How to Create and Use Vendor Records in QuickBooks Online

Keeping your supplies coming in may be difficult right now. Be sure you know your vendors and track their records carefully.

Your company counts on its supply chains to keep operations running smoothly. When it falters, you can have trouble creating and shipping products. Problems may even crop up that have a negative effect on your internal business needs.

We don’t have to tell you that COVID-19 has interrupted supply chains. The pandemic has been catastrophic for many small businesses because of this, and because income has been suddenly and sharply reduced. Some financial help is available, and we hope you’re able to take advantage of it during these extraordinarily difficult times.

It’s perhaps more important than ever to carefully track your income and expenses, and we hope you’re using QuickBooks to do so. Among the software’s financial management tools is the ability to maintain thorough records of those vendors that make up your supply chain. Let’s take a look at how this works.

Creating Vendor Records

We’ll go through the steps for creating vendor records, though you may have at least started on these already. Hover your mouse over Expenses in the toolbar and select Vendors. If you’ve already added some, you’ll see them in a list. To create a new one, click New Vendor in the upper right. Most of the form is easy to complete; it’s primarily contact information.

There are a few fields, though, that need special attention. These are:

  • Cost rate/hr and Billing rate/hr. These help you track time costs for your projects. Don’t enter anything here if you pay vendors via bills or expenses.
  • Terms. Due on receipt? 15 days? 30 days?
  • Account no. and Business ID No. You should have these on file.
  • Track payments for 1099. Put a check in this box for any 1099 contractors.

When you’re done, click Save. This vendor will now appear in your list.

Taking Action

QuickBooks Tips

You can take a number of actions from QuickBooks’ Vendors screen.

You can do a lot of your work directly from QuickBooks’ Vendors page. This screen displays a list of all of your vendors, along with columns for their PhoneEmail, and Open Balance. At the end of each row is an Action column. The link there reads either Create bill or Make payment, depending on whether there is an outstanding balance.

Click on the down arrow in that column to open a list of additional options. If there is a zero balance, you can Create expenseWrite checkCreate purchase order, or Make inactive. If money is due, your options are to Create bill or Create expense. Icons in the upper right allow you to print the list, export it to Excel, or change the column settings.

Collecting Your Billables

Before we look at vendor records in QuickBooks, we’d like you to check a couple of settings to make sure you’re billing your customers for every expense they incur with you. Click the gear icon in the upper right corner and select Your Company | Account and Settings, then click on Expense. Among others, you’ll see these options:

QuickBooks Tips

If you incur expenses on behalf of customers, be sure you will be reimbursed for them by adding a Billable column on expense and purchase forms.

To add a Customer column to expense and purchase forms, click in the first box pictured in the image above. To Make expenses and items billable, click in the second box and add a default markup rate if you want. Do you want to Track billable expenses and items as income? If you’re not sure, ask us. And if you’ve set up sales tax in QuickBooks and want to add that to billable items, check that box, too. When you’ve finished with these and the other questions under Bills and expenses, click Save.

Now is the time to focus on the importance of cash flow and vendor relationships by maintaining good vendor payable records. You want to keep your relationships with your suppliers in good status. If you’re having trouble tracking cash flow or dealing with any other element of your accounting (or QuickBooks itself), please do contact us. We want to support you through this difficult period as much as we can.

SOCIAL MEDIA POSTS

COVID-19 is affecting the supply chains. Do whatever you can to ensure that your vendor relationships maintain a good standing. QuickBooks can help. Find out how here.

You should be using QuickBooks to track your accounts payable status these days. Communicating with vendors about any potential payment problems is essential to maintaining your relationship. Here is how QuickBooks can help manage it.

Is the pandemic affecting your company’s cash flow? We can help you use QuickBooks to better manage it.

The Vendors page in QuickBooks can show you quickly where you have open balances. Be sure you’re tracking those carefully these days. Find out how here.

How to Use Rules in QuickBooks Online Transactions

Maintaining your transaction registers conscientiously leads to a clearer understanding of your finances.

