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The Tax Implications of Independent Contractors

August 9, 2022 @ 3:49 pm

Are your employees really employees, or are they actually independent contractors? It’s not just semantics; the IRS makes a stark distinction. You don’t generally have to withhold or pay any taxes on payments to independent contractors, as you do with employees. If you’re a business owner hiring or contracting with other individuals to provide services, consider the following: What degree of control and independence is there in the contractual arrangement? Does your company control or have the right to control what the worker does and how the worker does his or her job? Do you control the business aspects of the worker’s job? This includes considerations like how the worker is paid, whether expenses are reimbursed and who provides tools and supplies. Are there written contracts or employee benefits such as a pension plan and vacation pay, and will the relationship continue? Is the work performed a key aspect of the business? You need to weigh all factors when determining whether a worker is an independent contractor. The key is to look at your entire relationship and decide the degree or extent of your right to direct and control how he or she works. Document each factor used in coming …

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Do you have a hobby or a business? How to tell…

August 2, 2022 @ 10:01 am

Do you collect stamps? Write stories? Craft macramé holders for hanging plants? Are these hobbies or actual businesses? The IRS has weighed in on this: “A hobby is any activity that a person pursues because they enjoy it and with no intention of making a profit. People operate a business with the intention of making a profit.” According to the agency, you may engage in hobbies or activities that could turn into a source of income. However, determining whether that hobby has grown into a business can be confusing. To help simplify things, the IRS has established factors taxpayers must consider when determining whether their activity is a business or a hobby. These factors are whether: The taxpayer carries out activity in a businesslike manner and maintains complete and accurate books and records. The taxpayer puts time and effort into the activity to show they intend to make it profitable. The taxpayer depends on income from the activity for their livelihood. The taxpayer has personal motives for carrying out the activity such as general enjoyment or relaxation. The taxpayer has enough income from other sources to fund the activity. Losses are due to circumstances beyond the taxpayer’s control or are …

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Gabby Walker Joins BiggsKofford CPAs as Outsourced Accounting Specialist

July 26, 2022 @ 4:06 pm

Chris Blees, President and CEO of BiggsKofford CPAs, a leading Colorado accounting firm with offices in Colorado Springs and Denver, today announced that Gabby Walker, Outsourced Accounting Specialist, has joined the organization. BiggsKofford’s Virtual Accounting Solutions Team (VAST) is designed for modern businesses with a fully online, fully remote solution that leverages the latest technologies to maximize efficiency. Walker brings more than five years of professional accounting expertise with advanced QuickBooks and Excel skills, allowing her to assist privately-held business clients with complete accounting services. Formerly of Mississippi, Walker is enjoying her new home in Colorado with her husband, spending her free time enjoying the outdoors, cooking, and participating in volunteer activities. “We are grateful to have Gabby as such great addition to our team at BiggsKofford,” stated Chris Blees, President and Chief Executive Officer. Blees continued, “She has already made herself a valued part of our organization in her short time here. She’s been quick to learn the standards and practices that keep BiggsKofford a leader in the industry. Her positive attitude keeps our internal team and her clients appreciative of her efforts every day.” BiggsKofford is a thriving and growing full-service Colorado CPA firm established in 1982, with …

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All About Quarterly Tax Returns

July 20, 2022 @ 10:12 am

IRS Form 941 is a tax form that businesses file quarterly. It is how businesses report income taxes as well as payroll taxes, Social Security, and Medicare taxes that the business withheld from employee paychecks over the previous tax year. Filing deadlines are the last day of January, April, July, and October of any given year. On the form, you have to account for the following:  • Wages paid by the company • Tips that employees reported to the company • Federal income tax the company withheld from employees’ paychecks • Employer and employee shares of Social Security and Medicare taxes • Additional Medicare tax that was withheld from employee paychecks • Current quarter adjustments to Social Security and Medicare taxes for various items, such as fractions of cents, sick pay, tips, and group-term life insurance • Qualified small-business tax credit for increasing your company’s research activities Form 941 tells you how much money you should have remitted or will need to remit to the government to cover your payroll tax responsibilities for the quarter. You may be exempt from filing Form 941 if, for example, you’re a seasonal business that hasn’t had to hire anyone, a business that hires …

