Local now and alwaysAt one time I was among those who crossed the border to find a better deal. I stopped doing that several years ago when realized wasn't saving anything. Money or time. Today I am less likely to bother due to increased border security since 9 11. More wasted time waiting in long lines at the border.I am not one of those isolationists who is dead set against free trade ever.
Equine Accounting: Home, Sweet Home (Office Deduction)
If you use a portion of your home for business purposes, you may be able to take a home office deduction if you meet certain requirements. In order to claim a business deduction, you must use part of your home for one of the following two reasons: 1. Exclusively and regularly as either: your principal place of business, or as a place to meet or deal with clients in the normal course of your business. To meet the test for exclusive use, you must use use a specific area of your home only for your trade or business. And you must have no other fixed location where you conduct substantial administrative or management activities of your trade or business. For example, if you conduct part of your business from an office located in your barn, you could not also claim home office expenses for the same business activity. And you must use this space regularly, rather than incidentally or occasionally.
2. On a regular basis for certain storage use -- such as storing inventory or product samples -- as rental property, or as a home daycare facility.
The use of the office must be for “substantial managerial or administrative activities” such as billing customers, keeping books and records and scheduling appointments. The business activity associated with the home office need not be your main activity but the home office must be the principal place of business for your sideline activity. For example, an attorney working full time may judge at horse shows on weekends. If the home office is not used for purposes other than those associated with being a judge, the expenses associated with the home office should be deductible for tax purposes. Generally, the amount you can deduct depends on the percentage of your home that you used for business. Usage is commonly allocated based on the percentage of square footage allocated for business use but any other reasonable method would be acceptable.
Different rules apply to claiming the home office deduction if you are an employee. For example, the regular and exclusive business use must be for the convenience of your employer. If you own your home and qualify to deduct expenses for its business use, you can claim a deduction for depreciation. Depreciation is an allowance for the wear and tear on the part of your home used for business. You cannot depreciate the cost or value of the land.
HOWEVER (you knew there had to be a downside), if you sell your house, any depreciation taken on a home office after May 6, 1997 must be recaptured at the rate of 25 percent (for taxpayers in tax brackets over this amount). You cannot use the home sale exclusion to offset this tax. You cannot avoid the recapture by not reporting depreciation. Recapture applies to depreciation both claimed and claimable. If you want to avoid the depreciation recapture, you must choose to sidestep the deduction entirely by disqualifying the home office (by NOT using the space entirely for business). You will miss out on the depreciation expense but can still deduct related costs such as office maintenance.
For more information, see IRS Publication 587.
2. On a regular basis for certain storage use -- such as storing inventory or product samples -- as rental property, or as a home daycare facility.
The use of the office must be for “substantial managerial or administrative activities” such as billing customers, keeping books and records and scheduling appointments. The business activity associated with the home office need not be your main activity but the home office must be the principal place of business for your sideline activity. For example, an attorney working full time may judge at horse shows on weekends. If the home office is not used for purposes other than those associated with being a judge, the expenses associated with the home office should be deductible for tax purposes. Generally, the amount you can deduct depends on the percentage of your home that you used for business. Usage is commonly allocated based on the percentage of square footage allocated for business use but any other reasonable method would be acceptable.
Different rules apply to claiming the home office deduction if you are an employee. For example, the regular and exclusive business use must be for the convenience of your employer. If you own your home and qualify to deduct expenses for its business use, you can claim a deduction for depreciation. Depreciation is an allowance for the wear and tear on the part of your home used for business. You cannot depreciate the cost or value of the land.
HOWEVER (you knew there had to be a downside), if you sell your house, any depreciation taken on a home office after May 6, 1997 must be recaptured at the rate of 25 percent (for taxpayers in tax brackets over this amount). You cannot use the home sale exclusion to offset this tax. You cannot avoid the recapture by not reporting depreciation. Recapture applies to depreciation both claimed and claimable. If you want to avoid the depreciation recapture, you must choose to sidestep the deduction entirely by disqualifying the home office (by NOT using the space entirely for business). You will miss out on the depreciation expense but can still deduct related costs such as office maintenance.
For more information, see IRS Publication 587.
Salvaging Business Intelligence
"Software-as-a-Service is becoming more and more accepted as a deployment option for enterprise systems. But if the application is truly mission-critical, be sure you have an escape plan in advance" says Frank Scavo of the Enterprise Software Spectator.In his recent article "SaaS: plan to get out before you get in" Scavo discusses the issue of vendor lock-in involving the use of software-as-a-service (SaaS) for mission-critical applications. He points out that "If you thought vendor lock-in was a problem with traditional on-premise ERP software, think about the issue when it comes to SaaS. Under a perpetual license agreement for on-premise software, you always have the option of going off maintenance but continuing to run the software, and perhaps maintaining it yourself.But with SaaS, there is no such thing as going off maintenance. If you stop paying, access to your mission-critical system gets cut off."
"Therefore, I think it is important for buyers to think about what will happen if and when they decide to migrate from their SaaS provider. Specifically, there are two things I believe that buyers should ensure are in their license agreements:
First, if the SaaS provider offers an on-premise version (e.g. Oracle On-Demand), ensure that there are terms and conditions that allow you to transition to an on-premise version. This covers cases where you want to continue to use the software but are no longer satisfied with the hosting arrangement.
Second, if the SaaS providers does not offer an on-premise deployment option (e.g. Salesforce.com), be sure the provider gives you the ability to extract all master file and transactional data to an open format (e.g. XML). The ability should be repeatable--not a one-time right--so that you can develop migration programs to facilitate conversion to a new SaaS or on-premise solution. "
Small Businesses should be particularly concerned about whether or not the solution will fit the needs of the business for an extended period of time and through a variety of business conditions. The small business should also determine if there is a way to continue use of the solution (or transition from the solution) if the solution or the provider stop meeting the needs of the business. Small business owners are particularly at risk, because the SaaS solutions oriented towards small business users often don't have the on-premises options that some of their enterprise counterparts offer. And small businesses are the ones who are most likely to need to transition to another solution as the business grows. Further, the small business user often lacks the technical knowledge to manage the conversion effectively, and doesn't typically employ skilled in-house IT personnel to handle it for them. The result: consulting dollars get spent, just to retain the data the business already has.
