Now that the stimulus checks have all been sent out, many Americans are hesitant on using the funds. They aren't sure if the rumors they're hearing about the strings attached to them are accurate or not.

Now that we have all received our stimulus checks, we are now facing a slew of rumors and myths about the money we have received. This money was welcomed with open arms, helping pay bills, and keeping food on the table for many. Thanks to Social Media and other media outlets, and just the sheer amount of information (correct or not) that's available, rumors and misinformation have been spread about the realities of our stimulus checks. We are here to set the truth straight, calm your worries, and get rid of these myths once and for all.

According to AARP, once the CARES act went into action, the IRS sent out over 140 million stimulus checks. As this relief arrived and people started spending it, some hesitation did arise. The question if we will need to pay back the IRS and if these funds will be counted as part of our income in our 2020 taxes are at the forefront of this hesitation. With income and employment being so unstable, these are very understandable questions. Yes, this money is a blessing now. But, will it turn into a curse later?

First and foremost it is very important to know that you will not be paying back your stimulus checks. The IRS has even come out and said on multiple occasions that this will not be something that you will have to pay back. The stimulus check, according to CNBC, did get the nickname "recovery rebate" which is one of the main reasons why this concern began. Why won't you have to repay the IRS? That is due to the nature of tax credit the IRS is considering our stimulus checks. There is a certain type of tax credit, says Wealth Hacker Report Jeff Rose, called an Earned Income Tax Credit. These credits are completely refundable. Even if you don't owe any taxes at the end of the year, if you have any earned income tax credits, you will still be receiving a tax refund. This is how the IRS is treating your stimulus checks. It is something you're owed, not something you will have to repay. This is how those who don't file for taxes, like those who receive social security, disability, and railroad retirement benefits were eligible for a stimulus check. As long as you have a social security number and you meet the income requirements to receive a single or joint filing stimulus check, you will receive a stimulus check, with no strings attached.

Since the IRS is treating your stimulus check like earned income tax credit, it also will not be counted as part of your income when you file your 2020 tax return. You've received this money and it is taken care of, nothing else is required for you to do about it. Ironically, there is an opportunity for you to receive more money if your stimulus check wasn't calculated correctly by the IRS. These mistakes will most likely be caught when filing your 2020 tax return, or if you didn't claim a dependent child on your tax forms, or alert the IRS to a dependent child. You won't, on the other hand, be receiving any extra stimulus money when you file your 2020 tax return if you received the proper amount. The only way that will happen is if there is another stimulus check released, which for now is just a myth and rumor.

Also, know that the stimulus check will not reduce your refund that you're owed on your 2020 taxes. You will receive every penny that you're owed, and your stimulus check will not be deducted from it or even affect it. The stimulus check will also not lower the amount you owe in taxes, either. That can be confusing since other tax credits can reduce how much you owe. But, the stimulus check will not be one of them. At the end of the day, your stimulus check will not be affecting your 2020 taxes at all.

There have been some situations, according to CNBC, that some individuals have been overpaid and given more stimulus money than they should have received. If this happens, you will not have to pay that back either. This is incredibly rare though, and more often than not, is actually a scam. As we have mentioned in recent blogs, scams regarding the stimulus checks have become rampant since they were first released. If you receive a very official-looking check in the mail for more than your stimulus amount, and it is requested of you to pay back the difference in cash, certified check, money order, or in gift cards, that is without a doubt a scam. The IRS will not contact you via phone, social media, email, or texting. If you receive any messages about your stimulus checks through these platforms make sure to report them and then delete them right away.

We hope this insight helps you better understand your stimulus check, and what you are expected to do with them now that you've received them. If you have any further questions about them, or about the 2019 tax date that just passed us on July 15th, please don't hesitate to reach out. We will be very busy over the next couple of weeks, as we have been leading up to the 15th, but we will try and get back to you as quickly as possible. Don't forget! If you're looking for the best tax accountant in Summerville, the best tax services in Summerville, the best Quickbooks services in Summerville, and the best payroll services in Summerville, we are still here for you. Tax season may be over for some and just starting for others, and we will be here for you no matter what!​

Our latest blog focused on the importance of knowing what things you can look forward to writing off on your taxes this year. But just as important, you need to know all the things your business cannot write off as tax day draws closer. Battle this grey area, and be prepared before tax day.

