Nevada UI mandatory E-File effective July 1

Effective July 1, 2018, the Nevada Department of Employment mandated that all employers file their quarterly Unemployment Contribution and Wage reports electronically. Businesses must first register to file on-line through the Employment Security Division’s website. Although the agency mailed forms to each employer at the end of the quarter, these forms should not be filed manually.   Computer generated forms provided by QuickBooks software or other software also should not be mailed, but the form filed via the agency website.  I spoke with the agency today and they indicated that second quarter forms that are mailed in may be accepted but a warning letter will be issued. I was also told that third quarter forms will not be provided to employers and that mailed forms will not be accepted, which means if a quarterly wage report is mailed it will not be considered timely filed and will be subject to penalties and interest.

What employers should watch carefully is that the website requires that you file your quarterly unemployment form in two parts; the contribution report and the wage report. Ensure that you read the instructions carefully and make sure that both reports are submitted properly.

Start saving as early as possible!

Kids can start a retirement account as soon as they have earned income. Yes babysitting money and odd job income counts. If I were only 16 again. wish I had better financial education as a teen/young adult. Compound interest truly is the 8th wonder of the world. This is a great article on kids and retirement planning.

http://www.cpapracticeadvisor.com/news/12416937/its-never-too-early-5-tips-to-get-kids-started-with-retirement-planning

Found another $3500 of forgotten money!

Every so often I browse various states unclaimed property websites for my clients. This week I was able to recover 2 clients over $3500 of their own money just sitting in the state treasurer’s office.

Companies and organizations are required to send unclaimed paychecks, utility deposits, forgotten bank accounts, life insurance and any other unclaimed money to the state. The states now hold billions of dollars of unclaimed property.

Years ago I found a client $40,000 worth of unclaimed stock, just when he was on the verge of bankruptcy. Needless to say it was a huge help. That was a unique case of demutualized stock. However, I also had another client “find” $100,000 in life insurance proceeds that had been sitting in the state treasury for over 10 years!

Usually it’s just a forgotten utility deposit or a case of a name misspelling or bad address. Older people tend to have more of these claims. Businesses also may have unclaimed property.

Watch for companies who try to sell you their help in recovering this property and want a large cut. This type of service is regulated in many states.

I do it because I think it’s fun to email my clients a list of money or property that’s theirs, they are usually shocked and pretty happy. I also look for relatives and friends just because I know that many people aren’t aware of this.

Name and address mis-spellings are very common, so I use common mis-spellings to widen the search. Look under a maiden name as well.

To find your state’s unclaimed property division Google “unclaimed property <insert state>”. Look in all the states you’ve ever lived or worked in. Make sure you find the official state treasurer website and not a company trying to sell you something.

Getting your own money generally shouldn’t cost you anything, in my opinion. Sometimes if the amount is large enough and there is difficulty in recovery, you may need professional help. You can hire someone but that’s entirely your choice.

The states unclaimed property division is just one place to search. The link below is a great article which gives more tips and has links to additional sites.

https://www.google.com/amp/s/www.today.com/amp/money/free-money-how-find-claim-your-family-s-unclaimed-funds-t41531

Here is a link to Nevada unclaimed property and California Unclaimed property

How Quickbooks uses Undeposited funds

Many accountants HATE the undeposited funds account in Quickbooks. I can’t say I blame them depending on whether or not the account was used properly. The account is actually quite helpful when used as designed.

Undeposited Funds is a special account created by QuickBooks as a clearing account for payments that have been received but not yet deposited into the bank account.  The easiest way to visualized this account is to picture it as the top desk drawer.  As payments come in each day,  they are entered into the computer as a payment toward a specific customer or invoice; then it’s placed in the top desk drawer (and as a best practice, stamped with the company bank deposit stamp).   At the end of the day, the drawer is opened and money or checks are gathered and taken to the bank.  At that point, the make deposit function is completed in QuickBooks to pull the undeposited funds onto a deposit slip.  The total of this deposit slip in Quickbooks should agree with the bank deposit being made.

This process is also used to settle credit card batches, i.e. you post the customer credit card payment to the customer account, then at the end of the day when the credit card batch is settled, you “deposit” the credit card transactions so your Quickbooks deposit amount matches the credit card batch settlement report.

The problem occurs when the money is entered one day and the deposit is made on a different day.  During the interim, the amount will be in undeposited funds.  Once the deposit is made, the undeposited funds account will zero out. Undeposited funds is a zero balance account, meaning it should always zero out at some point.

Example:  5 Payments are received 1/29/15 for $5000 but they are not taken to the bank until 2/1/15. Undeposited funds account balance at 1/31/15 will be $5000 until those checks are taken to the bank and it clears out on 2/1/15. This is perfectly normal and the way the account should work.

The journal entry Quickbooks makes behind the scenes is:

Debit Undeposited funds   Credit Accounts receivable (customer payments are posted to open invoices)   related QB Function: Receive Payment

Once it’s deposited  Credit undeposited funds, debit bank account. (the deposit is made at the bank)    related QB Function: Make Deposit

Undeposited funds is merely a clearing account to make bank reconciliation simple. QuickBooks deposits quite simply would not work correctly without this account and the account is hard-coded into the software, meaning it cannot be name changed or deleted.  Additionally, journal entries to this account have, in the past, led to software errors and financial reporting issues.

Best paperwork practice:  Print your deposit summary from Quickbooks and attach the bank receipt or credit card batch to the front, the total amount being deposited to the bank and the date should match the Quickbooks summary report exactly.

