Tim Yoder, Ph.D., CPA

You can enter, track, and pay bills in FreshBooks from the Bills page under the Expenses menu. Use the New Bill form when entering a new bill, and track unpaid bills either from the Bills page or by running an A/P aging report. When it’s time to pay the bill, simply locate that bill on…

Prior to reconciliation, it’s essential to classify imported expense transactions in FreshBooks—which involves navigating to the Expense page, locating the transaction, and reviewing and properly classifying that transaction. You’ll then need to match the imported transactions with the entries in your FreshBooks; and when you’re ready to reconcile, head to the Accounting page, set your…

Income tax in the US is complicated and—of course—very unpopular. Rich or poor, most people feel they pay too much and others aren’t paying their fair share. I’ve compiled some tax facts and statistics to shed some light on how the tax system spreads the tax burden among individuals of varying income levels as well…

Business vehicle depreciation is severely limited for cars, smaller SUVs, trucks, and vans with an unloaded weight of under 6,000 pounds. Any vehicle with a personal-use nature is listed property, which eliminates section 179 and bonus depreciation and reduces MACRS depreciation to straight-line if the business use is 50% or less. Considerations for Business Vehicle…

The expense recognition principle is a fundamental concept in accounting that dictates when a business records its expenses. It is also known as the matching principle, which emphasizes presenting a clear picture of a company’s financial performance by matching revenues with the expenses incurred to generate those revenues. For instance, say you buy inventory for…

Self-employed small businesses—or sole proprietorships—must pay federal income tax, self-employment tax, and sometimes, additional Medicare tax on their Schedule C income. By studying various combinations of self-employment income and other income reported on the same return, we find that most small businesses have an effective tax rate between 14.13% and 37.00%. Self-employed taxpayers with wages…

Partnerships and multimember limited liability companies (LLCs) are two popular business types for operating a business with multiple owners. While a partnership is easier and less expensive to form, an LLC offers liability protection and has flexibility in choosing how to be taxed: A partnership is the default tax classification for any business with two…

The alternative minimum tax (AMT) is a parallel tax system with fewer deductions but lower tax rates than the regular income tax system. It is a parallel tax system in the sense that taxpayers must calculate their tax liability under both the AMT system and the regular tax system and pay whichever liability is higher….

The IRS considers deductible travel expenses to be any ordinary and necessary expenses you incur while traveling away from home on business. To get tax deductions for travel expenses, the trip must have a business purpose and be temporary (less than one year) and you must be away from your tax home for a length…

Calculating business income for tax purposes starts with accurate bookkeeping throughout the year to have a reliable income statement. Once you have your income statement, you need to do an extensive search for other sources of income, unclaimed tax deductions, and potential tax credits that can offset your tax. It’s a lot of work, but…

Generally, limited liability company (LLC) taxes are reported as a sole proprietor on Form 1040 Schedule C if there is only one owner or on Form 1065 as a partnership if there are multiple owners. Sole proprietors and partnerships are flow-through entities, so the income is taxed on the owner’s tax return. However, it may…

Accounting is a $133 billion industry in the United States. In addition to providing great career opportunities, accounting firms provide small businesses with much-needed support, such as financial audits and tax compliance services. They also stepped up in a major way during the COVID-19 pandemic, with almost 80% of firms providing COVID-19-related consulting services. To…