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BiggsKofford CPA and accounting software expert Eric Morgan discusses QuickBooks Desktop versus QuickBooks Online

July 12, 2022 @ 12:16 pm

Many of our business clients use the QuickBooks software to keep track of finances and to gauge performance.  There are two editions of QuickBooks available:  QuickBooks Desktop, which is installed locally on your workstation or server, and QuickBooks Online, which is cloud-based and accessed through a web browser.  Both have advantages and disadvantages. QuickBooks Desktop is more sophisticated and has more features and thus is better suited for a complex accounting environment.  It has multiple scalable versions and industry-specific versions like contractor, manufacturing, nonprofit, retail, and professional services.  QuickBooks Desktop can do sales orders, whereas QuickBooks Online cannot.  The Desktop version also has more robust reporting.  You must be using the computer where it is installed or have the ability to remotely connect to that computer.  The Desktop edition is purchased with an annual subscription that starts at $350/year for the Pro version. QuickBooks Online is easier to use for someone not coming from an accounting background and will be best suited for a straightforward small business accounting environment.  The primary advantage is that QuickBooks Online can be accessed from anywhere through a web browser, including by multiple users simultaneously.  However, the web-based nature makes it a bit slower than …

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Let Financial Statement Audits Boost Your Business

July 7, 2022 @ 10:11 am

As a privately held company, you are not required to prepare and submit financial statement audits. Currently, U.S. government regulators require that only public companies that sell stock or bonds, or companies that are in the process of going public must file audited financial statements. Again, privately held companies do not have to file, which applies both to corporations with closely held stock and to unincorporated businesses, which could be sole proprietorships, partnerships or limited liability companies. But you may want to get an audit anyway. Indeed, the most important thing for you to know is that there are a number of important benefits for your business and other reasons that justify at least seriously considering adding audits to your financial tool kit, if you haven’t already. While the government may not require your private company to provide audited financial statements, others may insist on seeing these documents as a matter of best practices. For example, banks or lending parties commonly ask for annual audited financial statements from businesses that apply for loans to ensure that the business is operating on sound financial best practices. Moreover, if you seek to recruit outside investors in a partnership or LLC, those potential …

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Introducing Summer Audit Intern Wyatt Kent

June 28, 2022 @ 8:04 am

My name is Wyatt Kent and I am a rising senior accounting major. I attend Samford University in Birmingham, Alabama, where I have lived my entire life. I have two previous busy seasons in tax and am very excited to have my first experience in audit this summer. Outside of the office, I enjoy hiking, biking, kayaking, running, and the guitar. Why BiggsKofford I chose BiggsKofford because I wanted to be a part of a firm that felt like home despite being across the country from my own. I could tell from my first interactions with my interviewers that everyone here has a lighthearted and friendly attitude, and this affirmed my decision to come so far for a job opportunity. In addition to that, I am drawn to the more finance-related aspects of accounting, which BiggsKofford deals heavily in. First Day My first day consisted of meeting a majority of the team members, training in a few concepts, and filing a lot of paperwork to HR. I did not expect to have the opportunity to sit and talk with the head of the firm That meant a lot to me, as this is not a typical meeting on your first …

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New Colorado Secure Savings Program

June 21, 2022 @ 3:24 pm

The Colorado Secure Savings Program, set to begin in 2023, requires any company with five or more employees that does not already offer a retirement program, to enroll. Employees can opt-out or reduce their contributions. The state’s goal is to provide retirement coverage to more than 40% of privately employed individuals who do not have retirement savings. If employers chose the Colorado Secure Savings Program over a private retirement plan, the program would coordinate with existing organizations to increase financial education and awareness in the state. Proponents of the savings program highlighted benefits:  Workers will have an easy and accessible way to save for their future • Workers are automatically enrolled via their employer and may opt out if they choose • Program Board will set contribution rate for payroll deduction • Workers will have investment options within their IRAs Accountability for employers and employees:  • Professionally managed, with oversight by Board chaired by the State Treasurer • Board is bound by fiduciary duty • All matters impacting the Program are debated in public with ample opportunity for stakeholder input The Program will provide a high-quality, competitive option for workers.  • Low fees for plan administration • Easy to use …

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New audit intern Michael Matthews shares a little about himself and his first days

