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Author: Jake Snelson

How Does The IRS View Sponsored Posts

How Does The IRS View Sponsored Posts?

Another question we hear often is “If a company gives me something for doing a review for them, do I have to report it on my tax return?” For any established blogger this can be a real issue. When you start adding up everything that you’ve received for doing reviews…trips, electronics, gift cards, appliances, etc. it may become a significant amount.

Tax reporting for bartering is pretty straight forward. The quick, unwanted answer to the question, is: Yes, the IRS does expect you to report the “fair market value” of goods or services received in a business related exchange. And what is “fair market value”? Basically the price you would have paid for it if you bought it off the company’s shelf, or what they would have sold it for to a regular customer.

I know this kind of takes the glam out of being a blogger, but that’s the IRS’ specialty…putting a damper on things. Did you know that until the early 1900s there was no income tax in the United States at all!? Nevermind, we won’t go down that road…

Know this about bartering: it only applies to business transactions. So if you aren’t technically providing a business related service or good in return, you may be able to justify not having to report it on the tax return. Let us know if you would like to bounce your situation off of us.

Remember, Vyde doesn’t charge by the hour…that’s so old fashioned.

Is My Blog A Business?

BUSINESS

We’ve worked with a lot of bloggers in the last few years and we hear a lot of the same questions over and over again from talented and tech-savvy wordsmiths blogging on everything from gardening to exercise. We’re tackling your blogging business questions, one at a time, starting with the question all bloggers wonder at some point: Is My Blog A Business?

Why did you start your blog? The reasons probably range from “for fun” to “to make some extra money.” Unfortunately, the reason you started the blog doesn’t matter when it comes to whether your Uncle Sam considers it a business.

There are technically two ways your blog, or any home based hobby, becomes a business.

First: Without consulting you, and without your consent, the IRS designates your activity as a business if you have a “reasonable expectation to earn a profit.” For a little more clarity on how that is defined, ask yourself these questions:

  • Does the time and effort I put into my blog indicate an intention to make money?
  • Do I depend on the income from the blog?
  • Do I run ads on my blog?

There are other considerations, but you get the idea. If you answer “yes” to any of these questions you’ve got a business on your hands, baby! Whether you like it or not.

Second: With your consent (they’re a little nicer), the State will designate you as a business if you apply to set up a business entity, like an LLC or S Corp. (Though, the caveat here is that if the IRS designates you as a business for tax purposes, the State does too.) But by setting up one of these entities, the State formally recognizes your activity as a business activity, separate and apart from your personal activities.

Why does it matter?

Big whoop, the IRS thinks you’re a business! So what?

Unfortunately, that means they expect to see the activity reported on your tax return…and for most bloggers or home based, hobby type, businesses, that means potential self employment tax, which can be an extra 15% surprise at tax time! A little planning can go a long way to make this a little easier to swallow.

For non tax, State purposes, having an LLC or S Corp will make a big difference if in the terrible chance you get sued for something your business did.

Feel free to contact us if you would like more information about your circumstances…and don’t worry about a bill. We don’t charge you a dime unless you sign up for our monthly services.

File Your Taxes Early to Protect Against Fraud and Identity Theft

Your taxes may not be due until April 15th, but there are certainly benefits to filing early. One of them being greater protection against tax fraud and identity theft.

According to an estimate by the IRS, they paid over 5 billion dollars in fraudulent identity theft in 2013.

Basically, that means criminals use your name and Social Security number to file a false return and get your big whopper of a return in their pocket instead of yours. Obviously, this can’t be done if your taxes have already been filed so filing early is the easiest way to prevent this from happening to you.

Not expecting a return this year? You’re still at risk for identity theft. If a criminal gets ahold of your Social Security number, they can give it to an employer to avoid being taxed on wages, and the opposite effect can happen: you get stuck with the tax bill.

The risk of having your identity stolen during tax season is greater than the rest of the year, but still not something to lose sleep over. The IRS is constantly working to stop and prevent as many false returns as possible and they’re getting better and better at catching those sneaky little criminals before disaster strikes.

