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TAX TIPS AND FACTS
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ROGER A. KAHAN Certified Public Accountant and Advisor Serving the tax and financial needs of individuals and small to medium sized businesses 11 Jeanne Road, Randolph, MA 02368 TEL: (781) 963-RAK-1 (963-7251) E-mail: kahan@rak-1.com Copyright © 1998 Roger A. Kahan, CPA ALL RIGHTS RESERVED |
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You are the person to access this issue!
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| BEST OF THE WEB | |
Recently, our web site was picked as the "Best of the Web" by the editors of Snap! Online. Snap! editors choose Best of the Web (BoW) from the thousands of
offerings in a given channel. "These are the sites that we tell our friends about and bookmark for return visits." BoW
is a designation given to sites that are:
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| INC.500 | |
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Congratulations to Schwartz Communications, Inc. of Waltham for making the INC.500 list. Schwartz
Communications, Inc. shows up as 187 in the 1998 Ranking of the Fastest-Growing Private Companies in America. Steve
Schwartz has been a client since the inception of the business, and we have watched the company grow each year. Schwartz Communications, Inc., with a branch office in San Francisco, provides public relations and marketing
services to high-tech companies throughout the country.
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| DESIGNATED PRIVATE DELIVERY SERVICES | |
Effective September 1, 1998, the list of designated PDS's is as follows:
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| Roger A. Kahan is a Certified Public Accountant and Advisor with an office in Randolph, serving the tax and financial needs of individuals and small to medium sized businesses almost anywhere in the United States. And with the advent of the Internet, professional consultation extends to several other countries. Roger is always seeking additional clients and professionals wishing to save money and better manage their own, a friend, a relative or a client's personal or business life. | |
| TOO MUCH INVENTORY IS NOT TOO GOOD | |
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Carrying too much inventory hurts cash flow. It lowers a company's profitability - and not just because of the money
spent to produce all those goods that are sitting unsold on your shelves. Excess inventory also eat up additional
warehouse space; boost needs for security, production, and warehouse staff, and require the purchasing of additional
hazard insurance (with the resulting cost).
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Remember, "It's not what you make that counts, it's what you keep."
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| BEEPERS CAN SAVE YOU MONEY | |
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Do you carry a cellular phone so you can keep in contact with your office, customer, client or home? Each incoming
call costs you bucks. I know, because that is what I used my cellular phone for. My cell-phone is normally off while
I use a beeper that costs substantially less than cellular phone usage. When I get beeped, I will decide when and how
I can return the call (sometimes the incoming call breaks into a client discussion, a seminar presentation, lunch or
dinner, or comes while I am driving on the expressway in traffic or I am too busy to talk just then). Most times, a return call from a regular phone costs less than a call from my cellular phone. If you are using a cellular plan with a minimum usage base with a high monthly rate, change your plan to the lowest monthly rate. Don't look for a lot of "free minutes" as you may not need them any more. You are just as accessible to your office, clients, customers and family. It just costs you less. Beepers have local, regional or national access. Basic beeper service starts at about $8 per month. The basic beeper equipment costs anywhere from "free" to $100 in advance. Look into this, it may save you money, interuptions and aggravation.
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| INTERNET ACCESS | |
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We are kahan@RAK-1.com (that is a "one" and not a small
"L") and an active user of the INTERNET. You can E-mail us from any service connected to the
NET. Our Internet provider is The Xensei Corporation of
Quincy. For more information about Xensei and a reasonably priced and easy to use
unlimited-time, local internet access, call me at (781) 963-RAK-1 or Xensei at
(617) 376-6342, e-mail info@xensei.com.
TAX TIPS AND FACTS will appear on our World Wide Web page, at http://www.rak-1.com making it available the WORLD. Last month, 6,178 Internet surfers from 21 countries accessed our web page and read TAX TIPS AND FACTS on-line. Several of the readers asked to be added to the list to receive TAX TIP OF THE WEEK.
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| CHECK WRITING HABITS | |
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Do your checks indicate that you are signing in your official capacity as an officer of your corporation or limited
liability company? Do you know you could be held personally liable for a check that does not? By placing the words
"Authorized Signature" just under the signature line may prevent that breach of the corporate veil. We strongly
suggest you look at each company check and have those words added to the check at the next printing. Until then, be
sure to write your title next to your name. This tip is not given to you as legal advice. It is from years of experience with clients.
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| TAX TIP OF THE WEEK | |
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I am now writing a TAX TIP OF THE WEEK that is distributed over the Internet to a growing list of people each week.
Some items in the weekly version will appear in the printed monthly version. If you would like to be included in the
weekly electronic distribution, just send me your e-mail address with your City and State (for statistical purposes)
by e-mail, snail-mail, voice-phone or fax.
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| WE NEED YOUR SUPPORT | |
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If you like our work, recommend us to a friend. If you are not happy with our work, please call me and let's talk about it. We will both appreciate it.
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| FEATURES WANTED | |
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We want to feature our clients in future editions of TAX TIPS AND FACTS.
If you would like to have a FREE spot to sell us on your company, its
products or services, simply send us a brief story about your company, an
overview of your company's products and future plans. We may edit the
information and include it in a future edition. Send the information to
Roger A. Kahan, CPA via mail, E-mail
or FAX it.
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| CERTIFIED? | |
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Your doctor is certified. Your lawyer is certified. Is your accountant certified? If your accountant isn't a Certified Public Accountant, think twice about where you are getting your advice. Who do you want handling your financial and business matters? If your accountant isn't a CPA, it's time to seek professional help.
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| SOCIAL SECURITY RECORDS NOT CORRECT | |
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When was the last time you checked on your Social Security earnings records? Did you know that Social Security
Administration records are not correct? Over the years, millions of dollars have not made it to the right accounts.