Last month, we talked about the types of best practices that can lead to more effective use of QuickBooks Online and, ultimately, more thorough knowledge of your finances. The first one was this: Go through your new transactions every day. Categorizing and otherwise expanding on the data brought in by your financial institutions really pays off when it comes to customer billing, reports, and taxes.

Granted, this habit will add time to your daily accounting chores. But there’s a tool on the site that can greatly accelerate this process: Rules. This feature must be used with care to avoid mischaracterizing or, worse, losing track of critical transactions. Here’s how it works.

Creating Rules

There are two ways to create Rules. The easiest is to start with an existing transaction. Hover over Banking in the left vertical pane and select Banking to open your transaction list. Be sure that you’re looking at transactions that are still For review, as these are the only ones that can be assigned to Rules.

Click on a transaction to open its expanded view. At the bottom of the small window that just opened, click on Create rule from this transaction. A screen like this will open:

QuickBooks tips

QuickBooks Online’s Rules feature allows you to automatically document transactions that meet certain conditions.

Let’s say you own a lawn and garden maintenance company. You always order supplies from the same vendor, so there are numerous transactions every month. You want QuickBooks Online to automatically categorize and clear transactions under $250; above that, and you’d want to see them individually.

You’d start by naming the rule, designating it as Money out or Money in, and choosing an account (or leaving this option set at All bank accounts). Next, tell QuickBooks Online whether the conditions you’re about to establish should apply to all or How to Use Rules in QuickBooks Online Transactions. That is, if you’re setting multiple conditions, is it all right if just one meets the criteria, or must they all?

Below that, you’d specify the actual conditions that must be present for QuickBooks Online to handle similar transactions in the same way. In our example pictured above:

The transaction [Description] [is exactly] Lawn and Garden Supply LLC, and, The [Amount] [is less than] $250.

So, any transaction that comes into QuickBooks Online from your bank that has Lawn and Garden Supply LLC in the Description field and which is for less than $250 will be treated similarly. There are other options for the first two fields; you’ll find them by clicking the down arrow.

Now you have to tell QuickBooks Online what to do with the transactions that meet those criteria. Farther down on this screen, you’ll see these options:

QuickBooks tips

QuickBooks Online will handle the transactions that meet the conditions you set by completing these fields.

Using the drop-down lists of options, you’ll select the Transaction TypePayeeCategory, and Class (if you use them). Every time a transaction comes in that meets the conditions you defined above, QuickBooks Online will apply these options.

Finally, you’ll have to choose from two different ways of processing these matching transactions. You can have QuickBooks Online Auto-categorize and auto-add, in which case the transactions will be automatically processed and moved out of the For review queue. In our example, we chose this so we didn’t have to work with transactions of less than $250; we only wanted to see more expensive purchases. If we had wanted QuickBooks Online to fill in those fields but still show us the transactions, we would have clicked in front of Auto-categorize and manually review. Clicking Save would move this Rule into a list that could be accessed by clicking Banking | Rules, where you can Edit or Delete them.

Complicated Stuff

To recap, because of the Rule that was created here, any transaction in which the Description reads Lawn and Garden Supply LLC and which is for less than $250 will now be auto-completed and moved out of For Review. Any transaction for over that amount will remain in the queue for approval.

QuickBooks Online’s Rules can save time if you have a large volume of similar transactions. But if they’re not created with absolute accuracy, you risk mischaracterizing or missing transactions you should have reviewed before adding them to the Reviewed queue. We’d be happy to help here to ensure that that doesn’t happen, so that you can take full advantage of the helpful Rules feature.

SOCIAL MEDIA POSTS

To save time when reviewing QuickBooks Online banking transactions, you can apply automated Rules. Here’s how to get started. We can help you with this.

Did you know that QuickBooks Online’s Rules feature allows you to automatically categorize banking transactions that meet certain conditions to help you save time? Find out more here.

If your business processes a high volume of banking transactions, you might consider applying Rules to process them quickly. Ask us about this, we can help get you started.