​There is plenty of time between now and April 15th to get prepared for paying Uncle Sam, but there is nothing wrong with being prepared. The last blog we posted was about knowing what items, some often unknown, that you can write off your taxes. We all love that extra break at the end of the year and it can be a huge burden lifted off your companies' bank account. But are you just as familiar with all the items you cannot write off your taxes? If not, you could be in for a lot of frustration when you start preparing your taxes and getting prepared to pay for them. Don't get caught in that trap, be prepared before you even begin your fiscal year. Know what receipts you need to save and where you can help your business save money - and know what to avoid spending money on before you get ready to sign the dotted line on April 15th.

Let's start with some of the basic nondeductible recommended by Quickbooks. After Quckbooks help you track your project probability, manage your bills, track your business mileage, track your income and expenses, helps you prepare invoices and payments, manage your contractors, and pay your employees, it also offers this fantastic reminder of what you cannot write off and deduct from your upcoming taxes.

• Gifts to your customers. This is such an important business practice to show your appreciation to your clients or future clients. You can still deduct a partial amount of gifts for your clients, but it is limited. The IRS has a $25 limit on gifts that you can give throughout the fiscal year.
• Business Clothing.  The only time that you can write off clothing items is if they are uniform pieces or protective equipment items that you need to stay safe and aren't provided for you. Clothing items that you can wear outside of work or that you choose to wear outside of work cannot be written off.
• Commuting Cost. You can only write off mileage if you are traveling for business, not for your commute to your place of business every day. If you're traveling off-site to go meet or work with clients, that can be written off.
• Meals. Some food costs can be written off - but there are some parameters. You can only write off 50% of what you treat your clients to, and it must be properly documented to receive that deduction.
• Fines or Penalties. Any type of fine (including parking or speeding tickets) or law that is broken during work hours or when you're traveling for work, is never tax-deductible. This does include tax-related expenses, if you get a fine for not estimated your previous taxes, you cant write that off.
• Life Insurance Premiums. If you pay the premiums and your business is not the beneficiary of the plan, you cannot deduct this payment.
• Political Donations. You cannot deduct donations made to a political organization or a political candidate. Any expenses you rack up to lobby the government or pay to a group to lobby on your companies behalf you cannot write off either.
• Cellphone Expenses. This can be very tempting, especially if you don't have a separate cellphone for doing business. You can only write off the bossiness portion of these expenses. So, you need to calculate what percentage of calls were made for your business and only deduct the percentage of the expense.

How does this sound so far? Are any of these nondeductibles surprising or frustrating? Or were you already aware of these items? Well - the list continues. This one is a little more detailed and focused towards small business owners.

• You cannot write off payment to sole proprietors, partners or LLC members. They are owners of a business, not employees.
• If you claim a home office deduction and have a landline, the cost of the first landline to your home is not a deductible. Only the second line is deductible.
• Half of your self-employment tax is not a deduction. It is an adjustment to gross income on your personal income tax return.
• Owners of pass-through entities cannot treat their state and local income taxes on business income as a business write off.
• The cost of health coverage for self-employed individuals and more than 2% of S Corporation shareholders is not a business deduction. The premiums are deducted on the owner's personal taxes.
• Commissions paid in connection with buying realty are not deductible.
• For those who are self-employed, contributions to your own qualified retirement plans are personal deductions and not business deductions.

When knowing what you can and what you cannot write off your taxes - there is a lot of grey area. The IRS keeps a strict eye on both categories - so make sure you know exactly what you can write off, especially when there are certain items that you can only partially write off. It's so easy to make a simple deduction that won't be recognized so don't get caught. When planning out the fiscal year in front of you and your company,  make sure you plan on the extra expense of what you cannot write off. Use Quickbooks to your advantage and keep track of everything. You're nine months away from paying your taxes, but we are already halfway through the fiscal year. Be diligent in paying attention to your expenses!

For new business owners and sole proprietors, it's so easy to forget or not even known about all of the best deductibles and write-offs for your future tax season. So here are some of the best tips and hints and what you can look forward to writing off come April 15th!