It seems that the IRS and the Social Security Administration do not have corresponding records. Do you know if your
account is correct? We recommend checking records at least every three years. To check your file and obtain a summary
of your earnings, call the local Social Security office or 1-800-772-1213 and request Form 7004-SM, Request for
Earnings and Benefit Estimate Statement. We have some in our office. Call (781)963-RAK-1 and ask for one or two.
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| WHY DO I NEED A CPA? | |
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CPAs do much more than prepare tax returns. A CPA can help you with all of your Personal Financial Planning
needs to help you achieve your goals.
Whether you're saving to buy a house, send your children to college or secure your retirement, you need a member of the Massachusetts Society of CPAs to assist you. Roger A. Kahan is an active member of the Massachusetts Society of CPAs.
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| ERISA COMPLIANCE | |
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Most people with company retirement plans do not know they are required to maintain a Fidelity ERISA Bond to cover the
assets of their plans. ERISA (a tax law) requires a fiduciary bond equal to 10% of the plans' asset value. When you order the bond from your insurance agent, plan to increase the coverage a little to allow for growth in the value of the fund in the future. (You do not want to be underinsured.) Thanks to Evan Haberman of Merrill Lynch's Wellesley, Massachusetts office for this reminder. Editor's note - The Internal Revenue Services says: "In general, all fiduciaries may be bonded if they have some discretionary control over a plan or the assets of the related trust. This bonding requirement also applies to ANY person handling the funds of the trust, regardless of whether they are a fiduciary or not. The bond must be at least $1,000 and the maximum bond coverage is $500,000, regardless of the trust account balance." A fiduciary can also include your CPA, so if you are a client of Roger A. Kahan, CPA and you must obtain a bond, please be sure to name Roger A. Kahan as one of the insureds on the policy. This additional listing should not cost you an additional premium, but will provide a more complete coverage for your plan.
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| Many accountants view their goal as minimizing their clients' taxes. NOT ME! I like to see my clients pay more taxes - because their earnings and profits are increasing dramatically. I can make a major difference in achieving those profits. Talk to me and find out more. | |
| DO YOU PAY YOUR CHILD AN ALLOWANCE? | |
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Have your child work for you in your business and pay him or her a reasonable wage for time spent. Instead of paying
a nondeductible allowance, you may be paying an "ordinary and necessary" business expense. Tasks such as answering
the phone, filing papers and doing simple maintenance jobs for a parent's business may qualify. By the way, hiring an over age 14 family member and paying a reasonable wage may also be a benefit to the family as a whole by allowing you to deduct the wages at your HIGHER tax rate.
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| DO YOU HAVE A NEW BUSINESS? | |
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Did you recently start a business? Did you form a corporation to limit your personal liability and to formally
separate you and the business for tax and financial planning purposes? Did you establish a fiscal (tax) year end?
Did you consider family members when you incorporated? Did you consider "income shifting?" If you have a partner in
this business, did you consider how to fund a buyout in case of untimely death or disability? Did you consider how to
account for your business transactions (the bookkeeping system)? Have you reviewed the methods of payroll processing,
the related withholdings of taxes and the many deposit requirements? Are you considering the purchase of a computer
or other major piece of equipment? Do you have adequate financing to cover ALL startup costs, equipment or inventory
acquisition AND working capital needed during the early days, months or years? Did you consider leasing instead of
buying? These are some of the questions you should be asking. If you answered NO or are not sure, this would imply
that you should meet with a CPA real soon. You may be spending your hard-earned money the wrong way. Your CPA is
experienced in business startups, and has seen and worked out some of the most common problems (and some of the hard
ones too). Why should you get stuck trying to muddle through them too? Your professional CPA can help you review
situations, assist in the structuring of alternatives, and bring to the discussion, the skills and resources necessary
to help you successfully complete even the most complex or unique transactions.
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| IRA DISTRIBUTIONS | |
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The tax rules relative to Individual Retirement Account (IRA) withdrawals require you to start your annual "minimum"
withdrawals in the calendar year in which you reach 70½. However, those rules also specifically allow for a delay of
the first withdrawal "until April 1 of the year following the year you turn 70½." If you turned 70½ during 1996, this means you may take your initial "minimum" withdrawal in 1996 or by April 1, 1997. However, regardless of when you take the first withdrawal, you must make your regular 1997 annual withdrawal by December 31, 1997, and then each year thereafter. If you wait until April 1, 1997 to take the first withdrawal, you will have put two annual withdrawals into the 1997 tax year (I mention this as a tax planning item). Please keep in mind that you can take your annual "minimum" from any one, some or all IRA accounts you own, just as long as you take at least the required "minimum" amount in total. You may take your withdrawals in monthly, quarterly or annual payments, but the total for each calendar year must equal or exceed the annual "minimum" amount. Benefits must be paid out over a period that does not exceed the life or life expectancy of the participant or the combined lives or life expectancies of the participant and his/her designated beneficiary. This mathematical calculation uses the total balances of all IRA's in your name and the ages of both you and your beneficiary (if you named a beneficiary). Life expectancies may be recalculated annually.
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TAX TIPS AND FACTS is published periodically by Roger A. Kahan, CPA.
Subscription is free to clients, prospective clients and friends of Roger
A. Kahan, CPA. If you know of someone interested in a subscription to TAX
TIPS AND FACTS allowing him or her to obtain valuable comments on
national, Massachusetts or local tax issues, call (781) 963-RAK-1.
The information contained in this publication has been obtained from sources I believe to be reliable at the time of writing, but I do not guarantee its accuracy or completeness. Neither the information nor any opinion expressed constitutes a solicitation by me of the purchase or sale of any securities or other investment. This material, or any portions thereof, may not reproduced without prior written permission of Roger A. Kahan, CPA. |
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