If you’re planning to use QuickBooks Online’s Rules, please consult with us first. This feature once implemented can help you save time, but the set-up process can be complicated. We can help.

Tracking Mileage in QuickBooks Online

If you’re having to drive for work during the pandemic, let QuickBooks Online make sure you’re recording all of your deductible mileage.

Many states are starting to open for business again. If yours is one of them and this is affecting you, we hope you’re taking steps to stay healthy. We also hope that you’ve been keeping up with your changing finances by using QuickBooks Online.

As many will resume back to the day to day of business, if any part of your work involves driving business miles that can be deducted on your income taxes, you’ll want to know about a relatively new QuickBooks Online feature: mileage tracking. You can NOW record trips either manually or automatically, and the site will calculate your deductions. Here’s how it works.

Tracking Trips Manually

Before you get started, you’ll want to create a record for the vehicle you’ll be using. Click Mileage in the navigation toolbar. Hover over the green Add trip button in the middle right of the screen , then click View Vehicles. Then click Add vehicle and complete the fields on the screen that opens. Click Save. Back on the main screen, click directly on Add trip. The New trip panel will slide out from the right.

Enter the Date, then the number of miles driven (Distance). If you’d like, you can enter the Starting point and Ending point for your records. Click either the Business or Personal icon and enter a Description. Select the correct Vehicle if you use more than one and click Save. Your trip will now appear on the main screen with your tax deduction already calculated, as pictured below. Click the More button at the end of the row (not shown here), and you’ll be able to Edit your trips and Duplicate them.

QuickBooks mileage tip

Once you’ve created a record for a trip in QuickBooks Online, it will be added to the list on the main Mileage screen.

Auto-Track Your Miles

There’s another way to track your trips, one that doesn’t involve writing down your odometer readings or mileage. The QuickBooks Online mobile app will automatically track your miles as you drive.

To set this up, open the app and click on the three horizontal lines in the lower right to open the app’s navigation shortcuts. Then click the Mileage icon. Auto-tracking is off by default, so you’ll have to click OFF to open the Mileage settings screen. Click the Auto-tracking button to change it from grayed-out to green. In the small window that opens, click Settings to go to the QuickBooks section of your phone’s Settings screen and make these changes:

  • Location must be Always On.
  • Motion & Fitness must be On.
  • Background App Refresh must be On.
  • Cellular Data must be On.

QuickBooks mileage phone tip

Before you can automatically track your mileage in QuickBooks Online, you’ll need to change some settings (image above taken in iPhone; Android phones have similar settings).

Close this screen and return to the QuickBooks Online app’s main Mileage screen after you’ve changed your settings. Auto-tracking should be ON. Click the + (plus) sign in the lower right, then Create trip. The app will automatically detect your starting and stopping locations using your phone’s GPS. When you’ve arrived at your destination, open the Mileage app again.

Swipe left on the trip’s record to categorize it as business and right to mark it personal. Enter the trip’s purpose if it’s a business trip and click Save. You’ll now need to turn off Auto-tracking and reverse the changes you made in your phone’s Settings (unless, of course, you normally leave any of them on).

A Quick Tip

Do you ever find yourself opening QuickBooks Online in a new tab because you need to check something in another part of the site but don’t want to shut down your current screen? If you’re accessing QuickBooks Online through Google Chrome, it’s easy. Right-click anywhere in the navigation toolbar that contains links (not the blank space below) and select Open link in new tab. A new tab will open to a QuickBooks Online page. You can do whatever you need to do in the second tab without disturbing your original page.

Stay in Touch

The COVID-19 pandemic has had impact on both large and small businesses all around the world. We hope you’ve stayed physically and financially healthy during this exceptionally difficult time. Don’t hesitate to contact us if we can help with your use of QuickBooks Online and /or your overall accounting.

SOCIAL MEDIA POSTS

As many will resume back to the day to day of business, did you know QuickBooks Online can now help you track your business mileage? It automatically calculates your tax deduction. Find out how here.

