Taxes Archives

3 Tips for Catching Up Your Books

October 1, 2021/by Team

A woman stress bites a pencil going over her Florida business taxes

Falling a little behind in your books is no big deal. After all, you can always catch up tomorrow, right? But how many “tomorrows” in a row does it take before you lose control over your incoming and outgoing expenses?

Before long, your overdue books are hanging over your head like that project you forgot to complete in middle school.

If your hands are already sweaty from the mere thought of catching up on your books, you’re not alone. Nearly 25% of businesses are behind in their books. Thankfully, we can help. Today, we’ll offer you three tips for catching up on your books and getting you back in the game.

Why You Need Current Books

Business owners wear many hats. “Bookkeeper” should never be one of them. Some owners handle their own accounting, thinking they can do it all. Others cut corners, trying to save expenses where they can.

Nearly all of them live to regret this decision. Don’t be one of them!

Here are some of the reasons why you need current books:

Tax Planning

Overdue books will cripple your business once tax season rolls around. If your books are not up-to-date by the time you file your taxes, you don’t just need to catch up books and data; you also run the risk of mistakes, audits, penalties, and late fees.

Filing an extension might sound like a solution, but it can cause your problems to snowball, creating a bigger mess than you had before.

Long-Range Planning

Without current books, you’ll have no clear picture of the health of your business. Keeping your books up-to-date will help you understand your cash flow, which can help you to make strategic plans and grow your business in the future.

Business Loans

If you need a business loan, your lender may ask for a recent financial report showing your income and expenses. Staying current with your bookkeeping will allow you to provide this documentation and increase your chance of receiving these funds.

Step 1: Organize Key Documents

One of the best tips for catching up your books is to stay organized. You’ll want to verify that you have the appropriate documents to record your company’s income and expenses.

If you’ve fallen a bit behind, you’ll want to organize your key financial documents, including:

Customer Invoices

How much money have you taken in? Your income will be reflected in your customer invoices. Organize them by date, and make a note of any outstanding invoices, if any.

You’ll also need to pay attention to your company’s accounting method. In a cash basis business, the invoice is sent to the customer once they’ve paid. But for accrual accounting, you’ll record the income when the sale occurs, even when the customer doesn’t pay until a later date.

Debt Collections

Unfortunately, many businesses will have customers who don’t pay their invoices. For accrual accounting businesses, you may have to chase down your delinquent clients.

Technically, you can deduct the cost of bad debt from your tax return, but first, you’ll have to demonstrate that you took reasonable steps to collect the money you’re owed.

Besides, it’s better to collect these debts than to accept defeat at the hands of non-paying clients!

Business Expenses and Receipts

What are your expenses? If you’ve saved your receipts, it should be easy to calculate and record your business expenses. Make sure to separate business and personal expenses, especially since these will represent different deductible income for tax purposes.

Vendor Accounts

Make sure you have a copy of every bill you’ve received from your suppliers. These expenses will appear on your year-end statement, so it’s very important that you have copies of these documents.

If you discover you’re missing a bill or invoice, contact the vendor, and they may be able to send you a copy. If you’ve missed any payments, make sure to take care of this as soon as possible so you can remain in good financial standing.

Employee Records

If your business has employees, you’ll need to complete the associated paperwork. This is important for them, but it’s also important for your business. If you paid a contractor more than $600 over the course of a year, you’ll need to send them a W9 and have them return it to you.

A W9 form requests the contract employee’s information, which you’ll then use to send them a Form 1099. This reports how much you paid them during the year.

Company employees will require W2s to show their yearly earnings. These documents will be important for tax planning, but the income your employees receive will also be recorded among your company’s expenses.

Step 2: Reconcile

After you’ve followed the above tips for catching up your books, you’ll need to reconcile your bank accounts and financial records. When reconciling, you’ll compare each transaction from your bank statement with the same transaction in your company’s accounting records.

Each transaction should be the same. If not, you’ll need to fix these errors so that your bank statement matches your company’s books.

In some cases, you’ll have to return to the previous step, since some errors may be the result of outstanding customer invoices or unpaid bills. Reconciling your books can therefore be a laborious process, but it can highlight discrepancies in your income and expenses to help improve the health of your business.

If this process sounds time-consuming, it’s because it is—especially if you’re behind in your books! You can farm this process out to a bookkeeper or a CPA, but they may charge for all of the time spent on this relatively menial task.

For some owners, it may be worth this added expense, especially if you need to catch up your books as fast as possible. Others might reconcile their books beforehand to save the account time and money.

Step 3: Have a Bookkeeper Help You (or Hire a Tax Professional to Review)

Finally, you may want to have a bookkeeper help you. Financial professionals will understand these tips for catching up your books quite well and can perform some or all of the work for you.

At the very least, a CPA or tax professional may be able to review your books, ensuring that your records are complete and up-to-date. They may be able to offer additional tips for catching up your books for tax planning purposes.

Small business owners usually have their hands pretty full. In some cases, you’ll need help with the whole process just to bring your records up to date. Thankfully, many of today’s accounting firms offer what’s called “historic accounting” or “catch-up bookkeeping.”

Catch-up bookkeeping is a simple process by which a financial professional will review your documents and ensure that your books are current and accurate.

These services can go a long way toward improving efficiency and cutting costs. Rather than relying on a company bookkeeper or accounting staff, an online accounting firm can handle your books and offer catch-up services at a fraction of the cost of a regular employee.

