Choosing & Setting Up a Retirement Plan

As a small business owner, are you ready to set up a retirement plan that meets your needs and provides you with tax-deferred savings? There are four options to choose from, depending on your goals and entity type. We will outline what to consider when selecting a plan and some basic information regarding set up and administration. Let’s take a look.

The Different Plans

1.      Simple IRA

Is this plan for me?

A Simple IRA is available for sole proprietorships, partnerships, C corporations, and S corporations with one-hundred (100) employees or fewer and for self-employed individuals.

Advantages

A Simple IRA requires the least amount of administrative work. There are no account fees or minimum balance required to open an account. Depending on which brokerage firm you select, there are a wide range of investment choices.

Additional Information

A Simple IRA does not require employer tax filings. However, certain annual employee notifications must generally be made no later than November 1. As an employer, you will need to establish this type of plan no later than October 1.

An employee can contribute up to $13,000 in salary deferrals a year ($16,000 if age 50 or older). The employer will either match participating employees’ contributions with up to 3 percent of compensation OR contribute 2 percent of each employee’s compensation, not exceeding $5,600.

2.      SEP IRA

Is this plan for me?

A SEP IRA might be the appropriate choice for self-employed individuals or small business owners with no employees. If a contribution is made on behalf of ANY employee, it must be made on behalf of ALL employees (at the same percentage of compensation).

Advantages

This plan is very flexible. It is easy to set up and maintain and does not require any additional tax filings by the employer. It has a wide range of investment choices as well as flexible, annual funding requirements. As an employer, you don’t have to contribute every year. If you are having a down year, you can contribute a small amount or not at all.

The deadline for setting up and contributing to a SEP IRA is established by the employer’s tax filing deadline. This makes a SEP IRA plan great for procrastinators, as you can still set it up and fund it for the prior tax year.

Additional Information

The only entity that can contribute a SEP IRA is an employer – employees do not contribute to this type of plan. In 2019, employers can contribute up to 25 percent of an employee’s annual compensation, for a maximum amount of $56,000. Employees must be notified of contributions made by the employer.

3.      Self-Employed 401(k)

Is this plan for me?

This plan is specifically designed for self-employed individuals or small business owners who DO NOT have any employees, other than a spouse.

Advantages

This plan has a potentially higher contribution limit than a SEP IRA with a wide range of investment choices. A Self-Employed 401(k) is funded by employee deferrals, as well as employer contributions. An employee can contribute up to $19,000 in salary deferrals in 2019 ($24,500 for employees 50 or older). An employer may contribute up to 25% of compensation, up to a maximum of $56,000. It is important to note that the total contributions made by employee and employer cannot exceed $56,000.

Additional Information

As an employer, you will need to file an annual Form 5500 after plan assets exceed $250,000. The employer must establish this type of plan by December 31 (or fiscal year-end). 

4.      401(k)

Is this plan for me?

A 401(k) the most versatile plan as it covers any type of public or private company. Generally, it is best suited for companies with twenty (20) or more employees.

Advantages

A 401(k) offers a lot of flexibility in plan design; however, keep in mind that it is the most expensive type of plan to administer. The account setup fees and deposit requirements will vary by the type of 401(k) you set up.

The plan is funded by employee deferrals and employer contributions. Most plans allow an employee to deposit up to $19,000 in salary deferrals ($25,000 for those 50 or older). However, there are limits that may vary by plan. Employers can make a matching contribution or profit-sharing contribution of up to 25 percent in compensation, with a maximum of $56,000. The total of both employee and employer contributions are not to exceed $56,000 per employee.

Additional Information

As an employer, you will need to file a Form 5500 annually and perform special IRS testing to ensure that your plan does not favor highly-compensated employees. You will generally hire a TPA firm to administer the plan on your behalf. The deadline for setting up this type of plan depends on the plan selected.

*Disclaimer*

Sharp Point Accounting Solutions does not provide legal advice. The information herein is general in nature and should not be considered legal advice. Please consult an attorney regarding your specific situation.

As tax professionals here at Sharp Point, we would be happy to assist you with your tax inquiries. Please contact us so we can help you decide on the most advantageous retirement plan for your specific situation. Let’s get started today!

Build Your Savings: Tips for a Rainy-Day Fund

There are many reasons why it’s important to have a rainy-day fund, or a savings account, for your business. You never know what your business may face in the future and will certainly want to have some extra cash stashed away for emergencies.

Why have a rainy-day fund?

Before we get into the tips for storing up a rainy-day fund, let’s review some of the reasons why setting one up for your business is vital for success.