Did you know the QuickBooks Online mobile app has a NEW feature? It can automatically track your mileage as you drive. You’ll of course have to change some phone settings first , and we can show you how.

As states and businesses open back up, if you put a lot of tax-deductible miles on your vehicle for work, you’ll want to check out QuickBooks Online’s new Mileage feature. Find out about it and how to set it up here.

Did you know QuickBooks Online allows you to track your vehicle mileage either manually or automatically? This is helpful if you put a lot of tax-deductible miles on your vehicle for work. Ask us about this new feature.

Sales Receipts, Invoices, and Statements in QuickBooks

QuickBooks allows you to create multiple types of sales forms for different situations. Here’s a look at what they are and when to use them.

When you buy something at a store, you want a piece of paper that shows what you purchased and what you paid. If you receive products or services before you pay for them, you certainly expect to receive a bill. And if you have several transactions with the same company and want clarification on what you’ve paid, and what you owe for a specific time period, the company can usually send you a summary.

Your customers want the same things. That financial documentation might be difficult for you to provide if you’re still doing your accounting manually on paper.

Fortunately, QuickBooks has a solution. Or, rather, several solutions. The software includes templates for all of the sales forms that you’ll probably ever need: invoices, sales receipts, and statements. Here’s an introduction to when and how to use them.

Sales Receipts

QuickBooks Tips

When a customer pays you on the spot, you can create a sales receipt.

When you receive full payment for a product or service at the time of the sale, the correct form to use in QuickBooks is the Sales Receipt. Click the Create Sales Receipts icon on the home page or open the Customers menu and select Enter Sales Receipts. You’ll see a form like the partial one pictured above.

Click the down arrow in the Customer:Job field and select the correct one or <Add New>. If you assign transactions to Classes, pick the right one in that list. The Template field should default to the appropriate form. If you’ve created more than one sales receipt template, select the one that you want. Click the icon above the correct payment type.

Tip: Want to be able to accept credit cards and eChecks? You’re likely to get paid faster by some customers. You’ll also be able to accept payments on your smartphone or tablet and create receipts. Talk to us about adding this capability.

Select the appropriate Item(s) from that drop-down list and enter a Qty (Quantity). Be sure to apply the sale’s Tax status by opening that list. (If you know that you’re responsible for paying sales tax on at least some of your sales but you haven’t set this tracking up in QuickBooks yet, we can work with you on that. It’s important.) When you’ve finished filling in the table with all the goods or services you sold, you can save the transaction and either print it or email it to your customer.

Invoices

QuickBooks Tips

After you’ve completed the top half of an invoice, you’ll see something like this at the bottom.

You’ll create and send Invoices to customers when you’ve received either a partial payment or no payment at the time of the sale. Those completed transactions become a part of your total Accounts Receivable (money owed to you). Click Create Invoices on the home page or go to Customers | Create Invoices. Fill out the fields at the top of the screen like you did with your sales receipt; the forms are almost the same. Invoices, though, have Bill To and Ship To addresses, as well as fields for the sale’s Terms and Due Date.

You shouldn’t have to do anything with the bottom half of the screen (pictured above) unless you want to include a Customer Message, since the information here is carried over from the top of the screen. Check to make sure the Tax Code is correct, though.

It’s important to note, it’s an either/or situation when it comes to creating an invoice and a sales receipt for the same transaction. It’s best to not use sales receipts for invoice payments, as it can cause issues.

Statements

QuickBooks Tips

When you create statements, you’ll first choose the customers who should receive them.

Statements are very useful when you have multiple customers who are past due on their payments (you can find this out by running the A/R Aging Summary report, which you’ll find under Reports | Customers & Receivables). Click the Statements link on the home page or go to Customers | Create Statements. You’ll first have to select the customer(s) who should be on your list, as pictured above. There are several other options on this page that will help you refine this group. When you’re done, QuickBooks will automatically generate them, and you can print or email them.

