taxplan1116-graphic-1April 17, 2017, sounds like it’s a long way off. But December 31, 2016, isn’t. If you haven’t given much thought to your 2016 income tax obligation, it’s time.

The holiday season has begun, and the end of the year is approaching. You probably have personal and business to-do lists a mile long. Gifts to buy. Friends and family to visit. Gatherings to plan, and customers to thank for another year of their patronage.

Somewhere in there, though, we highly recommend that you add a few more items related to your 2016 income taxes. There’s still time to reduce your financial obligation to the IRS.

Ask yourself these questions:

Have you been generous enough this year?

You surely know that you can deduct cash and non-cash contributions that you make to qualified organizations. This includes things like churches, nonprofit schools and hospitals, veterans’ groups, and the Salvation Army. You can also claim out-of-pocket expenses incurred if you did volunteer work for a qualified organization.

The IRS has many rules—and exceptions—governing these donations, so if you’re not sure about the status of a group or institution, ask. In some cases, you may need to get a letter from that organization documenting your contribution.

Tip: You can also consult an online IRS tool called Exempt Organizations Select Check.

You may also be able to “gift” money or property worth up to $14,000 ($28,000 for a married couple) to someone without having to pay the IRS’s gift tax. Again, there are numerous rules and exceptions.

Have you paid all estimated taxes due to date?taxplan-1116-graphic-2

By now, you should have made three estimated tax payments for 2016; the final one will be due in January 2017. If you forgot, or if you fear you may not have paid enough, the IRS will accept those quarterly payments any time, even if they occur outside of the stated deadlines (though you may face a penalty).

Have you been tracking your company’s income and expenses carefully?

Here’s where we can pitch in a lot. If you let us work with you throughout the year—starting now, even—we can help you with the complex financial reports that you need to really understand the status of your company’s finances.

You should be creating reports regularly on your own to keep an eye on things like aged receivables and payables, sales, inventory levels, and expenses. If you’re using an accounting application, this is easy. You can also set up Excel to display report data. And you can even pull together numbers manually, but it’s not a simple, automated process.

Bottom line: We know what information you need in order to stay on top of your income tax obligation year-round and avoid filing-time surprises.

Have you generated a lot of revenue without a lot of expenses to offset it?

We have two suggestions here. First, have you been putting off a major acquisition like equipment, vehicles, property, or technology tools? If so, consider following through on one or more of those purchases before December 31. Second, can you defer some income to 2017? Call us for tips on both of those tax-savings ideas.

taxplan-1116-graphic-3Have you been contributing regularly to your retirement plan?

The money you’ve been putting away to use after you stop working is financially advantageous in two ways. You’ll be more secure in your retirement years, of course. But depending on the type of plan you’re enrolled in, it could make good income tax sense to max out your contributions before the end of 2016. Don’t know the limits of your particular plan, or not sure how your taxes are affected? We can help.

Have you been following the possible tax law changes for 2016?

Much of this information, of course, isn’t final yet. And it’s hard to tell from just watching the TV news or reading the newspaper just what might have impact on your 2016 income tax obligation. We follow tax law closely, and we know what you might be able to anticipate.

The best time to start planning for the next year’s income taxes, frankly, is any time. November and early December, though, are especially critical in terms of taking any action you need to before December 31. So let us help you minimize your tax obligation for this year.

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In a previous column, we talked about setting up bills in QuickBooks Online. Now it’s time to pay them.

We recently laid out the benefits of using QuickBooks Online for bill entry and payment. It’s faster than manual methods. It leaves an electronic record of your accounts payable. And it helps ensure that bills are paid accurately and on time.

As we discussed, QuickBooks Online employs a two-step process for bill payment. Once you’ve completed the first (setup), the hard part is done, and you can move on to fulfilling your financial obligations. Let’s take a look.

Warning: Because you may be “handling” a lot of your bills twice in QuickBooks Online, this system can take some getting used to. We’ll be happy to walk you through the process until you’re comfortable.



Before you can pay a bill, you must create a template and enter its details. You can even set up payments to recur, as shown here.


To review quickly, we created a bill by clicking on the plus (+) sign at the top of the screen and selecting Bill under Vendors. Once you’ve created a bill, you can click on Make recurring at the bottom of the screen to establish periodic payments (as pictured above). You can choose to have payments that are always the same sent automatically, or you can request a reminder so that you can change the amount before emailing or printing. Those reminders appear when you first log into QuickBooks Online. You can access them by clicking on the corresponding link under Tasks.

Making Payments

QuickBooks Online makes it very easy to pay bills. You can do so from a handful of different screens on the site – sometimes in multiple places on the same page.

