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Security and Finances Part 1

Financial Security.

I’m not talking about Financial Security the way we generally are used to hearing about it as in retirement and investments. Instead I would like to discuss security in terms of hackers stealing your information, or your credit card being copied when you go out to dinner. These are just a few of the tactics used by criminals nowadays to exploit your credit and your finances of their own gain. This new series by Vaughn CPA is going expos ways that your finances can be exploited by nefarious people.

At Vaughn CPA we want our clients to maintain a healthy financial lifestyle. Part of maintaining this healthy lifestyle is to keep your finances secure; to help us do that, Devon a systems and IT analyst for Vaughn CPA is going to help us look good cyber crime in how it affects your finances.

Vaughn CPA as a tax accounting and financial consulting firm that services Loveland Colorado and Albuquerque in Mexico

It used to be that you can just deposit your money in a bank account, add a savings account and some investments and as long as your money was in one of these places it was relatively safe. Now we have cyber crime; and beating the way in cyber crime is identity theft. Identity theft any activity and uses your credit and/or your identity without your permission. A number one crime for identity theft is stolen credit card information. There are a number of ways in which criminals and require your credit card information and use it to purchase goods and or wire transfer themselves Monday using your credit card without actually being in possession of a credit card.

This week I would like to discuss beyond the ordinary cyber crime. We all can easily relate to the above example of credit card fraud without knowing how criminals steal our credit card information we are aware that happens with regularity. (Next week I’ll talk a little bit about how to secure credit cards.) Two day I want to dig into something that I hope is a not so common occurrence but still crosses into the realm of Financial Security and cyber crime. Recently Wells Fargo has just uncovered evidence that millions of new bank accounts and credit accounts have been created by employees trying to boost their sales.

 

 

The most baffling thing about this is over 5000 employees committed identity theft /cyber crime with the sole purpose of boosting sales. It is very concerning that this happened at all to institution like Wells Fargo. A bank is the one place where we should be safe from this kind of activity and the last place where something like that should happen. While the majority of these accounts were set up, opened, and closed with little money actually leaving the victims accounts this kind of thing can never happen in financial institution. Tons customers now have credit issues that they have to deal with because the customers had payments that they were unaware of. Let’s face the facts if someone could easily do this just to boost sales what’s to stop somebody from doing it if they’ve encountered financial hardship?

So how do you protect yourself? A something like this to not be limited just one bank as it can happen to anyone under any circumstance at any bank. Gonna give you the tools and advice to stay on top of your financial resources so you don’t become a victim.

1. Check your bank account with regularity. At least once a week login online and verify all the accounts under your name are correct.

2. Read your mail, you know when you open or close a bank account. You also know when you apply for credit cards or credit. If you receive a letter in the mail in their congratulating you or apologizing that you couldn’t can get a new account or credit. It’s time to contact the institution that wrote your letter.

3. Check your credit report your credit report will show you a list of all open and closed accounts. It will also show you all recent activity as it relates to recent credit inquiries.

These three simple steps will go a long way to protecting you are becoming a victim of this and other kinds of identity theft.

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Northern Colorado Enterprise Zone Tax Credits

Colorado’s Enterprise Zone Program is created to stimulate economic and neighborhood advancement in targeted locations around the state. Personal businesses located within an Enterprise Zone may receive incentives associated with business investment, business expansion, and/or brand-new business relocation. Your Local CPA can help you determine if you can apply for Enterprise zone credits for your business. Additional information is provided below to help you determine your eligibility.

Check out the Colorado Workplace of Economic Advancement & International Trade (OEDIT) site for a detailed list of company tax credits.
Please keep in mind that business must be pre-approved with the State prior to carrying out an activity that will earn them an Enterprise Zone tax credit. Please take a minute to submit your 2014 electronic pre-certification today!

The State of Colorado recently made changes to the Enterprise Zone pre-certification and accreditation website.

Enterprise Zone Pre-Certification and Certification Application Website
We encourage you to review the User Guides prior to going into the Application Portal. The User Guides step you through the application procedures and will reveal you what info you’ll need to finish the applications.
* User Guide – Pre-Certification *.
* User Guide – Accreditation *.