Catch-Up Bookkeeping You Can Count On

We hope you’ve benefited from these tips for catching up your books. Need a hand? We’d love to help. Busy entrepreneurs have come to rely on Xendoo’s industry-leading catch-up bookkeeping for small businesses, bringing financial records up-to-date.

We also believe the best solutions come with a good strategy. Without a clear plan, you could find yourself faced with the same problem in a few months.

Xendoo offers a variety of accounting and bookkeeping solutions to streamline your accounting processes and improve the efficiency of your business as a whole.

Create a free account today, and learn more about what Xendoo’s services can do for your business.

4 Signs Your Business Needs Online Bookkeeping

September 1, 2021/in Taxes /by Cecilia Valetta

White male business owner, hunched over on his couch, staring at a pile of documents with a calculator in hand

Bookkeeping is Holding You Back

Business owners know their companies like the back of their hands. They are the head of every department and perform the work of multiple people. Of all the roles they play, our customers express that the bookkeeper role is their least favorite.

DIY bookkeeping holds business owners back from fully focusing on their business, which is why they decide to outsource it. Is it time for you to do the same? Let’s take a look at 4 signs that it could be time to hire an online bookkeeper!

#1. Bookkeeping Takes Time Away from Your Business… and Your Life

Assess what bookkeeping is costing you. Is it taking significant time away from running your business? Let’s break it down.

Suppose your time is worth $200 per hour, and you spend 10 hours per month doing your books. That costs you $2,000 per month just for bookkeeping! How much could you increase your sales? What else could you accomplish with that time?

How does bookkeeping affect your personal life? Before partnering with us, many of our customers were up late at night and missed out on time with loved ones due to bookkeeping. Whether you are closing sales or enjoying a family dinner, your time is valuable. DIY bookkeeping does not make sense when you could be spending your time on the things that matter to you.

#2. Your Books are Behind

It is impossible to evaluate your business’ financial health when your books are behind. Old data cannot predict cash flow, track your revenue, or indicate if you are profitable. Out-of-date books may prevent you from making the best financial decisions for your business.

A professional bookkeeper can bring your books up to date. Bookkeepers input and classify your monthly activity. They also generate vital monthly reports such as Profit & Loss statements and Balance Sheets, which display your total income and expenses and your assets and liabilities, respectively. They also provide actionable insight to the current state of your finances. Xendoo bookkeepers reconcile your books weekly to keep you on track for future success.

Guess what! You are not alone. 25% of business owners are behind on their bookkeeping. Whether you are behind a few months or a few years, Xendoo will bring your finances up to date in no time. To get your books caught up, click here.

#3. You are Not Sure if You are Doing Your Books Correctly

DIY bookkeeping leaves room for error, especially in the hectic life of a business owner. It is rarely anyone’s area of expertise (or passion). If your numbers are not adding up, do not wait until tax season to figure out why.

Bookkeepers connect the dots between your sales, expenses, and profits to ensure business growth. They know how to properly categorize your transactions, keeping your books compliant and ready for tax season. At Xendoo Online Bookkeeping, you can rely on your dedicated team of finance experts to deliver accurate statements and financial peace of mind year-round.

#4. Tax Season is Chaotic

When tax season rolls around, do you drop off a 30-pound box of receipts at your accountant’s office and hope for the best? After all the back and forth, are you disappointed by your tax refund?

A chaotic and unrewarding tax season is a surefire sign that it is time to hire a bookkeeper. Your bookkeeper’s meticulous organization of your finances sets you up for smooth sailing during the most dreaded time of the year.

Best of all, because your bookkeeper understands your business and your finances, they recognize every opportunity to maximize your tax savings! You will never have to worry if you pay too much in taxes. With a bookkeeper on your corner, you can walk into tax season prepared – and you will walk out knowing you maximized your tax savings!

The Importance of Bookkeeping

Bookkeeping is vital to the success of every business. It provides insight into your financial health and drives your decisions. When your books are in order, you can strategize effectively and plan for growth. Keeping your books compliant and up to date is crucial throughout the year so that you are ready for tax season. Consistent bookkeeping habits maximize your deductions and make an otherwise stressful time, a breeze.

Bookkeeping is preventative care for your business. It puts a microscope on your finances to help you catch small problems before they snowball. A professional bookkeeper can take the stress of bookkeeping off of your plate so you can fully focus on running your business.

Xendoo Does it for You

Bookkeeping does not have to be an uphill battle. Let Xendoo’s expert online bookkeeping and tax team handle the hassles so you can have more time for what you love!

Schedule your free consultation today!

How Much Does a CPA Cost?

August 2, 2021/in Accounting, Bookkeeping, Taxes /by Team

If you’re a business owner looking for CPA services, pricing is one of the first factors you consider. Yet, finding the cost of CPA services online isn’t easy. Industry research is often inaccurate and misleading. It also doesn’t factor in your unique business tax and accounting needs, so the actual price ends up being higher than the online estimates. So, how much does a CPA cost?

The short answer is that CPA cost ranges from $1,500-$5,000 per month. The average CPA cost per hour is $250-$500. However, the long answer is that it depends on:

Type of service
Business entity
Your revenue
Accounting method (cash or accrual)
CPA pricing and experience

To hire a CPA for business tax preparation and filing, expect to pay $1,500 – $3,000.

The money and time you save by filing business taxes with a CPA make up for the costs though. An experienced certified public accountant (CPA) will do more than accurately prepare and file your taxes for you. They’ll identify business tax credits, deductions, and tax-saving strategies that lower your tax bill.

We’ll break down the cost of online accounting and CPA services, so you know what to expect for your business.