  • Click on the Vendors tab in the vertical toolbar on the left side of the screen. The page that opens displays a horizontal chain of bars near the top, color-coded to indicate what they represent: Purchase Order, Open Bills, Overdue, and Paid Last 30 Days. Each segment tells you how many transactions share that status as well as their total dollar amount. When you click on a segment, the table below changes to include a list of the actual transactions. At the right end of each line is a Make Payment link that you can click to get a payment screen. If you want to see the actual bill that was sent, click on the Vendor name itself.
  • You can click on the plus (+) sign at the top of any screen where it appears and go to Vendors | Pay Bills.
  • Open the bill itself and click on the Make Payment link in the upper right corner.


A partial view of the Bill Payment screen


When you’ve opened a bill that you want to pay, double-check the information in the upper part of the screen. The Vendor details should, of course, be correct, but make sure the date reads as it should. And look in the box to the right of the vendor’s name. If it’s not displaying the correct account for the transaction, click on the double arrows and select the right one.

QuickBooks Online will follow its own numbering system for bill payments. If you want to assign your own by entering a reference number of some kind, delete what’s showing in the Ref no. field and add your own. The Bill Payment # in the upper left will change to reflect that.

If there are multiple bills in the list below, click in the box in front of the one(s) you want to pay to create a checkmark. Look at the end of each line, too. QuickBooks Online defaults to a full payment for bills. If for some reason you’re planning to make a partial payment, replace the dollar amount in the Payment box with your own. In the bottom left portion of the screen, you can enter a Memo if you’d like and add an Attachment. When you’ve checked everything for accuracy, click Save and close or Save and new in the lower right corner.

Automation Helps

Paying bills manually can be painful. Beyond the fact that you’re watching money leave your accounts, the mechanics of writing checks and/or dispatching electronic payments on time—and keeping everything organized—can be a constant challenge. QuickBooks Online’s bill-paying tools can help with that.

Last month, we discussed QuickBooks’ report Preferences and The Report Center. We’ll look at report customization this month.

QuickBooks makes your bookkeeping faster, safer, and more accurate than what you could do using a manual system. Still, you may occasionally tire of your daily tasks. You want to know what all of these forms and records mean in terms of your overall financial health. You want to see reports.

The actual mechanics of creating reports in QuickBooks are fairly straightforward. You can go to the Report Center, make a selection, maybe change the date range, and voila! Your company’s related data appears in neat rows and columns.


You may be able to get some of the information you need by simply changing the date range on a QuickBooks report.

But perhaps you to see different columns than what QuickBooks’ report templates include. Further, you might like to filter your output for more meaningful, targeted analysis. And frankly, some of QuickBooks’ reports—particularly those included in the categories Company & Financial and Accountant & Taxes—can be a little advanced for the average small businessperson with little bookkeeping experience. They’re easy to run, but difficult to understand.

So we strongly encourage you to let us run these more complex reports, like the Balance Sheet, for you on a regular (monthly or quarterly) basis. They can provide valuable insight as you continue to make critical business decisions.

But we don’t want to discourage you from working with QuickBooks’ reports on your own. You could run A/R Aging Detail, for example, to keep an eye on past-due payments, or Unpaid Bills Detail to see where you stand with your own financial obligations.

Make Reports Yours

Sometimes, QuickBooks’ own report output is a bit too broad for your needs. So the program provides sophisticated customization options. You can work with these to narrow down and shape the data that appears in your reports.

First, columns. Building reports from scratch would be too time-consuming and frustrating for you to do all of the time. And it’s unnecessary, since QuickBooks provides templates for its reports, sets of columns and data filters that would serve some businesses well, but which can be modified by each user.

Try this. Open the Profit & Loss Detail report and click on the Customize Report button in the upper left corner. The Modify Report window opens.


QuickBooks lets you modify the columns that appear in reports.

The Display tab should be highlighted. Change the Report Date Range if necessary by clicking on the down arrow to the right of the Dates field. You can also create your own custom date range by deleting the dates in the From and To fields and entering new ones, or by clicking on the small calendar icons and clicking on the desired dates.

Warning: Do you understand the difference between running reports as either Accrual or Cash? This is important. If you don’t, let’s get together to go over some basic report concepts.

It’s easy to change the default columns that appear in reports. You can either enter a column label in the Search Columns box or scroll down the list of all possible labels. Click in the space in front of the ones you want to include, and click on existing checkmarks if you want to remove those labels. You can also designate a sort order, either Ascending or Descending.

If you want to work with the Advanced options, or if you come across a Display screen that puzzles you (depending on the report, you may have some complex choices), let us know.