1) Future tax payments

When tax season rolls around, you will need money to pay your tax liabilities. A good rule of thumb is to save 4.95% of your estimated profit to pay state income tax (in the state of Illinois) and to set aside your marginal federal tax rate times your estimated profit to pay federal income tax. Your marginal tax rate can be found here. Sole proprietors and single member LLCs will need an additional 15%, roughly, to cover Social Security and Medicare taxes.

2) Unexpected events

Life happens and that means emergencies happen. In fact, running out of cash is one of the top reasons why small businesses fail. Having money in your rainy-day fund could help you avoid this common problem. Having a rainy-day fund isn’t just necessary for unexpected events, it is needed to fuel company growth, such as buying new equipment or hiring additional employees. Plus, with a savings account, you can access money quickly if you need it on a short-term basis.

3) Getting through lulls

It is common for companies to experience lulls—whether they be seasonal or part of the economic cycle. Having access to saved cash can help your business stay running smoothly even during the inevitable lulls.

How much money should you save?

Experts agree that you should have at least three months’ worth of your monthly business expenses in readily accessible savings. This cushion will give you some peace of mind should you find your business facing any of the following, rather common, occurrences:

1) Loss of a key employee

Whether due to pregnancy, illness, death, or job change, this can deeply impact your business. Depending on your business and the position in question, it can take months to interview, hire, and train key employees. Knowing that you have enough money in savings to ride through this transitional phase will not only offer peace of mind but it will allow you the luxury of making a replacement decision in a controlled and methodical manner.

2) A sudden business opportunity comes your way

Should this happen, it is very advantageous to have access to readily available funds. Having to wait for loan approval could make the difference between the ability to capitalize on an opportunity, or your competition being able to close the deal while you are still waiting for funding.

3) A major weather event

Weather phenomena such as tornadoes, flooding, and other natural disasters can wreak havoc on your business. It takes time to rebuild, regroup, and restart. Having money in savings will allow you to begin the process of rebuilding while waiting for your insurance company to settle. It will also allow you to get a contractor in and begin the process of restoration started immediately.

Tips for Saving

1) Establish a budget

Properly functioning businesses should operate with a set budget. Understanding your monthly income and expenses will help you determine how much money you can save each month—whether that be a percentage of your business’s profit or a set amount. If you need help, the Sharp Point team can assist you in calculating these vital numbers!

2) Set up automatic savings

Set up your account to transfer money into your savings account automatically. Designated amounts move into your rainy-day fund without you having to remember to transfer the funds.

3) Go green

If your business is energy efficient, you will save money each month on your energy output and office supplies. By going paperless, you save money on supplies. By making your office energy efficient—lowering the thermostat in the winter, keeping it a little higher in the summer, and installing a programmable thermostat to adjust the temperature outside of office hours—you can save money here too. Put your green energy effort savings into your rainy-day fund!

4) Make meetings more efficient

How much money are you spending on your employees to meet every week/bi-weekly/month? Encourage them to keep meetings short and efficient to help save money—you can even consider holding a “standing meeting” to keep things brief.

In Conclusion

Establishing habits that work to help your business save money is vital for your success. You never know what life will throw at you and you will want to be prepared! If you need help creating good savings habits, the Sharp Point Bookkeeping Solutions team is ready for your call.

Customer Success Stories: NShore Patient Advocates

THIS MONTH, WE DECIDED TO TAKE A MOMENT TO HIGHLIGHT ONE OF OUR VALUED CLIENTS - NORTH SHORE PATIENT ADVOCATES - TERI DREHER.  

WE ARE SO PROUD TO BE A PART OF THE DIFFERENCE SHE’S EXPERIENCED IN BOTH HER PROFESSIONAL AND PERSONAL LIFE AS A RESULT OF HER COLLABORATION WITH SHARP POINT. 

NShore is a private company that specializes in health care advocacy. In simple terms, they assist their patients in many aspects. From their diagnosis, care, and treatment, to education and financial issues, NShore does it all. The team at NShore is experienced in assisting their patients in determining the very best healthcare decisions; their work makes their clients feel like they have a nurse in the family. Helping clients navigate through many tough decisions is just one of the many reasons why NShore stands out amongst the competition. 

MEET THE DREAM TEAM 

TERI DREHER – The owner of NShore, Teri opened her business in 2011. At that time, one of the first of its kind in the Chicagoland area. She has 36 years of experience and is licensed as an RN, CCRN, and iRNPA. Teri is passionate about helping patients understand their diagnoses, as well as the healthcare process. Teri also brings her experience working as a cardiovascular nurse clinician to her practice. She works tirelessly to pair her staff members with the patients that they are best suited to help. The goal being the ability to make a real difference in their care and their lives. Her can-do attitude and positive personality are just what the doctor ordered! 

