Newsletter Archives from HomesoonAccounting.com

QUICKBOOKS REPORTS AND TAXES
by David Roberts

Quickbooks software provides for end of year preparation of taxes. Simply scroll up to the Reports tab and click on Accountant & Taxes and print the Tax Preparation Report along with the end of year reports, the Profit and Loss Statements and the Adjusted Trial Balance Sheets.
Be aware that unless your Quickbooks software is set up correctly on day one, you could end up paying far too much in taxes, or worse (despite the immediate 'positive' result) paying too little. The services industry in Florida benefits from the non-taxable nature of services, however, the company may still be responsible for the collection of sales taxes if their services result in an alteration to property. i.e. A business which designs vehicle wrap advertising and attaches that advertising to the vehicle even if the actual attaching accounts for only 5% of the work involved must charge, collect and pay sales tax on 100% of the sale. Check with the Florida Department of Revenue and reverify the requirements to file quarterly returns for your sales tax and ask your accountant.
Are you incorporated? Then whether you are alone in the business or not, you have an employee! Yourself! And having an employee, you are responsible for filing for Federal and State Unemployment tax. If you haven't, you may want to consider filing an amended FUTA and SUTA return to avoid penalties!


Why would any business owner pay into the hundreds of dollars to file their federal return, when it's a simple matter of getting the right figures and plugging them into either the 1120 or 1120S forms? Homesoon Accounting does not charge more than $300 for a federal return for corporations and rarely more than $150 for a personal return. Ask about the discount for filing both!
(The exception occurs for day-traders with many trades, there will be extra charges for time.)

For a quote on your return please send a pdf of your PL statements and income tax summary via email and we will contact you for additional information needed.



FAMOUS TAX FRAUD ISSUES

If one could have a favorite fraud issue, mine would have to be the one pulled on an entire population of African Americans in the late 90's. It reoccurs every year and is known as the 'Reparations Credit'. The story behind it is that Congress passed the law that gave all African Americans a credit equalling today's equivalent of 40 acres and a mule, the promise never followed through on to relatives of those who fought in the American Revolution. Those fooled by this credit claimed it, and some even received into the thousands in a refund that would be later confiscated by the IRS.
First, it would be very difficult to prove that one is related to one of the original black Americans that fought in that war. Second, even more difficult to prove is the origin of person filing for this credit. If you are being told that you are entitled to this credit, IT IS A FRAUD.

My next favorite tax fraud involves the EIC cases where one relative 'gives' their child to someone else so they can get EIC. Legally, you aren't allowed to do this and if you get caught, you and the 'giver' can be barred from receiving EIC for ten years.

One tax fraud I despise is the efforts of some preparers to charge the client based on a percentage of the refund. That is illegal! First, it gives extra incentive to the preparer to file extra deductions the client isn't entitled to in order to 'pump up' their take. Second, think about those who are filing who OWE money, does the preparer pay a portion of what is owed? Absolutely not! Does that mean if you owe money that your return is prepared free or at a lesser charge? NO!

One of the reasons I got into the Fraud Prevention business is because of cases like these taking advantage of those who just didn't know the facts. I have an overdeveloped sense of justice for things like that so if you know of this or any other kind of fraud happening in your area, contact the IRS tip line!


Odds Are You Are Losing 6-10% of your Revenues!

The High Cost of Fraud

By David Roberts

Certified Fraud Examiner

ENRON, WORLDCOM, IMCLONE, when the word fraud is mentioned these are the companies that come to mind for most people. What they don’t realize is that for all the money stolen in the frauds of these three companies, the amounts still pale in comparison to the amounts lost by businesses like yours every year. Statistics show that small businesses lose somewhere between 6 to 10 percent of their annual revenues due to fraud! (Some of the high ticket businesses losing as much as 20%.) Think for a moment of what keeping just one percent of your annual revenue from slipping away from you would mean. Most of these frauds can be prevented and it is much cheaper to prevent than to detect fraud that is already occurring.

Preventing Employee Fraud

There are literally hundreds of ways that clever employees have devised to steal your bottom line. Most of these methods can be prevented through effective internal controls of the cash flow through your business. One business owner had a loyal and trustworthy worker who would do anything he asked of her. She kept track of payroll, accounts receivable, and payable and refused to take a vacation claiming that she didn’t have anywhere to go anyway. She was there seven years, and after an intensive investigation it was discovered that she had stolen over $250,000 from this business. What happened? There were no internal controls that would prevent this kind of fraud from occurring. Whether it’s using ‘ghost employees’ or a ‘pay-and-return-scheme’ it adds up quickly.

Preventing Customer Fraud

For every one bad employee out there, there are more bad customers. Check fraud, phony travelers checks, phony refunds and more. One person I spoke to said that his business loses close to 20% of revenues due to phony credit card charges and travelers checks. It is getting easier and easier to ‘create’ your own credit card using the magnetic information off of someone else’s legitimate card. They are cloned credit cards and many of them are good enough to fool the experts so don’t feel bad if you have been had. Here’s a freebie from Homesoon Accounting, many of these professional thieves already have a criminal record somewhere. Only about 3 out of ten are from out of country, so your best bet to protect yourself from the majority of them is to obtain a small fingerprint ink pad from Sam’s or from one of the suppliers on Froogle.com, like the ones they use in the banks, and have all customers using checks, travelers checks or credit cards place their thumbprint on the contract you keep so that if there is a chargeback, you have their identity! For checks and travelers checks make sure the fingerprint is far below where the banks usually stamp their information onto them. Driver’s Licenses can be faked, identity’s can be stolen, but (without some serious CIA type technology) fingerprints can not! The professional thief will huff and haw and simply refuse to leave a thumbprint with you. Legitimate customers won’t mind, and you will have a greater chance of recovering the lost funds when you have the true identity of the fraudster.