Table of contents

How CPA pricing works
How much does a CPA cost to do taxes?
What else does a CPA do?
Cost for other CPA services
Is a CPA worth it?

How CPA pricing works

Businesses pay for CPA services with one of the following methods:

Hourly: Freelancers usually charge an hourly rate
Salary: Full-time, in-house CPAs get an annual salary with benefits
Fixed monthly fees: Online accounting and bookkeeping services like Xendoo typically charge a fixed monthly fee
Per project: A flat, per-project fee for services

In this article, we’ll focus on the cost of online CPA services like those that Xendoo offers. We’ll explain the monthly cost and what it includes in comparison to other accounting options.

How much does a CPA cost to do taxes?

Businesses typically seek out CPAs for tax preparation and filing services. Most state licensing boards require CPAs to stay up-to-date with tax changes, so they’re qualified to provide tax advice. As a result, CPAs charge a higher price than bookkeepers or accountants.

Average cost of tax preparation by a CPA

CPAs charge different rates for business tax services, tax forms, auditing, and other tasks.

The average cost for tax preparation and filing services is $1,500-$3,000. Ultimately, where your business falls in that range depends on your revenue and complexity. Dive into the details below for a more detailed cost breakdown.

Tax preparation and filing cost

When it comes to filing taxes, an online CPA service is one of the most cost-effective options for businesses.

In addition to bookkeepers, Xendoo has in-house CPAs that prepare and file federal and state tax returns for all kinds of businesses. Businesses can add tax support, preparation, and filing to their Xendoo bookkeeping plans, and all those services come in one package. At $100 a month ($1,200 a year), businesses get tax advice and filing from an in-house CPA.

However, there are other online tax services that don’t actually have CPAs, so make sure to read the fine print. Some outsource tax filing to other companies because they don’t have in-house CPAs to do it.

Cost by business tax return

Some CPA firms will charge different fees depending on the tax return forms you require, which makes the pricing confusing.

Xendoo packages tax services into one package with a flat fee. For comparison, here’s a breakdown of average fees for common business tax forms, according to NSA data.

Form	Average fees
Schedule C (Business)	$192
Form 1040 (not itemized)	$220
Form 1040 (itemized)	$323
Partnership (Form 1065)	$733
Non-profit (Form 990)	$735
S corporation (Form 1120-S)	$903
C corporation (Form 1120)	$913

Note that there are more forms than listed above. The cost doesn’t include:

Every form you’ll need
CPA consulting on tax deductions and credits
Guidance on payroll taxes, sales taxes, etc.
Additional charges for incomplete or disorganized records

In the end, you could end up paying $1,500 to $3,000.

CPA cost by business revenue

This chart can help you get an idea of how much it will cost for a CPA to do your taxes based on your annual revenue.

Annual revenue	CPA tax preparation and filing cost
$300,000	$800 – $5,000
$500,000	$1,500 – $2,000
$1,000,000	$2,000 – $5,000
$5,000,000	$5,000 – $10,000

What does a CPA do?

Licensed CPAs provide tax and financial advice and must work in the best interest of clients. A CPA can also prepare financial statements, help you secure loans and investor funding, and give you personalized advice that grows your business.

Other CPA services include:

Financial statements
Business finance consulting
CFO services
Forensic accounting
Tax auditing
QuickBooks consulting and setup
Retirement planning

People may use CPA and accountant job titles interchangeably, but a CPA is different from the average accountant. This can be an important detail to keep in mind when looking for a CPA.

Differences between a CPA vs. an accountant

A certified public accountant or CPA is more than a job title—it’s a license. Only about 50% of accountants are actually licensed CPAs. In other words, you can call a CPA an accountant, but not vice versa.

The main difference that businesses need to know is that a CPA can file your taxes and represent your company during IRS dealings.

When choosing an online accounting service, ask if they have CPAs in-house. You might be surprised by how many don’t have CPAs to handle your taxes or don’t provide one-on-one tax guidance.

Cost for other CPA services

Besides taxes, the most common CPA services that businesses need are financial statements and auditing, and management and consulting.

Financial statements and auditing

Most companies keep three primary monthly financial statements—profit and loss (income), balance, and cash flow. In some cases, a bookkeeper will create and maintain these every month. Understanding the difference between cash flow and profit is essential for any business owner, as they provide distinct but complementary views of a company’s financial health.

However, a CPA can analyze them to provide business advice, and they can perform a financial statement audit.

When a CPA does a financial audit, they inspect your business finances and accounting policies. Lenders, regulators, and investors will look at financial statements and audits to assess your financial position and its accuracy.

If you plan to raise capital from investors or get a loan for your business, you’ll need to provide this data. CPA auditing is one of the more expensive services because it requires a higher level of experience and qualifications.

Average cost: The average CPA cost for auditing is can be several thousand dollars depending on audit complexity and company size. Typically, a CPA will give you a custom quote once they do an initial discovery.

Management and consulting

CPAs act as consultants for a range of business finance questions—from how to plan budgets to how to pay less on taxes.

Financial metrics like cash flow, sales, revenue, and more indicate your business performance.

An experienced CPA assesses your financial data and pulls insights that help improve and grow your business. For example, they may reveal your most and least profitable products, so you prioritize revenue streams and allocate your budget accordingly.

When it comes to consulting, there’s a wide range of tasks CPAs perform. However, here are some of the most common ones.

Assess expenses, accounts payable, and more to identify ways to save your business money.
Conduct financial analysis and forecasting for strategic planning, budgeting, hiring, and more.
Improve overall accounting practices.

