Tax & Financial Statements 101 for the Medical Industry: Understanding What they Are and Why You Need Them

As a medical or dental provider, some of the most important documents to familiarize yourself with are your company's financial statements. These documents serve a number of purposes, but their primary job is to provide you with the information you need to make smart financial decisions for your day-to-day operations. In some cases, your financial statements will also satisfy lenders' documentation requirements when you borrow money to expand staff or open a new office.

The three main types of financial statements are:

1. Balance sheet: a quick view of your business finances. The total amount of liabilities is added to the total amount of owner's equity and must balance with the total number of assets.

2. Profit and loss statement: This income statement is helpful in projecting sales and expenses.

3. Cash flow statement: This statement provides a quick look at cash inflows vs. cash outflows.

There are different financial reporting frameworks that can be used when preparing these reports; a full discussion of the choices is outside the scope of this blog post. However, your local business accountant can explain the different options to you, and can help you evaluate the pros and cons of each one.

Basic tax and financial statements are prepared based on the information you provide to your Arizona CPA firm; therefore, they are not audited or independently verified. If your lender needs some assurance of the information, your CPA may prepare a "compilation" report, which provides a statement saying that the CPA believes the financial statements are free from material misstatements and appear appropriate in form.

There are some nuances to preparing and reading business financial statements, so having a small business CPA who specializes in medical to rely on can be both helpful and reassuring, so you know you're relying on the information you need to run your business.

To learn more about the business tax, accounting and bookkeeping services Arizona CPA, Sean Core CPA PLLC, provides, contact us online today, or call (480) 626-5043.

Dealing with Past-Due Receivables: Try to Collect, or Write them Off?

For business owners, having past-due accounts receivable can be extremely frustrating!This is especially true in the early stages of a real estate business or construction business when cash flow may be tighter and you may be relying on those customers' payments to meet your other obligations. At some point, every small business owner has likely asked themselves whether it makes more sense to continue spending time and money trying to collect the money owed, or if instead, it would be smarter just to write it off.

Most of the time, it makes sense to try to collect for a reasonable period of time. Many business owners have found success with the following tactics and tips:

1. Communicate with your clients. It's OK to place a friendly reminder call or to send a letter reminding the client of the outstanding debt. And, the sooner you do this after the debt is past due, the more likely you are to collect.

2. Be willing to work with clients. Understand that your clients may be experiencing a temporary hardship; be open to working out a payment arrangement with them. Any payment arrangements should always be in writing, to protect both you and the client.

3. Hire a collection agency. If the amount owed is large enough and your efforts to collect have been unsuccessful, you may want to consider hiring a collection agency to help you collect. However, this is generally a last resort, as it means you are agreeing to accept just a portion of the total amount collected by the collection agency.

At some point, you may be faced with a decision about writing off bad debt. In that scenario, keep in mind that there are accounting principles that must be followed, so have a discussion with your Phoenix small business CPA about the best way to accomplish writing off the amount owed.

Contact Sean Core CPA PLLC today online, or by calling (480) 626-5043, to learn more about the CPA small business services we offer, including tax, accounting and bookkeeping.

Four Common Payroll Mistakes that can End Up Costing Small Business Owners

Just about every Arizona small business will, at some point, have to think about payroll. Even if you are a solo practitioner today, odds are good that you have plans to grow and add staff in the future. And, dealing with payroll means complying with a multitude of federal, state and sometimes local tax and reporting requirements. Because of the complexity involved, it is no surprise that local businesses sometimes make mistakes when it comes to payroll.

Here are four of the most common (and potentially costly) payroll errors we see small businesses make:

1. Not paying payroll taxes. The IRS uses the term "payroll tax" to refer to both the taxes that employers have to withhold from their employees' paychecks, and the amount of taxes an employer owes when paying employees' wages. Both are mandatory, and failing to withhold and remit the proper amount can lead to hefty penalties from the IRS.