The issue is that you are either a customer or you are not, meaning that companies can't keep their old SaaS solutions around just for historic data unless they wish to continue the subscription with the SaaS application. This is of particular concern with finance and accounting applications, as they are the core of the business intelligence, and the source for tax data, compliance, etc. Keeping the financial data for long term access is a requirement for most businesses.
Any small business - actually any business - electing to adopt SaaS-based solutions should give great care and consideration to how the business information might be protected and utilized in the event of a transition away from the online service. "In general, a lack of standards hampers the portability of data and applications between systems", says James Staten, an analyst at Forrester Research. He indicates that, while the popular hype implies that moving to the cloud doesn't require any heavy lifting, that's not true in some forms of cloud computing. "Particularly with software and platform as a service, vendors use unique and proprietary interfaces, application programming interfaces (API) and databases. Users and 3rd parties must program to those specifications in order to take advantage of the system. If they grow dissatisfied with the service, or if the vendor goes under, data and/or applications would need to be reformatted in order to switch providers or move it back in-house, which could be complex and costly."
Application hosting services may be a means to deliver the benefits of managed online application services to the business without also delivering the risks involved with SaaS application adoption. By providing access to business applications in a managed, secured environment, users gain the benefits of easy access and simplified IT management without also facing difficulties when discontinuing the service. Hosted applications offer the ability to return to an on-premises operating model, delivering the flexibility and the scalability the business needs without the concerns of loss of valuable business intelligence.
"Therefore, I think it is important for buyers to think about what will happen if and when they decide to migrate from their SaaS provider. Specifically, there are two things I believe that buyers should ensure are in their license agreements:
First, if the SaaS provider offers an on-premise version (e.g. Oracle On-Demand), ensure that there are terms and conditions that allow you to transition to an on-premise version. This covers cases where you want to continue to use the software but are no longer satisfied with the hosting arrangement.
Second, if the SaaS providers does not offer an on-premise deployment option (e.g. Salesforce.com), be sure the provider gives you the ability to extract all master file and transactional data to an open format (e.g. XML). The ability should be repeatable--not a one-time right--so that you can develop migration programs to facilitate conversion to a new SaaS or on-premise solution. "
Small Businesses should be particularly concerned about whether or not the solution will fit the needs of the business for an extended period of time and through a variety of business conditions. The small business should also determine if there is a way to continue use of the solution (or transition from the solution) if the solution or the provider stop meeting the needs of the business. Small business owners are particularly at risk, because the SaaS solutions oriented towards small business users often don't have the on-premises options that some of their enterprise counterparts offer. And small businesses are the ones who are most likely to need to transition to another solution as the business grows. Further, the small business user often lacks the technical knowledge to manage the conversion effectively, and doesn't typically employ skilled in-house IT personnel to handle it for them. The result: consulting dollars get spent, just to retain the data the business already has.
The issue is that you are either a customer or you are not, meaning that companies can't keep their old SaaS solutions around just for historic data unless they wish to continue the subscription with the SaaS application. This is of particular concern with finance and accounting applications, as they are the core of the business intelligence, and the source for tax data, compliance, etc. Keeping the financial data for long term access is a requirement for most businesses.
Any small business - actually any business - electing to adopt SaaS-based solutions should give great care and consideration to how the business information might be protected and utilized in the event of a transition away from the online service. "In general, a lack of standards hampers the portability of data and applications between systems", says James Staten, an analyst at Forrester Research. He indicates that, while the popular hype implies that moving to the cloud doesn't require any heavy lifting, that's not true in some forms of cloud computing. "Particularly with software and platform as a service, vendors use unique and proprietary interfaces, application programming interfaces (API) and databases. Users and 3rd parties must program to those specifications in order to take advantage of the system. If they grow dissatisfied with the service, or if the vendor goes under, data and/or applications would need to be reformatted in order to switch providers or move it back in-house, which could be complex and costly."
Application hosting services may be a means to deliver the benefits of managed online application services to the business without also delivering the risks involved with SaaS application adoption. By providing access to business applications in a managed, secured environment, users gain the benefits of easy access and simplified IT management without also facing difficulties when discontinuing the service. Hosted applications offer the ability to return to an on-premises operating model, delivering the flexibility and the scalability the business needs without the concerns of loss of valuable business intelligence.
Your software is only a toolNo doubt you have heard and seen a lot from Intuit lately. They are heavily promoting what you can use Quickbooks for to make running your business easier. Export this...import that. Download quickly everything from your bank and credit card statements. Currently Intuit is trying to convince you to use Quickbooks on your blackberry, palm, or iphone.I have
I had to talk to a CSR with Quickbooks recently after reinstalling the application and needing to register again. I don't like calling any CSR and was quickly reminded why avoid. While waiting to get the validation code was forced to listen to a script that now is the time to purchase their payroll service. Give me a break. Who believes these scripts.First didn't really have to wait for a
Migrating Business To The Web
Every business has similar, fundamental business problems to solve. In most cases, the business applies technology (computers and software) to facilitate the solution. The fundamentals that each and every business must address include: keeping score, accounting for their business operations; producing information, for internal and for external use; and communicating, with co-workers, team members, clients, and vendors.Once you get beyond those fundamentals, however, every business has something unique to address in terms of how they actually operate. Supporting the operational aspects of the business - managing people, resources, information, processes, etc. - is the next step in enabling the business.
Within each business there are different kinds of processes to facilitate, creating the demand for software developers to build systems to address specific processes or to deliver specific functionality to the many and varied businesses in the world. Even within an industry domain or realm, there are likely numerous solutions available for any given business problem. For most organizations, selecting the right applications for the business often requires that those applications integrate, or work together in some manner.