Average cost: Typically, a fractional CFO (Chief Financial Officer) or CFO services will do business management and consulting. It typically costs $1,500 to $3,000 monthly or starts at $5,000 per project.

Is a CPA worth it?

At some point in your business, you’ll need access to a CPA. A full-time staff is expensive and you might not need their services year-round.

Options like Xendoo cater to your business and scale with you as you grow. Whether you need catch-up bookkeeping, business tax services, or an accounting partner that’s willing to scale with you, we have experts in-house.

The first step is to set up a discovery call with our financial experts. We’ll take the time to get to know your business and accounting needs, so you can decide on the best option for you.

Online Bookkeeping Services for Small Business Owners

July 26, 2021/in Taxes /by Team

Black male consultant points to a laptop screen with bookkeeping plan details. He is discussing options with a potential customer, who is out of frame.

Author’s Note: This post was updated on February 23, 2022, with new information, links, and resources.

Bookkeeping is vital to the success of every business, but business owners rarely have the time (or desire) to manage it themselves. Many small businesses save time by partnering with an online bookkeeping and accounting team. However, there are some key features to consider when selecting online bookkeeping services for your small business.

What Is Online Bookkeeping?

Online bookkeeping, also called virtual bookkeeping, means managing your bookkeeping remotely.

A virtual bookkeeper works directly with your business to manage your company’s accounting and financial reporting. Typically, your company’s financial activity, records, and transactions will be stored in cloud-based accounting software that you are able to easily access.

An online bookkeeper will initially undergo a consultation with you to understand the needs of your business and your regular financial activities. Then, they can set up a system to generate sales invoices, manage accounts payable, and process payroll. With the right online bookkeeper, you can regularly view your company’s financials and make strategic business decisions. How do you choose the right financial partner for your business?

There are many options available, ranging from traditional CPAs to tech-savvy online providers.

Today, we will take a look at two popular options: Xendoo Online Bookkeeping and Bench. Both provide quality bookkeeping and tax services, but there are some key differences in features that may tip the scale for you:

Online bookkeeping and tax services
Additional services
Accounting software
Free trial

In this blog post, we will explore these differences so that you can make the best choice for your business.

Online Bookkeeping Services and Taxes

Xendoo’s online bookkeeping and tax packages start at $395. We reconcile your books weekly, and deliver your reports as early as the 5th business day of the month, depending on the plan you select.

What Services Do Virtual Bookkeepers Offer?

You may also want to consider what other financial services your business needs. A virtual bookkeeper offers a wide range of services. These may include any of the following:

Cash Reconciliation

Your company may have many cash transactions throughout the month. These can include payments, receipts, and other items. A virtual bookkeeper can connect your cash and lines of credit with your accounting system to record transactions as they occur automatically.

Accounts Receivable Management

As a business owner, you likely don’t have a lot of time to chase down overdue payments from your customers. Instead, your focus is on growing and managing your business. A virtual bookkeeping service can assist you with client account collections and ensure that any significantly overdue accounts are brought to your attention immediately.

Accounts Payable Management

Rather than relying on what you think you have incurred in expenses for the month, you can allow a virtual bookkeeper to record actual and expected expenses. This approach allows you to strategically plan your outgoing cash flow for the upcoming weeks.

Cash Flow Management

Cash flow management tracks the money that you have coming into and out of your business. Online accounting services should provide a clear picture of your cash flow. Simply put, money coming in from revenue should be greater than money going out for employee pay, vendors, tools, and other expenses.

Financial Reporting

Accurate financial reports are an important part of the monthly accounting process. Xendoo’s financial reports include profit and loss statements and balance sheets. Plus, you can view reports from anywhere with the mobile app.

Tax Preparation

Frequently, online bookkeeping services will offer tax preparation services. This service can save you a lot of time and effort. You can also make sure that your tax return will be completed by someone who understands your company and its financial performance.

What if you are behind on your bookkeeping? Outside of the ongoing subscriptions, Xendoo and Bench offer catch up bookkeeping services so you can get previous months’ books in order!

Accounting Software

There are a number of online accounting software systems available. The most popular include QuickBooks Online and Xero. Both of these services are cloud-based, with modern user interfaces that are easy to interpret. They integrate with a number of third-party applications, which gives them greater functionality.

Prices for both systems are much less than you would pay for a full ERP. However, both systems allow for a wide range of reporting tools that are perfect for small business accounting.

They have the ability to reconcile cash accounts and provide accurate accounts receivable and payable reports. You may also generate a full set of financial statements for monthly reporting purposes.

The biggest difference between Xendoo and Bench is the software used to do your bookkeeping and accounting.

Xendoo works with both Quickbooks Online and Xero. The biggest advantage of these two programs is that you own the software. Working with Quickbooks Online and Xero, you will always have access to your financial records, no matter who does your bookkeeping.

Bench only uses its proprietary software, which does not integrate with any other accounting programs. If you ever need to leave Bench, your records will not go with you and your financial history will have to be rebuilt. If you want to be able to hold onto your data, Bench may not be the best choice for your business.

Try Us Out

Xendoo offers a free trial. The online accounting team completes your books from the previous month and provides a Profit and Loss Statement and Balance Sheet.

What happens if Xendoo is not the best fit for you? In that case, we will gladly connect you with others in our network so you can find your ideal financial partner. The completed books and financial reports are yours to keep in your QuickBooks Online or Xero subscription!

