Tag: compliance

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Why Small Businesses Need Proactive Accounting

It has been demonstrated time and again that businesses working with experienced accounting professionals can benefit from the strategic financial guidance and compliance support they may provide. Yet these factors alone are often not enough to make the business owner happy. For most small business owners and growing enterprise stakeholders, the lack of proactive advice compounded by slow responses to business requests are the primary reasons for leaving their CPA.

Even if they don’t know how to ask for it, small businesses want proactive attention from their accounting professionals. Small businesses want and need to get information when it matters, and they need help deciphering what the information really means.

It is common for professional accounting firms to simply wait for their clients to provide after-the-fact information from which reports are prepared and delivered long after their relevance has passed. These firms often see no sense of urgency in helping clients address the business issues facing them in real-time.

Business owners attempting to grow a small enterprise from their budding small business especially need the benefit of experienced insight into operational metrics, cash flows and overall business performance. Without this meaningful data and advice delivered in real-time, stakeholders don’t really know what is going on or if they’re on the right path.

Advice on business planning and financial strategies should come to business owners from their accounting professionals, but it often does not. It is interesting that so many firms list business planning and strategy among the services promoted on their websites, yet they just sit back and wait for clients to ask for help.

Regulatory and reporting requirements for businesses are ever-increasing, so it makes some sense that many professional practices continue to focus on taxes and compliance work. Firms may find it challenging enough to keep up with changes to these core services provided. Yet this is why practitioners should take notice and accept that their ability to meet changing market and customer demands is wrapped in their ability to leverage technology to do what people and process can’t do alone.

Information technology is needed to speed up the bookkeeping, accounting and reporting processes, and it takes even more technology to help turn data into relevant and useful information. This is where Mendelson Consulting and Noobeh cloud services can help.
Working with businesses of all sizes and encouraging participation by the accounting professional, Mendelson and Noobeh help businesses implement the technology that facilitates faster collection of information throughout the business and then applying solutions that reflect those numbers in ways that helps users visualize the meaning of the data.

Mendelson and Noobeh help CPAs and accounting professionals remove threats of competition and irrelevance by helping them work closer with and deliver greater value to their small business clients. Applying proven, innovative technologies with improved processing methods and controls leads to better information provided in a timelier manner, which returns to the client as a better result offering greater insight. This is what small businesses want from their CPA, and Mendelson Consulting and Noobeh Cloud Services helps professionals deliver it.

jm bunny feetMake sense?

J

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QBonAzure: QuickBooks on Microsoft Azure Delivers Great Success for Small Business


For any business, the resilience and agility of IT systems can mean the difference between performing adequately and performing with great success. When a business elects to run their QuickBooks applications and data on the Microsoft Azure cloud via QuickBooks on Azure (QBonAzure) from Noobeh, they gain numerous advantages not available with locally installed IT.

Microsoft Azure is a highly available platform, meaning that it has built-in redundancy to ensure that applications and data are always accessible, even in the event of a hardware failure. Businesses running on the platform never have to worry about whether or not their server is aging and may fail due to hardware issues.

The platform also allows Noobeh to easily scale each client’s system up or down as needed, without the need for additional installation work. This allows each client business to quickly respond to changes in demand and grow their operations as needed.

With Microsoft Azure, Noobeh can provide from a broad range of security features that are built-in as well as enhancing protection with advanced features and services from Azure, Microsoft 365 and more. This all goes to help protect against data breaches and unauthorized access to sensitive information.

Azure has a global footprint, with data centers in multiple regions around the world. Noobeh provides services from all US-based Microsoft Azure regions, allowing businesses to host their QuickBooks in the location closest to their users, reducing latency and improving performance.

Azure also offers a wide range of services that may be integrated with QuickBooks or other business data, such as analytics, artificial intelligence, and machine learning. This allows businesses to gain deeper insights into their financial data and make more informed decisions.

For businesses focused on compliance, Azure meets a wide range of industry standards and regulations, such as HIPAA, SOC 2, and PCI DSS. This can help businesses meet their compliance requirements and avoid penalties.

Overall, hosting QuickBooks on the Microsoft Azure platform can provide businesses with high availability, scalability, security, global reach, integration, and compliance advantages that can help them run their operations more efficiently and effectively.