But here's the issue: not everyone programmer develops software the same way or using the same tools. What ends up happening is that each software product has its own "footprint", and behaves differently. Some packages are written well and offer flexibility in how they are implemented; and some not. Disparity in application design and operating platform requirements can significantly increase the complexity of not only integrating the solutions, but managing the software and platforms to keep those integrations running. For these (and other) reasons, application integration (or data integration) is not always easily accomplished in a small business.
At an ever-increasing level, users are also now demanding remote and mobile capability from their software. The market has generally accepted the value of remote/mobile access, and businesses need to offer their workers the flexibility to work from a variety of locations (at the office, from a remote office, from home). Now the enterprise has to figure out a way to fit that square peg (the software they currently use) into a round hole (mobility!) It really starts to matter if the software products in use are all designed to run differently. Can the organization's selected applications be oriented towards remote or mobile access? Generally, the answer is "YES" (but with caveats).
The Application Service Provider model, or hosted application model, was developed to provide remote access capability to applications that traditionally don't work in that capacity. Additionally, the ASP model was designed to improve application management and administration for the subscriber, reducing or eliminating the complexities of handling multiple integrated solutions. Allowing a business to "migrate" to the web gives that business new capability and, potentially, a new working model that could easily include remote offices and mobile users. Migrating with the existing in-use applications allows the business to benefit from the new working model, but avoids the difficulties of transitioning to and learning new software.
Application hosting isn't a new concept at all, it's just gaining in popularity for several key reasons:
- Broadband is plentiful. You can get high-speed internet service now just about anywhere. That wasn't the case just a few short years ago.
- Localized IT solutions are getting more complex. Bundled solutions (like a Microsoft Small Business Server) make it easier to purchase an array of technology solutions for your business, but there's nothing in the package that makes it easier to set up and manage over time.
- Remote and mobile access is critical. More businesses operate with a home-based workforce ("home sourcing"), or with multiple business locations. The Internet has made it a global economy, and remote and mobile access is what helps a distributed enterprise work as a collective or unit.
- SaaS solutions, such as online banking, have raised awareness of the possibility of secure Internet-based computing. So, as new SaaS solutions emerge, the market is beginning to recognize the value of hosting and is building trust in the model.
Joanie Mann
Equine Accounting: Franchises-The more we get together, the happier we'll be
Don't have $150,000 for a Grand Prix horse capable of competing on a national level? Just find 14 friends each with $10,000 to spare and create a syndicate. Is it that easy? No, not really. But syndicates, which have been popular for some time for race horses and breeding, are becoming a useful way to finance the purchase of a competition horse. Several friends of mine who were all students of a well-known dressage trainer combined funds and expertise with other interested parties and created a syndicate to allow the trainer to purchase a very talented horse that he had in training. One of my friends jokingly says that she "owns the tail".
What is a syndicate? A syndicate is a division of ownership. Each shareholder or member contributes a portion of the cost to purchase and/or maintain a horse or horses. Generally, the syndicate's legal form of organization is either a partnership or an LLC (Limited Liability Corporation). What does the Syndicate Agreement include? Generally, the agreement should include:1. the rights, interests, obligation and privilege of each member.2. identification of the animal(s) and where it will be held.3. warrants as to the health and title of the animal(s).4. conditions for transferability of shares.5. designation of syndicate manager and explanation of his/her duties and compensation.6. provision for the tax treatment of the syndicate.7. establishment of liability insurance coverage and in the case of stallion/mare, any warranties of fertility.8. any timelines for when the horse will be sold or the syndicate will terminate.9. explanation of procedure to modify current agreement, if necessary. What is the cost to purchase a share in a syndicate? The biggest variable in determining the cost of a share is the cost of the horse. Another variable is the issue of who bears the cost of future expenses. Many syndicates require that members make an annual contribution for the cost of maintaining the horse - feed, board, vet bills, farrier as well as costs for competition and shipping. However, some syndicates offer their shares at a one-time fee. This is more often the case if the current owner of the horse cannot afford the future costs of training and competing and creates a syndicate to obtain funding to campaign the horse further. In this case, there is no actual purchase of a horse. The revenues from sales of shares are used to fund future endeavors. What are the benefits of syndication? For members, the risk of ownership is significantly decreased. If the horse is not a successful performer or in injured, the loss is only a fraction of the purchase price. It is a relatively safe and inexpensive way to get involved in racing, breeding or competing and provides the opportunity to participate on a much higher level than individual ownership. Some syndicates offer perks such as the opportunity for members to attend select competitions with access to VIP hospitality or to obtain lessons on their own horses at discounted rates. For the trainer/rider, it provides funds to purchase a horse that may otherwise have been unobtainable. Because a syndicate is composed of many members and designation of the trainer has been included in the syndicate agreement, it provides a much more stable relationship for the trainer with the owners and the likelihood of a horse being moved from trainer to trainer is considerably diminished. What about taxes? An attorney, knowledgeable in this subject, is essential. A syndicate is treated under tax laws as either a joint ownership of property or as a partnership. The activities of the syndicate determine how it is treated for tax purposes. When the syndicate is treated as a joint ownership of property, each member files their tax return as a sole proprietor. They report their share of income and expense of the syndicate with no computation of the income and expense of the syndicate included with their return. They can choose the method of depreciation that is most beneficial to their tax situation. If the syndicate is treated as a partnership for tax purposes, Form 1065 K-1 (IRS filing on partnership informational return) must be included with each member's personal return and the method of depreciation is determined by the syndicate. Depending on the activities of the syndicate and the structure of the syndicate agreement, there is the possibility that syndicate shares may be treated as a security would be subject to specific requirements by the SEC (U.S. Securities and Exchange Commission). There are also murky tax issues such as "at-risk rules" and possible tax shelter status. So be sure to have an attorney that represents you look over the syndicate agreement.