QuickBooks report Filters screen

When you’re done here, click on the Filters tab. This is a powerful element of QuickBooks report customization. You can limit your report output to data that meet certain criteria. In the image above, for example, you can tell QuickBooks which subset of Accounts should be included. Click on the Billing Status filter, and you can limit the results to Any, Not Billable, Unbilled, or Billed. You get the idea.

You can apply multiple filters to a report. Every one you select will appear in the list under Current Filter Choices.

We’ll skip the Header/Footer and Fonts & Numbers tabs, since these are primarily cosmetic options you can explore on your own. But you can see from this brief overview how you can use many QuickBooks reports as is or customize them extensively. And we do recommend that you work with reports regularly, both on your own and with us. The insight they provide can help your company grow and flourish instead of just getting by.

Is manufacturing really on the decline in the United States?  Not so!  The Inland Northwest is home to more than 600 manufacturing companies which were showcased in the Manufacturing Matters Expo in September.  For more information, read Shelly O’Quinn’s Guest Commentary in the Spokane Business Journal here:

And put next year’s Manufacturing Expo on your calendar!

We’re into the fourth quarter of 2016: Have you been keeping up with your estimated income taxes?

taxplan-1016-graphic-1There are a lot of advantages to being self-employed, like—usually—no designated times you must be in an office somewhere. No dress code. Running to Costco when it’s not jammed. Having your dog as your administrative assistant and non-judgmental co-worker.

But if 2016 was your first year of being your own boss, we hope that you’ve acquainted yourself with the most onerous disadvantage to being self-employed: the self-employment tax. We hope, too, that you’ve already made three estimated tax payments on your 2016 taxes, and you’re planning for the fourth, which is due on January 17, 2017.


Not the Only Ones

It’s not just the self-employed who must pay estimated taxes. U.S. taxpayers who don’t have the requisite funds deducted regularly from their paychecks are expected to submit a payment four times a year on dates determined by the Internal Revenue Service (usually the 15th of April, June, and September, and January of the following year, unless those days fall on a weekend or holiday). This applies to anyone who expects to owe $1,000 or more in taxes at filing time, including people who:

  • Receive interest or dividends,
  • Receive rent from tenants,
  • Sold an asset, or,
  • Are living on a combination of Social Security and pensions, and don’t have enough withheld to cover their tax bills.

Note: Farmers, fishermen, and some high-income earners may have special rules applied to them. If you have non-W2 income and are at all uncertain of your estimated tax obligation, please talk to us.

Quarterly Forms

The IRS provides printable vouchers on its website that you can complete and mail in to the agency, accompanied by a check or money order. Be sure to submit your payments to the address assigned to your state; you’ll find this information on the Form 1040-ES, the same page where vouchers are located. If your business is a corporation, you’ll usually use Form 1120.


If you want to pay your estimated taxes by check or money order, print out these vouchers on the IRS Form 1040-ES and mail them to the correct address for your state.

You can also pay by debit or credit card over the phone or online through one of the IRS’s approved payment processors. These incur additional fees. Or you can use the IRS’s own phone and online system, the Electronic Federal Tax Payment System (EFTPS). This is a free U.S. Department of Treasury service, but you’ll have to enroll to use it.

Note: If you absolutely can’t pay or want to consider an annualized alternative, we can tell you about your options.

If you think you should have been submitting tax payments throughout 2016 and haven’t, you should by all means try to catch up as soon as possible. You may be subject to some penalties, but the sooner you attend to your obligation, the better. If you wait until you file to pay what you should have been paying throughout the year, you may find it difficult to pay your entire tax obligation all at once. And you’ll need to start paying the next year’s estimated taxes at the same time.


Calculating Your Estimated Taxtaxplan-1016-graphic-3

This, of course, is the hard part. The IRS provides a very complex worksheet for corporations, and the Form 1040-ES offers some help to other taxpayers. If you are an individual or business whose adjusted gross income, taxable income, taxes, deductions, and credits haven’t changed that much from the previous year, you might use that return as a model as you begin to estimate.

But tax law changes from year to year. And especially if you’re self-employed, work in a seasonal business, or have an unexpected windfall or financial crisis, coming up with a good estimate that neither leaves you with a lot to pay at filing time nor unnecessarily ties up funds in taxes can be quite a challenge.

So if you have income beyond W-2 compensation and you want to be in compliance with IRS requirements, what’s the answer? Year-round tax planning. Tracking cash in and out month by month and quarter by quarter is the only way to ensure that you’re not in for a big surprise when you file. So contact us, and together we can put together a strategy for dealing with your estimated taxes.

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