June 13, 2022 @ 10:16 am

Who I am: I am Michael Walter Matthews, I graduated from STEM School Highlands Ranch, and I am currently a senior at Western Colorado University. I have no professional or internship experience, so I am very excited to be starting this up. I snowboard during the winter, and I do whatever gets me outside during spring/summer. I am also a part of the e-sports organization at WCU (competitive video games) and I lift to balance that out. I am originally from Millersville, Maryland but I moved out to Colorado in 2009 and have lived here ever since. Why I chose BiggsKofford: I chose BiggsKofford for several reasons, the first of many being that there was a meet and greet that WCU was invited to in the fall of 2021, and it seemed like a very nontraditional CPA firm from the start. Once I learned of the core values of the firm, such as interdependence, I knew this was my top choice for an internship even though I lived an hour away. This firm seemed extraordinarily hardworking and honest, along with having a great team. Rather than assisting only one partner for the duration of the internship, I can work with …

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The Latest News: Greg Papineau retires after decades of dedication

June 6, 2022 @ 12:50 pm

  COLORADO SPRINGS, Colorado–June 6, 2022 – Chris Blees, President and CEO of BiggsKofford, Certified Public Accountant, a leading Colorado accounting and professional advisory firm with offices in Colorado Springs and Denver, today announced that longtime firm Partner Greg Papineau will officially retire on June 7, 2022.  After a professional career that has spanned over 43 years, the last 23 with BiggsKofford, of providing his passion for accounting and his expertise in the profession to many clients and industries and mentoring numerous firm associates, Papineau’s next role in life will be expanding his role as a Permanent Deacon for the Diocese of Colorado Springs.  In addition, Greg plans on traveling, playing more golf, hiking, and cycling, and spending time with his family and three granddaughters. Papineau began his career with a large West Coast CPA firm before moving to Colorado Springs and joining BiggsKofford in 1999.  After joining BiggsKofford, Papineau brought his expertise in serving nonprofit organizations and developed that niche into one of the leading nonprofit CPA firms in Colorado Springs.  In addition, Papineau began serving physicians and today the Firm’s physician practice is one of the largest practice segments within BiggsKofford. Blees, President and CEO of BiggsKofford, praises …

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Eric Morgan, CPA and Senior Manager, discusses the role of Quickbooks for middle-market businesses

June 1, 2022 @ 9:11 am

One of the key components of a successful middle-market business is the maintenance of accurate financial records. Accounting is much more than a chore that must be attended to in order to file annual tax returns—if done correctly, it can provide information useful for evaluating performance and for making decisions that have day-to-day and long-term implications. Although this article focuses on Intuit’s Quickbooks software, many of our clients use other products.  Most accounting products share similar feature sets, and so the information in this article can be easily applied to those products as well. Some organizations find the class system in Quickbooks to be very helpful.  In a professional services business, the class system can be used to segregate revenues and expenses between partners.  This is done by setting up a class code for each partner and then assigning a code to each revenue and expense transaction.  You can then run a special Profit and Loss By Class report with columns that show the revenues and expenses that pertain to each provider. Other accounting solutions also provide a similar feature that might have a different name like “Categories” but work in the same way.  If your business has multiple locations …

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BiggsKofford CPA Tyler Atkins  Promoted to Senior Manager

May 25, 2022 @ 8:25 am

  Dedicated CPA Awarded Elite Title at Colorado Springs and Denver Certified Public Accountants Firm COLORADO SPRINGS, Colorado–May 25, 2022 – Chris Blees, President and CEO of BiggsKofford, P.C., today announced that Tyler Atkins, CPA, has been promoted to Senior Manager. Atkins joined the firm in 2014 as an intern and has been a valued member of BiggsKofford since that time. He began formal employment as an Audit Associate and quickly moved up through three accounting levels in the firm, acquiring his current position in January 2022.  “Tyler has demonstrated his dedication and hard work from his first day as an intern, and at every title he has held in the past eight years with our firm. We are pleased to recognize his contributions to the team and his clients by awarding him this elite title,” said Blees, President and CEO. Atkins graduated from Castleton University in 2012, earning a Bachelor of Science degree in Business Administration with an accounting concentration. At BiggsKofford, Atkins has served clients across a variety of industries and spends the majority of his time working with local nonprofit organizations in the audit and tax fields. Atkins enjoys participating in BiggsKofford events, including volunteer days, and …