Common error #1: posting customer payments and letting Quickbooks deposit directly into the bank account, bypassing undeposited funds. Now you have a bunch of individual deposits to reconcile on the bank account which is more difficult, if not impossible, depending on the quantity of transactions.

Common error #2: Receiving a customer payment, letting it sit in undeposited funds. BUT, when doing the bank reconciliation, you post the bank deposits to Income directly.  Now you have a bunch of “undeposited funds” and have duplicated your income.

The undeposited funds account can be an asset if it’s used correctly both literally and figuratively.

Tracking Use Tax in Quickbooks

Many companies and individuals are not aware of the requirement to pay use tax on purchases that were made without paying applicable sales taxes.  Sales tax is levied upon the purchase at the point of delivery. This means that many internet sales do not include sales tax if they are shipped out of state, leaving the purchaser the pay the applicable sales tax (called use tax), to their home state.  This is likely about to change due to the recent Supreme Court decision (South Dakota vs. Wayfair ), however, in the meantime, businesses and individuals are still required to required to track and pay use tax until both the states and on-line retailers catch up.

For the remainder of this article I will focus primarily on the business requirement to track use tax due and how to use Quickbooks to facilitate that. Generally, use tax is remitted by businesses to the agency who collects and administers sales tax. This may be on a monthly, quarterly, or annual basis depending on the agency requirements.

If you do not pay sales tax at the time of purchase, you need to accrue the use tax in the books and pay when filing the use tax return. The best way is to record the tax due at the time of the purchase. First, create a new general ledger account called “Use Tax Payable”,  this is an “other current liability”. Then when posting the purchase, calculate the use tax in the overall cost of the purchase and then post the use tax due on a separate line.

For example:

Assume you purchase of a $10,000 piece of equipment, for which sales tax was not paid at the time of purchase. The current sales tax rate in the home city is 8% so this means $800 in use tax is due to the home state.

The treatment in Quickbooks is illustrated below.

snip for use tax

 

When it’s time to pay the tax and complete the use tax return you post the payment to the liability account.

use tax payment snip.PNG

If you pay sales tax at the time of purchase, for example, you drive out of state to purchase equipment and you do pay sales tax to the retailer, you may not be required to pay use tax if you paid more or equal sales tax to your home rate. This is unless of course, you pay less out sales tax of state than where the object ultimately is placed in use. For example, if you drive from Los Angeles, CA (Sales tax rate 9.5%) to Las Vegas, NV (8.25%) and you purchase a  piece of equipment paying 8.25% sales tax, then bring it back to Los Angeles to put it in use, you owe use tax on the difference between the sales tax rates. You would enter this in the same way as above, calculating the difference between the two rates.

Use tax may be incurred in the following transactions:

  • Amazon and other on-line purchases where sales tax is not paid.
  • Phone orders of equipment or supplies from out of state.
  • Ordering from a state that does not charge sales tax. (Alaska, Delaware, Montana, New Hampshire, Oregon).
  • Purchasing products for resale, then using them for business use.  (i.e an on-line office supply company who takes stock for internal use).

What is taxable? Generally it’s tangible personal property. However, other items can be taxable as well, such as software, equipment rentals, some food, off highway vehicles, boats, vehicles, aircraft, and fabrication labor. In some states, (like Texas) certain services are taxable.   Non-profits can be exempt from sales and use tax in certain states (like Nevada, on approval only). Freight and packaging materials also may be exempt. Each state has varying requirements depending on the type of company and product that is sold. Whatever product or service is subject to sales tax is usually subject to use tax.

However, some of these transactions, might have sales tax included; some Amazon purchases do have sales tax included, some do not. Phone orders  from an out of state company with a physical presence in your state may charge sales tax. However, it is generally up to the purchaser to determine whether or not sales tax has been paid and if not, then to pay the use tax. This can usually be done by reviewing receipts or invoices.

Currently, a large number of small businesses don’t often know about “use tax” until they are audited or they don’t have a good process to track use tax due. The rules can be complex for the purchaser,  particularly when using out of state or internet retailers.   It is anticipated that internet retailers will soon face a challenge in complying with changes to state sales tax laws due to the Wayfair decision. This may relieve some (but not all) of the burden on businesses to track and pay use tax.  As always, it’s important to get expert tax advice and be aware of the use tax requirements in your state.

 

 

QBO Training

If you ever need a quick reminder on how to perform a task in Quickbooks On Line or just need a refresher, take a look at free training videos by provided by Intuit.

QBO Training Videos

If you need more customized or in depth training we have several options to choose from.

We offer private tutoring as needed to clients located anywhere with an internet connection and in November we’ll be offering a complete QBO training webinar so you can get up to speed quickly. Sign up to follow our blog so you don’t miss important training updates.

Contact us for more information on QBO training:

 

 

 

 

Quickbooks Enterprise Tip: Fixed Assets

Did you know that you can sync your fixed assets with the QuickBooks Fixed Asset Manager software using QuickBooks Desktop Enterprise?

By clicking on Company | Managed Fixed Assets in QuickBooks Desktop Enterprise, you can open up a host of options for tracking fixed assets. First, create a list of fixed asset items in Enterprise. From the Lists menu, choose Fixed Asset Item List. Once you have your fixed asset items entered, make the connection to the Fixed Asset Manager using the aforementioned Company | Manage Fixed Assets process and, voila, you now have a professional grade fixed asset management software tool at your disposal.