SIBYL YAU - An MSN and RN who found her passion for patient advocacy while she was supporting her family members amidst their own health crises. She has used the experiences learned on her own personal path to effectively advocate for the patients she cares for. Her work at the University of Illinois Hospital in the GI Procedure Unit and Pulmonary Clinic is just another layer of expertise that makes her a force to be reckoned with. 

CAROL HARRIS - Carol has been an RN for over forty years. She studied senior exercise benefits while working for a formal care management professional program. The value of exercise to any patient is invaluable. The fact that Carol brings this knowledge to her patients is just one of the reasons that make NShore stand out amongst the competition.  

KATHRYN MACINTYRE - A registered RN, has a career history in both holistic nursing and finance. A former ER nurse, she is passionate about empowerment and education, especially as a patient advocate. Knowing that when patients become knowledgeable about their journey equals a more successful patient experience, motivates Kathryn to be so in tune with her patients. 

HOLLY MONGER - A registered health underwriter, Holly has thirty years of experience in the health insurance industry. She is licensed to sell all lines of insurance, although she does not actively sell insurance as she feels it would be a conflict of interest to her clients. 

JERYL ANN WOJICK – Jeryl is the business office manager and director of human resources. She has over twenty years of healthcare administrative experience. Jeryl helps to keep the office running smoothly and prides herself on helping the NShore team and patients work through any questions or problems relative to any financial issues they might be facing. 

ANNA DOLEZAL – As a health communication project coordinator, she is a recent graduate of Northwestern’s Master of Science in health communication. She is passionate about helping patients and people around the world through education and advocacy.  

BETTINA CARLSON - Originally from Germany, she is the senior executive assistant. Her passion for healthcare advocating stems from when she took care of her father while still in Germany. The knowledge she gained in caring for her father has no doubt helped to mold her into the compassionate caring advocate she is today. 

HOW WOULD NSHORE DESCRIBE THEIR EXPERIENCE WITH SHARP POINT? 

A longtime client of Sharp Point Books, we asked Owner/CEO, Teri how she was handling her bookkeeping challenges prior to her company's engagement with Sharp Point Books. The simple answer was this, “Before Sharp Point and I started working together, my life/business was struggling with our billing and budget management systems. Sharp Point helped me by getting everything streamlined and synced with QuickBooks enabling pull up easy to read monthly statements which are reviewed in person with Renee, myself and my office manager. Renee always maintains a positive attitude under stress and keeps us moving in a positive direction! I found the experience to be a game changer for our company!

I would recommend Sharp Point Bookkeeping Solutions to businesses who are struggling with billing, payroll, and financial monitoring of any kind. They are able to help companies of all sizes to move toward financial freedom on multiple levels. I highly recommend Sharp Point; hiring them has been one of our company’s wisest investments!” 

We, at Sharp Point, want to thank NShore for the opportunity to be part of their team. Helping them to keep their business running as smoothly as possible is exactly what our goal was when we started working with their staff. The sense of accomplishment and teamwork we have achieved is so gratifying. By helping them with their bookkeeping, they are able to focus on helping others with healthcare advocacy. Teamwork makes the dream work!  

Doctor, Do You have the Prescription to Grow Your Practice?

If the answer is YES… then look in the mirror and congratulate yourself for trusting a Fractional Chief Financial Officer to keep your practice growing while you focus on the health of your patients and the well-being of your employees. You took decisive action when you recognized symptoms of distress and you wrote yourself a prescription for success by trusting an expert to ensure your financial health.

If the answer is NO… Ask yourself, have I been successful? Can we be more successful? What hinders my practice from becoming a thriving hub, filled with patients who trust us to keep them mentally and physically healthy?

A doctor’s practice is acutely different from most other businesses & entrepreneurs because along with providing outstanding patient care you have to focus on:

-          Insurance billing                                              - Marketing
-          Payroll management                                     - Business expenses
-          Property management                                  - Medical licenses
-          Insurance                                                           - Reputation management
-          Networking
o   Within your peer group so that you stay at the cutting edge!
o   In your community to stay connected to your current — and future — patients.

You’ve established a solid foundation for your practice so far, and for that congratulations are in order! What are some of the frustrations that you have experienced along the way?  Are the long nights reconciling accounts, calculating payroll budgets, and developing a marketing plan for your next public event taking their toll?

That’s why a Fractional CFO is vitally important in helping you grow your practice to the next level. You are in the business of offering cutting edge techniques to help heal people. Why wouldn’t you invest in a cutting edge solution to heal & grow your practice? We trust our health and wellness to qualified and reputable doctor. Isn’t it time to trust your financial health & future to a qualified and reputable CFO and outsourced bookkeeping department?

