Archive for June 2010

How to Register as a Federal Contractor

June 28, 2010

Step 1: Obtain a D-U-N-S Number

Before you can bid on government proposals, you’ll need to obtain a couple of registrations. First, you will first need to obtain a Dun & Bradstreet D-U-N-S Number, a unique nine-digit identification number for each physical location of your business. D-U-N-S Number assignment is free for all businesses required to register with the federal government for contracts or grants. Visit the D-U-N-S Request Service to register.

Step 2: Register Your Business

Secondly, you’ll need to register with the federal government’s Central Contractor Registration (CCR), the primary database of vendors doing business with the federal government. Federal acquisitions regulations require all prospective vendors to be registered in CCR prior to the award of a contract; basic agreement, basic ordering agreement, or blanket purchase agreement.

Next, you’ll need to fill out the Online Representations and Certifications Application (ORCA), in which you provide additional information about your company and its business activities. The Federal Acquisitions Regulations, Section 52.212-3, Offeror Representations and Certifications – Commercial Items, explains the information that you’ll be asked on ORCA.

Step 3: Obtain Past Performance Evaluations

Businesses interested in getting on a GSA schedule contract, should obtain an Open Ratings, Inc. Past Performance Evaluation. Open Ratings, a Dun & Bradstreet Company, conducts an independent audit of customer references and calculates a rating based upon a statistical analysis of various performance data and survey responses. While some Schedule solicitations do contain the form to request an Open Ratings Past Performance Evaluation, vendors may submit an online request directly to Open Ratings.

Gustavo A Viera CPA

CPA in Miami Since 1983

www.vieracpa.com

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Seed & Venture Capital Financing

June 28, 2010

Venture capital is typically provided to early-stage start up companies that have high growth potential in industries such as biotechnology, information technology and manufacturing. Venture capital investments are generally made as cash investments in exchange for shares in the company.

Find Venture Capital Fast!

Search for Equity Financing & Loans for your small business

The following initiatives have been sponsored by the Federal government to create to help small companies raise capital. Numerous private equity firms also exist to provide funding. These firms tend to invest in businesses within a specific geographic area. Use our Loans and Grants Search Tool to find seed and venture capital programs in your area.

Small Business Investment Companies (SBIC)

In 1958, Congress created the Small Business Investment Companies (SBIC) program to help small U.S. companies raise capital. SBIC’s are privately owned and managed investment firms that provide venture capital and start-up financing to small businesses. To be eligible for SBIC financing, your business must meet certain SBA size requirements for a small business. Generally, the SBIC Program defines a company as “small” when its net worth is $18.0 million or less and its average after tax net income for the prior two years does not exceed $6.0 million. When you contact an SBIC, you’ll need to present a professional business plan that addresses your company’s operations, management, financial condition and funding requirements.

The following resources will help you locate SBIC financing:

SBA’s Guide for Entrepreneurs Seeking Financing provides in-depth information about the SBIC financing and eligibility requirements.

SBA’s SBIC Directory provides a listing of licensed SBIC investment firms in your state.

The National Association of Small Business Investment Companies (NASBIC) provides a Step-by-Step Guide to SBIC Financing. NASBIC is the trade organization for the SBIC industry, and also provides a directory of SBIC firms.

Active Capital

Active Capital is a nationwide listing service that connects entrepreneurs with angel investors. Potential investors can obtain information on start-ups and expanding small businesses seeking $250,000 to $5,000,000 in venture capital. Active Capital’s main benefit is that it allows entrepreneurs to directly access a nationwide network of investors while complying with federal and state securities regulations.

Small Businesses in Economically Distressed Communities

If your business is located in a low-income geographic area, there are a couple of venture financing options available to you. First, there is a special type of SBIC called Specialized Small Business Investment Companies (SSBIC). SSBIC’s provide assistance solely to small businesses owned by socially or economically disadvantaged persons. Secondly, you may be eligible for New Markets Venture Capital (NMVC) financing. Modeled after the SBIC program, the NMVC program makes equity investments in small businesses located in economically distressed communities in urban and rural areas. NMVC financing is available in limited areas, and available from these venture capital firms.

Gustavo A Viera CPA

CPA in Miami Since 1983

www.vieracpa.com

Maintaining Business as Usual in a Disaster: New Web Site Helps Businesses Plan for the Unexpected

June 28, 2010

Did you know that roughly 40 to 60 percent* of small businesses never reopen their doors following a disaster?