What is a syndicate? A syndicate is a division of ownership. Each shareholder or member contributes a portion of the cost to purchase and/or maintain a horse or horses. Generally, the syndicate's legal form of organization is either a partnership or an LLC (Limited Liability Corporation). What does the Syndicate Agreement include? Generally, the agreement should include:1. the rights, interests, obligation and privilege of each member.2. identification of the animal(s) and where it will be held.3. warrants as to the health and title of the animal(s).4. conditions for transferability of shares.5. designation of syndicate manager and explanation of his/her duties and compensation.6. provision for the tax treatment of the syndicate.7. establishment of liability insurance coverage and in the case of stallion/mare, any warranties of fertility.8. any timelines for when the horse will be sold or the syndicate will terminate.9. explanation of procedure to modify current agreement, if necessary. What is the cost to purchase a share in a syndicate? The biggest variable in determining the cost of a share is the cost of the horse. Another variable is the issue of who bears the cost of future expenses. Many syndicates require that members make an annual contribution for the cost of maintaining the horse - feed, board, vet bills, farrier as well as costs for competition and shipping. However, some syndicates offer their shares at a one-time fee. This is more often the case if the current owner of the horse cannot afford the future costs of training and competing and creates a syndicate to obtain funding to campaign the horse further. In this case, there is no actual purchase of a horse. The revenues from sales of shares are used to fund future endeavors. What are the benefits of syndication? For members, the risk of ownership is significantly decreased. If the horse is not a successful performer or in injured, the loss is only a fraction of the purchase price. It is a relatively safe and inexpensive way to get involved in racing, breeding or competing and provides the opportunity to participate on a much higher level than individual ownership. Some syndicates offer perks such as the opportunity for members to attend select competitions with access to VIP hospitality or to obtain lessons on their own horses at discounted rates. For the trainer/rider, it provides funds to purchase a horse that may otherwise have been unobtainable. Because a syndicate is composed of many members and designation of the trainer has been included in the syndicate agreement, it provides a much more stable relationship for the trainer with the owners and the likelihood of a horse being moved from trainer to trainer is considerably diminished. What about taxes? An attorney, knowledgeable in this subject, is essential. A syndicate is treated under tax laws as either a joint ownership of property or as a partnership. The activities of the syndicate determine how it is treated for tax purposes. When the syndicate is treated as a joint ownership of property, each member files their tax return as a sole proprietor. They report their share of income and expense of the syndicate with no computation of the income and expense of the syndicate included with their return. They can choose the method of depreciation that is most beneficial to their tax situation. If the syndicate is treated as a partnership for tax purposes, Form 1065 K-1 (IRS filing on partnership informational return) must be included with each member's personal return and the method of depreciation is determined by the syndicate. Depending on the activities of the syndicate and the structure of the syndicate agreement, there is the possibility that syndicate shares may be treated as a security would be subject to specific requirements by the SEC (U.S. Securities and Exchange Commission). There are also murky tax issues such as "at-risk rules" and possible tax shelter status. So be sure to have an attorney that represents you look over the syndicate agreement.
Happening again...Further insult to our intelligence, and trying to fool usSee the PSAs about a proposed tv tax ? 2 ads back to back every hour on every network. First from cable companies then from tv networks. Each wanting public opinion on their side. Each pointing a finger for who is to blame for a lack of funding for local programming, and why networks are struggling.You know I am no fan
Concentrate on your product or serviceRunning a business is difficult especially when you are wearing many hats. Office Manager, Sales and Marketing, Receptionist, Accountant, Bookkeeper. You are doing all that and more on top of providing the product or service for your business.How much time are you actually spending on the product or service ? I am willing to bet not as much as you would
Responsibility Flows Downhill (just like a few other things!)
A recent article published in Computerworld discusses a court order requiring some website hosting companies to pay heavy penalties for allowing counterfeit products to be sold via sites they hosted. The article delivers a message that technology service providers - and the customers who utilize them - should listen to very carefully.
The article mentions two website hosting companies in California that were found to be hosting sites that were selling counterfeit Louis Vuitton products. The court found that the hosting companies had essentially enabled the selling of the counterfeit goods. "In awarding the damages, the jury agreed with Paris-based Louis Vuitton Malletier S.A.'s claims that the defendants knowingly allowed several Web sites they hosted to sell products that infringed Louis Vuitton's copyrights and trademarks." The website hosting companies were not found to be directly tied to the selling of the counterfeit products; it was simply determined that they were aware of their hosting customers' activities.
The result: assessed damages totaling more than $32M.
For hosting companies, this is certainly something to watch out for. For potential hosting customers, it is important to realize how your activities might impact your service provider.As an example, let's say you are working with an ASP (application service provider) who is hosting certain business applications for your company. In order for this hosting company to deliver your solution, they must have the software installed on their systems and provide access for you. Typically, an ASP will know what applications they are legally able to provide hosting for, and (most importantly) they may require that you supply proof-of-ownership for the applications to be hosted on your behalf.
There are, however, many providers in the market that will simply deliver anything - applications you may wish to have access to, but do not have valid use licensing for. There are also providers notorious for "leveraging" licensing, meaning that there may be one or more valid licenses in the system, but they are offered for use to more customers than there are actual licenses to support. In other situations, you may only have one valid license for a business application, but use that license as a basis for the provider to deliver the solution to additional users. In all of these scenarios, the service provider is at risk for not protecting the intellectual property of the software companies whose applications are being hosted.
From the Business Software Alliance website:: "Software piracy is the unauthorized copying or distribution of copyrighted software. This can be done by copying, downloading, sharing, selling, or installing multiple copies onto personal or work computers. What a lot of people don't realize or don't think about is that when you purchase software, you are actually purchasing a license to use it, not the actual software. That license is what tells you how many times you can install the software, so it's important to read it. If you make more copies of the software than the license permits, you are pirating."
License management is an important part of any managed application and hosting service and exists to protect customers, partners, and the provider. When it all flows downhill, you don't want to be the fellow left holding the bucket.
Make Sense?
J
The article mentions two website hosting companies in California that were found to be hosting sites that were selling counterfeit Louis Vuitton products. The court found that the hosting companies had essentially enabled the selling of the counterfeit goods. "In awarding the damages, the jury agreed with Paris-based Louis Vuitton Malletier S.A.'s claims that the defendants knowingly allowed several Web sites they hosted to sell products that infringed Louis Vuitton's copyrights and trademarks." The website hosting companies were not found to be directly tied to the selling of the counterfeit products; it was simply determined that they were aware of their hosting customers' activities.