At Sharp Point Books our Fractional CFO services are designed to integrate with your practice with fundamental principles that will help shape your future and avoid financial sickness. If your financial health is sub-par, it’s time to invest in the most trusted cutting edge treatment available to get your medical practice back to thriving. Write yourself a prescription and let’s start getting your practice healthy together!

Can Hiring a Bookkeeper Actually INCREASE Profits?

How many hats do you wear on an average day? If you're like many business owners, the simple answer is TOO MANY! Does the thought of having to do your own bookkeeping stress you out? Does it take you a significant amount of time to complete it each and every month? Maybe it’s time to outsource your bookkeeping to save you time, money, resources, and peace of mind.

Hiring a bookkeeper who knows how to efficiently and effectively manage your company’s books allows you to spend more time focusing on your company’s profits. In fact, a study conducted by Xero found that small businesses that hire accounting professionals increase their profits by 16 percent.

Top 5 Tips

1. Keep your focus on your core business – Your business needs your attention. Your time should be devoted to strategy, sales and marketing, and overseeing day-to-day operations. These are the activities that will drive revenue and bottom line profits.

2. Balance your work and home life – By outsourcing your bookkeeping, you’ll have time left at the end of your day for yourself and your loved ones. This is the balance we all need to stay healthy and avoid potential burn out.

3. Do what you love to do – Let's face it, unless your business is bookkeeping or accounting, you most likely find these tasks to be tedious, at best. Spend your time doing what you love and leave the rest to us.

4. Rely on professional expertise – Very few business owners have a background in finance. It’s best to leave this a professional. Mistakes are less likely when you are relying on someone who’s dedicated their career to bookkeeping. If you miss a payment or compliance filing, this can impact your business credit, cause ill-will, or incur non-deductible penalties. A knowledgeable bookkeeper will keep you on the right track.

5. Gain financial perspective – Your bookkeeper can put the financials in order and run reports to show you how you are doing each month, where your funds are going, and how your efforts are paying off. S/he will have the added benefit of experience interpreting your financials and providing you with comparative scenarios from work done for others over the years.

Keeping doors open.

Save Time

Do you know how much money your time is worth? What if you could get some of those hours back? Hiring a bookkeeper will save you time. They are able to effortlessly stay on top of all of your financials. You, on the other hand, likely have it hanging over your head on top of all of the other work you have to do for that week. Your time is valuable. The more time you spend working on and worrying about your bookkeeping, the less money you are making for yourself and your business. Many business owners already work 50-60 hours a week solely doing their job. By unloading your bookkeeping tasks to a professional, you are able to put that extra brain power, and more importantly time, to good use. 

Save Money

Along with saving time, you will be saving money by hiring a bookkeeper. Your bookkeeper will be able to do all of the bookkeeping tasks much more quickly and efficiently as they are proficient at their job.

Working with the experts at Sharp Point Bookkeeping Solutions will also save you money when you hand over your books to your tax accountant. When your bookkeeping is correct, your tax accountant will spend less time reviewing your books and preparing your tax returns. Accountants charge significantly more per hour than bookkeepers, so if you’re doing your books yourself, your tax accountant will very likely need to spend extra time looking over them and making adjustments —costing you more money. Each year, your bookkeeper will be able to deliver a flawless set of books to your accountant, creating additional savings for you.

Having a great team like Sharp Point Bookkeeping on your side means that you have the potential to save money and pay less in taxes. We are proficient and educated in the tax system and know where to look for tax breaks for your business. We know which business expenses are considered tax deductible, which includes the money you spend on bookkeeping services.

Take Action

If you’re one of the many businesses that is spending any time on bookkeeping-related tasks each month, we're determined to help you regain your time and boost your profits. Our team at Sharp Point Bookkeeping Solutions is ready and waiting to hear from you. Contact us today to start improving your bottom line!

Best Practices for 1099s and W-9s in 2019

If you are like many businesses, the end-of-the-year wrap-up for 2018 was a bit of a blur. How did your business handle the 1099 process? Did you have all of the information you needed at hand, or did the last-minute scramble cause you angst?

Below are some best practices that you can implement today that will make 1099 filing for the 2019 tax season a breeze.

Prepare in Advance

The issue we see most frequently is companies failing to collect vendors W-9’s as business is conducted throughout the year. This makes it difficult (and sometimes near impossible) to produce the 1099-MISC forms at year end. At best, you are scrambling to get the necessary information; at worst, you may be facing IRS fines (as mentioned below) or vendor confusion/irritation. Don’t wait until January to begin this process! 

If you have gathered the proper information before the end of the year, your January 2020 will go much smoother. Make it a habit to request W-9s as each new vendor is on boarded so you have all the information at hand when it is needed.