If you decide not to work with Bench, you can hold onto the financial reports, but you will no longer have access to the previous month’s bookkeeping as it is done in their proprietary software.

We’ve done a detailed Xendoo vs Bench comparison, but we’ve highlighted key differences in the chart below:

*Some options may only be available on certain plans.

Who Is Right for You?

It depends! Every business owner needs their bookkeeping done, and they deserve the freedom to take their data with them. Xendoo Online Bookkeeping works with industry-standard accounting software, ensuring you will always have access to your financial records and data.

Are we a fit for your business? Schedule your free consultation today!

7 Tax Tips for Independent Realtors

June 23, 2021/in Accounting, Bookkeeping, Taxes /by Team

A real estate agent holds out the key for his buyer's new home.

Editor’s Note: This post was originally published in November 2016 and has been revamped and updated for accuracy and comprehensiveness.

As a self-employed realtor, you face some unique challenges when tax season comes knocking at your door. Since you don’t have taxes withheld from a regular paycheck, it’s up to you to lessen your tax burden by identifying all of the deductible expenses you incur throughout the year. Without careful planning, the tax bill you face when April rolls around can be quite a shock.

But here’s the good news: there’s probably more you can deduct than you realize! By carefully assessing not only your properties but your business as a whole, you can hold onto more of your hard-earned cash at tax time. The following tax tips for real estate agents are a great place to start looking for valuable deductions.

7 Tax Tips for Real Estate Agents

#1 – Mileage & Auto Expenses

Realtors tend to spend a lot of time behind the wheel. The miles you rack up can include getting to appointments, taking clients to see new properties, and staging homes. Don’t also forget to include car maintenance like new tires, tune-ups, and even car washes! At tax preparation time, you will need to determine whether the standard or actual cost deduction will save you the most money.

#2 – Office Space

Whether you pay desk fees under another agent or work from a home office, the IRS allows you to deduct the cost (or a percentage of) your office space. Depending on your situation, this could be a rather significant expense over the course of a year, so you don’t want to miss out on this deduction.

It’s important to note that you won’t be able to deduct both the desk fees you pay and the space you use at home for an office. Instead, you can only deduct one or the other – whichever is greater. Keep careful records of how much you spend on any office-related rent and purchases, so you have an accurate accounting of this component when it comes time to file.

#3 – Marketing

Business cards, website maintenance, mailers – any method you use to get your name out there is deductible as a business expense. Did you have a new logo designed? Maybe you purchased a mailing list? Those are included, too.

Unfortunately, many agents simply fail to track these kinds of costs throughout the year. The money just goes out to various vendors and services, and a (digital) paper trail is not kept up. This can be an expensive mistake. Instead, by utilizing online bookkeeping for real estate agents, you can adequately record all marketing expenses along the way, saving them in one central location for use at tax time.

#4 – Supplies & Equipment

Think of all the tools you use to run your business: a nice camera to photograph properties, your computer, lockboxes, and staging decor. Did you buy a new vacuum to clean up that “fixer-upper” you were showing? Work-related cleaning supplies are also deductible! Once you start keeping careful track of everything you purchase, you might be surprised to find how many items fall into this category over the course of a year.

#5 – Licenses & Fees

As a real estate agent, you are all too familiar with the various fees you pay throughout the year. Fortunately, MLS, brokerage, and legal fees — to name just a few — are all deductible. You can even deduct professional membership fees — just remember that any portion of dues designated for lobbying or political advocacy is not deductible. And don’t forget about your state license renewal.

#6 – Meals & Entertainment

Do you take clients out for lunch after a morning of showing properties? Did you meet up with a prospective business partner for happy hour? Did you cater an open house? If you discussed business before, during, or after the meal, it could be deducted on your tax return. Using the right accounting software will make it much easier to track all of these types of casual expenses throughout the year.

#7 – Professional Development

Staying at the top of the real estate market in your area means you’re always looking for ways to expand your learning and stay on top of industry trends. Professional development events, along with any trade events, can be deducted. Also, books you purchase or publications you subscribe to can be subtracted from your revenues.

Utilizing the services available from Xendoo can help make tracking all of your business expenses a whole lot easier, so you can spend more time selling and less time worrying about next April. Get started today!

Sunshine Tax: Taxes for Small Business in Florida

May 31, 2021/in Taxes /by Team

Florida is among the most tax-friendly states in America and has seen huge growth, especially in their tech economy. If you have a small or midsize business in the state of Florida, you may be shielded from many typical forms of small business taxes. But how can you know which tax laws apply to your business? This post will cover some of the more common tax questions related to taxes for small businesses in Florida.

What Types of Tax Liabilities Are There for Florida Small Businesses?

Florida business owners should be aware of the following:

Corporations that do business in Florida must pay a 5.5% income tax
Florida has a sales tax rate of 6%
S Corporations are exempt from paying state income tax
Sole proprietorships, partnerships, and most LLCs are exempt from state income tax
Florida residents do not pay a state income tax
Business owners should expect to pay federal income tax on business earnings
Business conducted in other states may be subject to additional state laws

Because so many businesses are exempt from Florida state income tax, many small business owners can benefit from having their business shielded from traditional tax liabilities. Below, we’ll go into greater detail regarding the rules for taxes for different types of business entities in the state of Florida.

What Kinds of Taxes Can an S Corporation Expect to Pay in Florida?

In Florida, S Corporations are not treated as traditional corporations when it comes to taxes. Thus, S Corporations do not pay the state’s 5.5% corporate tax. S Corporations are also exempt from federal income tax.