The result: assessed damages totaling more than $32M.
For hosting companies, this is certainly something to watch out for. For potential hosting customers, it is important to realize how your activities might impact your service provider.As an example, let's say you are working with an ASP (application service provider) who is hosting certain business applications for your company. In order for this hosting company to deliver your solution, they must have the software installed on their systems and provide access for you. Typically, an ASP will know what applications they are legally able to provide hosting for, and (most importantly) they may require that you supply proof-of-ownership for the applications to be hosted on your behalf.
There are, however, many providers in the market that will simply deliver anything - applications you may wish to have access to, but do not have valid use licensing for. There are also providers notorious for "leveraging" licensing, meaning that there may be one or more valid licenses in the system, but they are offered for use to more customers than there are actual licenses to support. In other situations, you may only have one valid license for a business application, but use that license as a basis for the provider to deliver the solution to additional users. In all of these scenarios, the service provider is at risk for not protecting the intellectual property of the software companies whose applications are being hosted.
From the Business Software Alliance website:: "Software piracy is the unauthorized copying or distribution of copyrighted software. This can be done by copying, downloading, sharing, selling, or installing multiple copies onto personal or work computers. What a lot of people don't realize or don't think about is that when you purchase software, you are actually purchasing a license to use it, not the actual software. That license is what tells you how many times you can install the software, so it's important to read it. If you make more copies of the software than the license permits, you are pirating."
License management is an important part of any managed application and hosting service and exists to protect customers, partners, and the provider. When it all flows downhill, you don't want to be the fellow left holding the bucket.
Make Sense?
J
InsynQ's Application Ecosystem at Work
Since 1997 InsynQ has been a leader in delivering online application services to small/medium businesses and enterprise workgroups. Our QuickBooks hosting solutions, for example, help thousands of small business owners stay in touch with their business information any time, anywhere.Our ability to host and manage a large variety of applications enables businesses to utilize the right solution to meet their needs, and enjoy the benefits of predictability in their IT costs, comprehensive management of applications and business data, and anytime, anywhere access.
Don't believe anything these three criminal organizations spout. They are not good corporate citizens. Could care less about humanity, the environment, and society in general. All they care about is to cheat you out of what money you have.I tried to discuss with someone from Shaw a few years ago about their practice of inserting ads. This person claimed not to do such and pointed a finger at
Equine Accounting: Hobby vs Business...What the IRS says
To you, it's a way to combine your passion with the need to eat and have a roof over your head. It's a business. But the IRS might have an alternative view. How do they decide and what difference does it make to you?
The IRS has created the Hobby Loss Rule for unincorporated businesses that it determines to be created mainly for recreation, sport or personal enjoyment. In addition to horses, examples of other activities that might qualify under this heading would be coin/stamp collecting or dog/cat breeding. For the IRS to classify your activity as a business, there must be a presence of a profit objective. The owner must have entered into or continued with the activity with the objective of making a profit.
The profit motive can be inferred by the IRS by examining the following factors (commonly known as the 9 Factors Test):
1. Is the activity carried on in a business-like manner - business records are separate from personal records, the business has a long-range business plan (preferrably written) and complete and accurate books are kept?
2. Does the owner invest a significant amount of time in the business?
3. Does the owner depend on the income from the activity for his/her livelihood?
4. What is the amount of occasional profits, if any?
5. Has the activity been profitable in some years and how much profit is realized?
6. Does the owner have the expertise to carry on the business? Do they solicit the advice of experts?
7. Are there elements of personal pleasure or recreation involved?
8. Is there an expectation that the assets used in the activity will appreciate in value?
9. Has the owner had success in other similar ventures?
The burden of proof is on the taxpayer. IRS regulations state that in determining whether an activity is enaged in with a profit motive, the IRS will look to "objective standards, taking into account all the facts and circumstances of each case."
What can you do to avoid having your business classified as a hobby activity? As a business owner, you need to operate in a way which conforms to the factors that indicate a profit motive. Available on the IRS website is the Audit Techniques Guide for Farm Hobby Losses with Cattle and Horse Activities. This guide is available to auditors, prior to visiting a horse/cattle activity. Read it and familiarize yourself with the areas are important to the IRS regarding this issue.
Another factor for you to consider is the possibility of timing the profit and loss years. In IRS terms, this situation is known as the "General Presumption" or more commonly as the "Two out of Seven Rule". This is a lengthy subject and will be discussed in a later issue of this newsletter.
If you think that your business is too big, has been in business too long, etc. to be determined to be a hobby by the IRS, consider this; in 1958, Tempel Smith decided to build a herd of Lipizzan horses and create an organization in the U.S. similar to the Spanish Riding School. Tempel Farms showed consecutive losses over the period from 1958-1976, totalling approximately $5.9 million dollars. By 1976, the herd size was approximately 400 horses. In Smith v Commissioner 1979, the IRS challenged the profit presumption and tried to establish that Tempel Farms was a hobby activity. Fortunately for Tempel Farms, the U.S. Tax Court disagreed with the IRS position.
If your activity IS determined to be a hobby, income is reported as other income on Form 1040 and deductions are reported as miscellaneous itemized deductions on Schedule A. However, any expenses your business sustains may not be deductible in excess of business income and the unused losses cannot be carried over to another year.
In these tough times, your business may not be able to show a profit. But you can operate your business with consideration for the eight factors listed above. Plan ahead.
The IRS has created the Hobby Loss Rule for unincorporated businesses that it determines to be created mainly for recreation, sport or personal enjoyment. In addition to horses, examples of other activities that might qualify under this heading would be coin/stamp collecting or dog/cat breeding. For the IRS to classify your activity as a business, there must be a presence of a profit objective. The owner must have entered into or continued with the activity with the objective of making a profit.
The profit motive can be inferred by the IRS by examining the following factors (commonly known as the 9 Factors Test):
1. Is the activity carried on in a business-like manner - business records are separate from personal records, the business has a long-range business plan (preferrably written) and complete and accurate books are kept?