You’ll save a lot of time when you use QuickBooks’ sales forms. Your bookkeeping will also be more accurate, and it will be easier to track down specific transactions. If you use them conscientiously, you’ll be able to run reports that provide comprehensive overviews of various elements of your finances.

Do you have questions about any of this, or are you just getting started with QuickBooks? We’re happy to schedule a consultation to determine what your needs are and how we can assist. Contact us, and we’ll set something up.

SOCIAL MEDIA POSTS

Still creating sales forms manually? QuickBooks makes this task much simpler and faster. They’ll be easy to find, too. Find out how here.

Do you sometimes receive payment for products or services at the same time you provide them? QuickBooks can create sales receipts. Here’s how.

If you bill customers after you’ve provided a product or service, you can use QuickBooks’ invoice forms to collect your payments. Find out more here.

Did you know QuickBooks can help you create statements to send to customers who are past due on their payments? Find out how here.

HHS provider relief fund enters phase two

On July 31, 2020, HHS announced that Medicare providers will have another opportunity to receive additional Provider Relief Fund payments. The announcement targets those providers who previously missed the June 3, 2020 deadline to submit an application for additional funding equal to 2 percent of their total patient care revenue from the $20 billion portion of the Phase 1 General Distribution.  Those qualifying under this plan include Medicaid, Children’s Health Insurance Program (CHIP), and dental providers with low Medicare revenues. In addition, providers who underwent a change in ownership, making them previously ineligible for Phase 1 funding, will also be given a chance to apply for the HHS financial relief.

The new deadline to submit an application for potential funding under the HHS Provider Relief Fund is August 28, 2020.

Providers Eligible for Phase 2 General Distribution Funding:

  • Providers who were ineligible for the Phase 1 General Distribution because:
    • They underwent a change in ownership in calendar year 2019 or 2020 under Medicare Part A; and
    • Did not have Medicare Fee-For-Service revenue in 2019.
  • Providers who received a payment under Phase 1 General Distribution but:
    • Missed the June 3 deadline to submit revenue information – including many Medicaid, CHIP, and dental providers with low Medicare revenues that assumed they were ineligible for additional distribution targeted at Medicare providers or had planned to apply for a Medicaid and CHIP specific distribution; or
    • Did not receive Phase 1 General Distribution payments totaling approximately 2 percent of their annual patient revenue.
  • Providers who previously received Phase 1 General Distribution payment(s), but rejected and returned the funds and are now interested in reapplying.

For providers who have already received a Phase 1 General Distribution payment from HHS, the previous amount received will be considered when determining the eligible amount for the Phase 2 General Distribution payment. Also, fund recipients must accept HHS’s terms and conditions and may be subject to an audit to ensure the data provided to HHS for payment calculation is accurate.

Please contact us for more information on the HHS Provider Relief Fund Phase 2 program.

What To Know About Getting a Tax Refund

All taxpayers are no doubt hoping for a refund this year. Unfortunately, there are a lot of myths about when and how you’ll get your refund.

In a recent statement, the IRS noted that most taxpayers are issued refunds by the IRS in fewer than 21 days. If yours takes a bit longer, here are six things that may be affecting the timing of your refund:

  • Security reviews – The IRS and its partners continue to strengthen security reviews to help protect against identity theft and refund fraud. Your tax return may be receiving additional review, which makes processing your refund take a bit longer.
  • Errors – It can take longer for the IRS to process a tax return that has errors. Fortunately, electronic filing has reduced the number of errors, which are more common in paper returns.
  • Incomplete returns – Here again, electronic returns make the most sense. It takes longer to process an incomplete return. The IRS contacts a taxpayer by mail when more info is needed to process the return.
  • Earned income tax credit or additional child tax credit – If you claim the earned income tax credit (EITC) or additional child tax credit (ACTC) before mid-February, the IRS cannot issue refunds as quickly as others. The law requires the IRS to hold the entire refund. This includes the portion of the refund not associated with EITC or ACTC.
  • Your bank or other financial institutions may not post your refund immediately – can take time for banks or other financial institutions to post a refund to a taxpayer’s account.
  • Refund checks by mail – It can take even longer for a taxpayer to receive a refund check by mail. Direct deposit is a better bet.