Noobeh cloud services and QuickBooks on Azure utilize only the Microsoft cloud for their client deployments so that each business client has the benefits of big enterprise technology without the big enterprise price.

jm bunny feetMake Sense?
J

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‘Tis the (Filing) Season – Time for W2s and 1099 Reporting

1099-santa-hatEvery year-end brings with it not just the holiday spirit, but also the underlying dread felt by small business owners – a creepy and back-of-your-neck hair-raising feeling associated with annual business tax reporting and filing. That old saying about “death and taxes” has a lot of validity to it; sometimes they feel like the same thing to a small business owner. And this is the filing season. Ho ho ho.

The reporting requirements for small businesses seem to be growing at a rapid pace, and business owners are struggling to find the information and tools that ease the adjustment to increasingly burdensome reporting and compliance. The IRS has implemented a number of measures to increase tax revenues and enforce compliance, including stricter 1099 reporting requirements. With information provided at both ends of the “transaction” it is easier to identify those discrepancies which trigger audits.   With this type of business intelligence, the IRS has developed a fairly strong weapon to combat non-compliance, so small business owners need to really pay attention (the IRS is).  If the feds are tooling up, then business owners should, too.

Just to add to the seasonal festivities, make sure you upgrade your accounting software in time to benefit from the right rules and forms. If you run a small business and keep most of your information on spreadsheets (still? really?), that’s OK because there are solutions available which draw the information from spreadsheets, eliminating the need to re-enter data. Seriously, though, you should consider using actual bookkeeping or accounting software.

It is also important to remember that payroll tax filing dates for W-2s and 1099 forms were changed for 2016 taxes, and these changes continue for 2017. The filing deadline for 2017 W-2s and 1099 forms (including Form 1099-MISC) is January 31, 2018, which is a month earlier than the pre-2017 filing date. Thankfully, the deadline for providing W-2 forms to employees and 1099-MISC forms to other workers for 2017 has not changed. This deadline is still January 31, 2018. 

Using a cloud-based service to file 1099s online should be something your business considers doing if it isn’t already. Because most services include form and feature updates, users don’t have to go looking for the right documents or worry that they are using an outdated form.  In an online or hosted solution, users benefit from updates without downloads and get stricter security around their data than would likely be present on their own PC.  As it relates to your accounting software, make sure it has the capabilities you need in this area and don’t settle for limited functionality.

Here are some features you’ll want to look for in your e-filing solution this year:

  • The ability to print and/or mail forms to recipients as well as e-filing forms directly with the IRS or SSA
  • Have Form 1096 or W-3 automatically calculated and transmitted electronically with the detail forms
  • Upload volumes of data with Excel templates or import from your accounting software (saves time and reduces input errors)
  • Store data securely and provide full access to filed forms for multiple years
  • Maintain payer and recipient records securely for use year after year.
  • Encrypt data upon submission and keep it encrypted throughout the entire process
  • Supports 1099 Corrections (should allow filing of corrected forms regardless of how the original form was filed)
  • Accountants, Bookkeepers and Tax Preparers should be able to set up multiple payers and file on behalf of many clients from a single account, even filing for all clients at once or via batch submission

Year-end tax filing, especially dealing with 1099s and W2s, is an arduous task for most small businesses and their professional service providers, yet it is one of those things that simply can’t be put off.  Where there is a single income tax return there could be literally hundreds of associated 1099s or W2s to file.  1099 filing in particular has become more of a focus as authorities crack down on contractor versus employer classifications and seek to develop easier identification of audit candidates (something every business owner wants to avoid).

The point of the discussion is that there are cloud-based tools which are highly useful, feature rich, and very affordable… and business owners and their accountants or bookkeepers would be wise to take a look rather than assuming that the general accounting software will do the trick this year and the next.  Remember that tax filing season is an annual event, and being able to rely on a consistently useful solution can make the season a bit merrier (or at least a little less stressful) for all.

jmbunnyfeetMake Sense?

J

Hi! I was looking for the Frangos.

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Report Right or It’ll Cost You (double)

Report Right or It’ll Cost You (double)

paper-stackReporting requirements for business just keep growing, and so do the penalties for doing it wrong.  New this year and just in time for the annual reporting season (makes it sound almost fun, huh?) are new forms to file and an increase in penalties for not making an effort to get the information correct and into the hands of the proper recipient. Failure to file by the due date can cost businesses $250 per item, up to $3,000,000 in penalties ($1,000,000 for small businesses).  Add to that the warning about intentionally not filing or having an “intentional disregard of the requirements to furnish a correct payee statement”, which carries a penalty of at least $500 per payee statement and has no maximum penalty. Clearly, the cost of making sure the information is correct and filed in a timely manner is far less than the cost of not getting it done – or done right.