And the fact is no business owner is immune. Whether you operate out of a home-based office, lease space on Main Street or do business wherever you can find it –natural and man-made disasters are a constant threat.

Try operating a home-based business without power for several days and, believe me, you’ll never look at everyday conveniences like power and the Internet in the same way ever again!

The trouble is, many business owners think the threat lies elsewhere, and couldn’t possibly happen in their back yard. Yet time and time again, from Nashville to the Gulf, California to the Plains, disasters are an ever-present threat to the small business dream that can hit when least expected.

So in light of what we all know, the Small Business Administration (SBA) announced this week that it has partnered with Agility Recovery Solutions* to launch an unprecedented effort to develop a one-stop, online resource devoted to the sustainability of small businesses through business continuity planning.

Aptly named Prepare My Business, this online educational portal, provides small business owners access to a variety of tools and solutions to strengthen their firms’ resiliency when faced with unforeseen interruptions – whether manmade or natural disasters. Additionally, the program addresses the steps business owners should take in order to develop a business continuity plan, including a detailed risk analysis and evaluation of critical business functions.

What differentiates the “Prepare My Business” initiative from other disaster assistance resources is that it not only addresses what we come to think of as major disasters such as earthquakes, flooding, and so on, but also offers strategies for preparing for common everyday events such as server failure, burst pipes and power outages – all of which can be equally devastating for a small business.

The user-friendly site (www.preparemybusiness.org) is broken down into the four key actionable elements of disaster preparedness and recovery – PlanningEducation (webinars), Testing (i.e. what to test, how to test it, when to test…) and Disaster Assistance (such as SBA Disaster Assistance Loan Programs).

Live Monthly Webinars – Keeping Disaster Preparedness Top-of-Mind


In addition to the web-based resources, SBA and Agility are also hosting a monthly webinar series to promote continuous learning among small business owners.  Dates for the first three webinars are already set:

Disaster preparedness can be a lifeline for staying in business – don’t leave it until it’s too late!

Gustavo A Viera CPA

CPA in Miami Since 1983

www.vieracpa.com

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IRS Not Suited for Certifying Tax Software Privacy, Accuracy, ETAAC Says

June 25, 2010

The Internal Revenue Service should not be forced into the “ill suited” role of certifying and enforcing privacy and accuracy standards for tax software providers, but should turn instead to established outside providers for those services, members of an Electronic Tax Administration Advisory Committee (ETAAC) said June 16.

Industry advisers presented their 2010 ETAAC recommendations to Congress to IRS officials, and also made a special report on a new subcommittee formed to address e-file security and tax software policies and programs. The report is expected to be released June 17.

This year’s annual recommendations focus on tax preparer e-filing, business systems modernization, the IRS return preparer review, and new information reporting requirements.

The push to certify that tax software is accurate is coming from a number of different directions, ETAAC Chairman Phillip Poirier, a vice president in Intuit’s consumer tax group, said. The Government Accountability Office has recommended that IRS do a risk assessment of the reliability, security, accuracy, and privacy of tax software.

“Software is a term that is too narrow,” he said. “It’s really all the pipes to get the return from the preparer or the taxpayer to the IRS e-file system.” To that end, IRS has included software in its return preparer review, commenced a tax software risk assessment, and formed an ETAAC subcommittee.

That subcommittee’s principal spokesman, Dave Olsen, said tax software certifications should not be left up to the IRS. “Effective and efficient oversight should not be attempted by trying to force the IRS into what may be ill-suited roles, by making them the direct certifier or enforcer of some of these requirements; but rather it would make sense to rely on third-party certification processes and standards-setting that can be applied in that broader context across the different portions of the industry,” Olsen, director of product management with CCH Small Firm Services, said.

Olsen told BNA that IRS has an interest in making sure standards are put in place for oversight and verification of IRS electronic systems that deal with transfer of tax data. These controls would deal with security and privacy. Oversight and verification of tax software will be necessary to address accuracy and reliability, he said. However, IRS is not the appropriate agent to create these measures, he said. “It does not have the resources or the expertise.”

The standards should be established by a self-regulatory organization with third parties being brought in to review the controls that have been put in place, he said.

Olsen also said there needs to be a full understanding of the differences between professional and self-preparer software. “Professionals do things differently than a self-preparer does,” he said.

Information Reporting

Some stakeholders have recommended accelerating Form 1099 information return reporting, but ETAAC said it has some concerns with that.