April 15th. It's a day that goes down in infamy once you're proudly bringing home your first paycheck or have opened your own business or have become a sole proprietor. Even though it's still 9 months away from when we all have to open our wallets for Uncle Sam, taxes don't have to be as painful or as costly to you or your business as you think. We get it - taxes aren't your favorite thing. So to ease the pain between now and April 15 let's talk about something a little less painful - your tax write-offs and deductibles!

Those glorious write-offs can cut your taxable income and cut down on what you end up paying for your taxes come tax season. But are you writing off everything that you can? Do you know just how much you can track and write off every year to make sure you're getting the financial break you and your company deserves? Let's break down what exactly you can write off - and how you should be keeping track. Federal tax laws can be a bother and can get in the way of what you think you can write off and what you actually can. Tax code and Tax law does change a little every year, so there are loopholes and certain things that will affect how, how much, and when you can write off certain things. When tax season does come around, make sure you, your tax advisor, or your Quickbooks extraordinaire takes the time to research the new tax code for the year. This list covers the big write-offs - and a handful of others that you might not know about. A lot of the time the more unknown or forgotten write-offs can be some of the most lifesaving and profitable at the end of the day. Make sure you're keeping track - and reading the small print.

Our first recommendation is to keep track of everything for your company. Quickbooks is a simple and easy tool that can help you track all of your project probability, manage bills, track your mileage, keep track of your income and expenses, help you manage your invoicing and payments, manage your contractors, and of course - pay your workers. It's simple, efficient, and can take the headache out of tax time. You will also be a star employer if you get your taxes finished sooner than the cut off date. The faster you do, the faster that tax return can get back into your pockets and the pockets of your employees.  

The first general idea to keep in mind when you're just beginning and making plans of what you're going to be writing off this year, your write-offs HAVE to be something that is always used in your business industry. Once this is established, don't forget to keep and track your records. There are TONS of amazing apps and programs that can help you stay organized. Did I mention how amazing  Quickbooks is and how they can do all of that for you?

TOP WRITE OFFS FOR SMALL BUSINESSES!

• Equipment and Supplies: Any office equipment or supplies. This includes printers, computers, software, desks, paper, pens, and phones. This can also include cleaning supplies for a cleaning service and postage. You can also write off the rent or cost of any machinery or equipment you use for your company.
  • When writing off large ticket tangible items like tables, chairs, or vacuum, look into their depreciation values. Will it be better for your company to write off all of these big-ticket items now, or wait until later? If you don't depreciate them, they are treated as non-incidental materials and supplies (under a de minimis safe harbor). These items then become deductible when purchased or furnished to customers.
• Business Costs: This is the cost of doing business for the current fiscal year for services like attorneys, accountants, and consultants. This also includes your utilities; electricity, your mobile phone, and your second land line at your home (if you work from home). Ordinary repairs and maintenance of your building, office, or workspace. This also includes contract labor for freelancers and independent contractors.
  • Remember if your freelancers and independent contractors are making $600 or more from you, deliver the correct tax papers for them to fill out at the end of the year!
  • When writing off mobile phones - you can only write off the time you're using it STRICTLY for business.   
• Promotional Investments: All of your ordinary and common ways of advertising are fully deductible. This includes your business cards, phone book ads, sponsorship, Facebook ads, social media campaigns, and so on.
• Bad Debts: Surprising right? As long as the product that was sold as a tangible good NOT a service, bad debt from that fiscal year can be written off, as well as interest on business indebtedness. This also includes penalties or fines for late performance or nonperformance of a contract!
• Selected Taxes: This includes employment taxes, licenses, regulatory fees, taxes on real estate and personal property, employer taxes, the employer share of FICA, FUTA, and state unemployment taxes.
• Labor Costs: This includes employee compensation, wages, gifts, bonuses, and benefits such as health insurance and vacation pay. If your business helps with adoption assistance, and group team life insurance. This also includes commissions and taxable fringe benefits. You can also write off plan admission fees. This write-off also includes education assistance, dependent care assistance, and contributions to qualified retirement plans.
• Insurance: This write-off includes your business owners policy, malpractice coverage, flood insurance, cyber liability coverage, and business consultation insurance.
• The Office: You can write off the rent for the current year as long as the owners don't have and won't receive equity in a title to the space. You can also write off mortgage interest if you own realty.
  • If you work from home, you can still write off a part of your mortgage and the household expenses. BUT there are some important rules you need to follow. The space you choose must only be used for work and NOTHING else. To write of this space, measure the workplace you've chosen and divide that by the square footage of your home. The percentage you come up with is the amount of housing payment and utility cost you can deduct.
• Commission Fees: Fully deductible!
• Travel: If you travel for work, your transportation and lodging can be written off. Meals can be - but there is a limit to how much. If you're taking yourself out for a meal, this can't be written off. But if you're taking a client or employee out for a meal, 50% of that meal can be written off. You must substantiate the expense if you choose to do so.
• Car & Truck Expenses: The cost of operating any vehicle is only deductible if there are required records (receipts) to prove business usage. This practice can be eliminated if you rely on the IRS standard mileage rate of 58 cents per mile, instead of deducting your actual outlays. You can write off these expenses if you own the vehicle or you're leasing it.

