You can track the hours employees work in QuickBooks Online. But if your time-tracking needs are complex enough, you’ll need an integrated app. If your company has a staff and sells services, you know better than anyone that time is money. It’s critical that you track every minute that employees work, as well as those that can be billed to customers. QuickBooks Online offers dedicated tools that let you do just those tasks. But QuickBooks Online has limitations in that area, and you may need more versatile time-tracking than it provides. There’s a solution for that: add an integrated add-on application. Several are available that go above and beyond in the area of employee time management. If you’re interested in exploring these online solutions, we can help you both find and get started with the right one. What QBO Can Do QuickBooks Online’s own time-tracking features are easy to set up and use – but you must be sure they’re turned on. Click the gear icon in the upper right, then Account and Settings under Your Company. Click on the Advanced tab and go down to the Time Tracking section. The first two entries here should be checked; if they’re not, click in the boxes. If you don’t want employees to see how much customers are actually being billed for their time, keep that box unchecked. Change the First day of work week if you want and click Save. If you’re going to track hours worked by employees and bill them to customers, these two boxes need to be checked. Once time-tracking is enabled, you’ll be able to enter single timed activities and/or fill in timesheets., marking them as billable where appropriate. Employees will be able to enter their own hours on timesheets, and billable hours can be easily transferred to customer invoices. Adding an Add-On As we said earlier, there are numerous advanced add-on time-tracking applications that can be integrated with QuickBooks Online. They contain built-in tools to facilitate their actual connections with QBO, and they know what data needs to be exchanged and synchronized. Hours captured on timesheets go directly into QuickBooks Online, which transfers billable hours to customer invoices and uses the data in job costing and payroll. Here’s an example of how the setup process works in one of the most popular apps, TSheets

First, don’t panic. Audits are relatively rare, as fewer than 1% of taxpayers grouped by income level will get that dreaded notice on IRS letterhead. Per the linked statistics, for the average American who earned $50‒70K per year, only about half a percent of those tax returns got audited. If you made between $25‒50K or between $75‒100K, less than half a percent of those returns were under audit. Only 6.66% of tax returns reporting an eight-figure adjusted gross income were audited as well. Additionally, the IRS has less funding and about one-third fewer agents on board compared to less than a decade ago, so this keeps audit figures down. To cut to the point right away, your chances are being audited by the IRS are quite slim. There are often many red flags that are likely to trigger an audit, but even then, you’re still more likely to get an examination notice than an actual field audit in which an IRS agent shows up at your door demanding to examine your workspace and files. An IRS Letter Is Not Likely to Be an Audit You might think that you’ve been selected for an audit because a letter from the IRS came in the mail that demanded to know why a line item on your tax return was reported a certain way or that they computed your tax bill for you. A notice is not the same thing as an audit. Most IRS notices are computer-generated with a “CP” prefix. Notices in the CP series will be automatically mailed to you when changes are made to your IRS account, such as making a payment or having all or part of your tax refund seized to pay down your current balance. These notices are sent with the intent to catch discrepancies and underreporting based on information they already have on file, such as if you forgot to report that 1099 you received for giving a side hustle a try or you mistyped your salary as $56,000 when $65,000 was reported on your W-2. Requests for more information are often referred to as a “desk audit,” but your contact with the IRS is still largely minimal, particularly if your notice pertains to math or input errors. Common Audit Red Flags Despite having a pretty low chance of ever being audited, it’s helpful to know which criteria are the most likely to trigger an audit:

