The Blog Of TL Wall Accounting

Archive for August, 2015

A Way To Pay Your Bills On Time

Here at T L Wall Accounting, one of the things we talk about helping people with is paying their bills. A part of that is helping people budget their money, personally and professionally. Another part, which we don’t talk about all that often, is setting up processes to pay your bills.

Did you know that you can set up every single monthly bill you owe to be paid automatically through your bank? It’s not only a way to make sure your bills get paid each month, but it puts you in better control of your money than allowing a third party to take money directly out of your account. That might not be an option when it comes to things like life insurance, but in general everything else can be set up that way.

Depending on the bank, it can be a pretty easy process, although in many cases people feel more comfortable having someone else help with it. As long as who you have to pay has an account number it can be done. Many people pay their mortgages this way, along with things such as utility bills, car insurance, cable… everything.

Once it’s set up, you can always go online and change the amounts at any time, since it’s accessed the same way you access your bank account. For instance, say you and your spouse or partner make payments on something and one of you pays more than normal at some point. If you have the ability to skip a payment or make a reduced payment for one month, you can adjust it easily. Also, suppose that you’ve gone over your data usage on your smartphone and they’ve imposed a penalty, then you could go in and adjust the payment to make it higher.

Your payment will go out on whatever date you tell it to. It might take up to 3 days before it registers as a payment for some vendors, but for most they’ll see it in a day, even if it takes a few days to clear. No mess, no fuss, and no more late payments.

If this is something you’d like to do and you’d like some help with it, feel free to ask us to help you.

Why You Should File Your Corporate Taxes

This is a true story of someone we know regarding corporate taxes and why it’s important to file them.

This particular person has some interesting breaks that most people don’t get. He’s retired from the military so he gets tax breaks. He’s also retired from a state job so he gets a few other breaks. He gets his military pension and is only a couple of years away from adding his pension from the state, as well as going on Medicare.

He’s also in business for himself, a S-corp instead of a C-corp, a photographer as well as doing a few other things to make money. He’s not rich by any means, but being incorporated and former military, he qualifies for a lot of tax breaks.

The problem? Because he knew that if he filed his taxes he would qualify for a refund, he didn’t file on time, figuring that any penalty would be taken out of his refund. He was good with that. He was so good with it that he went more than 2 years without filing. He told his accountant to file an extension for him, figuring that would alert the IRS and the state that he wasn’t ignoring them. Yet, he never made a payment and didn’t pull his papers together for his accountant for more than two years.

When he was finally ready and had everything together, his accountant wasn’t ready. It was after tax season, but accountants do more than taxes. So he had to wait another month before his accountant could look at his paperwork.

What happened? My was partially correct. Because of all his tax breaks he basically “pushed”. In other words, he didn’t get a refund because of the lateness but he didn’t owe much either; around $25. That sounds like a pretty lucky deal doesn’t it?

It wasn’t. Turns out there are penalties for not filing one’s corporate taxes. After 60 days, there’s an automatic $100, and it’s added monthly. On top of that are penalties and fees that can eventually reach 47.5% interest, especially if personal taxes weren’t filed either; unfortunately, these things usually go hand in hand.

This guy went from the possibility of a refund to owing the IRS more than $5,000, and the state more than $2,200. His accountant filed the taxes finally, but he wasn’t in a position to pay even a small portion, let alone the full amount.

Luckily, both the state and the IRS allows you to get on a payment plan, which he’s going to do. He’s also planning on making sure to file his taxes next year to take advantage of his tax status, but unless he’s fully paid up he’ll end up with the state and federal government keeping whatever he might have gotten back.

It’s a double edged sword when it comes to paying one’s taxes, even if you know you’re getting a refund. We can’t stress enough how important it is to at least file your taxes on time so you can avoid penalties, whether you owe or not. The penalties are never worth it, as this gentleman realized.