A new regulation put into place in the 2014 filing season is that only three refunds can be deposited into a single bank account. They’re also providing taxpayers with personal identification numbers–in addition to the Social Security number they’re required to provide–to prove their identity when filing tax returns. The number of taxpayers requesting these PIN numbers is nearly doubling every year.

benefits to filing early

Filing your taxes early can prevent the identity theft catastrophe and we’ll even reward you with cool Vyde gear. Send your tax documents to us by February 28th and receive a $10 Amazon gift card and a trendy Vyde t-shirt.

FAQs about Filing Taxes Early to Protect Against Fraud and Identity Theft

1. Why should I file my taxes early? Filing taxes early offers greater protection against tax fraud and identity theft. Criminals may use your information to file false returns, but if you’ve already filed, it prevents them from doing so.

2. How does filing taxes early protect me from identity theft? By filing early, you reduce the risk of criminals using your Social Security number to file false returns and claim your refund. This proactive approach helps safeguard your identity and finances.

3. Am I still at risk for identity theft if I’m not expecting a tax return? Yes, even if you’re not expecting a refund, your Social Security number can still be used for fraudulent purposes. Criminals might use it to avoid taxes on wages, leaving you with unexpected tax bills.

4. How is the IRS combating tax fraud and identity theft? The IRS is actively implementing measures to prevent fraudulent returns. Initiatives include limiting the number of refunds to a single bank account and providing taxpayers with personal identification numbers for added security.

5. Are there any incentives for filing taxes early? Yes, some organizations offer incentives for early filers. For example, Vyde offers a $10 Amazon gift card and a trendy t-shirt for submitting tax documents by February 28th. Filing early not only protects against identity theft but also comes with rewards.

common tax deductions

A Dozen Deductions for Your Small Business

It’s every business owner’s favorite time of year again! Tax season! Kidding…we know you may not love it as much as we do. But hey, if you’re already signed up with Vyde, we’ve got you covered.

Here are a dozen common and not-so-common tax deductions to get you started on your taxes:

Home Office. There are a few guidelines that go along with this deduction, but it is almost always worth the extra sorting and record keeping to get it right on your taxes. Uncle Sam says the space you claim as your “home office” must be devoted solely to your business and absolutely nothing else. If you sit on your couch and work on a laptop while watching TV, it won’t fly with the IRS. If you do have a legitimate home office, you can even write off a portion of your mortgage, insurance, and utility bills, based on the size of the space.

Office Furniture. 100% of office furniture, carpet, paint, and any improvements you’ve made to the space are tax deductible in the year you buy them. You can go that route or you can depreciate them over a course of seven years (meaning as their value lessens, you can still deduct a portion of the amount you bought them for each year.) You can use the IRS Tax Form 4562 to calculate these amounts.

Office Supplies. Even if you don’t have a home office, you’ve likely still bought supplies for your business. Think ink, paper, pens, scissors, tape, shipping supplies and notepads, highlighters, and the like. Keep your receipts; these things will help offset your taxable income.

Hardware and Software. There’s hardly a small business in existence that operates without a computer in this day and age. But this also includes other equipment like a camera, scanner, printer, laptop, webcam, Photoshop, Microsoft Office, Catch-up Bookkeeping, etc. Like office furniture, you can deduct the full amount of these things up front or you can depreciate them over five years.

Mileage. If you traveled at all for your business this year, you can deduct the costs incurred. You can either add up your mileage, parking, oil changes, tires, and other expenses and decide how much you use your car for business vs. personal use and then calculate your deduction; or you can take the standard mileage rate, which is simpler, and deduct .56 per mile for 2014.

Travel. Things get tricky tax-wise when you travel. It’s great to have a business trip/vacation, but you have to be careful. Hotel stays are 100% deductible (live it up!), but eating out is only 50% deductible (McDonald’s it is!). The cost of travel—airplane tickets, train rides, tips for a taxi driver are all 100% deductible as well.

Client Gifts. If you were an especially generous business owner this year, take those client gift receipts and use them to your advantage. The IRS allows you to deduct up to $25 per client in gifts.

Phone Charges. If you use your cell phone for business, you can claim that as a business expense. If you use your phone 50% of the time for business, you can deduct 50% of your monthly bill.

