Tax Guru – Ker$tetter Letter

Helping real people win the tax game.

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Archive for February 28th, 2003

Posted by taxguru on February 28, 2003

Not On The Same Team

I hope Stephen Moore is wrong in his assessment of the new Chairman of Bush’s Council of Economic Advisors, Gregory Mankiw. If it is true that he denies the effectiveness of the Reagan tax cuts of the early 1980s, our chances of seeing substantial new cuts are dwindling.

I know Bush has bigger things to worry about right now; so I am assuming that some of his advisors, who chose this person, are out to sabotage the tax cut agenda. Selecting someone who denies the reality of the Reagan tax cuts to be an economic advisor makes as much sense as having a member of the Flat Earth Society be Director of NASA. It’s ludicrous.

KMK

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Posted by taxguru on February 28, 2003

TimeSlips

As big a fan as I am of QuickBooks for bookkeeping, I have to admit that I do not like its billing features at all. Each year, when the new version of QuickBooks comes out, I give the billing a test spin with the hope of using it for my own practice. Every year, it comes up quite short.

I had been using TimeSlips back in my offices in the PRC, but wanted something simpler and less expensive when we moved here to the Ozarks ten years ago. While I had dozens of workers and thousands of clients to keep track of back there, it was going to be a much smaller operation here. After realizing that QuickBooks was completely unacceptable for my billing needs, I found that TimeSlips had come out with a much less expensive version for just two timekeepers. I have been using it ever since moving here, buying the new versions as they have been released. There were some upgrades a few years back that had so many bugs that it caused me to shop around again. However, the most recent version (11) has been the most stable and reliable yet.

KMK

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Posted by taxguru on February 28, 2003

QuickBooks Is Mandatory

People seem to think we are kidding about our explicitly stated requirement that all clients have their records on QuickBooks. We have been receiving a lot of inquiries from people who want us to take them on as clients, who we have to turn away because they are unwilling to set their info up on QuickBooks. What’s been frustrating is that many of the inquiries are referrals from existing clients who are well aware of our QuickBooks requirement.

We just want to make sure that there is no misunderstanding about how serious we are regarding the importance of QuickBooks for new and existing clients. We have even been dropping several very long term clients who feel it is too much hassle; so we are not just picking on new people.

We are determined to provide the best service possible, as efficiently as possible, and have decided that the high level of quality in which we pride ourselves is not achievable with the classic “shoe-box” and other kinds of sloppy bookkeeping that most people use. I am very confident that once people get up to speed on QuickBooks and learn how to use it in place of their normal checkbook, they will wonder how they could have survived without it. It will also make tax and financial planning tasks amazingly easier and quicker to accomplish, with a much higher degree of accuracy.

In spite of what many people have claimed, this isn’t just to please me. Having everything on QuickBooks is a smart move regardless who prepares your tax return and definitely if you do your own. In addition, if you apply for a loan or need to review how your finances are doing, you will be able to appreciate being able to produce up to the moment financial statements in a matter of a few minutes, rather than the several weeks or months after the fact that is normally the case. It is also the most widely used and supported accounting software; so finding someone to help with it is easier than with any other program in the world. Contrary to how many other tax practitioners operate, we do not want to keep clients captive to our systems or ways of doing things. We try to make them as self sufficient and flexible as possible.

KMK

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Posted by taxguru on February 28, 2003

Corporate Extensions

Corporate income tax returns, both C and S, are technically due two and a half months after the end of the tax year. For those with a normal January though December calendar fiscal year (required for S corps, not a good idea for C corps), this means the due date is March 15. However, since the 15th falls on Saturday this year, the official date will be Monday, March 17.

We have already had people contacting us panicking about this impending due date as if it’s a set in stone, drop-dead do or die deadline. Not even close. Just as there are extensions of time to file individual income tax returns, there is an automatic six month extension available for corporations with IRS by sending them Form 7004 by March 17.

Just as with individual extensions, this only gets you out of the late filing penalties and does not affect late payment penalties. If it looks like your C corp will owe any tax, you should enter that on the 7004 and deposit that amount with your bank with a corporate depository coupon by March 17. Since S corps don’t normally pay any Federal income tax, only the 7004 needs to be sent in for them to have an additional six months of time.

After filing the 7004, the new deadline for the corporate tax return will be September 15.

KMK

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Posted by taxguru on February 28, 2003

State Farm to Exclude Nuke Attacks

Do they know something the rest of us don’t about the immediate future? Insurance companies are notorious for having loopholes in their coverage. At least State Farm is up front about this one. I did a search on the Farm Bureau (our insurance provider here) website for “nuclear” with no mention of coverage. Likewise with the other commonly used variations of that word (nucular, nukular, nuke-u-lar, etc.).

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