How is this possible? With an S Corporation, the income earned by the business goes directly to the business owners. The owners are then expected to pay federal income tax based on the income they receive from their company. However, this income is not subject to Florida state tax.

How Are Small Business LLCs Taxed in Florida?

An LLC can be classified in one of two ways. Typically, LLCs are designated to be partnerships or disregarded entities. However, in this case, the LLC does not pay Florida income tax simply because it is not classified as a corporation.

However, some LLCs can be classified as incorporated. If they are classified as an incorporated business, the LLC must pay the standard 5.5% Florida state income tax—or at least the 3.3% alternative minimum tax. LLCs classified as corporations will file Form F-1065 if one or more of its owners is a corporation.

The actual business owner does not have to pay tax to the state of Florida for the income they personally receive from the business, except in those cases in which the LLC is incorporated.

How Are Small Business Partnerships in Florida Taxed?

Business partnerships can be classified as general partnerships, limited partnerships (LPs), and limited liability partnerships (LLPs). Regardless of these specific designations, none of these partnerships are required to pay state income tax in Florida.

However, the partners of these businesses are required to pay federal income tax on the money they receive from these businesses, based on standard income tax rates. But because Florida does not tax ordinary income, business owners of partnerships are not required to pay Florida state income tax.

What Tax Obligations Are There for Sole Proprietorships in Florida?

Florida treats a sole proprietorship like a partnership. The only difference is that the state looks at the distributed income to one proprietor instead of many partners. Thus, like partnerships, sole proprietorships are shielded from traditional state income tax.

This also means that the proprietor is expected to pay tax on any business income he or she receives, though only to the federal government. Since it is considered to be personal income, the individual does not pay state income taxes.

What If You Have a Multi-State Business? How Are You Taxed?

For most organizations, there are no required taxes for small businesses in Florida. However, if you own a business in Florida but earn money from another state, you are considered to have a nexus in those states. Therefore, in these situations, your business may be subject to the tax laws in those states.

Because different states have different state tax laws, this can be confusing. If you earn money in multiple states, it may be prudent to review nexus rules to see how they may impact your business.

Let Xendoo Help You

Looking for Florida bookkeeping services? Xendoo can help. We understand the rules regarding taxes for small businesses in Florida and help you keep your books up-to-date. We can even help with Florida tax preparation. When you have questions, contact the experts at Xendoo.

Eight Tax Tips for Restaurant Owners

May 26, 2021/in Small Business Tips, Taxes /by Team

A bar owner standing in front of a POS system

Between accounting for all of your potential deductions and reporting them all accurately, it’s important to have a professional who can help make sure you don’t miss anything. Here’s seven tips to help you get everything mise en place come tax time.

Editor’s Note: This post was originally published in February 2017 and has been revamped and updated for accuracy and comprehensiveness.

You know that filing taxes can be stressful even in the best of times, but as a restaurant owner, tax time can leave you feeling in the weeds because your deductions are exponentially more complex. Never fear, though, because Xendoo is here to help. If you aren’t yet taking advantage of our full suite of professional business accounting services, here are a few quick restaurant tax tips for filing returns that can help save you some headache and money.

1. Document, Document, Document!

Did we mention that you need to document everything? One of the best restaurant tax tips is to document and keep every invoice, every check stub, and every e-mail, no matter how inconsequential you might think it is at the time. You just never know when you might need to produce that little receipt during an audit, and running across a receipt might even remind you of something that you almost forgot to deduct. Set up a sound filing system where you can locate any tax documents you might need by vendor or category and keep it up to date.

2. Deduct All Food and Beverage Expenses

Since food cost is almost certainly your largest expense category (with the possible exception of labor), you should be deducting the cost of everything on your menu as an ordinary and necessary cost of doing business. But it’s not just the actual ingredients that you can write off. You can also deduct the cost of preparation materials like fryer oil and condiments, as well as any food that you have to throw out because it’s expired or spoiled. This is one restaurant tax tip that can take the sting out of tossing out old produce.

3. Deduct All Employee Compensation

Payroll is your other big expense category, and it’s deductible as an ordinary and necessary expense because obviously, your business can’t operate without staff. But, again, it’s not just the weekly payroll that you get to deduct. You can also deduct the cost of any employee discounts on meals, paid vacation or sick days, and any dental, vision, health, life, or other types of insurance you might provide for your team members. However, business owners don’t generally get to count salaries or benefits to themselves as deductions because doing so would essentially make any profits from the business tax exempt.

4. Deduct Mileage and Business Travel

Do you or any of your employees drive a personal vehicle as part of the business? Are you maybe making deliveries or picking up supplies? What about to or from training events? If you have any sort of driving directly related to your business, you can deduct that at the current standard mileage rate. But be careful—this is an often-abused deduction, so your documentation of it needs to be meticulously maintained. Driving to and from work doesn’t count as a business expense. Use either a separate ledger or a smartphone app that’s designed to track mileage. Also, if you have overnight travel for training, food shows, conferences, or other business-related events, you can deduct hotel and food expenses, as well.

5. Deduct Large Equipment Purchases

Under a 2016 change to the tax code, you can now deduct the total cost of certain equipment purchases up to $500,000 for the year of purchase instead of depreciating equipment over time in the traditional manner. Known as the ‘Section 179 deduction,’ this change is meant to ease the cash flow for small businesses. It covers a wide array of equipment such as computers, office furniture, vehicles, and machinery. That means the new walk-in cooler you just bought because the old one finally bit the dust can start working for you right away.