Advertising and Marketing. If you spent any money at all on advertising your business and its services, you can deduct those expenses. These usually include business cards, promotional flyers/campaigns, yellow page ads, graphic design services, marketing services, Internet ads, and the like. You can also deduct promotion costs for publicity, like sponsoring a local sports team.

Professional Fees. Accountants, lawyers, consultations, etc. are all tax deductible.

Service Fees. If you sell goods in an online story like Etsy or use Paypal to receive payments, all of those fees are tax deductible. This also includes bank fees, credit card fees, and check deposit fees.

Educational Expenses. If you took a course or bought research material to learn more about your industry, these fees are 100% tax deductible. Also consider books, manuals, local college courses, seminars, and professional publications that you may have purchased within the last year.

What tax deductions are most useful to your business? We’d love for you to share them with us!

Reasons Businesses Should Outsource Payroll

The 3 Big Reasons Businesses Should Outsource Payroll

Few business owners cite payroll as their favorite business task. In fact, it generally tops the list of least favorites. At what point does it make sense to leave it to the experts?

Here are three big advantages of outsourcing payroll:
  1. Access to expertise and knowledge. Employers have to deal with almost 10,000 federal, state and local taxing jurisdictions across the United States. In addition, employers today rely on technology to operate more efficiently.  As a business grows, employers have more employee records to keep and also need more reporting.  The lack of technology becomes a hindrance to scaling for growth of the business. When you’re doing payroll in-house, you’re more likely to make mistakes that not only upset employees, but the government as well. Payroll service providers may be less likely to make big mistakes, and when they do, it’s easier to approach them about it than if the same mistake were made by one of your own employees.
  2. Minimize costs and risks. Outsourcing payroll can also assist with cutting costs and limiting risks. On average, businesses are overpaying employees by about 4 percent because of differences between the employee’s time and an accurate time record. Larger businesses often have the means to employee an entire accounting/payroll department, but businesses with fewer than 20 employees often find that outsourcing payroll saves them money. A quick way to determine if outsourcing payroll would save your business money is to figure out how many hours your employees are devoting to payroll-related activities, calculate how much you’re spending and compare the amount to the plans offered by several payroll-services providers. Also, be sure to factor in the money your business spends on tasks like printing and distributing checks, creating tax documents, and the like. You’ll probably be surprised by amount of time and money spent on these tasks.
  3. More focus on your core business. Doing payroll yourself can take a lot of time and focus from the money-making aspects of your business. Payroll may not directly increase sales, but done incorrectly, it can put your business in a world of hurt. To be in accordance with the laws and legal requirements of payroll takes a considerable amount of time and detail. Outsourcing payroll will help you save time and allow you to spend more money on the profitable parts of your business.

More focus on your core business

FAQs:

1. When should I consider outsourcing payroll for my business?

  • It’s advisable when payroll tasks become burdensome or prone to errors.
  • As business grows, managing payroll in-house may hinder scalability.
  • Expertise of payroll service providers reduces mistakes and ensures compliance.

2. How does outsourcing payroll help minimize costs and risks?

  • Reduces overpayment errors, averting financial losses.
  • Especially beneficial for small businesses with limited resources.
  • Comparing costs of in-house payroll tasks against outsourcing can reveal significant savings.

3. What are the benefits of focusing more on my core business by outsourcing payroll?

  • Saves time and resources for revenue-generating activities.
  • Ensures legal compliance and minimizes risks of payroll mistakes.
  • Allows business owners to prioritize growth and profitability.

4. What advantages does outsourcing payroll offer in terms of expertise and technology?

  • Access to specialized knowledge on complex tax regulations.
  • Integration of efficient technology for payroll management.
  • Service providers offer reliable support and troubleshooting for payroll issues.

5. How can I evaluate if outsourcing payroll is cost-effective for my business?

  • Assess time and resources spent on payroll-related activities.
  • Compare costs of outsourcing against in-house payroll management.
  • Factor in expenses like check printing, tax document creation, and distribution for accurate comparison.
Client Gift Giving

Vyde’s Holiday Business Gift Giving Guide: Part 3, Do’s and Don’ts of Client Gift Giving

If you’re planning on holiday customers, employees or client gift giving,  this year, we’ve got you covered! We covered what to give and who to give it to,  what’s tax deductible, and now we’re talking Do’s and Don’ts of holiday gift giving.

holiday gift giving for clients

DO:

-Give. Don’t promote. You have all year to promote your business; allow the holidays to be a time to focus on your clients and let them know how grateful you are for them.