2. Does the owner invest a significant amount of time in the business?
3. Does the owner depend on the income from the activity for his/her livelihood?
4. What is the amount of occasional profits, if any?
5. Has the activity been profitable in some years and how much profit is realized?
6. Does the owner have the expertise to carry on the business? Do they solicit the advice of experts?
7. Are there elements of personal pleasure or recreation involved?
8. Is there an expectation that the assets used in the activity will appreciate in value?
9. Has the owner had success in other similar ventures?
The burden of proof is on the taxpayer. IRS regulations state that in determining whether an activity is enaged in with a profit motive, the IRS will look to "objective standards, taking into account all the facts and circumstances of each case."
What can you do to avoid having your business classified as a hobby activity? As a business owner, you need to operate in a way which conforms to the factors that indicate a profit motive. Available on the IRS website is the Audit Techniques Guide for Farm Hobby Losses with Cattle and Horse Activities. This guide is available to auditors, prior to visiting a horse/cattle activity. Read it and familiarize yourself with the areas are important to the IRS regarding this issue.
Another factor for you to consider is the possibility of timing the profit and loss years. In IRS terms, this situation is known as the "General Presumption" or more commonly as the "Two out of Seven Rule". This is a lengthy subject and will be discussed in a later issue of this newsletter.
If you think that your business is too big, has been in business too long, etc. to be determined to be a hobby by the IRS, consider this; in 1958, Tempel Smith decided to build a herd of Lipizzan horses and create an organization in the U.S. similar to the Spanish Riding School. Tempel Farms showed consecutive losses over the period from 1958-1976, totalling approximately $5.9 million dollars. By 1976, the herd size was approximately 400 horses. In Smith v Commissioner 1979, the IRS challenged the profit presumption and tried to establish that Tempel Farms was a hobby activity. Fortunately for Tempel Farms, the U.S. Tax Court disagreed with the IRS position.
If your activity IS determined to be a hobby, income is reported as other income on Form 1040 and deductions are reported as miscellaneous itemized deductions on Schedule A. However, any expenses your business sustains may not be deductible in excess of business income and the unused losses cannot be carried over to another year.
In these tough times, your business may not be able to show a profit. But you can operate your business with consideration for the eight factors listed above. Plan ahead.
Equine Accounting: Tax Records - What, what, where, when and how (long to keep it)...
The IRS requires that you keep permanent records that are "sufficient to establish the amount of gross income and deductions, credits and other matters shown on your tax return." To accomplish that goal, tax law requires that your business maintain an accurate and complete set of books. J.K. Lasser Publications estimates that the average small business owner spends ten hours each week working on their company's financial records.
Examples of deductible expenses for a horse business could include costs for wages, training, supplies, feed, breeding fees, veterinary visits, donations, trailering, interest, taxes, repairs, auto, travel, advertising and insurance.
Documentation for most types of expenses require that you maintain basic information for each expense - date of purchase, amount, description and business purpose. But some categories of expenses have specific requirements for documentation:
Auto - Keep a log of all business-related travel including destination, purpose of trip, name of party visited and start and end odometer readings.
Charitable Contributions - For cash contributions, you need either the bank record or written communication from the donee with the date, amount and donee name. For cash contributions of $250 or more, a contemporaneous, written acknowledgement from the donee indicating the amount of donation is required.
Gift - The amount, date given, description of the gift, business reason for giving the gift, name and occupation of person receiving the gift and their business relationship to you must be documented.
Travel & Entertainment - Records must show the amount, time, place and business purpose of the expense. The written proof must be recorded "contemporaneously" with the expense. In other words, you can't spend the money one day and document the expense in writing six months later.
How long do you need to keep this documentation?
The IRS has three years from the date the return is due or filed OR two years from the date the tax was paid (whichever is later) to assess the tax. There are also longer statutes of limitation for unreported income, filing a credit or claim for refund and losses from worthless securities. However, if the taxpayer files a fraudulent return or doesn't file a return, there is NO statute of limitations for the IRS to assess tax. Also, for any property, supporting documentation for the cost and any improvements should be kept until the property is sold. Since each situation is different, business owners should consult with their financial advisor before deciding to throw away any documentation that support their tax return.
For more information, visit the IRS website.
Examples of deductible expenses for a horse business could include costs for wages, training, supplies, feed, breeding fees, veterinary visits, donations, trailering, interest, taxes, repairs, auto, travel, advertising and insurance.
Documentation for most types of expenses require that you maintain basic information for each expense - date of purchase, amount, description and business purpose. But some categories of expenses have specific requirements for documentation:
Auto - Keep a log of all business-related travel including destination, purpose of trip, name of party visited and start and end odometer readings.
Charitable Contributions - For cash contributions, you need either the bank record or written communication from the donee with the date, amount and donee name. For cash contributions of $250 or more, a contemporaneous, written acknowledgement from the donee indicating the amount of donation is required.
Gift - The amount, date given, description of the gift, business reason for giving the gift, name and occupation of person receiving the gift and their business relationship to you must be documented.
Travel & Entertainment - Records must show the amount, time, place and business purpose of the expense. The written proof must be recorded "contemporaneously" with the expense. In other words, you can't spend the money one day and document the expense in writing six months later.
How long do you need to keep this documentation?
The IRS has three years from the date the return is due or filed OR two years from the date the tax was paid (whichever is later) to assess the tax. There are also longer statutes of limitation for unreported income, filing a credit or claim for refund and losses from worthless securities. However, if the taxpayer files a fraudulent return or doesn't file a return, there is NO statute of limitations for the IRS to assess tax. Also, for any property, supporting documentation for the cost and any improvements should be kept until the property is sold. Since each situation is different, business owners should consult with their financial advisor before deciding to throw away any documentation that support their tax return.
For more information, visit the IRS website.
Equine Accounting: General Guidelines for Tax Deductible Expenses
We'll be covering specific expenses such as depreciation, meals and entertainment and auto/travel expenses in future issues of the newsletter.