IMPORTANT MODIFICATIONS CONCERNING THE ENTERPRISE ZONE!
For 2014-2015, there might be considerable changes concerning the Larimer County Enterprise Zone. If you are a Certified Public Accountant, your company has applied for or has actually considered getting, or you just would like to know more about Enterprise Zone Tax Credits, please contact Jacob Castillo, Enterprise Zone Administrator.
For more information about Business Tax Credits, check out these links:

What are the Enterprise Zones in Larimer County?800px-Map_of_Colorado_highlighting_Larimer_County.svg

Larimer County has four subzones:.
Berthoud.
Fort Collins.
Loveland.
Wellington.
________________________________________.
How do I know if my company address is located in the Enterprise Zone?
To figure out if your business address is located within the Enterprise Zone, use this locator map. Enter your full address in the box. If your address falls within the orange shaded area, you are in the zone. (For an example of exactly what an address in the Enterprise Zone resembles insert: “200 West Oak Street, Fort Collins,” in the box.).
________________________________________.
Do I have to do anything special to take the Enterprise Zone Business Tax Credits?
Pre-certification is needed in 2012– If your company will perform an activity on or after January 1, 2012 that may earn an Enterprise Zone business tax credit Pre-certification is required prior to beginning the activity that earns the credit. Click here for details.
________________________________________.
What if I finish the Pre-certification and after that choose not to take the tax credits?
Pre-certification does not obligate you to take Enterprise Zone Business Tax Credits. If you make an application for the Pre-certification and do not make use of the tax credits, you do not need to do anything even more.
________________________________________.

Contribution Tax Credit.

In addition to tax credits for personal companies, the Enterprise Zone Program encourages contributions to non-profit organizations that serve an Enterprise Zone and the population therein.
Taxpayers who make a financial contribution to an approved Enterprise Zone Project may claim a 25 % state earnings tax credit based upon the value of the contribution (as much as an optimal $100,000 credit.) In-kind contributions might likewise qualify the taxpayer to assert a 12.5 % state income tax credit based on the value of the contribution.
To learn more on Contribution Tax Credits, check out these links:.
Contribution Tax Credit Frequently asked questions.
List of Approved Enterprise Zone Projects.

Non-Profit Organizations.

Are you a non-profit company that lies within the zone and/or services a population within the zone and would like to discover how to end up being a licensed Enterprise Zone project?
Please contact:
James Vaughn
Vaughn CPA, LLC
970-667-2123
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Colorado Enterprise Zone Tax Credits

The information listed below supplies web links to the application or process to get credits, CO Department of Revenue FYI Publication and Regulation, and statute for each EZ reward.
After examining these files, you may want to seek advice from a tax expert like a local CPA. You can also get a CO Department of Earnings Letter Judgment for situational responses.
If you would like help with your enterprise tax credits contact one of our local Colorado Tax Advisors – 970-667-2123.
Colorado Enterprise Tax Credit Introduction Table
* FYI Income Rules
Investment Tax Credit (ITC).
3 % of equipment purchases.
Application: Online.
FYI: FYI Income 11.
Laws: EZ Laws.
Statute: C.R.S. 39-30-104.
Task Training Tax Credit.
12 % of certified training costs (new rate 1/1/2014).
Application: Online.
FYI: FYI Income 31.
Policy: EZ Laws.
Statute: C.R.S. 39-30-104(4)
Investment Tax Credit (ITC).
3 % of equipment purchases.
Application: Online.
FYI: FYI Earnings 11.
Laws: EZ Laws.
Statute: C.R.S. 39-30-104.
Task Training Tax Credit.
12 % of certified training costs (new rate 1/1/2014).
Application: Online.
FYI: FYI Income 31.
Policy: EZ Laws.
Statute: C.R.S. 39-30-104(4)
New Staff member Credit.
$1,100 per new task (brand-new 1/1/2014).
Application: Online.
FYI: FYI Income 10.
Policy: EZ Regulations.
Statute: C.R.S. 39-30-105.1.
Agricultural Processor New Employee Credit.
$500 total per new a.p. task (new 1/1/2014).
Application: Online.
FYI: FYI Earnings 10.
Policy: EZ Laws.
Statute: C.R.S. 39-30-105.1.
Employer Sponsored Medical insurance Credit.
$1,000 per guaranteed job (brand-new 1/1/2014).
available for very first 2 years in EZ.
Application: Online.
FYI: FYI Income 10.
Policy: EZ Laws.
Statute: C.R.S. 39-30-105.1
R&D Boost Tax Credit.
3 % of enhanced R&D expenses.
Application: Online.
FYI: FYI Income 22.
Regulation: EZ Laws.
Statute: C.R.S. 39-30-105.5.
Vacant Structure Rehabilitation Tax Credit.
25 % of rehab expenses.
Application: Online.
FYI: FYI Income 24.
Regulation: EZ Laws.
Statute: C.R.S. 39-30-105.6.
Manufacturing/Mining Sales & Use Tax Exemption.
Application: For 100+ Kind DR1192 or Type DR1191 .
FYI: FYI Sales 10 (statewide details).
FYI: FYI Sales 69 (Expanded in EZ details).
Policy: EZ Laws.
Statute: C.R.S. 39-30-106.
Process: No Pre-cert. or Accreditation required
Industrial Car Financial investment Tax Credit.
1.5 % of comm. car purchases.
Application: CVITC Application.
FYI: FYI Earnings 11.
Policy: EZ Regulations.
Statute: C.R.S. 39-30-104.
Process: Commercial Automobile Tax Credit Process.
Contribution Tax Credit.
25 % of Cash Contribution, 12.5 % of In-Kind.
Application: DR0075 form provided by task. See list here.
FYI: FYI Earnings 23.
Regulation: EZ Regulations.
Statute: C.R.S. 39-30-103.5.
Process: Contribution Tax Credit Process.
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Tax Planning, Business Tax Planning, Individual Tax Planning