Photo by Tyler Nix on Unsplash

6. Take Advantage of the Work Opportunity Tax Credit

Many business owners aren’t aware that the tax code rewards employers for hiring people from certain groups that have historically had difficulty finding employment. Known as the Work Opportunity Tax Credit (WOTC), these groups might include military veterans, summer youth employees, long-term unemployment recipients, rehabilitated felons, residents of designated Empowerment Zones, and many others. This restaurant tax tip is an excellent way to save your business some money while contributing to the community through socially responsible hiring practices.

7. Make Use of Enhanced Charitable Deductions

With a handful of exceptions, the IRS allows businesses to deduct donations to §501(c)(3) nonprofit organizations just like individuals do, including some enhanced deductions specifically for restaurants donating food. Take advantage of these types of restaurant tax tips can be a little tricky, though, so you probably want to hire a small business accounting firm like Xendoo to help navigate these waters safely. You can’t deduct staff time or the total fair market value of the food, but these deductions can still help boost your profit margin significantly.

8. Track Employee Tips Meticulously

Reporting credit card tips is pretty easy since they are tracked through the POS system, but cash tips can get messy. It’s the responsibility of servers to report their tips accurately, but if they don’t report cash tips, the IRS will assume an 8% tip rule. In cash sale situations, the business owner’s responsibility is to withhold 8% of the employee’s cash sales as an assumed tip, and liability for failure to do so could land on the employer. It’s a good idea to go over these rules with your team because you also have to file a Form 8027 each year, and the IRS expects to see accurate records, so it’s in everyone’s interest to pay attention to this one.

These restaurant tax tips are a good start for any business owner, but bookkeeping for restaurants isn’t for the faint of heart, which is why Xendoo is ready to help with our affordable bookkeeping and accounting services. Instead, it would be best if you spent your time growing your business and let our team of experts lift the tax burden and do what they do best.

Why You Should Hire an Experienced Florida Accountant

May 19, 2021/in Small Business Tips, Taxes /by Team

Two business woman smile discuss accounting at a desk

As a small business owner, you want to keep your head in the game. After all, you started your business because you’re passionate about the work you do, and you want to connect your products and services to customers.

So why are you trying to juggle your own books?

We understand the pressures that small business owners are experiencing. Handling your own bookkeeping and accounting may seem like an easy corner to cut, but the chances are that you’ll pay for it in one way or another.

You simply might not be able to give your books the time and attention you need—a problem that can snowball out of control and leave you with a disaster once tax season approaches. There are many online accounting services available. You can’t discount the value and simplicity that these services can offer, but how can you be confident that these services will understand your local business or Florida state law? Unfortunately, accounting software is similarly generic and can only take you so far in navigating the needs of local Florida businesses.

An experienced Florida accountant can help you with more than just the books. So let’s explore the various benefits of hiring a Florida accountant for your business.

A Florida Accountant Can Help with the Legal Structure of Your Business

On paper, businesses are largely defined by their legal structure. A business can be a limited liability company (LLC), a partnership or corporation, or a sole proprietorship. These structures are based on characteristics such as:

Liability
Taxation
Fees and forms
Investment needs and opportunities
Maintaining operations

When you set up your business, how will you consider these factors? This is where an experienced Florida accountant can really be helpful. Choosing an accountant can help your business to navigate these questions and ensure that your business is optimized according to Florida business law.

A Florida Accountant Can Keep Your Books and Records Up-to-Date and Accurate

Perhaps the most obvious benefit of working with a Florida accountant is that they can keep an eye on your books. Ideally, an experienced accountant will monitor your books all year long (or at least at regular intervals), which is vital when it comes to tax planning.

A Florida Certified Public Accountant Can Help You to Understand Sales Tax Laws

Tax laws are notoriously complicated. Sales tax laws in Florida are no exception. Unless you have a degree in accounting, you could quickly start tearing your hair out trying to stay above board. And if you slip up, your business could face stiff penalties for violating tax laws or failing to meet deadlines for your tax returns. This doesn’t just affect you — it will also affect your staff and your loyal customers.

What about an eCommerce business? Organizations that work with out-of-state customers create a business connection called a “nexus” that requires them to pay sales taxes. An experienced accountant can help you to navigate these twenty-first-century questions and spare you the penalties that might come your way for improper financial reporting.

This is where Xendoo can be especially helpful. Our online financial experts provide tax services to a variety of businesses, but our real advantage is our understanding of the Florida economic landscape.

Businesses looking for bookkeeping in Naples or bookkeeping in Gainesville, for example, can take advantage of our financial expertise and local knowledge.

A Florida Accountant Can Help to Expand Your Business

Are you looking to grow your business? An accountant can help with that, too. Good accountants can distill your financial statements into a digestible summary of your overall cash flow.

Understanding your company’s financial health can be a great first step to discovering growth opportunities. An accountant can point out ways to leverage your assets so that your business can grow and flourish without sacrificing the organizational strategies necessary for filing taxes.

When certified public accountants handle the books, you can focus on the day-to-day operation of your business.

We Handle the Books; You Handle the Business

Ready to hire an accounting professional for your small business? As you’ve seen, there are many benefits of hiring an accountant. The average base salary for a Florida accountant is over $50,000, plus benefits. Most small businesses simply can’t afford to hire someone for the position. If your company needs bookkeeping services in Orlando, where can you turn?

This is where Xendoo truly shines. With our localized knowledge, we can provide expert Tampa bookkeeping services as well as almost anywhere in Florida. You won’t have to pay a full-time professional or contract with expensive accounting firms.