In an unusually poetic statement, the IRS explains that “tax returns, like snowflakes and thumbprints, are unique and individual. So too, is each taxpayer’s refund.” So keep this in mind. Fortunately, you can track your refund status online by entering your Social Security number and other key information.

…from the Team of Professional at RE-MMAP We are just a click or call away. www.re-mmap.com and phone # (561-623-0241).

When the IRS Wants to Audit Your Business

Nothing can frighten a business owner like an audit notification. Is it the first step toward arrest and trial? No need to panic. Find out what a tax audit actually is and how to get through it with minimal fuss.

You may be surprised to learn that not every audit notification you receive will be legitimate. So, first, make sure you received an official audit notification. The Internal Revenue Service (IRS) will notify you either by letter or by a phone call followed by a letter. The IRS does not notify taxpayers about audits through email, so if you do get an email saying you’ve been selected for an audit, it’s probably fraudulent. If you’ve determined that you’re definitely getting audited, your next step is to learn what’s involved.

What Exactly Is an Audit?

According to the IRS, an audit is “a review/examination of an organization’s or individual’s accounts and financial information to ensure information is being reported correctly, according to the tax laws, to verify the amount of tax reported is substantially correct.”

That’s it. It’s an audit – not an arrest and not a trial – so don’t panic. Contrary to popular belief, an audit doesn’t automatically mean you made a mistake. Yes, an inconsistency can trigger an audit if there’s a discrepancy between what’s on a tax form and what you actually reported. But the IRS may choose to audit a taxpayer based on random selection or a statistical formula. Also, an audit may be less intrusive than you feared. For example, it may be entirely through the mail, although in some cases, it may be at an office or the taxpayer’s home or place of business. And not all audits result in your owing money. In fact, your audit may lead to no changes at all.

Both businesses and individuals may be audited (even sole proprietorships), and there may be some differences in how they are handled. One thing that virtually all audits have in common, however, is access to records. The IRS is going to want to check some of your records, and maybe a lot of them. Did you deduct business expenses? Make some substantial charitable contributions? You’ll need to show the IRS some receipts. The good news is that in many cases the IRS accepts electronic records.

What Happens Next?

There is no typical length of time for an IRS audit, but if you have your records handy and cooperate fully and quickly, you increase your chances that it will be as brief and painless as possible. Ultimately, the IRS may determine that you owe more money. At this point, you can pay it or you can appeal. The audit doesn’t have to be the end of the road. There is a substantial appeal process and a long and expensive court trial may not even be necessary.

The important thing to remember is that you don’t have to go it alone! Your accountant can work with you throughout the audit process, including any appeals. The key factor is to call us as soon as you receive the notification about your audit. We’re ready to work through the details and help you gather any records you may need.

…from the Team of Professional at RE-MMAP We are just a click or call away. www.re-mmap.com and phone # (561-623-0241).

IRS Clarifies Deductible Expenses

The Internal Revenue Service has updated the rules to reflect changes resulting from the Tax Cuts and Jobs Act. This article will help you zero in on changes involving deductible expenses and make sure you’re in compliance.

The IRS is offering some updated rules as guidance for deductible expenses that may have been murky as a result of the Tax Cuts and Jobs Act. The rules being updated involve using optional standard mileage rates when figuring the deductible costs of operating an automobile for business, charitable, medical or moving expense purposes, among other issues.

There are more succinct rules to substantiate the amount of an employee’s ordinary and necessary travel expenses reimbursed by an employer using the optional standard mileage rates. But know that you’re not required to use this method and that you may substantiate your actual allowable expenses, provided you maintain adequate records.

The TCJA suspended the miscellaneous itemized deduction for most employees with unreimbursed business expenses, including the costs of operating an automobile for business purposes. However, self-employed individuals and certain employees, armed forces reservists, qualifying state or local government officials, educators, and performing artists may continue to deduct unreimbursed business expenses during the suspension.