Form W-9

Form W-9 is an informational form you send to each vendor to fill out with the following: Business or individual name, FEIN or SSN, federal tax classification (C corporation, S corporation, partnership, individual/sole proprietor, etc.), and address. This is the information you will need to supply your vendors with a 1099-MISC in January 2020.

Best Practice

To ensure that you have all the information you need to fulfill the 1099 requirements by January 31st each year, we recommend the following:

• As part of your onboarding process, make sure to have new vendors fill out a Form W-9.

• Before making any payments to outside vendors, double check that you have a W-9 on file for them. If you do not, require them to fill one out prior to paying their invoice. (Your vendors will gladly give you the information you need in exchange for getting paid. If you wait until after they’ve received payment, their motivation to return the Form W-9 is lessened.)

• Bonus: It’s good practice to have existing vendors fill out a new W-9 form at the beginning of each new year to keep your data current (this ensures you have all the correct information on file).

If your QuickBooks file is maintained by Sharp Point, you will then forward a copy of the W-9s for all applicable vendors so that we can enter this into the vendor information section of your QuickBooks file.

1099’s done right. The First Time.

Information About Forms 1099

Understanding who needs to receive a Form 1099 can be very tricky. We are hoping to make it easier by laying out some of the main points.

You are required by IRS regulations to send a Form 1099-MISC to any independent contractor/non-employee who has earned $600 or more in a calendar year. You will send the 1099 to the entities or individuals whose tax classification is individual/sole proprietor/single-member LLC or partnership. Remember, LLCs may be classified for tax purposes as either a corporation, a partnership, or a disregarded entity. This means that some LLCs must be furnished with a 1099 and some do not need to receive them. You will also send 1099s to all attorneys, even the ones who are incorporated.

All of your 1099-MISC forms must be postmarked or electronically submitted by January 31, 2020 to each individual vendor. Additionally, Copy A of all 1099 forms issued along with the compilation form (Form 1096) are due to the IRS by February 29, 2020. If you fail to correctly file the 1099 forms by these due dates, you may be penalized by the IRS; the amount of the penalty will depend on the time of the delay and the number of occurrences.

If you need any help understanding the 1099 requirements or setting up a process, the team members at Sharp Point Bookkeeping Solutions are ready to assist you.

2019 Is Here: Is Your Business Ready?

The best way to make the most of this year is to prepare for it now.

First thing: Review 2019 deadlines.

Know when everything is due. One of the key tasks for any new year is preparing to file your tax returns. Even though taxes laws are complex and difficult to understand, at least the deadlines are clear. Make sure you know the deadlines that apply to you; this way, you can plan ahead to make sure you meet your tax obligations and get all the required paperwork to your accountant.

Important Tax Filing and Deadline Dates for 2019

January 15

Make final estimated quarterly tax payment for 2018

January 31

Form W-2 filing deadline

Form 1099-MISC Copy A filing deadline

March 15

S corporation (1120-S) and Partnership (1065) tax returns due

Deadline to file for an extension for s corp and partnerships

April 15

Individual tax returns due (1040, 1040A or 1040EZ)

Deadline to file Corporation tax returns (Form 1120)

Deadline to file for an extension on individual or Corporation tax returns

First estimated quarterly tax payment for 2019 due

June 17

Second estimated quarterly tax payment for 2019 due

September 16

Final due date to file calendar year 2018 tax returns for S corporations (1120-S) and Partnerships (1065) who received a 6-month extension

Third estimated quarterly tax payment for 2019 due

October 1

Deadline to establish your firm’s Simple IRA plan for 2019

October 15

Final due date to file calendar year 2018 tax returns for individual (1040) and Corporation (1120) taxpayers who received a 6-month extension

December 31

Final day to make any tax planning moves for the 2019 tax year

Deadline to set up a solo 401(k)

 2018 Was a Big Year in the Tax World

The Tax Cuts and Jobs Act (TCJA) went into effect on January 1, 2018, bringing a number of changes for small businesses. The new low corporate tax rate may have spurred you into changing your entity structure.  

Confirm Employee Data

As businesses expand, it’s important to ensure employee records are kept current. In preparation for each new year, all employee records, compensation, and benefits should be updated so that the proper tax forms can be prepared and submitted. The same goes for contractors.

Conclusion: Boom! You’re ready for 2019.

Sharp Point encourages you to reach out to your accountant to confirm that you’ve successfully wrapped up 2018 and are ready to tackle 2019.

Happy New Year!

Can You Qualify for a Home Office Deduction?

Small business owners, have you fully explored taking the home office deduction as a means of lowering your tax burden? This flowchart will help you determine if you qualify.

Itemized Deductions for Homeowners

The IRS defines a home as any house, condominium, cooperative, mobile home, boat, or similar property that has sleeping space, toilet facilities, and cooking facilities. Some homeowners qualify for these deductions.

