Category: Heath N Hendrickson

Heath Hendrickson of Caledonia, NY is a big advocate of small businesses bringing in an accountant to take their company to the next level. So much of business success hinges on timing. Today, Heath Hendrickson of Caledonia, NY will touch on some of the best times to bring an accountant into the fold.

Businesses who are able to afford the services of the accountant in the early going are wise to seek their counsel for their business plan. A professional accountant can upgrade a company plan by adding financial projections and relevant statistical reports. This will help map out a future of success for an emerging business.

Accountants can be great assets when determining the legal structure of a new business. Companies can be categorized as sole proprietorships, limited liability companies, partnerships, and corporations. Each designation comes with different consequences. Accountants can help a business owner navigate not only the tax consequences of each designation but the liability factors. Some structures leave an owner liable for any damages caused by their company. Depending on the type of the business, this can grow increasingly risky.

The most common time to bring on an accountant is when a small business feels like handling the finances is turning into the majority of their job. When an owner is losing the ability to focus on the parts of the business have helped the business become successful, it’s time to add an accountant to the fold.

Tax season is a common time to bring on an accountant as small business owners realize that dealing with government paperwork can be a truly grueling process. When the time comes for the first tax filing for a small business it needs to be done accurately and within all compliance guidelines. A trained accountant can ensure that happens. While taking care of the taxes, a skilled accountant will be able to provide advice on ways the business could save money in the year ahead. This is often when small business owners decided to add the accountant full-time.

Finally, in the rare event that a company is audited, they need to bring on a professional accountant as soon as possible. Ideally, companies will have a full-time accountant on board before the audit process as they will be able to ensure a small business never violates any tax laws that would garner the attention of the government. If an audit begins prior to that hire, the only solution is to bring on a professional as quickly as possible.

According to recent studies, more than a third of all Americans are anxious about filing their taxes. This number is much higher, however, among young 20-something-year-olds who report severe anxiety regarding any correspondence with the IRS. Although it is understandable that many American’s hold some worry regarding their tax return accuracy, Heath N. Hendrickson, a CPA based in Caledonia, NY, hopes to reduce this anxiety by sharing his tax knowledge with young Americans. Today, CPA Heath N. Hendrickson of Caledonia, NY, will discuss the most common tax mistakes made by 20-something-year-olds and how to avoid these tax errors.

Overpaying Out-Of-State Taxes

At the beginning of a career, it is common for young adults to move once every few years. For this reason, one of the most common mistakes that young 20-something-year-olds make come tax season is overpaying their taxes for a state they previously worked in. When a person works in multiple states or moves from one state to another, your employer is required to withhold taxes and pay them to the state where you worked. However, each state has different tax withholding and reporting rules which can get tricky when a person has moved more than once in a year. When a person works out of state, they only have to pay taxes on the wages earned for the time period they were working in that state, which means individuals must calculate state wages earned in each state.

Penalties for Roth IRA Contributions

Recent surveys have found the majority of Roth IRA accounts are opened by recent college graduates. Once young twenty-something-year-olds receive their first full-time position, many will open a Roth IRA. However, Roth IRAs and Traditional IRA accounts can be quite complex, especially for young adults unfamiliar with IRA tax codes. Many young adults are unaware that income limitations contribute directly to a Roth IRA.  An individual’s modified AGI limitation is $125,000, whereas it is $198,000 for married couples. If your AGI is above the threshold, you may be able to contribute a reduced amount, however, if individuals or couples violate this limit, there is a 10% penalty. This can be avoided if young taxpayers utilize the backdoor Roth IRA strategy, which consists of putting funds in a non-deductible Traditional IRA and converting it to a Roth IRA.

Paying Taxes on a 401(k) Rollover

As many young 20-something-year-olds change jobs every 2-3 years, many choose to move funds from their old 401(k) to their new employer’s 401(k) plan. Even if the funds are only going to be transferred from one pre-tax plan to another, there will be no tax associated with the transfer. However, if a person fails to report the 1099-R rollover on their tax return, or forgets to put the gross distribution on their tax return, they may receive a notice from the IRS.  This can be easily avoided by consulting with a licensed CPA.

 certified public accountant can do so much more for their clients than file their taxes once a year. Everyone wants to make sure they are making the best financial decisions possible, but not everyone has the resources to make those decisions on their own. Heath Hendrickson of Caledonia, NY is here to say that certified public accountants are available to help. You just need to know the right questions to ask them.