Growing problems around wage and revenue reporting have caused the IRS to pursue a variety of measures over the years to try to improve information reporting.  The Affordable Care Act has also had quite an impact on wage and benefit reporting, increasing reporting requirements substantially.  From the introduction of health plan reporting on W2s to the new mandatory forms 1095-C and 1094-C (for applicable large employers), businesses of all sizes are feeling the pressure.

February 2016 marks the date when employers and healthcare providers are required to file those shiny new IRS information returns regarding employer-provided healthcare coverage, providing a copy of the return to each employee much like a W2. The information would then enable the IRS to enforce rules established under the Affordable Care Act by revealing whether an individual might be eligible for a premium tax credit, or if an employer may be subject to non-compliance penalties. Penalties for failing to comply essentially double in 2016.  And the IRS suggests that a “good faith effort” standard will be applied to information reporting, offering no relief for employers that fail to make the effort to file timely and correctly.

It wasn’t very long ago that 1099 filing requirements expanded substantially, forcing businesses to get far more detailed in their production of information to the IRS and to payment recipients.  While this filing requirement impacted businesses both large and small, most lived through it (with the help of their trusted accounting professional!) and were able to comply.  That effort informed the IRS on a wide variety of business payments and expenses not previously tracked, in particular payments made for services and non-employee compensation.

The increasing scrutiny of wage and earning information may also help in efforts to curtail tax refund fraud.  Identity thieves use stolen (or borrowed) social security numbers to file false tax returns early in the year. Unfortunately, with the IRS motto of “pay first, prove later” the cross checking won’t likely be done until after the refund check has been sent. Once the task is performed, however, the taxpayer could end up getting a letter from the IRS stating that more than one tax return was filed using the social security number, they owe for a tax year for which they did not file a return, or the IRS indicates that wages were reported from an employer the taxpayer doesn’t know.

The IRS expects tax refund fraud to top $21 billion by 2016, which is an increase of 223% from 2013 numbers. Tax refund fraud costs every taxpayer.  No wonder the IRS is getting tougher with the penalties for not filing information returns accurately or on time.

jmbunnyfeetMake Sense?

J

Following is the text from the IRS, which outlines the “Increase in Penalties for Failure to File Correct Information Returns and to Provide Correct Payee Statements — 31-JUL-2015

L. 114-27, section 806, increased penalties for failure to file correct information returns and provide correct payee statements for information returns required to be filed after December 31, 2015.

Penalties are discussed in Section O in the General Instructions for Certain Information Returns. The penalties in the bulleted list under “Failure To File Correct Information Returns by the Due Date (Section 6721)” are revised as follows.

  • $50 per information return if you correctly file within 30 days (by March 30 if the due date is February 28); maximum penalty $500,000 per year ($175,000 for small businesses).
  • $100 per information return if you correctly file more than 30 days after the due date but by August 1; maximum penalty $1,500,000 per year ($500,000 for small businesses).
  • $250 per information return if you file after August 1 or you do not file required information returns; maximum penalty $3,000,000 per year ($1,000,000 for small businesses).
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Payment Card Roll Call: “Not Present” fraud likely to increase as EMV takes hold

Payment Card Roll Call: “Not Present” fraud likely to increase as EMV takes hold

rollingballNo retailer wants to become the next Target (pun intended).  Payment card fraud costs businesses and consumers billions of dollars every year.  What’s even more frightening, many of the breaches in the news are the result of innocent participants inadvertently granting access to the bad guys.  The Target breach in 2013 exposed the data of 110 million payment cards.  Hackers got into the network using perfectly good credentials of the HVAC company.  Sometimes password security just isn’t enough, which might bring in to question the security of all those SaaS subscriptions and online shopping sites folks use these days.

EMV chip technology, the standard around the world which has just recently become a standard in the United States, has done a lot to stem the tide of credit card fraud in other countries.  As it was implemented in various countries, guess where it pushed the fraudsters?  Where the anti-fraud technology wasn’t, of course! The United States was among the laggards in requiring EMV chip technology for payment cards, opening the door for bad guys and turning the US into a veritable haven for credit card fraud, “accounting for nearly 50% of global fraud losses, according to the Nilson Report[1]”.