Real Estate Taxes

You can deduct real estate taxes assessed on all the real estate you own. You are not limited to the tax on just one or two homes.

• Only the amount actually paid is deductible. Don’t confuse this amount with deposits made to your mortgage escrow account.
• Charges for trash collection, sewer, etc., are sometimes added to real estate tax bills. These amounts are not deductible as real estate taxes.
• Special assessments are sometimes added to real estate tax bills. Assessments are not necessarily deductible as real estate taxes.

Mortgage Interest

If you borrow money to buy, build, or substantially improve your main or second home, the mortgage interest may be claimed as an itemized deduction on Schedule A.

Form 1098

Your lender will generally give you Form 1098, Mortgage Interest Statement, to tell you how much interest you have paid.

• An explanation must be attached to your tax return if the amount shown on Form 1098 is different from the deducted amount or if more than one person paid deductible mortgage interest (other than a spouse filing jointly).
• If you did not receive Form 1098, you must provide the name, identifying number, and address of the interest recipient

Home Mortgage

A home mortgage is any loan secured by your main or second home, including first and second mortgages, home equity loans, and refinanced loans. The loan must be legally recorded, with the home as collateral for the debt. You must be legally liable to make the payments. For example, if you borrow money from your parents to make a down payment on your home, you cannot deduct the interest you pay them unless the loan is legally recorded with the home as collateral.

Limits

You may generally deduct the mortgage interest on your main home and a second home, up to the limits described below.

• A loan secured by a third home is a personal loan and the interest is not deductible. Interest on a third home used exclusively for business might be deductible as a business expense.
• Your mortgage interest deduction is limited, based on the type of debt you have. 

Note: Slightly different rules apply to mortgages taken out before October 14, 1987.

Refinanced Loans

Debt that is refinanced generally retains its character as acquisition or home equity debt, up to the old loan balance.

• Debt used to substantially improve your home is acquisition debt, even if it is refinanced home equity debt.
• Refinanced acquisition debt that exceeds your old debt may qualify as home equity debt.

Points

Terms such as points, loan discount, loan origination fees, etc., refer to certain charges you might pay in order to obtain a mortgage. If you pay points to borrow money, the points are deductible as prepaid interest.

• Points are deductible ratably over the life of your loan. Points you pay at the time of your home purchase are deductible in full.
• Points you pay to the lender in exchange for a lower interest rate are generally shown on your closing statement. Each point charged to obtain a loan is 1% of the loan amount. For example, 2.5 points charged on a $100,000 loan equals $2,500 ($100,000 × 2.5%).
• Fees your lender charges for specific loan services are not deductible. Examples include appraisal, notary, and document fees.

Mortgage Insurance Premiums

Premiums paid for acquisition indebtedness for insurance contracts issued after December 31, 2006, on a first or second home are treated as deductible mortgage interest. The deduction begins to phase out when AGI exceeds $100,000 ($50,000 MFS). Qualified mortgage insurance providers include the Department of Veterans Affairs, the Federal Housing Administration, or the Rural Housing Service, and private mortgage insurance.

The deduction expires for premiums paid or accrued after December 31, 2016.

Medical Expense Deductions

You may need to make home improvements in order to provide medical care for yourself, your spouse, or your dependent. Examples: (1) Lifts or elevators, (2) therapy pool for help with a specific medical condition, (3) bathroom or countertop modifications to accommodate a person who is disabled, (4) ramps, handrails, support or grab bars, (5) modifications to halls and doorways.

An expense may generate a medical deduction to the extent the expense does not result in an increase to the home’s value. Not every expense results in such an increase.

Operation and Upkeep

Amounts you pay to operate and maintain a medically-related home improvement qualify as medical expenses, if the main reason is for medical care. This is true even if only part or none of the asset cost qualified for a deduction.

Other Itemized Deductions

Casualty and Theft Losses

If your home is damaged or destroyed due to an identifiable event that is sudden, unexpected, and unusual, you may have a casualty loss. Losses are calculated on Form 4684, Casualties and Thefts, and carried to Schedule A, Itemized Deductions.

Business Use of the Home

If you use a home office as an employee, you may be able to claim a miscellaneous itemized deduction for the business use of your home.

• You must use your home office for the convenience of your employer.
• You may not rent your home office to your employer.

Contact Us

There are many events that occur during the year that can affect your tax situation. Preparation of your tax return involves summarizing transactions and events that occurred during the prior year. In most situations, treatment is firmly established at the time the transaction occurs. However, negative tax effects can be avoided by proper planning. Please contact us in advance if you have questions about the tax effects of a transaction or event, including the following:

• Pension or IRA distributions.
• Significant change in income or deductions.
• Job change.
• Marriage.
• Attainment of age 59½ or 70½.
• Sale or purchase of a business.
• Sale or purchase of a residence or other real estate.
• Retirement.
• Notice from IRS or other revenue department.
• Divorce or separation.
• Self-employment.
• Charitable contributions of property in excess of $5,000.