Here are general guidelines as to the deductibility of an expense. The expense has to be part of the cost of carrying on a trade or business and the business is operated with the goal of making a profit. The expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your business. For example, limo service may be an ordinary expense to a literary agent but not to a plumber. A necessary expense is one that is helpful and appropriate to your business, but need not be indispensable. For a riding school, a bridle for each school horse would be an example of a necessary expense.
When deciding whether an expense is both ordinary and necessary, examine industry guidelines, speak with others in your field and check related literature. But keep in mind that the IRS tends to be conservative in its interpretation of this topic.
For more information, visit the IRS website.
Here are general guidelines as to the deductibility of an expense. The expense has to be part of the cost of carrying on a trade or business and the business is operated with the goal of making a profit. The expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your business. For example, limo service may be an ordinary expense to a literary agent but not to a plumber. A necessary expense is one that is helpful and appropriate to your business, but need not be indispensable. For a riding school, a bridle for each school horse would be an example of a necessary expense.
When deciding whether an expense is both ordinary and necessary, examine industry guidelines, speak with others in your field and check related literature. But keep in mind that the IRS tends to be conservative in its interpretation of this topic.
For more information, visit the IRS website.
The working model for demanding clients is On Demand
From Wikipedia: "On-Demand refers to a service or feature which addresses the user's need for instant gratification and immediacy of use. In most cases the value proposition for an on-demand service is wrapped up in the fact that the user or consumer of the service avoids a significant up-front financial investment and instead participates in a "pay as you go" plan - a model which makes on-demand services frequently more affordable for users.
Today's technology solutions allow you to have this type of flexibility and "instant gratification", while delivering the reliability, security and performance your business and your clients' businesses demand. By using technology to improve how you, your team members, and your clients work together, you can introduce new efficiencies into your existing business model. By using technology to your strategic advantage, you can change the way you do business and build new and more value into your services.
If you haven't yet involved your practice with online and Internet-based application services, you should move now to find out how they can streamline your existing processes, or even transform your practice into a firm which is ready to offer the type of "on demand" services and solutions business owners are looking for. The market has created the demand. Will you be ready to meet it?
You are the trusted advisor
The accounting professional has always been seen as a business advisor - a trusted partner that understands the conditions that impact business performance. This advisor not only reports on the business performance, but may make recommendations or judgments on certain situations or processes that are key to the business model. Leveraging your direct participation in your clients' financial systems can be a very successful component of practice building - mining out other opportunities that may exist in current client engagements.
In some cases, your clients will want to process their own bookkeeping in-house. Rather than taking a hands- off approach to these clients, engage them by providing training or consulting services to support their in-house bookkeeping.
If your firm provides real-time guidance and reviews, the quality of the financial information is far better and requires less work to adjust and report. Ultimately, saving your client time and money will reward your practice with more opportunity to engage the client in other efforts.
Protecting Yourself Against Data Theft
InsynQ e-Accounting takes information security and confidentiality very seriously. In fact, one of our engineers is a Certified Information Systems Security Specialist (CISSP) and carries certifications as a HIPAA Professional and HIPAA Security Specialist (among other things). Visit Michael Ehart's HIPAA blog Comply With Me
Equine Accounting: Employee vs. Independent Contractor. Who's Who?
An independent contractor (IC) is someone who provides services to others, outside the context of employment. Examples of possible ICs to an equine business would be a contractor and an attorney. An employee is a person who provides services to a company on a regular basis in exchange for compensation and does not provide these services as part of an independent business. Examples of possible employees to an equine business would be your office manager and daily barn help.
Why is this information important to you? In recent years, the IRS has focused considerable attention on this issue. Classifying a worker as an IC avoids the payroll tax liability and reporting responsibility of having an employee. But misclassification of employees as independent contractors can cause the IRS to levy penalties and interest which could significantly affect your company.
The IRS considers three general categories - behavioral controls, financial controls, and the relationship of the parties.
Behavioral control exists when the company who has hired the worker has the right to control and direct the worker. The company does not have to actually control and direct the worker – only have the right to do so. Behavioral control includes the type and degree of instruction, any training provided and the type of evaluation performed.
Employee IC
Instruction Detailed General
Training Provided Worker uses own methods
Evaluation Ongoing Only end result evaluated
Financial control is measured by the degree of significant investment in the work, unreimbursed expenses, availability of services to the general marketplace and the opportunity for profit or loss. More financial control is usually indicative of an independent contractor.
Relationship of the parties covers factors such as whether the worker receives benefits, the existence of a written contract, permanence of the relationship, and whether the worker provides services which are a key activity of the business.
You may request a determination by the IRS as to the status of a worker by submitting Form SS 8 to the IRS. Be aware that the worker themselves may also file if they feel improperly classified as ICs and are held responsible for payment of employment taxes and denied benefits. The IRS will investigate the claim and you may be held responsible for all employment taxes as well as significant penalties and interest.
What is your responsibility as someone who hires an IC? If you anticipate that your annual payments to this vendor will meet or exceed $600, before commencement of work, you should obtain a signed W-9 Form. At the end of the year, you are responsible to complete a 1099 Misc Form for each unincorporated vendor meeting the $600 or more threshold. Submit a copy to the vendor by Jan 31 of the following year and a copy to the IRS by Feb 28.
If you determine the worker to be an employee, you are responsible for withholding and submitting to the IRS income and FICA taxes and paying unemployment taxes. You must also submit periodic reports regarding these withholdings and payments to the IRS. There is a lot of record-keeping involved and if you are not familiar with this process, it would probably be in your best interest to outsource the payroll. QuickBooks offers several affordable payroll solutions.
Prepare now for several proposed changes to 1099 reporting which include
Payments to corporations would now require a 1099 form when they exceed the $600 limit.
IC would be subject to withholding if they do not provide a valid Tax Identification Number.
IRS Publications 1779 and 15A on IC/Employee classification provide more detailed information on this issue and can be found at http://rs6.net/tn.jsp?t=ul9id6cab.0.0.tnz777cab.0&p=http%3A%2F%2Fwww.irs.gov%2F&id=preview.