-Send a card. A handwritten card or personal email can be meaningful and memorable. Gift giving has lost its personal touch over the years and your client will love getting a special note from yours truly, with or without a gift.

-Keep an ongoing list of employees, clients, service providers, and others who make your business great throughout the year. The holidays are a busy time of year, making it easy to forget someone. Keeping a small list throughout the year will ease your holiday stress and keep you from overspending at the last minute.

-Set a budget. Not all client gifts are equal, but you do need to have a budget in place before you start shopping. Using a small business bookkeeping system can help you keep to a budget. Check out our post on tax deductible gifts (link) and amounts here before deciding how much to spend.

-Check into a company’s gift giving and receiving policy before shipping your presents. The larger the company, the more likely a specific policy is in place. You don’t want to spend unnecessary cash on a contact who is not allowed to accept your gesture. However, a hand written card will almost always suffice and show your genuine appreciation! 

DON’T:

-Don’t wait until the last minute. Keep in mind many people take a lengthy break from work to travel during the Christmas season, so sending a gift to a client’s office on December 23rd may not work. Try to have your gifts sent out early in December to ensure on-time delivery.

-Don’t feel pressure to run out and buy a nice gift for everyone who sends you one. Again, a quick way to go over budget and not always necessary. However, be sure to send a nice thank you card expressing your gratitude or a holiday card, and add that person to the list for the next year, if need be.

-Don’t send gifts that are too personal or religious. Keep it professional in the work place and avoid gifts like clothing, perfume, and other items people have personal (and sometimes very strong!) opinions about.

-Don’t be a brown-noser. Give gifts because you’re grateful for your client, employee, boss, etc. and keep it at that. Don’t try to out-do another employee or company and keep in mind that as long as your gift is genuine and sincere, the recipient will appreciate the gesture.

company’s gift giving

The best holiday gift to give comes from the heart. Be genuine and sincere and your clients and employees are sure to appreciate the heartfelt gesture.

FAQs for Holiday Gift Giving to Clients, Customers, and Employees

1. What’s the primary approach during the holiday season for gift giving to clients? Focus on giving rather than promoting your business. Use the holidays as a time to show gratitude and appreciation for your clients’ support.

2. Is sending a card a meaningful gesture in holiday gift giving? Absolutely! A handwritten card or personal email adds a memorable personal touch, making your client feel valued, even without a physical gift.

3. How can I avoid last-minute holiday stress while planning gifts? Maintain an ongoing list throughout the year of employees, clients, and contributors. This helps prevent oversights and last-minute rushes during the busy holiday season.

4. Should I have a budget in mind when selecting client gifts? Yes, setting a budget is crucial. Consider using a small business bookkeeping system to manage expenses and ensure gifts are within a reasonable range.

5. What are some things to avoid when gifting during the holiday season? Avoid waiting until the last minute for gift sending, feeling obliged to reciprocate every gift received, selecting overly personal or religious gifts, and trying to impress with extravagant gifts. Keep the gesture genuine and sincere.

Mazuma’s Story

Mazuma’s Story

Benjamin Sutton, CPABenjamin Sutton, CPA and Mazuma Managing Partner, was sitting in his ridiculously overpriced chair at a large accounting firm a few years ago, contemplating his future as a six figure partner with a time share in Hawaii.

He unsuspectedly came across an article about a start-up accounting firm in the UK who built an offering around affordable small business bookkeeping and tax services. The article argued that a firm with a little more heart (in terms of billing rates) and a focus on small business bookkeeping and tax preparation could provide a needed service to a group that represents over 90% of all companies. Ben’s heart grew three sizes that day and he convinced his wife this was the right thing to do.