2. Failing to properly classify employees. The people who work for you should be classified either as employees, who earn W-2 wages, or independent contractors for whom you need to issue 1099 forms at the end of the year. Treating an employee as a contractor for payroll purposes can be a costly error for the business owner.

3. Not making payroll tax payments on time. Businesses that fail to make their payroll tax payments on time risk late deposit penalties from 2% - 15% plus interest.

4. Paperwork errors. Business owners are responsible for ensuring payroll records are calculated appropriately, that forms are completed correctly and submitted in a timely manner, and that required records are maintained.

While these are the most common errors, there are many other potential traps for small business owners when it comes to business bookkeeping and accounting. Consulting with a Phoenix area  small business accountantcan save businesses time, money and can help ease the frustration that can come with handling payroll.

To learn more about the business tax, accounting and bookkeeping services we offer, contact the CPA firm Arizona business owners have come to know and trust, Sean Core CPA PLLC, today at (480) 626-5043, or contact us online.

Starting a New Business in AZ? Don’t Forget about Tax Planning!

If you have decided to start a new business, congratulations! The process of becoming a business owner in any type of business can be immensely rewarding. In addition to making all kinds of decisions about things like your logo, marketing campaign, staffing and office location, it is important to consider tax implications from the start, and to create a strategy to best work within the framework of tax laws for businesses.

Here are some tips and things to consider from a tax planning and strategy standpoint:

1. Choice of corporate entity matters.

Don't just choose an S-Corporation or an LLC because a non-CPA friend told you to do so; the decision of which entity to use for your business can have big tax consequences over time. There is not one "right" entity for all businesses; the decision will depend on a number of factors. Talk to a an experienced, business CPA who can offer you tax and business advice to help you explore the ins and outs of various business entities so you can make an informed decision.

2. Choose your fiscal year-end.

While many businesses have December 31 as their fiscal year-end, you can choose to end your fiscal year in another month, to help control your tax filing due dates. This can be helpful if you are depending on cyclical cash flow to pay your tax obligations when due.

3. Work with a tax professional.

Tax planning and strategy are best handled by a business tax specialist who can help you explore the implications of various decisions up front. For example, the choice of hiring full-time or part-time employees will result in different tax treatment. Similarly, the decision to purchase or lease office space, and to purchase or lease equipment will all effect your business taxes. Jumping the gun by making a decision without thinking through all of the consequences could end up costing you more.

To learn more about how Sean Core CPA PLLC can help your small business with tax planning and strategy, accounting, business bookkeeping and tax services, contact us in Mesa today!

Depreciation of Rental Properties and Taxes

Our Mesa accounting firm handles business taxes for many people in the real estate industry such as realtors, brokers, property investors, landlords and mortgage companies.  One of the top requested services, besides tax preparation service in real estate,  is helping them determine the most useful real estate tax strategies. Property owners who use their property in the course of their business or to produce income (such as rental property) can take annual tax deductions every year if they meet certain qualifications, effectively recovering some of the cost of owning the property. In tax lingo, this process is referred to as "depreciating" the property.

What qualifies for depreciation?

If you own property, whether or not you still owe money on it, and if you use it in the course of your business or rent it out to others for income, you can take a depreciation deduction on your tax returns, as long as that property is expected to last more than one year but will eventually lose its value over time due to natural causes.

When can property be depreciated?

You can start taking depreciation deductions when your property is "placed into service", which is the date the property was ready and available to be used for your business (or as rental property), whether or not it was idle on that date.

When does it end?

If you reach a point where the depreciation you've taken has reached your total cost basis in the property, you cannot continue depreciating it. This is a little bit nuanced, as that level also includes depreciation that you were allowed to claim in prior years but never did.

If the property is sold, destroyed, abandoned or converted to personal use, you cannot continue taking depreciation deductions. 