EMV chip (or chip and pin) technology will go a long way to prevent credit card fraud for businesses accepting payment cards… in-person and counterfeit card fraud, anyway. Online retail, on the other hand, not so much.  A chip on the card doesn’t really help when the transaction is completed with the card not present (CNP).  Some industry analysts suggest that CNP fraud losses will exceed $6 billion within the next few years, making e-commerce and online payment security a high stakes game for even the smallest of retailers.  As it gets more difficult to hack the payment system when the card is presented, bad guys will fall back in even greater numbers to the card-not-present model to find their victims.

Online retailers and service providers must take additional steps to secure their systems and protect customers and business partners, and face the challenge with the understanding that effort must be ongoing as new threats emerge. Tokenization is a prime method of layering the system with security, making the merchant system somewhat less of a worthy target by not storing the card data in the system.  Even if the system becomes compromised, the bad guys wouldn’t find customer payment card information.  There are numerous other steps a business can take to secure the CNP sales, including applying behavioral analytics which might identify rogue activities, or using 3D Secure to authenticate a cardholder’s identity at the time of purchase.   The point is that CNP fraud is likely to spike as EMV technology takes a firm hold in the US.

Card fraud is already escalating rapidly for ecommerce retailers and other card not present channels – it didn’t take EMV to start on that roll but it will surely give it a push.  Paperless payment systems, SaaS subscription services and online application service usage are increasing dramatically and there’s no chip to get in the way of these transactions.  Sellers of any and every service utilizing online payments need to now pay particular attention to system and information security.  The risk has always been there, and EMV chips and other shifts in pay card technology simply give it a push.

jmbunnyfeetMake Sense?

J

 

[1] Chipping away at Credit Card Fraud with EMV; Information Week Tech Digest powered by Dark Reading, Nov 2015; NilsonReport http://www.nilsonreport.com/publication_newsletter_archive_issue.php?issue=1071

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EMV and Retail – Your Trusted Advisor Should Be Advising You about This

EMV and Retail – Your Trusted Advisor Should Be Advising You about This

EMVChipCardThere is ‘big change a comin’ for retailers, merchants and any business that accepts credit cards for payments, and there are a great many businesses that are completely unprepared for it.  The change, what is being referred to as the “Payment Networks’ Liability Shift”, goes in to effect in October 2015 and places the burden of liability for fraud squarely on the shoulders of the merchants and card issuers who are not compliant with certain payment system security standards.  Accounting professionals and Trusted Advisors – here’s one of those things you should be helping your clients with.  Help them get informed, trained, and prepared.  Help them to understand the risk and decide on a course of action.  This is part of what makes a trusted advisor: they got your back.

The way things generally work in the US today, a fraudulent charge on a credit card is likely to end up being covered by the credit card company (the issuer). Starting in October, retailers are supposed to be able to accept payment cards with EMV chips (named for the founders of the standard: Europay, MasterCard and Visa), and must process those cards using the compliant technology that takes advantage of what the chip processing and security offers.  If these conditions aren’t met – like having a POS or payment terminal not capable of reading the EMV chip – the merchant is on the hook for the fraudulent transaction.  Given the volume of credit card and payments fraud in the country you’d think that most merchants would already be ready for this, but replacing all the POS and terminal equipment could be pretty costly.  It may take a bit of analysis to understand the real risk and compare that to the cost of compliance.  Certainly it makes sense to always be in compliance, but there are always factors which influence how quickly (or how completely) compliance may be met.

The liability shift is part of the influence being leveraged to get businesses to adopt newer and more secure models of electronic payment acceptance and processing.  It is simply the case that the magnetic strip on a credit card isn’t good enough any longer.  The new EMV Chip reading payment terminals require that the card be inserted and processed by the terminal rather than simply swiping the magstrip across a reader.  Over 40 years of using the magstrip approach has helped to earn the United States a top spot on the leaderboard for credit card and financial fraud, and we seem to be lagging behind in adoption and implementation of the EMV technology even though it has been shown to seriously curtail fraud even as payment card usage increases.  The EMV chip process, which encrypts information about the card so that even the local POS system doesn’t get access to it, is far more secure and is being widely adopted and used in Europe, Canada, Latin America and the Asia/Pacific regions.  Now the clock is ticking for US businesses to get ready to either update their systems or accept the liability for not doing so.

The shift in how payment cards are made and processed is simply one of many changes which will continue to occur as technology and human ingenuity continue to be applied in both good and not-so-good ways.  Recognizing that the pace of change is increasing, businesses must find ways to remain informed and prepare for those changes which will impact the business operation and sustainability.  This is among the essential roles the trusted advisor plays, and the current imperative simply underscores the growing need for such advisors by business large and small.

jmbunnyfeetMake Sense?

J