Tools Every Accountant Needs

This blog was originally published to JBowmanAccountant.org.

You may not have thought about it, but accountants all need certain tools to do their jobs right. Many of the tools used by accountants are to make the job easier and provide ways of offering better services. Below is a list of a few of the most important things every accountant should have.

Reliable Computer

Invest in a quality computer because it is the one that takes on most of your work for you! Having a fast, reliable computer will allow you to run multiple programs at once. It also gives you the peace of mind that you will be able to do your job effectively.

Tax Software

Tax software eliminates the need to file taxes by hand and saves you a ton of time and headache. Investing in a great tax software will help you serve more clients at a more efficient rate. Plus, tax software will catch any mistakes you may make and gives you the option to correct them. Doing so can save your client a lot of money.

File Encryption

Adding a layer of security to the confidential and sensitive information found on most of the files you have will ensure clients that their information is safe. By having file encryption in place you will be able to email sensitive materials without the risk of the wrong person getting a hold of that information.

Scanner

In order to convert paper files into easily accessible electronic files, you will need a scanner. You can get a traditional scanner/printer combo or even a file scanner specifically for scanning documents and sorting them. These special document scanners often can scan both sides of a double sided documents at the same. They also turn your bulky paper documents into easily accessible PDFs.

Gear Up

You can have the best computer all the software in the world, but nothing beats old school gear. Have a great calculator handy for crunching numbers. Also have plenty of writing utensils and notepads around for note taking. Being able to do the thing the “old fashioned” way never hurts. You may not always be able to rely on technology and having the tools to complete the job are important.

4 Things You Should Know About The R and D Tax Credit

This blog was originally published to JBowmanAccountant.org.

The Research and Development Tax Credit benefits almost any business, no matter the size, age, or industry. Since 1981, this incentive has offered reimbursement for innovative and highly-technical businesses. Here are four things you should know about the R&D Tax Credit.

It is available for many industries

From aerospace organizations to wineries and vineyards, several industries can reap the benefits of an R&D Tax Credit. Organizations within these industries must pass a four-part test to affirm that their research activities qualify for an R&D Tax Credit. The four parts of the test are:

  1. Technological in Nature – “Activities must fundamentally rely on the principles of physical or biological science, engineering, or computer science.”
  2. Permitted Purpose – “Activities must be performed in an attempt to improve performance, reliability, or quality of a new or existing business component.”
  3. Eliminate Uncertainty – “Activities intended to discover information that could eliminate technical uncertainty concerning the development or improvement of a product.”
  4. Experimentation – “All of the activities must include a process of experimentation including testing, modeling, simulating, systematic trial and error.”

It covers a variety of expenses

With all of the activity that goes on in a given business, it can be difficult to track your direct and indirect R&D expenses. However, taking note of those expenses is essential for receiving the appropriate tax benefits. As a rule, the major expenses that qualify are salaries and supplies and materials. For salaries, employees who work in R&D or directly manage those in R&D are covered. Supplies and materials covers anything from nails to computers.

It offers unique benefits to smaller companies

If your small company has gross receipts for five years or less that average less than $5 million, your company may be eligible for an R&D Tax Credit. This is the case even if your company does not owe any taxes, and the covered amount can reach up to $250,000 of a payroll offset. If your small business does not have credit for offsetting payroll taxes in a given quarter, you can carry that credit into a different quarter. However, to do this, you must not exceed the $250,000 limit.

It undergoes regular updates

The R&D Tax Credit does not behave exactly as it did over a quarter of a century ago. As industries and economies evolve, the R&D Tax Credit does, too. In particular, the removal of the Discovery Rule in 2003 redefined research activities as those that would be “new to the taxpayer” rather than “new to the world.” More recently, the Protecting American from Tax Hikes (PATH) Act ensured that small, mid-size, and startup businesses could benefit from R&D Tax Credits.

John J. Bowman, Jr. is an accountant and tax professional based out of Pittsburgh, Pennsylvania. Follow him on Twitter for more blog updates!

5 of the Best Accounting Books

If you are an accounting student or even if you are a veteran professional accountant, it’s important to keep learning about the industry. The easiest way to learn outside of the classroom is to pick up a book. Yet with so many accounting books out there, where should you begin? Below are some of the tops accounting books that you should read.

Accounting Made Simple: Accounting Explained in 100 Pages or Less Mike Piper

Accounting Made Simple prides itself on explaining some of the most important accounting concepts in simple-to-read language. The book is currently the best selling accounting book on Amazon—a testament to its popularity with readers. In its pages, you’ll find information about things like the accounting equation and financial statements.

Accounting All-in-One For Dummies Kenneth Boyd

The Dummies series of books are great for people who need a brief, yet in-depth, overview of a subject. Accounting All-in-One is a great resource for people who have to learn accounting basics in a short period of time, like small businesses or one person startups. When you’re finished with this book, it’s a great resource to keep on the shelf. This book is written in a similar easy-to-read style like Accounting Made Simple.

Barron’s Accounting Handbook – Joel G. Siegel Ph.D.

Barron’s Accounting Handbook is written by two finance professors. The book covers just about every accounting topic that is worth studying. One of the best features of the book is its A-Z dictionary of important terms to know. The dictionary alone makes the book worth the price.

The Tax and Legal Playbook: Game-Changing Solutions to Your Small-Business Questions – Mark J. Kohler

Even if you are not a small business owner, this is an important book to own—especially since you will most likely help small business owners at some point during your career. The chapters that discuss tax are particularly useful to business owners. Many readers note that the book is not only informative but entertaining as well due to the examples it presents from the real world.

A Random Walk Down Wall Street – Burton Gordon Malkiel

Burton Gordon Malkiel is a Princeton economist. While his book doesn’t specifically focus on accounting, accountants will find its advice on investing very useful. Although it’s written by an academic, it’s easy to read. The book’s main point is that it’s incredibly difficult to “beat the market” unless you have a stroke of luck to assist you. Here is an interview with the author that highlights the main ideas of the book.