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How to apply financial modeling when building a business

May 18, 2022 @ 11:25 am

Austin Buckett, Director and CFO at BiggsKofford, explains why it’s never too late to put together a good financial model that can promote your company to investors and guide your business decisions: Building out a financial model is one of the most critical steps in launching a new business, but it is also one of the most commonly overlooked steps along the path from idea to income-generating operation. Whether you are just starting the process of launching a new business or deep in the entrepreneurial game, it’s never too late to put together a good financial model that can promote your company to investors and guide your business decisions. What is Financial Modeling? Financial modeling is the foundation that supports any solid business plan. Before you can understand how a business will run, you must first have a rough idea of where the revenue and profit will come from, which explains why having a robust financial model is a critical component of any good startup pitch. Most startup investors have a long list of business plans that they could consider funding. The financial model is often the difference maker that gets those investors to dig in and read one business …

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What To Know About Business Financial Ratios

May 9, 2022 @ 12:28 pm

How do you measure how robust your business is? One of the key ways is by looking at financial ratios, which can be grouped into four categories. Liquidity — Your business’s ability to remain liquid so you can meet your short-term liabilities. How much of a cash cushion do you have each accounting period? How much of your operating cash flow is funneled into your spending projects? Here are some ratios to help with liquidity measurements : Current ratio, which measures your ability to meet obligations due in less than one year. Defensive interval ratio, which compares assets to daily cash expenditures. Operating cash flow, which evaluates your ability to pay off short-term liabilities using cash flow from operations. Operational risk — How much inherent risk there is in your capital structure and operating model. Operational risk will tell you about your creditworthiness and ability to meet periodic liabilities. This is useful in evaluating leverage. Here are some ratios to measure operational risk: Asset coverage ratio, which measures your ability to cover debt obligations with assets. Cash coverage ratio, which measures your ability to cover debt obligations with cash. Debt service coverage ratio, which evaluates your ability to use operating income to …

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How Physicians Can Avoid Frequently Overlooked Barriers When Successfully Managing Financial Performance

May 4, 2022 @ 10:04 am

Deborah Helton, Director at BiggsKofford, discusses why physicians need to be aware of frequently overlooked barriers their practices face when considering revenue compression and inflationary supply chain price increases: Medical practices face ever-evolving business climate changes.  Physicians may not be aware of the frequently overlooked barriers their practices face considering revenue compression and inflationary supply chain price increases.  To analyze both productivity and costs physicians depend on accurate and timely information. Continual ‘checkups’ are required to maintain useful financial information. Most successful practices include physician review of weekly financial cashflow updates and continual monitoring of overhead costs.  Some signs of unattended financials include a lack of documented billing procedures and reconciliations between EMR and banking activity on the revenue side and missing internal controls such as vouching for shipping invoices to actual invoices on the expense side.  Financial reporting should allow owners to monitor patient visits, and procedure types and count trending and trending in large cost items such as medical supplies and personnel expenses. Inefficient processes, inaccurate reporting, and a lack of key performance indicators can put a strain on medical practices that isn’t necessary and negatively impacts financial results. By fine tuning the specifics of these systems, physician …

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Three Ways Nonprofit Organizations Can Up Their Game Against Fraud

April 25, 2022 @ 2:41 pm

It’s no secret that nonprofits have had to weather challenging circumstances in the past two years. Building strategies and tactics that remain flexible are basic guiding tenants for any organization, especially for nonprofit groups. Incorporating a higher level of agility into operations and finances help prepare nonprofit groups to face unknown hurdles yet to come. Creating a tailored plan based on appropriate preventive and detective controls helps guard against future issues such as fraud. The past two years saw an increase in reported cases of fraud for nonprofit organizations. Learning lessons from these unfortunate events is important, but applying those lessons is even more critical. Fraud risk grew as people sensed increased threats to their health and finances, and even if those insecurities improve in the coming months and years, there are still considerations regarding security to make. Issues such as altered internal controls and segregation of duties are still impacted by staff absences and reductions. The natural tendency of nonprofit organizations s to be more trusting of employees and volunteers has historically been a factor, and added strain from the pandemic means that background checks and security checkpoints may be limited. Additionally, many organizations are subject to more extreme …

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