Surprise! There is a Wednesday BUZZ after all!
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* A post at Stacie Clifford Kitts’ blog STACIE’S MORE TAX TIPS (A Blog About - Duh - Income Tax) led me to this excellent “Understanding IRS Guidance - A Brief Primer” at the IRS website.
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* Jean Murray of JEAN’S BUSINESS LAW/TAXES: US BLOG, a colleague of William Perez at about.com, joins the debate on the appropriateness of a separate business checking account in two posts – “Do You Need a Separate Business Checking Account?” and “How to Simplify Your Business Checking and Accounting”.
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The bottom line of her first post (the highlights are mine) – “My suggestion (and remember I'm not a CPA or an attorney): If you are a sole proprietor, having only one checking account is not a problem as long as you can keep your business and personal records separate and be sure you are not recording personal expenses as business expenses. If you are any other kind of entity (LLC, partnership, or corporation), get a separate checking account.”
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This post points out two good reasons why a separate business checking account is important in any situation -
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• “To let the IRS know you are a separate business entity, so they don't look on your business as a hobby”. And
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• “To maintain the integrity and separateness of your business from your personal life”.
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Her second post also has an excellent message – “I'll make this as simple as possible: You MUST keep track of all business expenses, in order to claim them as deductions. And all expenses you record as business, must be for a legitimate business purpose.”
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She includes two more MUSTS –
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• “Record business income and purchases as they happen.” And
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• “Include the important information about each business transaction.”
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Jean, FYI I am not a lawyer! I am just a simple “unenrolled” tax professional with 38 filing seasons of experience.
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* It is a good idea to go back to blog posts that you have found interesting or useful time and again to check out any comments that have been published since your last visit.
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Stacie Clifford Kitts, whose blog I referenced above, has submitted a comment to my post “WHY CAN’T WE ALL JUST LEARN TO GET ALONG?”. It is the same comment that she submitted to June Walker’s offending blog post. Check it out.
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Stacie has also joined the fray with her own post on the subject titled “Wowser - A Tax Blog Throw Down - Why Keeping a Separate Business Checking Account Can Save Your Clients Money”
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Right on, sister! BTW – I like the new look of your blog.
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* June Walker, who started this whole debate, provided two rebuttal posts – “Bravo Indies” and “Indies Are Not Corporations”. In neither of these posts did she address the actual issue or the comments from other tax professionals – although she promises to respond “accordingly” at some point. Her second post was basically an attack on Peter Pappas. These two deserve each other, as they both apparently get “postal” when someone dares to disagree with them. When promising to address comments from tax pros Ms Walker specifically referenced a phrase, “chick think”, from the comment by Stacie Clifford Kitts I mentioned above. Poor Stacie – I expect she will be the next to feel the Wrath of Walker!
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Before I leave this mess – a new comment, supporting a separate business checking account, by JustJan, a CPA from Michigan, has been published at the “offending” post “There’s No Shortage of Bad Advice Out There”. Check it out.
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* That is enough about “the debate”. But I am not finished with Stacie Clifford Kitts yet. She has an informative post on “Retirement Plans - 7 Steps to Making a Hardship Distribution”.
* The IRS is now on YouTube! Click here.
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* Click here to download a 126-page transcript of the consumer and tax professional panel discussions on registering tax preparers from the July 30 public forum.
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* Joe Kristan adds his always valuable 2 cents to my two-part discussion on the advantages and disadvantages of incorporating in “Corporations: Yea or Nay?” at the ROTH AND COMPANY TAX UPDATES BLOG.
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Joe’s good advice – “If you don't know what to do, start with the partnership or proprietor formats; if nothing else, they are the easiest formats to change”
.
The post includes perhaps the best quote about corporations that I have seen to date, what Joe calls “the famous Bittker and Eustice admonition”. It basically sums up my opinion on the use of the corporate entity for small business (great minds do think alike) -
.
“Decisions to embrace the corporate form of organization should be carefully considered, since a corporation is like a lobster pot: easy to enter, difficult to live in, and painful to get out of.”
.
I wonder how many lawyers tell their clients that?
.
TTFN
.
* A post at Stacie Clifford Kitts’ blog STACIE’S MORE TAX TIPS (A Blog About - Duh - Income Tax) led me to this excellent “Understanding IRS Guidance - A Brief Primer” at the IRS website.
.
* Jean Murray of JEAN’S BUSINESS LAW/TAXES: US BLOG, a colleague of William Perez at about.com, joins the debate on the appropriateness of a separate business checking account in two posts – “Do You Need a Separate Business Checking Account?” and “How to Simplify Your Business Checking and Accounting”.