This blog post contains general information for taxpayers and should not be relied upon as the only source of authority. Taxpayers should seek professional tax advice for more information.

The 5 Absolutely Essential Books Every Performance-Focused Entrepreneur Should Read

“It's not the will to win that matters...everyone has that. It's the will to prepare to win that matters.” Bear Bryant

Preparation is everything. From the victorious team at the Super Bowl to a business owner building a profitable venture, preparation is the key to success. For those hungry for business growth, an essential component of preparation is the willingness to fuel one’s inner fire with self-empowering knowledge. A life-long pursuit of personal growth helps entrepreneurs to perform at peak levels not only in the workplace, but in their home life too.

Your ability to perform at optimal levels is significantly enhanced when you make the continual effort to increase your knowledge base. Implementing the strategies gleaned from motivational books can have far-reaching effects on your business success. If you are a performance-focused entrepreneur determined to achieve better results, the following five books should be on your reading list:

The Secret Collaborative Economy - Marsha Wright

Marsha Wright’s The Secret Collaborative Economy will have you rethinking your approach to business. Instead of the traditional competitive business mindset, this powerful book espouses the wisdom of business owners collaborating with each other. The adage ‘a rising tide lifts all boats’ is applicable to the collaborative economy mindset. Entrepreneurs working with each other instead of in competition are capable of much greater achievement than those toiling alone. The Secret Collaborative Economy offers a goldmine of actionable tips on everything from cultivating relationships to strategic business partnerships.

Focus on Impact - Wendy Lipton-Dibner

Focus on Impact by Wendy Lipton-Dibner helps entrepreneurs and small business owners understand that true business success comes through a focus on making an impact in the lives of their customers. Rather than concentrating on closing the deal or making the sale, the most successful leaders focus on how their business can improves the lives of their customers. This ability to truly make an impact comes from understanding your own inner entrepreneurial drive and being fully aware of the ‘why’ that guides your business journey. Once you have read Focus on Impact you will understand how helping others to grow leads to profound personal growth at the same time.

Never Eat Alone - Keith Ferrazzi

Keith Ferrazzi’s book Never Eat Alone offers powerful insights on networking. It is through building a network of individuals you can help (with no concern for repayment of that help) that you facilitate your own growth as an entrepreneur or small business owner. Honing your ability to reach out to others and offer assistance grows your network as a by-product, not as a means to an end. While this book does contain some not so subtle #humblebrags, the author does get his point across that building a life as a successful business owner comes from focusing on the quality of those in your network not the number of social media followers you collect or the number of contacts in your smartphone.

The ONE Thing - Gary Keller with Jay Papasan

The ONE Thing from Gary Keller and Jay Papasan is a panacea for our crazy, busy, distracted lives. Instead of being consumed the myriad of items demanding our attention, The ONE Thing teaches you to narrow your focus on completing the one critical thing that will make the most difference. This ability to focus on doing a few select things well catapults you into accomplishing more than you imagined possible. If you are ready to put your multi-tasking ways behind you and accelerate your success, add this business guide book to your must-read list.

Grit to Great - Linda Kaplan Thaler & Robin Koval

If you are an entrepreneur who believes that success will just magically happen overnight, Grit to Great is not for you. If on the other hand you believe that true success comes to those who never say die and who find a way to make their dreams a reality regardless of the speed bumps along the way, then this essential read is for you. Grit to Great teaches you strategies to help strengthen your resiliency and power your tenacity. Warning: this is not a read for the weak-willed.

Just like a football player becomes an elite athlete by relentlessly practicing their sport and studying the winning plays of others, increasing your performance as an entrepreneur or small business owner comes from dedication and a willingness to apply growth-enabling information. These five must-read books will not only help hone your professional development, they will accelerate your personal growth too. Are you ready to supercharge your entrepreneurial spirit?

Track Your 2015 Tax Refund

Click HERE to check the status of your Federal refund

When to check status of your refund:

• Within 24 hours after the IRS has received your e-filed tax return; or
• 4 weeks after mailing your paper return.

When the IRS processes your tax return and approves your refund, you can see your approximate date of refund deposit. Even though the IRS issues most refunds in less than 21 days after they receive your tax return, it’s possible your tax return may require additional review and take longer. 

You should only call the IRS if it has been:

• 21 days or more since you filed electronically;
• More than 6 weeks since you mailed your paper return; or
• The Where’s My Refund? tool directs you to contact them.

Click HERE to check the status of your IL refund. 