Exceptions

Of course, there are exceptions to what can be depreciated. Even if property meets all of the other tests, you cannot take a depreciation deduction for rental property that you bought and then sold in the same tax year. You also cannot depreciate land by itself.

People who own rental property meeting IRS requirements may be eligible to recover the cost of the property over time through depreciation.

To learn more about depreciation or  rental properties tax questions, here are several good examples provided by the IRS. To evaluate how the depreciation rules apply to your business or rental property, contact Sean Core CPA PLLC online today, or call (480) 626-5043.

Depreciation of Rental Properties and Taxes

Our Mesa accounting firm handles business taxes for many people in the real estate industry such as realtors, brokers, property investors, landlords and mortgage companies.  One of the top requested services, besides tax preparation service in real estate,  is helping them determine the most useful real estate tax strategies. Property owners who use their property in the course of their business or to produce income (such as rental property) can take annual tax deductions every year if they meet certain qualifications, effectively recovering some of the cost of owning the property. In tax lingo, this process is referred to as "depreciating" the property.

What qualifies for depreciation?

If you own property, whether or not you still owe money on it, and if you use it in the course of your business or rent it out to others for income, you can take a depreciation deduction on your tax returns, as long as that property is expected to last more than one year but will eventually lose its value over time due to natural causes.

When can property be depreciated?

You can start taking depreciation deductions when your property is "placed into service", which is the date the property was ready and available to be used for your business (or as rental property), whether or not it was idle on that date.

When does it end?

If you reach a point where the depreciation you've taken has reached your total cost basis in the property, you cannot continue depreciating it. This is a little bit nuanced, as that level also includes depreciation that you were allowed to claim in prior years but never did.

If the property is sold, destroyed, abandoned or converted to personal use, you cannot continue taking depreciation deductions. 

Exceptions

Of course, there are exceptions to what can be depreciated. Even if property meets all of the other tests, you cannot take a depreciation deduction for rental property that you bought and then sold in the same tax year. You also cannot depreciate land by itself.

People who own rental property meeting IRS requirements may be eligible to recover the cost of the property over time through depreciation.

To learn more about depreciation or  rental properties tax questions, here are several good examples provided by the IRS. To evaluate how the depreciation rules apply to your business or rental property, contact Sean Core CPA PLLC online today, or call (480) 626-5043.

Why Quality Tax preparation for Small Businesses is so Important

Some small business owners choose to try to handle their own tax preparation and filings. Unfortunately, unless a small business owner is also a tax professional, trying to tackle their own taxes means facing an increased risk of errors that could trigger an audit. Taking a "do-it-yourself" approach can be costly in other ways too, as business owners are potentially leaving money on the table, essentially over-paying the IRS and state of Arizona.

 Small business tax services

Professional tax preparation services for AZ small business owners should be about more than just preparing and filing tax returns. Decisions you make throughout the year can dramatically change your tax liability, for better or worse.

An experienced tax professional adds value by providing guidance about decisions related to payroll, retirement plans, record-keeping, business bookkeeping services, and more.

 

Choosing a tax prepare for your business

There are a lot of tax professionals offering professional services. When you're looking for a professional to handle your small business returns, look for a well-rounded, knowledgeable CPA who has experience working with AZ small businesses. This is critical; as a business owner you need someone who knows the ins and outs of the rules governing taxes and deductions for small businesses, including

• Self-employment taxes
• Rules about taking a deduction for a home office
• Small business retirement plans

Requirements for deducting meals, entertainment, meeting and travel expenses

It is also important to choose a professional who understands how to, and who has experience applying local and state tax rules to your business. For more tips on how to choose a small business tax professional, see this IRS video.

When it comes to taxes, what you don't know can hurt you. The tax code is complex; most small business owners have enough on their plates without expending the time and energy to try to figure out all of the nuances of the laws. To learn more about the small business tax preparation services offered by Sean Core CPA PLLC, contact our Mesa CPA office online today or call (480) 626-5043.

