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Happy (belated) Easter From 
Engineered Accounting Solutions
Accounting • Advisory • Bookkeeping • Tax

Online Newsletter – April 2024

To All My Friends, I Say Welcome!

It’s been an extremely busy first three months of this year for me and, I’ve done a poor job in communicating and getting these out. Time to get back on track…Here’s a first of many Newsletters that I’m looking to publish in 2024.

Spring is here, and the Winter was mild – We were lucky. And, Michigan was crowned National Champions! Sorry for the Swipe Sparty fans, I had to get that in.

I want to keep these Newsletters, light, but informative and entertaining. So, If my attempt(s) miss the mark, tell me and I’ll change it up so you can get something of value that you like. I’m not writing these to impress or inundate your (overburdened) inbox. More than anything, I want to learn something from YOU.

(Not so) Amusing Tax Convictions

I saw this and it stood out. From court documents and statements – Vervia Watts, of Lansing, Illinois, was a tax preparer for business clients within and outside Illinois. For a six and a half year period – January 2017 through June 2023, Watts intentionally reported false education expenses and business income to create refunds from the IRS, greater than what her clients were entitled to. In total, Watts claimed more than $1.5 million in fraudulent refunds. She’ll be sentenced this spring.

Here’s another – an unscrupulous business owner instead of a crooked tax professional. Francesco Illiano, employed over 100 employees in restaurants (and another business) that he owned and operated. For a little over 2 years – April 2014 to July 2016, Illiano refused to pay more than $1.4 million in federal withholding – from his employees, to the IRS that included federal tax withholding, SS and Medicare that he was legally obligated to pay. He had also been assessed a Trust Fund Recovery Penalty. Illiano plead guilty and was scheduled to be sentenced in March (2024). Possible penalties included five years in prison, plus restitution in addition to penalties.

The One Folder Rule

As the calendar brings us ever closer to Tax Day, the sense of frustration for many people keeps right on growing. Not to worry! There is a simple, yet powerful tool to transform this annual chore into a smooth and stress-free experience for those taxpayers with more simple and straightforward returns.

Note: This is NOT the best solution for (most) business owners and folks who traditionally have complicated returns, but for newer taxpayers or employees – It’s an easy way to stay more organized.

Use a single, dedicated folder for every tax-related document. This could be a physical folder or a digital folder on a computer or cloud service. The rule is straightforward – throughout the year, any document with the slightest hint of tax relevance finds its home in this folder. Receipts, invoices, and other financial documents are all neatly corralled in one, easily accessible location.

This One Folder Rule is simplistic. No need for elaborate systems or complex software. It’s a return to the basics – organization and discipline. As documents are added consistently over the year, this humble folder evolves into a comprehensive repository of all things tax-related. When tax season arrives, you’ve got a neatly organized collection of everything you need. This approach doesn’t just ease the burden of tax preparation; it virtually eliminates it.

Now, as the frenzy of Tax Day fades into the rearview mirror, it’s the perfect moment to consider your organizational strategies to make next year’s tax season a breeze or at the very least, easier than prior years. Building on the foundation of the One Folder Rule – where every tax-relevant document finds its place in a single, dedicated folder – let’s talk about taking this organization to the next level, especially now that the immediate pressure of filing is behind us.

Reflect on the recent tax season: what pieces of paper and documentation were you frantically searching for at the last minute? This insight can help you tweak your One Folder strategy. Consider creating specific sections within your folder for different categories of expenses or income, making it even easier to keep track of your financial story throughout the year.

If you haven’t already, moving to a digital version of the One Folder can streamline the process even further, making documents easier to find, share, and secure. Regularly, perhaps quarterly, sift through your folder. This not only ensures you stay organized but may keep you in tune with your financial situation, uncovering potential tax opportunities (or questions you may have) in the new year.

These quarterly check-ins are the time to evaluate your spending and saving habits. If you notice areas where you’re consistently spending – with no obvious (or questionable) tax benefits – it might be time to shift your strategy.

Consult with your CPA/Accountant, particularly if you have questions or your situation has changed.