.
The bottom line of her first post (the highlights are mine) – “My suggestion (and remember I'm not a CPA or an attorney): If you are a sole proprietor, having only one checking account is not a problem as long as you can keep your business and personal records separate and be sure you are not recording personal expenses as business expenses. If you are any other kind of entity (LLC, partnership, or corporation), get a separate checking account.”
.
This post points out two good reasons why a separate business checking account is important in any situation -
.
• “To let the IRS know you are a separate business entity, so they don't look on your business as a hobby”. And
.
• “To maintain the integrity and separateness of your business from your personal life”.
.
Her second post also has an excellent message – “I'll make this as simple as possible: You MUST keep track of all business expenses, in order to claim them as deductions. And all expenses you record as business, must be for a legitimate business purpose.”
.
She includes two more MUSTS –
.
• “Record business income and purchases as they happen.” And
.
• “Include the important information about each business transaction.”
.
Jean, FYI I am not a lawyer! I am just a simple “unenrolled” tax professional with 38 filing seasons of experience.
.
* It is a good idea to go back to blog posts that you have found interesting or useful time and again to check out any comments that have been published since your last visit.
.
Stacie Clifford Kitts, whose blog I referenced above, has submitted a comment to my post “WHY CAN’T WE ALL JUST LEARN TO GET ALONG?”. It is the same comment that she submitted to June Walker’s offending blog post. Check it out.
.
Stacie has also joined the fray with her own post on the subject titled “Wowser - A Tax Blog Throw Down - Why Keeping a Separate Business Checking Account Can Save Your Clients Money”
.
Right on, sister! BTW – I like the new look of your blog.
.
* June Walker, who started this whole debate, provided two rebuttal posts – “Bravo Indies” and “Indies Are Not Corporations”. In neither of these posts did she address the actual issue or the comments from other tax professionals – although she promises to respond “accordingly” at some point. Her second post was basically an attack on Peter Pappas. These two deserve each other, as they both apparently get “postal” when someone dares to disagree with them. When promising to address comments from tax pros Ms Walker specifically referenced a phrase, “chick think”, from the comment by Stacie Clifford Kitts I mentioned above. Poor Stacie – I expect she will be the next to feel the Wrath of Walker!
.
Before I leave this mess – a new comment, supporting a separate business checking account, by JustJan, a CPA from Michigan, has been published at the “offending” post “There’s No Shortage of Bad Advice Out There”. Check it out.
.
* That is enough about “the debate”. But I am not finished with Stacie Clifford Kitts yet. She has an informative post on “Retirement Plans - 7 Steps to Making a Hardship Distribution”.
* The IRS is now on YouTube! Click here.
.
* Click here to download a 126-page transcript of the consumer and tax professional panel discussions on registering tax preparers from the July 30 public forum.
.
* Joe Kristan adds his always valuable 2 cents to my two-part discussion on the advantages and disadvantages of incorporating in “Corporations: Yea or Nay?” at the ROTH AND COMPANY TAX UPDATES BLOG.
.
Joe’s good advice – “If you don't know what to do, start with the partnership or proprietor formats; if nothing else, they are the easiest formats to change”
.
The post includes perhaps the best quote about corporations that I have seen to date, what Joe calls “the famous Bittker and Eustice admonition”. It basically sums up my opinion on the use of the corporate entity for small business (great minds do think alike) -
.
“Decisions to embrace the corporate form of organization should be carefully considered, since a corporation is like a lobster pot: easy to enter, difficult to live in, and painful to get out of.”
.
I wonder how many lawyers tell their clients that?
.
TTFN
3 comments:
Really, thanks for all the references. I have been so busy that I haven't had a chance to hope on over.
BTW, I just learned by reading some of your posts that you still prepare your returns by hand. Wow wee, that’s amazing. Okay that would take me forever, I have several returns that are somewhere in the neighborhood of 500+ pages with all the schedules and disclosures. It would take me months to get through a single return. Kudos. I'm sure your understanding of the ins and outs of the individual tax return is unmatched!
SCK-
Thanks for the kind words.
I haven't had a 500 page 1040 yet. My biggest returns in terms of pages usually contain 40 to 50 pages of "cut and paste" Schedule D supplemental schedules taken from the P+L reports of multiple brokerage accounts.
With computer-generated 1040s do you also use "cut and paste" in such a situation? I can't see inputting hundreds of stock trades into the software.
TWTP
I usually cut and paste when there are lots of transactions. However, most brokerage houses have electronic information that can be downloaded and then pulled into the tax program. Of course then you have the reconciliation process that follows to make sure everything imported okay.
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