The IRS needs to consider the full impact of accelerated information reporting on both businesses and taxpayers, especially small- and medium-sized businesses, said Grant DeMeritte, tax compliance manager with Howard Hughes Medical Institute.

Beginning in 2012, businesses will be required to use Form 1099 to report to the IRS all payments to corporations in excess of $600 for goods or services, not just services and supplies, which had previously been the case, he said.

“We want to make sure the IRS is ready to handle the significant increase in the number of e-filed information returns—and not just the number of e-filed returns, but the potential for an increase in the number of e-filers,” he said. Many businesses may exceed the 250-form threshold for having to file in this category due to the new legislation, which was an offset to a portion of the Patient Protection and Affordable Care Act ( Pub. L. No. 111-148)—a requirement from which corporations were previously exempt.

IRS Response

An IRS official responded to the ETAAC recommendations by saying she heard a consistent theme—that more and better communication is needed. “It’s so important but difficult to do well,” said Norma Brudwick, IRS deputy director for electronic tax administration and refundable credits. She also said IRS recognizes the importance of partnering with the industry, in part because of IRS’s limited resources.

Brudwick also said she was glad to hear that industry understands that IRS is willing to make allowances for taxpayers that do not want to e-file. “We need to really always keep in mind the taxpayer,” she said.

Gustavo A Viera CPA

CPA in Miami Since 1983

www.vieracpa.com

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Say Goodbye to Checks – Peer-to Peer Payments Gain Momentum

June 25, 2010

Small business owners and their customers no longer have to rely on checks to make and accept payments thanks to new peer-to-peer payment services cropping up.

Peer-to-peer payment services, which are being offered from a slew of banks, lets business owners transfer money to a customers’ accounts or vice versa using just an e-mail address or mobile phone number.

Users can conduct the transaction from their existing bank account, which means they won’t have to visit a different Web site to access the service.

“Billions of dollars are transferred back and forth from one business to another via check,” said Steve Shaw, Internet banking and electronic payments group director at Brookfield, Wisc.-based Fiserv (FISV), which later this month will launch ZashPay, its P2P transfer service.

Shaw said more consumers and businesses are looking for ways to make payments sans the check as their comfort level with conducting financial transactions online grows.  “Either the check is put in the mail or handed to someone. It takes time and effort [to cash the check].”

According to Javelin Research, nearly 44% or 38 million of the 86 million online households made at least one online P2P fund transfer in 2009, up from 27% in 2008. Javelin is forecasting 60 million American households will use P2P transfers by 2014. The oldest and most popular form of P2P payments comes via PayPal. With the new services, however, the customer will be able to make the payment through an existing bank account.

Fiserv’s product, dubbed ZashPay, will launch in late June with 100 banks committed to offering the service with more being added each week.

If a bank is offering the service, the business owner would login to the bank account, input an email address and send a message to the recipient and transfer the money. The service lets you make transfers online or via a browser-enabled mobile phone.

The recipient would then login to claim the money, which would automatically be deposited into the account as soon as the next day.

If the banks for the payee and the person receiving the money don’t offer the service, Fiserv is launching a public web site atwww.zashpay.com where after signing up, people can transfer money back and forth. The banks determine the fee the sender of the money has to pay with a suggested fee of 50 cents. ZashPay.com will charge $0.75 for each payment initiated at the site.

The service is just as secure as the existing bill pay service offered by Fiserv thanks to fraud tools built in to ensure the payment is coming from a valid e-mail address and going to a verified location. If a red flag arises, the payment won’t be sent.

For small business owners and their customers P2P lending may be attractive because they will no longer have to write a check, buy a stamp, mail it and then wait for the check to clear.  Shaw noted small businesses can use it as a way to manage and reconcile invoices.

“It helps from a convenience and speed perspective because they can reconcile more accounts,” said Shaw.

Fiserv with ZashPay isn’t the only financial company launching P2P payment services. CashEdge of New York has its Popmoney P2P payment service and in May announced Bank of the West is using the service.

Like ZashPay, Popmoney lets bank customers send money from their bank account using a recipients email address, mobile phone number or bank account information.  Intuit has its PaymentNetwork service that charges small businesses 50 cents per payment received. Like the other services with PaymentNetwork the small business would receive payments from anyone with an email address with the funds directly transferred into the small businesses bank account.  Among the banks offering P2P payment services are PNC (PNC)  and Wells Fargo (WFC), to name a couple.