WARNING! Video cameras in your store will catch everything the eye can. Don’t let them lull you into being complacent against fraud, as many times the frauds committed are done in plain sight and can be misconstrued for everyday actions anyone might be doing. Make sure your employees know what to look for in someone attempting to commit fraud, if you aren’t sure that they know, Homesoon Accounting offers a one hour session in training employees on how to detect fraud attempts. Call for more information.

NEXT ISSUE: Vendor fraud is one of the most pervasive forms of fraud that exists, and coupled with complicit employees, or even ex-employees it can steal from your company.


Which Quickbooks Is Right For My Business?

Saving Money in Choice of Software Packages.

By David Roberts

Certified Quickbooks Pro-Advisor

Every small business owner wants to keep careful track of revenues and expenses. The days of the green journal ledgers and hand-written receipts are over with the advent of accounting software and the personal computer. But which package is right for you? Do you need extremely customized software or will a program like Quickbooks work for you? Do you need help with the Quickbooks you have already chosen and installed?

Choosing the Right Software Package

Intuit, Inc, makers of Quickbooks software have several different packages in their software line. You have your choice from Quickbooks Basic (cheapest) to Enterprise Solutions (most expensive) before you make that investment you may want to consider a consultation with Homesoon Accounting Services. We can help you save money through discounts on Intuit products and in choosing the right package for your business. Simply go to www.homesoonaccounting.com and click on the Intuit Products page.

For most businesses, Quickbooks is a capable and efficient program, but not for all. It would do me no good to try to persuade you that QB is for you when it isn’t. If you are using FIFO or LIFO to keep track of your inventory, QB is not for you. If you don’t know what FIFO is, you aren’t using it, so no worries.

The Quickbooks Basic package is the least expensive and will help keep track of revenues, expenses, and be able to create some reports based on that information. But if you are keeping track of inventory, payroll, or any other more complicated accounting then you will need to consider Quickbooks Pro or Premier.

The Quickbooks POS package is for businesses that want to keep close track of inventory and be able to have the all-in-one capabilities of being able to print bar codes to help save time and effort on reordering inventory, sales, and cashier training.

There are so many variables in choosing a QB package that it would be hard to list them all but you need to ask yourself a few questions.

Do I want to be able to store my accounting information online in case of computer crash?
How many people will be using my QB at the same time?
Will it be on a network, or on individual computers with different users?
Do I anticipate steady growth in my business or will the demand outpace my software?
Calling us for a QB Consultation will save you money! Most QB mistakes occur during initial setup, let us help you! Do you need to make sense out of QB reports to give to your CPA? Most companies do not make full use of the QB software they already own, simply because they haven’t been shown how to use it. Call us now about our special package of consultation hours! 407-968-5241


VENDOR FRAUD
by David Roberts
Certified Fraud Examiner

Vendor fraud occurs both with and without the collusion of employees that work for small business owners. When there is collusion, that fraud is typically more difficult to detect and continues for a lot longer than the frauds perpetrated solely by vendors. There is the obvious where the vendor brings in loads of boxes claiming there are 30 items when there are really 28. That kind of fraud can be countered by careful verification of invoices and actual shipped goods.
There are a lot of honest vendors out there and there is plenty of money to be made in the routes they work. Some however make a play for a little 'extra' money. When a vendor finds a willing accomplice there is no end to the way a vendor can help take advantage of your company.
Some vendors use bribes and kickbacks so that the person in charge of purchasing in your business, (assuming that it isn't you), will give extra consideration to the purchasing of products from that vendor. These bribes can include cash, gifts, meals, tickets to events, etc. These incentives will cause a purchaser to think twice before finding a cheaper alternative to the big spender vendor.
Some imbedded purchasers can actually become vendors by forming a shell company, purchasing products through that shell company and selling back to your company with a penny's worth or more profit on each item. There are cases where employees have formed several of these shell companies that continued to pay off long after they had left or been fired, because no one was checking for that.
Other vendors may have never been real, (see article on Homesoon Accounting Blog, The Monsters of Construction Fraud). They are called Zombie Masters, well I call them that but I am a little melodramatic. Word gets out that a legitimate vendor is retiring, closing or selling his business. Using the name of that legitimate business, a Zombie Master will often go so far as to print stationary, obtain a P.O. Box and even open a bank account in the name of the dead company, thus 'resurrecting' it. Invoices are sent to similar companies directing mail to the Suite that is in actuality a post office box and not an office, and by the time the victims are aware of it, the Zombie has moved on to another victim.
Vendor fraud is devastating, but it can be prevented. There are numerous ways that vendors can take advantage of your business. As well there are numerous ways to prevent vendor fraud from happening to you. I do not tell you this to make you paranoid but to educate you so that you can be aware and vigilant.