In the largest possible sense, handling the cash flow for your new business is exactly what it sounds like ‒ you’re trying to get the clearest level of visibility into “money coming in versus money going out” as possible. But managing cash flow is also about a lot more than that, too. It’s about making sure that you not only have the funds on hand to “keep the lights on” and to remain operational, but that you can also capitalize on opportunities as they arise instead of watching them pass you by. It’s about making sure you have access to what you need to not only put your best foot forward today, but to better prepare yourself for challenges that may develop six months or even a year from now, too. All of that is to say that the importance of gaining a precise understanding of your cash flow cannot be overstated. Indeed, running out of money is also one of the most common ways that new businesses in particular are forced to close their doors ‒ usually very quickly after their initial launch. But while this is certainly an essential topic, it isn’t necessarily a difficult one. Properly managing the cash flow for your new business is a lot more straightforward than you might be fearing ‒ you just need to keep a few key things in mind. The “Breakeven” Point By far, one of the most important metrics for you to understand about your new small business is your “breakeven” point ‒ that is, the point at which your current (or projected) revenues will allow you to meet all of your operating expenses. This is the bare minimum amount of money you need to keep your employees paid, to keep your bills up-to-date and to keep your doors open ‒ and unfortunately, it usually changes on a regular basis. As your business continues to scale, your revenue should increase ‒ but your expenses will increase, too. Therefore, it is of paramount importance that you don’t make finding your “breakeven” point something you “do once and forget about.” For the best results, you should return to this figure on a regular basis to make sure you: a) understand what it is in the literal sense; and b) understand what actions you need to perform to actually achieve that. Once you have a handle on your breakeven point, you’ll at the very least be able to remain functioning ‒ which means you can start to devote more of your attention to actually growing into the type of business you want to be running in the first place. The Importance of Cash Reserves If you take a look at some of the other reasons why small businesses usually fail, you’ll quickly see that they’re closely related: About 79% of businesses fail because they start out with too little money, according to one study. 77% run into troubles when they fail to price properly, or don’t include all necessary items when setting prices. 73% close because they were either too optimistic about achievable sales, about the money required to generate those sales, or both at the same time. These types of issues are common with small businesses, and particularly with those controlled by an entrepreneur who may be running their first SMB to begin with. But for as much as all of these ideas ultimately tie directly back into cash flow management, they also underline another very important best practice to that end:The Value of Maintaining a Cash Reserve Absolutely every new business ‒ regardless of its size or the industry it’s in ‒ should expect problems to crop up on a regular basis. Entrepreneurship is very much one of those areas where “Murphy’s Law” rules the day. Working hard to keep a quality cash reserve will not only help lessen the ultimate impact of those problem times, but it can also help reduce stress and distractions, too. If you have no cash reserve, every problem becomes a major cash flow problem. But at the very least if you have something to fall back on, you have the clarity you need to learn from the situation and double down with your focus on growing your business moving forward.

Article Highlights Higher Standard Deduction IRA Options Self-Employed Parent Employing Your Child Tax Benefits Children who are dependents of their parents are subject to what is commonly referred to as the kiddie tax. This generally applies to children under the age of 19 and full-time students over the age of 18 and under the age of 24. The kiddie tax originated many years ago as a means to close a tax loophole where parents would put their investments under their child’s name and social security number so that their investment income would be taxed at lower tax rates. Enter the kiddie tax, under which unearned income (investment income) in excess of a minimum amount was taxed at the parent’s highest marginal tax rate. Tax reform enacted late in 2017 changed the way children are taxed by no longer having the children’s unearned income taxed at the parent’s top marginal tax rate, but instead at fiduciary income tax rates, which generally result in higher taxes on the unearned income. Tax-Free Income - On the bright side, a child’s earned income (income from working) is taxed at single rates, and tax reform just about doubled the standard deduction for singles. The standard deduction is $12,200 for 2019. This means that your child can make $12,200 from working and pay no income tax (but will be subject to Social Security and Medicare payroll taxes), and if the child is willing to contribute to a traditional IRA, for which the 2019 contribution cap is $6,000, the child can make $18,200 from working—federal income tax free. IRA Contributions - Even if your child is reluctant to give up any of their hard-earned money from their summer or regular employment, if you, a grandparent, or others have the financial resources, the amount of an IRA contribution could be gifted to the child, giving your child a great start toward their retirement savings and hopefully a continuing incentive to save for their retirement. Roth IRAs are actually a better alternative; unlike Traditional IRAs, they provide tax free income at retirement. However, the contribution to a Roth is not deductible, and thus income in excess of $12,200 would not be tax free. Even so, the tax rate at the lower income level is only 10%, and it may be worth paying a small tax to gain the tax-free retirement provided by a Roth IRA. Employing Your Child – If you are self-employed (an unincorporated business), rather than helping support your children with your post-tax dollars, you can instead hire them to work for your business and pay them with tax-deductible dollars. Of course, the employment must be legitimate and the pay commensurate with the hours and the job worked.