Using the One Folder Rule (or something similar) is more than just an organizing your records, it’s an approach to managing your finances. As you continue to organize your records, you will see (or think of) things that will make you become more aware as to how your situation impacts your financial health. At the very least, you will have questions. So, as we look beyond Tax Day, let’s embrace the simplicity and power of staying organized, making next year’s tax season something you can actually look forward to.

Digging Into Small Business

As an Accountant, I believe in forging a partnership with small business owners that goes beyond just number-crunching and transforming tax management from a chore into a strategic advantage. Here’s the essence of making this collaboration work:

  1. Open, year-round communication is crucial. Communicating during tax season is essential for the immediate issue of preparing and filing returns. But, As your business evolves, it’s important to maintain open lines so that changes to your business can be evaluated against changes in tax law. Understanding your financial reports is key – I’m always looking to simplify the complexities of accounting and tax law to help empower you to make better, more informed decisions.
  2. Embracing technology is a game-changer. The right tools, from accounting software to cloud-based document management. Anything that streamlines your order-to-cash processes and enhances how you operate is a big plus.
  3. Proactive tax planning. Taxes need to be part of your business strategy. By considering tax credits and deductions, implementing plans early in the business cycle can reduce your tax liability.

Staying informed about tax law changes is what I do. As laws or rules change, (and, as long as we’re communicating) we can pivot strategies promptly, keeping you both compliant and optimized to seize these advantages.

In essence, my role as your Accountant is to be a trusted partner (and analyst) in your business’s financial health. But, more than that, I genuinely want to help you navigate the complexities of accounting and managing your tax exposure to make it easier and give you better insight. Working together, we can turn tax time into an opportunity for growth and success.

Important – Beneficial Ownership Information (BOI) Reports. Please READ Below

What is This?

Yes. Another filing to the government.

This will affect you the majority of business owners. Any business that was created by filing articles with their respective Secretary of State – an LLC, Corporation, Partnership, or other entity, will need to file this document.

The Financial Crimes Enforcement Network (FinCEN) of the U.S. Treasury is mandating this requirement for most businesses (large and small) starting in 2024.

In essence, any business, in existence prior to January 1st, 2024 has until January 1st, 2025, to file a report with FinCEN. Those businesses that are started after January 1st, 2024 have 9o days in which to file. The filing is fairly simple – they want some details of the business and the owner, partner(s), or shareholder(s), most notably, contact information.

It’s a fairly simple document that needs to be filled-out and filed.

There are some exceptions (for some businesses and owners) but these exceptions are very narrow. The only businesses that will be exempt are large publicly-traded companies, already under substantial regulatory control.

Failure to file carries (potentially) substantial risk. Under the Corporate Transparency Act (enacted in 2021) Fines of $500 PER DAY and prison time are possible!

Contact me to learn more. Let’s get you and your business, compliant.

A Message to My Special Clients and Friends

I don’t pester or bug clients for business. I choose to focus on service – which in the accounting/tax business, leaves much to be desired. If you have a friend, business associate or family member in need of help, please let me know.

Digital Life Hack Tip

If you’re like me, you suffer from information overload, especially when you have clients and employees. When you find your computer or laptop acting up or slowing down, you may want to check the device’s storage. If you’re near the limit for hard drive storage consider two options – cloud storage solutions or a portable hard disk.

We all have personal information on our work computers. So, separate your personal files – documents, digital files – audio and photos, messages, etc., from work-related files and send them to the cloud or a portable hard disk. You’ll “relieve” the stress on your computer and ensure that your personal info is safe and accessible whenever you need it.

Cloud services have improved dramatically and also offer back-up and recovery options to mitigate the risks of cloud storage.

Adopting a simple file management system lessens the risks of hardware seizures and crashes that happen all too often in today’s information age.

Feedback is Always Welcome / Contact Us 

Contact Us by hitting this link or Book a Call.

Until next time,

Mike Faremouth
Engineered Accounting Solutions, LLC
Accounting • Advisory • Bookkeeping • Tax
Woodhaven, MI. 48183
Ph. (734) 778-8429
Fax (734) 275-2454

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