Heath Hendrickson of Caledonia, NY thinks the best question a client can ask is how they can achieve their highest profit margins. By keeping a record of all transactions, a business can help shed light on regular operating expenses and the cost of producing product or divvying out services. A CPA can serve as a second pair of eyes that can turn numbers into a story that shows opportunities for smarter spending in the year ahead.

The next question Heath Hendrickson of Caledonia, NY suggests asking is if all records are being kept properly. Every business should be prepared for the IRS to audit their company – even years after taxes have been filed and paid out. A CPA can ensure that all documents, employee wages, tax remittances and sales of assets are accounted for properly. Most records are kept in electronic form nowadays, which is fine as long as they are backed up properly.

Those who run a business should always ask their CPA what types of deductions they can take advantage of come tax season. Common deductions include the use of a company car, airline miles and home office expenses. Of course, the flipside is that every business owner needs to make sure they are paying enough in taxes. A CPA should be able to estimate the most likely total tax liability for a year and allow their client to pay a quarter of the amount every three months. The downside of paying too little is a lump sum in April, so it is important to pay the proper amount of taxes throughout the year.

If you are unsure of the status of employees, Heath Hendrickson of Caledonia, NY suggests asking your CPA whether or not the people who work for you are considered employees or independent contractors.  There are different tax regulations based on the official status of a worker. Independent contractors, for instance, are in charge of making their own estimated tax payments whereas full-time employees fall under the responsibility of their boss.

Ultimately, every CPA should be an ally to their clients. Never be afraid to ask a question to your CPA as they may be able to provide guidance that can provide significant financial assistance.

Over the course of Heath Hendrickson’s career as a CPA, his firm’s services have been requested by small businesses for a wide variety of reasons. The expertise that CPAs lend to small businesses has proven valuable, as it gives administration the breathing room to handle several situations that would otherwise take up valuable time and energy. Here, Heath Hendrickson of Caledonia, NY includes a short list of common reasons CPAs are hired by small businesses.

Prevention of Filing Issues

When it comes to filing taxes for small businesses, there are many resources out there that assist with the ins- and outs of tax preparation. Still, Heath Hendrickson of Caledonia, NY notes that not all these resources are fully helpful for each case. For example, some of the resources for filing that are available online include misleading information or facts that reference currently outdated tax law. A CPA can help prevent misfiling issues by lending their expertise on tax law and guidelines, especially those that may have changed very recently.

IRS Audit Representation

Audits can be an arduous and complicated process for individuals that are not tax professionals. One of the inherent benefits of hiring a CPA is that they can represent your business if it is audited, which can be an immense help for undergoing the process smoothly. CPAs can be trusted to execute claims on behalf of the business and can ensure that records, pertinent information, and supplementary materials to substantiate items reported on tax returns make their way to the IRS.

In-Depth Financial Analysis

One of the largest benefits to hiring a CPA is that they can perform detailed financial analysis for your organization. CPAs can monitor your total business assets, analyze financial reports, and provide a complete picture of your business’s current financial standing. Improving recordkeeping is a crucial step in assisting businesses with processes such as increasing business tax deductions. To this point, CPAs focus on a safe, accessible, and organized approach to record keeping strategy. Heath Hendrickson acknowledges that CPAs are also in the unique position to offer important financial advice that can be used for future development.

Tax Deduction Maximization

Many small business owners are surprised to learn that there are plenty of ways to legitimately minimize taxes they are not currently utilizing. Heath Hendrickson of Caledonia, NY recognizes that, by maximizing tax deductions and credits, CPAs can save businesses money that can instead invest in their upward trajectory. To do so, CPAs will typically evaluate the specific financial situation of the business and tailor a recommendation to lower tax liability for the current year, maximize savings from allowable deductions, and take advantage of tax credits that are available.