Differences in Taxation of LLCs and Sole Proprietorships

If you are starting a business, one of the most important considerations is how your choice of entity will be treated for tax purposes. Please see below for some important information on the differences between the two most common types of businesses our Mesa accountants work with:

Sole Proprietorships

Sole proprietorships are the simplest of business types when it comes to initial set-up and ongoing reporting. They are also simple from a tax standpoint, and do not require separate income tax returns. Instead, profits and losses are reported on Schedule C of the business owner's personal income tax return. Self-employment taxes are reported on Schedule SE.

LLCs

When a business owner decides to create a Limited Liability Company (LLC), if it is a "single-member" LLC (just one owner of the business), it will be treated as a "disregarded entity". Essentially, this means it will be taxed like a sole proprietorship unless the business owner elects to be taxed as a corporation by timely filing a form with the IRS. Arizona LLCs with more than one member (owner) are automatically taxed as partnerships by the IRS unless the business timely files the required form with the IRS to elect corporate income tax treatment.

When LLCs either choose to accept the default partnership tax treatment, or fail to file the required form in a timely manner, the business must submit an informational return to the IRS each year. Instead of paying taxes with the return though, the profits and losses are passed through to each owner who then must report their income on their own personal tax returns.

In contrast, if an LLC elects C-corporation income tax treatment, the entity itself will file and pay income taxes on Form 1120, with no "pass-through" of profits or losses. 

Taxation for your business is an important consideration; the right choice for your business will depend on a number of factors. Business owners should consult a tax professional to determine how different entity structures might impact taxation. To learn more, contact our CPA firm today.

Medical Accounting with CPA Assisted Ease

Medical accounting and recording keeping is a world unto it's own.   A CPA with that expertise is a rare find!

Medical accounting demands a precision in record keeping that is as highly valued or needed in few other professions.   Medical billing is a complex balance, and you need someone who will give you the ability to have as few errors as possible in a climate that errors are as common as rain in the tropics.

The goal of the medical accounting to not only deal with the taxes and financial strategies, but also to ensure that the provider is properly reimbursed for their services.   Not being aware of the billing can create substantial unpaid invoices.  Errors, both human and electronic occur.   But a small business accountant with a keen eye for detail and a down-to-earth approach, can help you master the accounting and billing software and assist you in creating an ease-driven, rather than a stress-driven environment.  

In the unique world of medical accounting, there is a balanced approach to creating a smooth flow.   Creating tax strategies and payroll that makes the office run smoothly, as well as develop a routine in the  the processing of medical billing.    Medical billing involves two incredibly delicate elements --health and money. A CPA, who can bring harmony to managing all the pieces of the picture and creating an approach, is integral in helping  the medical professional and his or her team.  Making

critical decisions and structuring transactions that consider not only the tax aspects of those transactions, but also the overall economic and operational effects is what a Quality CPA can do.

In creating the office that handles medical billing and accounting, you create a backbone for the organization. With solid principles and teamwork, the business allows the medical professional to do what they do best, heal and treat people and bring health to their community.

Sean Core CPA is an Arizona CPA who can be  the healer's healer.

The Magic a CPA Can Create

Have you ever watched a professional magician?  

They take ordinary items, manipulate them and change them.   They make them appear smaller or larger or disappear completely.  A red scarf turns to white and back again.  A coin disappears and appears on your earlobe.   A famous illusion is called the "Bill in a Lemon" where a destroyed dollar bill appears in a lemon that has never been cut.  It appears intact and whole.

A QUALITY tax accountant can do the same thing with your money.  

He doesn't make it vanish and reappear, but he can manipulate it using good accounting principles so that it serves your business in the best possible way. When you need business tax consulting, you want an accountant that can manipulate the numbers and make them do what you need them to do, rather than hire a mere number crunch-er, who is only vested in creating tidy columns.