Gustavo A Viera CPA

CPA in Miami Since 1983

www.vieracpa.com

Certified Public Accountants, the Preferred Financial Planner

June 25, 2010

The time has come to take stock of the options that Certified Public Accountants (CPAs) have for their clients’ financial planning needs. Whether it is incorporating a financial-planning practice in a firm, partnering with a Miami CPA financial planner or referring business to a Miami CPA financial planner, never has there been a greater number of resources and guidance to help the Miami CPA firm develop an additional service line, the sole practitioner to develop a new practice for the benefit of clients and colleagues or for CPAs to cultivate relationships with CPA financial planners to work with the CPA, PFS to help ensure that their client is well cared for.

Many thousands of Miami CPA’s and across the United States practice financial planning, a profession with many facets. For years, members of the accounting profession have taken tepid steps forward only to step back to evaluate what may be appropriate for the firm and for their suite of services provided. Recognition of barriers is the important first step to the integration of financial planning into an additional practice line within the firm. A greater focus should be examined on what is making CPAs overwhelmingly successful with their clients; the holistic approach that CPAs across America take when engaging with clients. The anecdotal evidence points to the clients of CPAs being in far better shape than most as it applies to their clients’ finances. When it comes to barriers, one key obstacle is a lingering discomfort with the misinformed notion that CPAs would recommend specific product. Others are more fundamental. There may be a cultural clash within firms between the profession of financial planning and the more traditional services. During the ramp-up years, there is a feeling that the financial-planning practice is being subsidized due to the revenue streams achieving insufficient results when compared to traditional lines of the practice; usually for the first five years. When the building of the practice is complete, the CPA financial planner enjoys a significantly greater revenue stream and the work hours may not match the other areas of traditional practice.

In addition, others may find it difficult to distinguish the profession of CPA financial planning from the financial services industry. In fact, the very possibility of a loss in a portfolio increases trepidation. While many non-CPA financial planners have a primary focus on investments, there are key aspects that separate CPAs from the financial services industry, including the deep tax knowledge they bring to the table, the holistic approach of covering all elements of a client’s financial plan as well as a high standard of care. There has been talk of how the fiduciary standards may not be applied to certain financial planners and exempting some relationships from fiduciary standards that focus on one or two areas of financial planning. The discussion among CPA, PFS financial planners is not how to escape fiduciary responsibilities with their client, but rather questioning the appropriateness of escaping fiduciary responsibility in financial planning, even if only a couple of the elements of the financial planning process are engaged.

Regardless of how we feel about the investment side of planning, the reality is that markets rise and fall and that most money is made in a down market, which is counterintuitive. If we lose a fraction of what the S&P 500 loses, then we don’t have to come back nearly as much and can give significant benefits to our clients on the rebound. The 58 percent market drop this last time around requires a greater than 100 percent return to get back to even. CPAs in financial planning understand what risk is, how to explain it to clients and help clients assess their risk and position assets that are consistent with their risk tolerance.

Make no mistake about it. There are plenty of balanced portfolios that have similar risk characteristics to being fully invested in the stock market. I would suggest that any CPA who does not currently have a professional relationship with a CPA, PFS (Personal Financial Specialist) to pick up the phone and have a CPA, PFS financial planner explain why financial planning is based on the very powerful questions identifying what the client’s mission, values and goals are before they recommend specific strategies and products in all aspects of planning. To find a PFS in your neighborhood, go to http://www.findapfs.com. For investments, spend some time with a CPA, PFS to discuss risk, portfolio volatility and the steps the CPA, PFS goes through to ensure that clients are well positioned to weather any economic storm. Any perception of similarity between CPA financial planners and the financial services industry is not only incongruent with reality, it could very well invalidate in excess of 100 percent of the benefit clients derive from your tax-and-accounting expertise. The comparison is similar to CPA tax preparers and enrolled agents. While we would all agree that enrolled agents provide important and valuable services to society and recognize that some enrolled agents can stand shoulder to shoulder with CPAs preparing taxes, generally there is a significant additional benefit that CPA tax preparers bring to their clients.