Tax planning and preparation are two separate activities, but are definitely connected.

Tax planning is the art of thinking out of the box about what your activities are and how they are accepted by IRS. This is mostly about listening to a client talk about their family, there business, their goals, and what they actually do to earn their money. Sometimes a person beleives they are running a business, but in actuallity they do very little; the children may have taken over the business, and the owner is really retired. BING! A possible tax planning opportunity.

After listening, then asking the questions is important. Get to the details on what the business is actually doing, does it manufacture something, when the owner thought it just installed something? These types of details and perspectives are what Tax Planning is all about.

The Tax Planning process then lays out different alternatives and compares them against the true taxes. It should be done for a period of years, projecting what will happen in the coming years. Some decisions may make sense for the first year, only to be a real problem in the second or third year. Depreciation is a good example of this…often a businessman will ask if he should buy a piece of equipment at the end of the year. Might be the right decision and it might give a good tax benefit. But, maybe the next year would need the benefit more, or maybe the method of depreciation should be looked at over a number of years. This is why tax planning and preparation must be done for more than one year.

Once several alternatives are presented, the tax planning has to step back to the business planning. Is the tax saving more than the actual economic cost. To go back to the depreciation question…is the business better off to have that new vehicle than to get by with its current vehicle for another year? Determine the real cost of that tax saving tool, and don’t forget to factor in the cost of capital required to either buy the equipment for cash or the interest on a loan used to buy the equipment.

And it is not just the business that needs to do tax planning. Selling of stocks, taking dividends in cash or stock, maxing out the 401K or planning in a Roth account…all part of the long term tax planning.

Tax Planning is so much more than you probably thought.

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Accounting and Bookkeeping

Accounting and Bookkeeping, what type of person should I be hiring for my accounting-bookkeeping needs?

There are several parts to an accounting and bookkeeping system and one of the best ways to determine what type of accountants or bookeepers you need is to do a flow chart of how the paperwork flows through the office or business. Sit down and draw boxes and lines to show who needs to handle each part of the work.

For instance, say you have a home repair business and the accounting-bookkeeping is just now working out. Flow chart the entire system. First, probably a customer calls in with a job request. A clerical person may take an order, this could create a paper or electronic record (which is best?). A job number may be attached to this accounting and bookeeping record. The tech is then dispatched to the job and when finished, an invoice may be hand or electronically written and given to the customer. This may have the job number attached to it.

Usually, the tech will pick up a check or process a credit card (on his phone) to record the payment and give a receipt to the customer. Then he is off to the next job.

From an accounting-bookkeeping point of view, this transaction has so far involved two people, the order taker and the producer. Now some additional parts need to be added to the system. The job has to be recorded as a sale in the books. The payment has to be recorded as an increase to the cash account. If the payment was by check, someone has to take it to the bank. If parts were purchased to do the work, those have to be recorded as a purchase and then they have to be paid for.

Many transactions like this eventually must be recorded in a set of books, and financial statements and tax returns are produced.

Accounting and bookkeeping are involved in all of these steps and they may be done by one person or each job may have a separate person, depending on the size of the business. It is important to discuss the accounting and bookkeeping flow with your outside, independent CPA to set out your flow chart of tasks so that it includes a system of checks and balances. Maybe the person who took the order should log that order and another person should record the payment. This “segregates” the duties so that there is less chance that one person could pocket the money and delete the transaction all together.

Most people are honest, but setting up your system to encourage honesty and keep those tasks separate is easier if you use that flow chart to show each step in the process.

Once the system is flow charted, you will be able to determine what the skills and background need to be for each task. Often a person calls themselves a “full charge bookkeeper” when they really are a good clerk. A clerk generally takes charge of one area, like paying the bills, whereas an accountant will probably be the one to do the financial statements. Again, your CPA should be able to help you set up the skills needed for each position.

 

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