EXTRA WRITE OFFS YOU MAY NOT KNOW ABOUT!

• Books, audiotapes, CDs, videotapes, software, and other similar items that grow your business skills.
• Bank Service Charges
• If you join a chamber of commerce and attend trade shows, you can write off dues and registration fees.
• Coffee and Beverages for your employees.
• Business Licenses
• Regulatory Costs
• Outplacement services for employees

How much did you know? Did you find anything surprising and helpful? I hope so! Hopefully, this has shone a light into some confusing or unknown waters that now makes more sense and will save you a few extra dollars this next tax season.

Next up: Things you think you can write off, but actually, you cant!

Tax season is quickly approaching, and Pathways wants to ensure that your business has their taxes under wraps! Here are a few tax tips for your business!

Use Quickbooks Payroll
When it comes to payroll, it can be difficult to manage by hand and keep up with all the employees of your business. In order to combat that, and provide relief come tax time, we recommend using Quickbooks payroll! 

File your Taxes on Time
Many have been there, in crunch time, and end up missing the deadline for their taxes. Don't let that be you with your business. Ensure you get your taxes done on time, if not early, by using Pathways! Call and schedule your appointment today!

Take Deductions Seriously
When it comes to taxes and running a business, it helps to know what deductions you can file for and have. It is best to communicate with a Pathways team member to discuss the deductions that you and your business qualify for.

We hope to see you soon for your tax appointment, make sure to get everything you need to get done early so you do not have to pay any late fees come 2019!

Have you been having a hard time lately with your finances for your small business? Have you been struggling trying to flip through papers up on papers that don’t seem to have the correct information? What if we at Pathways Consulting told you you don’t have to do that anymore?

That’s right. You don’t.

QuickBooks is an accounting software that can change the way you do booking. From spreadsheets to payroll, QuickBooks will have your business running smoother than you ever thought it could.

QuickBooks is smarter than a spreadsheet, since it’s an online program you can use the convenience and efficiency of computer software to keep a hold of your businesses’ exchanges of money.

Eliminate your worry today and do some reach search on QuickBooks. Once you’ve made a decision then that’s what you want to do, contact us!

Lucky for you at Pathways Consulting we have experienced, knowledgeable, members of our team who understand QuickBooks to a T! Don’t be shy and call today to schedule your appointment! 

We will go over QuickBooks software with you and help you receive a better understanding of what this new innovative computer technology means for your small business! We look forward to hearing from you!

​Hurricane Florence has brought to our attention the necessity of having your business at your fingertips. Luckily for all the small business owners out there, technology has grown and flourished to accommodate every demand we place on it. 

It even makes it possible and easy to handle your business from your phone! That means 24/7 access for you! But what allows you to run your business solely through your phone if you so choose? Quickbooks!

Quickbooks is the best and most efficient accounting system right at your fingertips. Here at Pathways, we even have quickbooks specialists to help you manage your account without the hassle or confusion! 

Do you have your business’ books and records safe in case of a natural disaster? Make the switch to Quickbooks today by calling Pathways Consulting and scheduling a meeting! If you live in the Summerville, or surrounding area, we will get you on the right track with your money and out of the storm!