In 2011, Mazuma USA opened its doors with an extremely efficient business model based entirely on small business bookkeeping, tax preparation and payroll services. Business owners simply upload their bank and credit card statements, receipts, and invoices each month. Mazuma does all the work, and the owner receives a clean and accurate monthly Income Statement (P&L), Ledger, and Balance Sheet. It couldn’t be easier, and definitely not cheaper.

Since the clients’ books are being managed all year by Mazuma, year-end taxes are a breeze. This allows Mazuma to prepare their clients’ taxes for the same flat-rate fee. Not to mention, the Mazuma accountants are aware of their clients’ every expense and deduction, giving them a leg up on providing the best return and tax advice.

If this all sounds too good to be true, try Mazuma free for one month. Click here to start.

What Gifts are Tax Deductible

Vyde’s Business Holiday Gift Giving Guide: Part 1, What Gifts are Tax Deductible?

The holiday season is the perfect time to show your clients and employees just how much you appreciate them. However, figuring out what to give, when to give it, and what’s tax deductible can be a daunting task. Vyde’s made it easy with our comprehensive, deductible focused Business Holiday Gift Giving Guide.

Finding a gift that is sincere, useful, meaningful to all clients, and tax deductible sounds like a whopping job. Not to mention sending it out on time, staying within a budget and somehow making it personal. So how can you wrap all of this up in one business holiday gift?

Is a Holiday Business Gift Tax Deductible?

Let’s start with the numbers. What is tax deductible when sending a business holiday gift to a client?

Like so many other tax deductions, there is a limit on how much you can deduct when it comes to gifts. Right now, the limit is $25 per recipient per year.

Perhaps you’re especially generous throughout the year and send your clients many gifts. It’s important to know that only $25 per year per recipient is actually deductible. So, if you sent your favorite client three $25 gifts this year totaling $75…you guessed it, you are only allowed to write off $25 for that client.

How about prepping that fabulous gift and sending it off to clients? Wrapping paper, cards, scissors, tape, ribbons and bows are all tax deductible so fancy it up before shipping it out! And when you get to that mile-long post office line this December, keep your receipts because shipping and stamps are deductible as well. These costs are an addition to the $25 per recipient limit, so the actual gift itself can be valued at $25 and these expenses are still deductible.

If the $25 limit feels restrictive to you, there is a circumstance that can help you deduct more—and probably cut your work in half, too. According to the IRS, if you give a gift of “entertainment,” you can deduct 50% of the cost.

Business Holiday Gift Giving Guide

Examples of entertainment gifts are concert tickets, sporting event tickets, movie passes, restaurant gift cards, vacations, hotel stays, etc. Clearly that $25 limit per recipient can quickly be surpassed in these categories, so your deductions may actually be greater than $25 each. Your clients are sure to love the gift of entertainment and you won’t have to bother with the ribbons and bows. In fact, most of this shopping can be done online and sent to your client electronically, so win-win!

FAQs for Vyde’s Business Holiday Gift Giving Guide

1. How can I combine sincerity, usefulness, meaning, and tax deductibility into one business holiday gift?

Finding a gift that ticks all these boxes might seem challenging, but it’s not impossible. Vyde’s comprehensive guide offers suggestions tailored for such occasions, ensuring your gift is thoughtful, practical, and tax-deductible.

2. Is a holiday business gift tax-deductible?

Yes, holiday business gifts can be tax-deductible. However, there are limitations. Currently, the IRS allows a deduction of up to $25 per recipient per year. It’s crucial to stay within this limit to maximize tax benefits.

3. What expenses related to sending out business holiday gifts are tax-deductible?

Several expenses associated with preparing and sending business holiday gifts are tax-deductible. This includes the cost of wrapping paper, cards, shipping, stamps, and other related items. These expenses are separate from the $25 limit per recipient, allowing for additional deductions.

4. How can I exceed the $25 per recipient limit for tax deductions?

One way to surpass the $25 limit is by giving gifts of “entertainment.” According to IRS guidelines, you can deduct 50% of the cost of entertainment gifts, such as concert tickets, restaurant gift cards, or vacations. These gifts often exceed the $25 limit, providing greater deductions while offering clients memorable experiences.

