QuickBooks Top 5 Tipsfor Effective Bookkeeping

Our QuickBooks Team can provide you with customized training, support, tips & more

Tammy Bryant & Julie Spiegel785-537-2202www.varney.com

Profit & Loss Setup

• Setup income accounts based on tax reporting

• Use sub-accounts if you want more details

Profit & Loss Setup

• Setup expense accounts based on tax reporting

• Use sub-accounts if you want more details

1099 Tracking

• Setup of vendors using proper names

• Enter addresses

• Check the box if you know they are eligible for 1099

• Obtain W-9s & enter Tax IDs

1099 Tracking• Use 1099 Wizard –

Vendors – Print/e-file 1099s

• Vendors should already be selected from previous setup

• Warnings of missing vendor information

• Map vendor payment accounts

Structure of Loans

• Create Liability Accounts for each lender

• Create sub-accounts for each loan per lender

• Break out principal payments vs interest

• Separate mortgage interest from other interest

Segregate Personal Items

• Use Other Income and Other Expense Account Type

• Setup accounts for itemized deductions for Sch A reporting

Reconcile, Reconcile, Reconcile

• Bank Accounts

• Credit Cards

• Loans

Reconcile, Reconcile, Reconcile

• Pay attention to outstanding items – might be duplicates, errors, things that need voiding, etc.

• Difference should always be zero when done

Thank You!

Contact us today to explore options on cleaning up your QuickBooks. We look forward to working with you!

Tammy Bryant & Julie Spiegel785-537-2202www.varney.com

Top 5 Tax Tips

Do you have the RIGHT financial partner for your farming, ranching or agribusiness operation –someone who understands the agricultural industry?

Julie Spiegel & Tammy Bryant785-537-2202www.varney.com

Depreciation

• Section 179 - $500,000 (2016)/$510,000 (2017) new and used with 15-year life or less (permanent – indexed for inflation)

• 50% Bonus – unlimited on new assets with 20-year life or less (2016 and 2017). Percentage declines in 2018-19; gone after 2019

(NOTE: Machine sheds qualify)

• Asset lives:

Depreciation (continued)

HRA

• An HRA is a Health Reimbursement Arrangement

• Two examples:• Farmer employs spouse as only employee: Rather than taking

deduction of health insurance premiums on front page of tax return (limited to farm net income), allowed to deduct health insurance and out-of-pocket medical expenses on Schedule F –lowers net income and reduces self-employment tax

• Farm businesses with multiple employees: Offers employee attractive benefit package. Tax free benefit to employee and tax deductible expense to business

Classification of Livestock

How you account for livestock makes a difference!

• Raised livestock• Example: Calf sales• Report on Schedule F – ordinary income

• Breeding livestock• Raised breeding livestock held at least 24 months is eligible for

more favorable capital gains tax treatment (0% or 15% typically)

• Purchased breeding livestock has been depreciated and is subject to depreciation recapture and taxed at ordinary gain rates

• Report on Form 4797 – capital and ordinary gains

Repair Regulations

• New guidelines issued in 2014 – taxpayer friendly

• In 2014 and 2015, a de minimis safe harbor was created to expense amounts below $500

• In 2016, IRS increased the $500 de minimis safe harbor threshold to $2,500 per unit of property.

• Applies per invoice or per item

• Must be substantiated by invoice

• Election must be made annually on the filed tax return

De Minimis Safe Harbor

Repair Regulations

• Safe Harbor - less than $200 can be expensed

• Incidental (Not Inventory and consumed in 12 months or less)

Materials & Supplies

Repairs• Taxpayer can deduct amounts paid for repairs and maintenance to

tangible property as long as not required to capitalize as an improvement.

• Recurring activities expected to keep a Unit of Property (UOP) in ordinary operating condition

• Cleaning, inspection, testing, replacing parts

• (i.e. annual maintenance on tractor or combine)

Repair Regulations

• Betterment• Corrects a material condition or defect• Makes it materially more efficient or productive• (i.e. modify farm equipment to do same thing better)

• Restoration• Makes an asset like new again after the end of its class life• Replace major component or substantial structure• (i.e. 15-year old tractor – restore engine)

• Adaptation• Adapts tangible property to a new or different use• (i.e. convert old barn to office space)

Improvements

Cash versus Accrual accounting

• Cash basis – report income when received and expenses when paid• Most farmers report cash basis accounting on tax return• Examples: Prepaids can be expensed; contract grain and

insurance claim proceeds can be deferred to a future tax year; credit card charges are considered expensed when charged (not when paid); fixed assets are based on when placed in service (not when paid).

• Accrual basis – report income when earned and expenses when incurred• Benefit: Better management reporting and overall picture of

operations

Thank You!

Contact us today to explore options on becoming financial partners. We look forward to working with you!

Julie Spiegel & Tammy Bryant785-537-2202www.varney.com