Article Highlights: Expiring ITINs IRS Currently Accepting Renewal Applications Family Renewal Options How to Renew Common Errors to Avoid According to the Internal Revenue Service (IRS), just about 2 million Individual Taxpayer Identification Numbers (ITINs) are set to expire at the end of 2019. ITINs are used by people who have tax filing or payment obligations under U.S. law but who are not eligible for a Social Security number. ITIN holders who have questions can visit the ITIN information page on the IRS website. ITINs that have not been used on a federal tax return at least once in the last three consecutive years will expire Dec. 31, 2019. In addition, ITINs with middle digits 83, 84, 85, 86 or 87 that have not already been renewed will also expire at the end of the year. ITINs with middle digits of 70 through 82 expired in past years. Taxpayers with these ITIN numbers who haven’t already renewed their ITIN can renew at any time. Note: It is important to understand that ITINs with middle digits 83 through 87 will expire whether or not they were used for filing returns in the last three years. IRS is currently accepting ITIN renewal applications - Taxpayers whose ITIN is expiring and who need to file a tax return in 2020 must submit a renewal application. Federal returns that are submitted in 2020 with an expired ITIN will be processed. However, exemptions and/or certain tax credits will be disallowed, and the taxpayers will be notified by mail advising them to renew their ITIN. Once the ITIN is renewed, any applicable exemptions and credits will be reinstated, and any applicable refunds issued. Therefore, renewing early will avoid these last-minute hassles and delays in receiving refunds. Family renewal option - Taxpayers with an ITIN that has middle digits 83, 84, 85, 86 or 87, as well as all previously expired ITINs, have the option to renew ITINs for their entire family at the same time. Those who have received a renewal letter from the IRS can choose to renew the family’s ITINs together, even if family members have an ITIN with middle digits that have not been identified for expiration. Family members include the tax filer, spouse and any dependents claimed on the tax return. How to renew an ITIN - To renew an ITIN, a taxpayer must complete a Form W-7 and submit all required documentation. Taxpayers submitting a Form W-7 to renew their ITIN are not required to attach a federal tax return. However, taxpayers must still note a reason for needing an ITIN on the Form W-7. See the Form W-7 instructions for detailed information. An application package can be submitted in one of three ways: By mail, along with original identification documents or copies certified by the agency that issued them, to the IRS address listed on the Form W-7 instructions. The IRS will review the identification documents and return them within 60 days. Work with Certified Acceptance Agents (CAAs) authorized by the IRS to help taxpayers apply for an ITIN. CAAs can authenticate all identification documents for primary and secondary taxpayers, verify that an ITIN application is correct before submitting it to the IRS for processing and authenticate the passports and birth certificates for dependents. This saves taxpayers from mailing original documents to the IRS. In advance, call and make an appointment at a designated IRS Taxpayer Assistance Center to have each applicant’s identity authenticated in person instead of mailing original identification documents to the IRS. Each family member applying for an ITIN or renewal must be present at the appointment and must have a completed Form W-7 and required identification documents. See the TAC ITIN authentication page on the IRS web site for more details.

Article Highlights: Adjusted Basis Passive Loss Carryovers Installment Sale Tax-Deferred Exchange Tax on Net Investment Income Qualified Opportunity Fund Home Sale Exclusion If you are contemplating selling real estate property, there are a number of issues that could impact the taxes that you might owe, and there are steps you can take to minimize the gain, defer the gain, or spread it over a number of years. The first and possibly most important issue is adjusted basis. When computing the gain or loss from the sale of property, your gain or loss is measured from your adjusted basis in the property. Thus, your gain or loss would be the sales price minus the sales expenses and adjusted basis. Adjusted Basis - So, what is adjusted basis? Determining adjusted basis can sometimes be complicated, but in a simplified overview, it is a dollar amount that starts with your acquisition value and is then adjusted up for improvements to the property, down for depreciation taken on the property, and down for any casualty losses claimed on the property. The acquisition value could be the price you paid for the property, the fair market value of an inheritance at the date of the decedent’s death, or, in the case of a gift, the donor’s adjusted basis at the time of making the gift. As you can see, it is extremely important that you keep track of your basis, since it is a key factor in determining gain or loss upon the sale of the property. Failure to keep a record and substantiating documentation could cost you dearly in income tax. Passive Loss Carryover - If the property was a rental and the rental operated at a loss, there is a chance that the losses were not fully deductible in the year(s) of the loss because of the passive loss limitation rules; in this case, you will have a passive loss carryover that can be used to offset the gain. In addition, current year passive losses and passive loss carryovers you may have from other properties can also be used to offset any gain from selling a rental property. Next, you have to decide whether you want to take (i.e., report on your tax return) all the income in one year or whether to attempt to spread the income over a period of years with an installment sale (by carrying back a loan) or defer the income into a replacement property through a tax-deferred exchange. Installment Sale - In an installment sale, the seller acts as the lender to the buyer. That can entail holding the first trust deed or taking back a second trust deed for only a portion of the loan amount. However, second trust deeds are as the name implies: They are second in line to be paid if the buyer defaults on the loan and thus are riskier. When set up as an installment sale, part of the gain is reported for each year that payments are received, generally as capital-gain income. In addition, the interest that the buyer pays the seller is taxable as ordinary income to the seller. Installment sales can be structured as short- or long-term loans, but remember, the buyer can always pay off the loan early or refinance. Either of these actions would make the balance of the profit from the sale taxable at that time.