5. Where can I find more ideas for business holiday gift giving?

For additional ideas and tips on business holiday gift giving, explore the comprehensive gift-giving guide provided by Vyde. It covers everything from gift selection to recipient considerations, ensuring your gifts are both meaningful and tax-efficient.

For more ideas on business holiday gift giving, visit the rest of our gift giving guide:

What To Give and Who To Give It To

Do’s and Dont’s of Client Gift Givingp

Mazuma’s 3 Year Anniversary

Mazuma is turning 3! And, we’re doing the hula accountant-style over here because we’re celebrating another great year. We couldn’t have done it without you. We started with the idea that small businesses need simple, affordable accounting and because of you and the family, friends and colleagues you’ve referred to us we’ve grown. Thank you for entrusting us with your accounting.

There are all kinds of wonderful going on this week and you’re invited to participate in them all.

MAZUMA ANNIVERSARY SWEEPSTAKES

WIN A $25 GIFT CERTIFICATE TO YOUR FAVORITE RESTAURANT/STORE
ENTER BOTH CONTESTS FOR TWO CHANCES TO WIN

Say Cheese!

Grab your purple envelope and smile! Take a photo of you and your purple Mazuma envelope, add it to Facebook with a caption telling the world about your feelings for Mazuma. Share it with Mazuma to be entered into the contest. Want some free publicity? Stand by your business sign or hold up your bcard in the photo.
Be a Mazuma Star!
Tell your Mazuma story. Review and share Mazuma on Facebook to be entered into the contest.

Not a facebook groupie? Send us an email with your review and photo to be entered in the contests or post it to google.

MAZUMA STYLE TRAINING VIDEOS LAUNCHED
As part of Anniversary Week, Ben Sutton taped a three part series exposing the real secrets of accounting and how to use it to be more successful in your business. These informative videos show the document you’ll receive from Mazuma each month and how to read the Income Statement, Balance Sheet and Ledger Report to get the most out of your Mazuma services. Ben even highlights ways to use the numbers in your real life situations. And, he uses normal words and examples. Insert applause here.

Profit and Loss/Income Statement Training

Balance Sheet Training

Ledger Report Training

PARTY ALL WEEK LIVE AND VIRTUALLY
All week long we’ll be partying online on our facebook and pinterest pages. Join the fun and share what you think of Mazuma and where you stash your purple envelope. Or if you have general questions, ask away. We’ll respond.

If you’re in the Utah area, plan on joining us for some food and fun. Watch for your invite in your inbox.

Thanks for celebrating with us!

Turn Your Business Trip into a Vacation

I’m headed to San Diego on business and the beach is calling to me.  Since the client is paying for the trip, I might as well add some vacation time and bring the family along.  So, what do I have to do to keep this a business trip, while sharing expenses with my family vacation?”   We hear questions like this over and over again. It seems like everyone is turning business travel into vacation time and that makes sense as we look for chances to save money and have new experiences. The IRS is vigilant about business expense tracking, so make sure you follow some simple rules and grab the sunscreen before you leave!

To claim business deductions associated with travel:

– Keep ALL receipts from your business trip.- Separate business expenses from personal expenses. Split the meal check between business and personal, book airline tickets separately, etc)- If your domestic trip is primarily a business trip, the price of travel to and from the destination and the business expenses are deductible.- If the trip is primarily pleasure, transportation to and from the destination is not deductible.- If you spend less on transportation by staying until Saturday, the IRS has indicated it will generally consider that extra stay time as a business expense.- Meals are only 50% deductible, even if they’re business meals.- If you bring your spouse or other guests, the costs they incur are not tax deductible, as they are not “necessary” for your business trip.- If traveling foreign and adding some pleasure time, a portion of the transportation cost is not deductible.  But, if you are staying less than a week, it is deductible.- If it feels doubtable that it is a business expense, it probably is not a business expense. Wherever your business travels take you, with a few minutes of planning and extra receipts, you can add vacationing as part of the fun.  Enjoy the beach. Surf’s up, dude!

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Vyde is a licensed accounting firm (CPA) based in Provo, Utah, and members of the AICPA. We provide professional accounting services to businesses and individuals, with a focus on small business bookkeeping and taxes.

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