usual two. This means that a business that had a net operating loss (NOL) in 2008 could carry that loss as far back as tax-year 2003, rather than the usual 2006. Not only could this mean a special tax refund, but the refund could be larger, because the loss is being spread over as many as five tax years, rather than just two.

This option may be particularly helpful to any eligible small business with a large loss in 2008. A small business that chooses this option can benefit by:
Offsetting the loss against income earned in up to five prior tax years,
Getting a refund of taxes paid up to five years ago,
Using up part or all of the loss now, rather than waiting to claim it on future tax returns.

Under ARRA, eligible taxpayers can choose to carry back a NOL arising in a taxable year beginning or ending in 2008 for three, four or five years instead of two. The option is available for an eligible small business (ESB) that has no more than an average of $15 million in gross receipts over a three-year period ending with the tax year of the NOL. This choice may be made for only one tax year.

Most taxpayers still have time to choose this special carryback and get a refund. A calendar-year corporation that qualifies as an ESB must file a claim by Sept. 15, 2009. For individuals, the deadline is Oct. 15, 2009. This includes a sole proprietor that qualifies as an ESB, an individual partner in a partnership that qualifies as an ESB and a shareholder in an S corporation that qualifies as an ESB. Deadlines vary for fiscal-year taxpayers, depending upon when their fiscal year ends and whether they are making the choice for the tax year that ends or begins in 2008.

Individuals can accelerate a refund by filing Form 1045, Application for Tentative Refund. Similarly, corporations with NOLs may also accelerate a refund by using Form 1139, Corporation Application for Tentative Refund. Normally, refunds are issued within 45 days. These forms, along with answers to frequently-asked questions about this special carryback, and other details can be found on the IRS Web site.

Read How Small Business Can Get A Bail Out

Here’s the latest More Tax Tip – Read about the small business bail out

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