Select the blue "Individuals" button at the top of the page and click the "Where's My Refund?" link under "Individual Income Tax-related Items" in the left hand column.

The Illinois Department of Revenue (IDOR) is taking additional steps to protect Illinois taxpayers from identity theft and fraud. As a result of the new security measure, your refund may take longer than in previous years.

One of the Best Investments You Will Ever Make

Small business owners are the kings of DIY and pride themselves on wearing many hats: marketing, managing, creating, IT, customer relations - the list goes on and on. The accessibility of financial software apps such as QuickBooks and Zero contributes to entrepreneurs’ belief that they should be doing their own bookkeeping too. Is spending time deep in the books a better use of your time than meeting with prospects and customers, finding new sales opportunities or developing your marketing plans? Chances are, you and only you can handle these all-important tasks, and finding a good bookkeeper will pay dividends in giving you the breathing room to engage in activities that are the lifeblood of your business. Add in the potential for saving money, and you will begin to wonder why you ever sat down with those piles of receipts to begin with.

Take Back Your Time

Outsourcing your bookkeeping tasks frees up valuable time which can be spent growing the business and developing critical systems – fundamental to bringing your business to the next level. At every stage of business, your time is money, and the hours you reclaim will allow you to concentrate on your core business, innate skills, and billable activities. Even if you have the necessary background and skills to complete the bookkeeping yourself, delegating the tasks will empower you and position you away from non-essential activities and towards customer-critical tasks.

Cutting Edge Expertise

Your business will benefit from full-time expertise without having to pay a full-time salary. By leveraging the knowledge base and experience of your outsourced bookkeeper, you will reap the benefits of best practices and efficiency that larger firms enjoy. An experienced bookkeeper is a highly skilled professional, and will be able to complete the job in less time while providing value through expert suggestions, comparisons to industry standards, and economies of scale. Tax and compliance regulations and technology change quickly – a bookkeeper who invests in training to stay current on issues and state-of-the-art solutions can reduce your risk and give you an important competitive advantage.

Better & More Timely Information

When your books are up-to-date, you have the necessary information at your fingertips to make informed decisions about your business. From applying for a loan to completing your annual workman’s comp audit, everything is more efficient with clean books. You can easily compare your monthly expenditures to your budget, and there’s the added benefit of having your information organized in a way that’s helpful when making forecasts. Estimating future income is always challenging, but the process is easier when you make your projections using sound historical data.

Less Worry

At first thought, you might be inclined to handle all your books yourself, or delegate the work to an existing employee. This may seem ideal on the surface – but consider what comes along with doing everything in-house. Unless you or another employee are experienced in bookkeeping, mistakes are inevitable – and the time to correct them can quickly outweigh the cost savings from not outsourcing. Outsourcing your bookkeeping means you won’t miss important payments, get behind on client invoicing, or make mistakes on critical compliance tasks such as filing payroll taxes and forms. These mistakes result in expensive penalties and interest, and cumbersome paperwork to fix the problems. While proper bookkeeping cannot guarantee you will never be subject to an audit, it may reduce your risk of being flagged for an audit. If you are audited, properly documented books will help you support your position with the IRS.

Save Money

Every small business owner is looking to cut expenses, and hiring a bookkeeper seems counterintuitive to this goal. However, there are a number of ways in which professional assistance in this area can actually save you money. You will save money by having your books ready for year end with your tax accountant. You will save money by avoiding late fees.  You will save money by not paying for hiring and training expenses, payroll taxes, employee benefits and IT equipment and support of an in-house employee. You will save money by not having to pay someone to fix your mistakes when it would have been cheaper and easier to have it done properly the first time. Finally, a dedicated bookkeeper is extremely focused on the tasks at hand instead of being distracted by other operational issues, so the hours you are paying for are all productive ones.

Maximum Flexibility

Outsourced bookkeeping allows you to expand or cut back as your needs require. A good bookkeeping firm will have the resources in place to start your project right away. A flexible service contract with your preferred vendor allows you to increase or reduce your level of service as your business requires. Hiring your own internal bookkeeper, by comparison, can take weeks or months and requires resources to train him and provide the support he needs. When you hire internally, you are committing to a dedicated payroll; with outsourced bookkeeping you pay only for what you need at the time.

Take the Next Step

When it comes down to it, finding a bookkeeper you trust can be extremely beneficial to you and your business; keeping costs down and allotting more time for you to attend to higher level matters in the company that require your particular area of expertise. You will want to make certain that your prospective bookkeeper has undergone a background check, has experience helping others in your industry, and has systems in place which will enhance accountability, communication, data security and uniform bookkeeping procedures. If there is anything the Sharp Point team can do to assist you in your search for the right bookkeeper, please feel free to contact us.