Why is this information important to you? In recent years, the IRS has focused considerable attention on this issue. Classifying a worker as an IC avoids the payroll tax liability and reporting responsibility of having an employee. But misclassification of employees as independent contractors can cause the IRS to levy penalties and interest which could significantly affect your company.
The IRS considers three general categories - behavioral controls, financial controls, and the relationship of the parties.
Behavioral control exists when the company who has hired the worker has the right to control and direct the worker. The company does not have to actually control and direct the worker – only have the right to do so. Behavioral control includes the type and degree of instruction, any training provided and the type of evaluation performed.
Employee IC
Instruction Detailed General
Training Provided Worker uses own methods
Evaluation Ongoing Only end result evaluated
Financial control is measured by the degree of significant investment in the work, unreimbursed expenses, availability of services to the general marketplace and the opportunity for profit or loss. More financial control is usually indicative of an independent contractor.
Relationship of the parties covers factors such as whether the worker receives benefits, the existence of a written contract, permanence of the relationship, and whether the worker provides services which are a key activity of the business.
You may request a determination by the IRS as to the status of a worker by submitting Form SS 8 to the IRS. Be aware that the worker themselves may also file if they feel improperly classified as ICs and are held responsible for payment of employment taxes and denied benefits. The IRS will investigate the claim and you may be held responsible for all employment taxes as well as significant penalties and interest.
What is your responsibility as someone who hires an IC? If you anticipate that your annual payments to this vendor will meet or exceed $600, before commencement of work, you should obtain a signed W-9 Form. At the end of the year, you are responsible to complete a 1099 Misc Form for each unincorporated vendor meeting the $600 or more threshold. Submit a copy to the vendor by Jan 31 of the following year and a copy to the IRS by Feb 28.
If you determine the worker to be an employee, you are responsible for withholding and submitting to the IRS income and FICA taxes and paying unemployment taxes. You must also submit periodic reports regarding these withholdings and payments to the IRS. There is a lot of record-keeping involved and if you are not familiar with this process, it would probably be in your best interest to outsource the payroll. QuickBooks offers several affordable payroll solutions.
Prepare now for several proposed changes to 1099 reporting which include
Payments to corporations would now require a 1099 form when they exceed the $600 limit.
IC would be subject to withholding if they do not provide a valid Tax Identification Number.
IRS Publications 1779 and 15A on IC/Employee classification provide more detailed information on this issue and can be found at http://rs6.net/tn.jsp?t=ul9id6cab.0.0.tnz777cab.0&p=http%3A%2F%2Fwww.irs.gov%2F&id=preview.
I was contacted recently by someone with Primerica. Once again theyare trying to lure people with financial backgrounds over to becomerepresentatives. I didn't fall for their pitch.I went to a meeting a few years ago being curious. I wasn't impressedwith the orientation presentation or with Primerica. I walked outalong with several others. Started to wonder if the company evergives financial
A few years ago I was contacted by someone recruiting for Primerica. Looking for people with financial backgrounds as reps. At the time I thought would be an interesting experience.However after attending the presentation it wasn't long before I knew I wanted nothing to do with the opportunity. Also I was turned off by the company. It is nothing but a mlm scheme. I doubt they ever do any actual
The auto industry is on their way out. First Chrysler now GM has gone into bankruptcy. The others will follow. Only have themselves to blame. Manipulating people to buy gas guzzling suvs. Now no one can get rid of these vehicles that are nothing more than needless demonstration of status.Next on the chopping block is the corporate giants in media.CTV, CBC, Canwest Global, NBC, CBS, Fox, CNN,
I came across a new low from Shaw. Shaw is claiming CTV, CBC, and Canwest Global are blowing out of proportion the state of media networks. Well...they and the networks don't realize just how bad it really is. Shaw, Rogers, CTV, Canwest Global have been buying up tv, radio stations, and newspapers eliminating any choice for consumers. A few are dictating what the many should see and hear.
Employment agencies are a great land of wasted time. Recruiters, who clearly have no idea how to satisfy clients, routinely mislead job candidates. It doesn't matter how you try to meet some vague criteria in order to get your resume forwarded. Will never happen; most of the time there was no client to forward a resume in the first place. I am not alone in this conclusion; candidates and
I have been busy rebranding and changing the name of my business. The new site is tjkfinancialaccounting.comFull service provider from day to day to year end. Consolidating 3 jobs into 1.The group on google now:groups.google.com/group/tjk-accounting-services
Accounting for Small Business Goes Online
The Impact in India
India was one of the first countries to visibly enter the smb outsourcing market en masse. Large numbers of business people and accounting professionals from the US paid visits to groups in India, discussing the market opportunity and potential around smb outsourcing, and to enlist processors and head count to prepare for the deluge of inbound work from US businesses. In many cases, the participants in India were required to pay heavily for the privilege of participation spending thousands (hundreds of thousands, in some cases) of dollars in training and education, building infrastructure, buying software and services only to find that the return on investment was not going to come any time soon if at all. The US accounting market was not yet ready to ship its work offshore in wholesale. And, in reality, the outsourcers weren't ready for the business anyway.
Road shows, seminars, presentations, free offers, email and fax mail and junk mail of all flavors - all have been employed to attempt to convey the value of offshore outsourcing to the business market and to accounting professionals. This marketing was, in many cases, the use of funds from the investments made by the offshore entities. Those promoting the opportunity in India were garnering funds from participants there (while promising that work would be coming in immediately), and then returning to the US only to spend the money on trying to get the business that was already promised. Needless to say, this did tremendous harm to many of the offshore start-ups, and ran some of them out of business before they ever had an opportunity to perform. Certainly, some of these businesses were simply ill-prepared and were not ready for operation, but there were many which were, and some of these positioned themselves with partners that took advantage without delivering anything of value in return.
There were other models employed, as well. Postings on open job boards, offering e-Accounting work for a fee, and with a promise of huge returns, are prevalent. The representation is that, if the offshore processor would pay into the model, then the work would be forthcoming. Many paid into the model; few received any real revenue-earning work.
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