Businesses grow when they are well-managed, and an accountant can handle the books while you run the business. When you’re ready to stop juggling the books and get back in business, contact us and see how our online services can help your business to thrive.

2021 Tax Deadlines: how to be tax ready all-year long for your small business

January 25, 2021/in Accounting, Small Business Tips, Taxes /by Team

A person setting an Apple Watch with a tax deadline

Keep this chart handy or copy the relevant parts of it into your calendar so you won’t miss a due date throughout the year.

February 1, 2021:

W-2 Filing: Wage and tax statement for full- and part-time employees. These are normally due on January 31st, but since this is a Sunday, the deadline will fall the following day.

1099s: Are issues with independent contractors. You will need to issue them a 1099-NEC. Both Copy A and Copy B are due at the same time.

February 12, 2021:

The IRS will begin accepting 2020 tax returns starting 2/12/21.

March 1, 2021:

Form 1099-MISC if you are paper filing.

S Corporation Tax Filing

March 15 Submit Form 1120S Income Tax Return

March 15 File for an extension

September 15, 2021 extension tax deadline for S corporations (form 1120-S)

Partnership Tax Filing

March 15 Submit Form 1065 Income Tax Return

March 15 File for an extension

September 15 Extension tax deadline for partnerships (form 1065)

C Corporation Tax Filing

April 15 Submit Form 1120 Income Tax Return

April 15 File Form 7004 Application for an Automatic Extension of Time

October 15, Extension tax deadline for C Corporations (form 1120)

LLC Filing as Corporation Tax Filing

April 15 Submit Form 1120 Income Tax Return

April 15 File Form 7004 Application for an Automatic Extension of Time

Individual Tax Filing

(Sole Proprietor, Independent Contractor)

April 15 Submit Form 1040, 1040A or 1040EZ Income Tax Return

April 15 File for an extension

October 15, Extension tax deadline for sole proprietors and individuals (form 1040)

Estimated Quarterly Tax Payments

Q4 2020 (January 15) Send final 2020 payment with Form 1040-ES Payment Voucher 4

Q1 2021 April 15 for first 2021 payment with Form 1040-ES Payment Voucher 1

Q2 2021 June 15 for second 2021 payment with Form 1040-ES Payment Voucher 2

Q3 2021 September 15 third 2021 payment with Form 1040-ES Payment Voucher 3

Q4 2021 December 15, 2021, fourth-quarter tax estimate deadline (corporations)

Q4 2021 January 17, 2022, tax estimate deadline (individuals)

Some types of businesses may have different or additional deadlines and requirements. Consult with your accountant or tax advisor early in the year to make sure you meet your obligations. To learn more about being tax ready all year long visit us here

Pass-Through Deductions: What It Is and Who Qualifies

January 18, 2020/in Taxes /by Team

One of the best small business-friendly aspects of the Tax Cuts and Jobs Act (TCJA) is the 20% deduction you can take on your income tax if your business is a pass-through entity. Here’s what you need to know about it.

What Is the Deduction

The TCJA was passed in 2017 and first applied to 2018 tax returns. Provision 199A of that law states that you can deduct 20% of your “qualified business income” which was earned from a “qualified trade or business.”

What Is a Pass-Through Entity

Any business structure that allows you to receive income as an “owner’s draw” rather than as a regular employee is a pass-through business. The money is “passed through” from the company account to your personal account. You only pay income tax on it with your personal return; you don’t have to file a separate return for the business.

Pass-through entities include:
• Sole proprietorship
• Partnership
• LLC (limited liability corporation)
• S-Corporation

However, there are some restrictions.

Taxable Income Restriction

• Less than $157,500 (single, married filing separately, head of household) or $315,000 (married filing jointly): you qualify for the full 20% deduction.
• $157,500 – $207,500 or $315,000 – $415,000, respectively: your deduction may be less.
• More than $207,500 or $415,000, respectively: you are not eligible for the deduction.

Specified Service or Trade Restrictions

What your business does may disqualify it from the deduction. Here’s the list of excluded fields, as issued by the Treasury Department in August 2018:

• Health
• Law
• Accounting
• Actuarial science
• Performing arts
• Consulting
• Athletics
• Financial services
• Brokerage services
• Any business where the principal asset is the reputation or skill of one or more of the employees or owners
• Any business that consists of investing and investment management, trading or dealing in securities, partnership interests or commodities

But don’t give up if you see your business in one of these categories, because there are numerous exceptions. For example, in the Health category, healthcare providers who provide services directly to patients — such as doctors and dentists — are not eligible. On the other hand, health clubs, spas, medical research companies, and those who sell pharmaceuticals or medical devices may qualify for the deduction.

In the case of businesses who both provide services and sell products, eligibility is determined by sales:
• Less than $25 million in gross receipts and less than 10% of your business comes from disqualified services; or
• More than $25 million in gross receipts and less than 5% of your business comes from disqualified services

Employee and Property Restrictions

There are two further conditions that could affect how much of a deduction you can take. They are:
• Business that pay W-2 wages
• Business that owns “qualified property” such as real estate or other tangible assets that can be depreciated

If your business fits either of these descriptions, your deduction will be the lesser of:
• 20% of qualified business income (or the “tentative deduction”); or
• The greater of:
o W-2 wages paid x 50%; or
o W-2 wages paid x 25% + the unadjusted basis (cost) of your qualified property x 2.5%

Still confused about the pass-through deduction? Your Xendoo small business expert can clear things up, answer your questions, and help you get every tax break you deserve.