Given the markets that have always been volatile throughout American history (Table 2), clients cannot afford to risk working with those who consistently demonstrate a heavy bias toward firm products that vanish into the haze after they post inferior results. While it is recognized that across America firms provide some very important products, CPAs apply analytical tools and due diligence to evaluate specific investment options to ensure that the client receives service in an unbiased and objective environment. As I travel across America, I have borne witness to CPA, PFS after CPA, PFS who delivered dynamically different results from their non-CPA peers. This is not to say that there aren’t any extraordinary non-CPA financial planning practitioners, because there are. However, on the whole, the CPA, PFS has a background and experience that is significantly more beneficial to clients than the non-CPA financial planners.

CPAs tend to focus on a variety of issues and take time to explain the most critical areas of investment planning. Just three technical areas discussed involve risk and the specific dollar impact that ups and downs can have on a portfolio with 95 percent confidence, what makes a good long-term investment and set the table on how money grows over time (the power of compounding) This is a brief sample of just one area of financial planning.

If firms recalibrate their perspective toward financial planning, it will come with the recognition that it is a terrific time for accounting firms to evaluate and add financial services as an additional service line for clients or when a conflict arises, to work with other CPA firms to work together in an environment to deliver superior planning services to their clients.

Gustavo A Viera CPA

CPA in Miami Since 1983

www.vieracpa.com

Making Estimated Tax Payments – A 101 for the Small Business Owner

June 23, 2010

What are Estimated Taxes?

Uncle Sam requires that individuals and businesses pay taxes almost as quickly as they earn income. This means you have to pay taxes over the course of the year instead of waiting until April 15. If your taxes are not withheld by an employer then you will likely need to pay estimated tax payments each quarter.

Estimated tax payments include both your income tax obligations as well as your self-employment tax (Social Security and Medicare) obligations – which, by the way, will increase the total federal taxes you owe.

Who Pays Estimated Taxes?

Generally, if you carry on a trade or business as a sole proprietor, an independent contractor, a member of a partnership, or are otherwise in business for yourself, then you are considered aself-employed individual. According to the IRS, If your tax withholdings don’t cover 90% of your tax liability then you must pay estimated taxes on income that is not withheld (use Form 1040-ES).

If you operate a corporation, you generally have to make estimated tax payments if you expect to owe tax of $500 or more when you file (use Form 1120-W).

You don’t have to make federal estimated tax payments if your tax due, after taking withholdings into account, is less than $1,000 or if your withholding and credits add up to at least as much as your prior year’s tax.

How Much Should You Pay in Estimated Taxes?

The IRS recommends that you calculate your quarterly estimated tax payment using Form 1040-ES (the same form used to pay estimated taxes) which comes with a worksheet that helps you estimate how much you owe for the current year. Corporations can use Form 1120-W to calculate estimated taxes.

You are not obligated to use this calculation method and can instead refer to the estimated tax calculation on your previous year’s tax return (most online tax tools will calculate this figure for you when you complete your return).

If you are an independent contractor, and face fluctuating periods of income, you might prefer to calculate your estimated taxes on a quarterly basis based on the income and deductions for the quarter owed.

If you still feel that you are essentially guessing what your estimated payment should be, take a look at this guide* from Fairmark.com which includes pointers on how to best calculate your estimated payments.

When are Payments Due?

For estimated tax purposes, the year is divided into four payment periods. Payments for each year are due on the 15th day of April, June, September and the following January. You should endeavor to pay at least the minimum owed by the due date (with the remainder paid on April 15), or risk incurring penalties from the IRS or your state.

How to Pay Estimated Taxes

Paying your estimated taxes is actually an easy process and the best thing is that you don’t have to explain to the IRS how you reached your estimated sum (any reconciliation is done during tax return season).

If you are filing as a self-employed individual you should use Form 1040-ES which includes quarterly payment vouchers to submit with your payment. Corporations can deposit the payments by using EFTPS for deposit coupons (Forms 8109).

Once you are in the system, the IRS will send you payment vouchers at the end of each tax year so that you don’t have to worry about downloading the latest forms.

What about Estimated State Income Taxes?

You need to pay your estimated state income taxes at the same time as you pay your federal taxes. Find links to your state’s tax office for the appropriate forms here.

Call our Miami CPA

At the end of the day, it’s worth spending an hour with a tax specialist to help you understand what the best calculation methods are, how to appropriately track and deduct expenses, and maintain good records. Many will provide this initial consultation for free – simply because they hope you will return and use them come filing season. So don’t be afraid to shop around for the right kind of advice that your budget can afford.

Gustavo A Viera CPA

CPA in Miami Since 1983

www.vieracpa.com

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