A 1099 is only an official record of something that occured during the year. You should have or be able to get that information before the next year for most things that are relevant to your tax situation. The tax laws change a lot from year to year due to politics and the state of the economy. Some years you can get much more favorable treatment of equipment purchases, capital gains, health benefits, etc. than other years so it makes sense to try to get the income or expenses to happen when it is most favorable, as the law allows.
As an accountant, I spend many hours in CPE classes each year learning about these new laws, and have access to lots of trade publications and fourms that discuss strategies for doing just that. Not that an individual could not learn the same things I learn, its just that I have to take the time to learn it because that is what I do for a living.
Do you handle the accounts of beekeepers? If yes, what sorts of things unique to beekeepers expenses or agricultural expenses do you come across?
I don't know who you have been talking to or are refering to, but I imagine you are correct about what you say. You have an industry inside view which someone not a Tax Preparer does not.
I don't have employees, so I don't fit that mold. I have a number of friends who sweat thru the hassles of employing people and I have friends who pay cash or trade services and don't account for those transactions on an employer/employee basis. I doubt that this is isolated to beekeeping. I imagine it is quite common in other areas of agriculture and other businesses too.
Thanks for your reply.
any advice on what to look for in an Accountant? How do you find one who one can work with and feel good doing so. I know this is probably like choosing a Doctor.
I've used Quicken for years now. I'm no accountant so I like to keep things as simple as possible. Every cent goes into and out of a single checking account. Check no. and job gets written on every receipt. If you set up classes and categories correctly it makes taxes a breeze.
CPA did my taxes the first couple of years and schooled me in proper setup of Quicken. Now, my schedule C practically does itself.
I certainly am not trying to imply that all beekeepers, or even most, are not paying their employees properly. Its just that a LOT of small business people don't understand the importance of keeping good records and doing things according to the law. If one is going to operate outside the law there is no reason to spend good money paying an accountant. Just make up the numbers you want to go on your return and send it in. (Disclaimer: This is not tax advice and is not to be used as such.)
On choosing an accountant, I was in the restaurant business for years before I became an accountant and have employeed at least 3 CPAs during that time. I look back now and see that I left a lot of money on the table because of things I did not know I could do, and did not have enough communication with my CPA that he let me know. Years ago, we owned a restaurant here and two more in a town 50 miles away. My CPA knew this. I drove over 100 miles per day from one location to the other and paid for gas out of my own pocket. Did not take mileage, did not have a company vehicle, etc. Just taking the standard mileage deduction I could have taken an additional 18k in expenses. He was too big and busy and I was too small of a fish in his pond.
I would talk to several accountants. Many are CPAs, I am an enrolled agent. We are licensed by the federal government whereas CPAs are licensed by the state. I have a degree in Business Management, an MBA and went back to school and took over a years worth of accounting courses. To get a degree in accounting I would have been required to take a total of 1 class in taxation. The primary focus of CPA training is to be able to properly do accounting for corporations according to Generally Accepted Accounting Principles which differs greatly from taxation.
There are many good accountants who are CPAs. There are also more than a few who are not. Some of the clients I have taken on who had previously used CPAs were not well served in my opinion and some were very well served. The point is don't just rely on a professional designation to choose your accountant, though that may be a good place to start. Talk to several, see how you get along, ask what service they provide, what they need from you, how long it takes them to get your financial reports back to you. Are they too big for you?
I feel that a big strength that I offer my clients is that I have been in business for myself (not as an accountant) for a number of years and I understand that most small business people do not understand how diligent they must be with their record-keeping and timely submission of records to tax authorities. I have many that started out with me clueless and have grown to be very good clients. I also have some I have asked to leave. My job is to organize and simplify their time spent keeping records and complying with law, while pointing out ways to best save them money.
You are right, it not easy to find an accountant that fits your needs the way that it should, but don't be afraid to change to a different one until you find that one that fits. Believe me, you will know that when it happens. Hope this helps.
Mark, as painful as it is it may be to your advantage to dig into the states requirements for running a small business. You may find that it is more advantages to move your operation to SC or NC because you are already there some of the time, tax wise. It doesn't matter where you live especially if you are a migratory beekeeper. Bartering, and trading services is a slippery slope because it cuts out income taxes both ways. This should never appear on your books. Having no employees and making a sizable profit is a red flag to an auditor. Sometimes it is smarter to charge each other a very small fee so there is a record and pay the associated taxes. The auditor cannot argue whether you got it for cheap but he can say you bartered for nothing and it will be the bartering that he can hammer you on.
Let me just say this, there is not an accountant that will take responsibility for your tax liabilities. He/She will only take your numbers and place them in the appropriate forms for tax filing. Those numbers are your numbers and it is up to you to verify them come audit day. They can assist you on how to juggle the numbers so it is to your advantage but if you give them numbers, substantiated or not they are your numbers not theirs.
I don't think 1099's are just a formality. Nothing involving the IRS and the state government (at least in NY) should be taken lightly. I have to believe that every new start up business supports 3 state employees, maybe 6 at the speed they move.
There are rules that state which State is your tax State. That does not mean you can't change your tax state, but that requires a change in residency and depends on how many days you actually reside in that state.
Bartering & trading is ALLOWED as long as there is an accounting for it and it should ALWAYS appear on the books! See form 1099B. Today's accountant better NOT just put your numbers on a form. There is a much greater degree of fiduciary responsibility today. But it is true, they are your numbers, not theirs.
If you record your transactions properly, 1099's ARE just a formality. They are there to inform the IRS that certain transactions have taken place. But you should have already recorded those anyway.
Ace, I hope you use either a CPA or enrolled agent to prepare your taxes. A LITTLE knowledge is dangerous.
I've got a lot of ag clients in my practice, but no beeks. Ag taxes can be different than the average return, a couple items stand out like income averaging and income deferral under certain circumstances. In order to be a "farmer" for tax purposes, 2/3rds of your gross income has to be from the farm.
Of course, just having the CPA's signature on your return will remove a big red flag from the IRS browsers. It is not economically feasible for the agents to go after pilfering. They have to go after the racketeer to make it worthwhile.Quote:
Ace, I hope you use either a CPA or enrolled agent to prepare your taxes.
I get it, you are an accountant probably working for big corporations. If I have a guy volunteer to help me extract my honey and I buy him lunch or breakfast I am going to rip up that receipt walking out the restaurant door and nobody knows otherwise. The whole point of bartering on a small scale is to avoid taxes and red tape from government bureaucracies. Of course it is not legal but if you remove all records of the transactions every existing it never did. Don't take someone out to lunch and then put it in your books as an expense. That would be foolish.
> That would be foolish.
The really foolish thing is to take seriously accounting and tax advice from a 'bird that posts comments like this:
Full thread here:
Now that's just plain unfair, using someones own words against them. lol