The TCJA also suspended the deduction for moving expenses. However, this suspension doesn’t apply to a member of the armed forces on active duty who moves pursuant to a military order and incident to a permanent change of station.

The IRS has also made it clear that the TCJA amended prior rules to disallow a deduction for expenses for entertainment, amusement or recreation paid for or incurred after Dec. 31, 2017. Otherwise, allowable meal expenses remain deductible if the food and beverages are purchased separately from the entertainment, or if the cost of the food and beverages is stated separately from the cost of the entertainment.

…from the Team of Professional at RE-MMAP We are just a click or call away. www.re-mmap.com and phone # (561-623-0241).

Social Security: Note the Key Changes for 2020

The Social Security Administration has released new numbers for those paying Social Security and those collecting it. Check out the new maximum taxable earnings amount as well as COLA and other key adjustments.

Every year, the Social Security Administration takes a fresh look at its numbers and typically makes adjustments. Here are the basics for 2020 — what has changed, and what hasn’t.

First, the basic percentages have not changed:

  • Employees and employers continue to pay 7.65% each, with the self-employed paying both halves.
  • The Medicare portion remains 1.45% on all earnings, with high earners continuing to pay an additional 0.9% in Medicare taxes.
  • The Social Security portion (OASDI) remains 6.20% on earnings up to the applicable taxable maximum amount — and that’s what’s changing:

Starting in 2020, the maximum taxable amount is $137,700, up from the 2019 maximum of $132,900. This actually affects relatively few workers; the Society for Human Resource Management notes in an article that only about 6% of employees earn more than the current taxable maximum.

Also changing is the retirement earnings test exempt amount. Those who have not yet reached normal retirement age but are collecting benefits will find the SSA withholds $1 in benefits for every $2 in earnings above a certain limit. That limit is $17,640 per year for 2019 and will be $18,240 for 2020. (See the SSA for additional information on how this works.)

Cost-of-living adjustments

Those collecting Social Security will see a slight increase in their checks: Social Security and Supplemental Security Income beneficiaries will receive a 1.6% COLA for 2020. This is based on the increase in the consumer price index from the third quarter of 2018 through the third quarter of 2019, according to the SSA.

detailed fact sheet about the changes is available on the SSA site.

Payroll Taxes: Who’s Responsible?

Any business with employees must withhold money from its employees’ paychecks for income and employment taxes, including Social Security and Medicare taxes (known as Federal Insurance Contributions Act taxes, or FICA), and forward that money to the government. A business that knowingly or unknowingly fails to remit these withheld taxes in a timely manner will find itself in trouble with the IRS.

The IRS may levy a penalty, known as the trust fund recovery penalty, on individuals classified as “responsible persons.” The penalty is equal to 100% of the unpaid federal income and FICA taxes withheld from employees’ pay.

Who’s a Responsible Person?

Any person who is responsible for collecting, accounting for, and paying over withheld taxes and who willfully fails to remit those taxes to the IRS is a responsible person who can be liable for the trust fund recovery penalty. A company’s officers and employees in charge of accounting functions could fall into this category. However, the IRS will take the facts and circumstances of each individual case into consideration.

The IRS states that a responsible person may be:

  • An officer or an employee of a corporation
  • A member or employee of a partnership
  • A corporate director or shareholder
  • Another person with authority and control over funds to direct their disbursement
  • Another corporation or third-party payer
  • Payroll service providers

The IRS will target any person who has significant influence over whether certain bills or creditors should be paid or is responsible for day-to-day financial management.

Working With the IRS

If your responsibilities make you a “responsible person,” then you must make certain that all payroll taxes are being correctly withheld and remitted in a timely manner. Talk to a tax advisor if you need to know more about the requirements.

…from the Team of Professional at RE-MMAP We are just a click or call away. www.re-mmap.com and phone # (561-623-0241).