Any good CPA  who works with small and medium size businesses will tell you, it's not the numbers but how you make the numbers work.  When you require tax and payroll assistance, you need a CPA who will ---provide--- practical tax plans and make your bank account accumulate almost by magic.   Often it's not what you do, but how you align your goals and intentions within the accounting.  

A down-to-earth CPA can manage those numbers for you and give you the financial direction you need.

When your company needs financial services, employee benefit plan services, and tax valuation support you need to choose wisely.   A CPA who is well versed in what the effect are on your tax position is truly is magic.  You need the assistance and  knowledge of a professional who is vested in your success  and  understands the effect on all disciplines and how they relate.

Let's face it, you need a CPA magician, or at least one that is adept at accounting illusions.

Medical Accounting with CPA Assisted Ease

Medical accounting and recording keeping is a world unto it's own.   A CPA with that expertise is a rare find!

Medical accounting demands a precision in record keeping that is as highly valued or needed in few other professions.   Medical billing is a complex balance, and you need someone who will give you the ability to have as few errors as possible in a climate that errors are as common as rain in the tropics.

The goal of the medical accounting to not only deal with the taxes and financial strategies, but also to ensure that the provider is properly reimbursed for their services.   Not being aware of the billing can create substantial unpaid invoices.  Errors, both human and electronic occur.   But a small business accountant with a keen eye for detail and a down-to-earth approach, can help you master the accounting and billing software and assist you in creating an ease-driven, rather than a stress-driven environment.  

In the unique world of medical accounting, there is a balanced approach to creating a smooth flow.   Creating tax strategies and payroll that makes the office run smoothly, as well as develop a routine in the  the processing of medical billing.    Medical billing involves two incredibly delicate elements --health and money. A CPA, who can bring harmony to managing all the pieces of the picture and creating an approach, is integral in helping  the medical professional and his or her team.  Making

critical decisions and structuring transactions that consider not only the tax aspects of those transactions, but also the overall economic and operational effects is what a Quality CPA can do.

In creating the office that handles medical billing and accounting, you create a backbone for the organization. With solid principles and teamwork, the business allows the medical professional to do what they do best, heal and treat people and bring health to their community.

Sean Core CPA is an Arizona CPA who can be  the healer's healer.

Small Business CPA Services Work With Your Mesa Business!

Are you the owner of a small business? If so, you’re among the 27.9 million plus small business owners operating in the U.S. (U.S. Census Bureau 2010). Operating a small business is both challenging and rewarding. Approximately fifty percent of new businesses survive five years, while only  one-third make it to ten years or more. If you are just starting out in business or have been established for a while, Mesa small business accountant can help with your financial and tax challenges. Here are some of the many benefits you get when securing small business cpa services:

Full accounting services

Accounting services no longer means simply having your tax documents filled out at the end of the year; when you use a quality cpa in Mesa, AZ, you obtain year-round support. Certified public accountants take your financial data (in any format) and compile it into meaningful information for your business. What does that look like? Charts and graphs extracted from the data help guide your business to a more profitable strategy. When you receive cpa services for small businesses, the specialist doesn’t simply print out charts for you and send you on your way; they assess, analyze, and provide valuable feedback as to what the charts indicate. Thus, you have the best plan going forward.

Full tax services

A quality tax preparation specialist will prepare your tax documents reducing tax liability to its minimum and optimizing credits to its maximum. Accounting and tax expertise becomes a significant component for your business when you utilize certified public accountants.

Another feature worth mentioning is that of business tax counsel. The cpa gives advice on future steps to take, whether it’s beneficial for you to become incorporated, what the steps are for becoming incorporated, and much more.

Personal service

In the Mesa/Chandler, AZ area, Sean Core CPA are known for their trustworthy and personal service. When you’re the owner of a small business, you want an accounting firm you can keep coming back to year after year. You need a company that will walk with you through the ups and downs – a place where experts can give personal guidance. If you would like more information about small business cpa services, please contact our Mesa Accounting Firm  today!