Why are Churches Tax Free?

Tax Free Church Deductions Exempt Donate

Tax-Free Church

In the United States, for many years churches have been exempt from income taxes. The tax exempt status of churches is part of the reason why we receive deductions when we donate to churches. This is because churches and religious organizations generally operate like charities because they provide to those who are in need and also to society in general. Many also believe that churches are tax exempt because of the constitutional provision which requires that we separate church and state. Separating church and state is the government’s way of keeping its hands off of religious organizations.

While most churches are naturally tax exempt, they must follow the criteria listed below in order to be able to qualify 100 % for exemption.

Criteria:

  • Distinct legal existence;
  • Recognized creed and form of worship;
  • Definite and distinct ecclesiastical government;
  • Formal code of doctrine and discipline;
  • Distinct religious history;
  • Membership not associated with any other church or denomination;
  • Organization of ordained ministers;
  • Ordained ministers selected after completing prescribed study;
  • Literature of its own;
  • Established places of worship;
  • Regular congregations;
  • Regular religious services;
  • Sunday schools for religious instruction of the young; and
  • Schools for preparing its members.

Still not sure if your church qualifies for tax exempt status? Contact one of the CPAs in our office or simply leave your questions in the comment section below. We are available to help you in any manner we can to ensure you are getting the tax credits and deductions you need.

Image credit: Gary Ullah

How to Avoid Tax Scams

Scam Tax Avoid IRS Security Accountant CPA

Avoiding Tax Scams

With tax season coming to an end, many consumers are now trying to pull themselves out of some of the worst tax scams they have ever experienced. Some are finding out first hand what it feels like being scammed during tax season while for others it is a constant reminder that you have to make sure you are careful during tax season.

According to a report issued by the IRS, thousands of people have lost millions of dollars due to ax scams and fake IRS communications in recent years. Below are popular scams and how you can avoid them:

You Are Under Arrest

One of the most popular IRS scams to date, is when individuals pose as officials from the IRS to notify you that you are under arrest for not paying your taxes. Please note that the IRS will never call you to tell you that you will be arrested so don’t ever feel pressured to give away personal information over the phone. Once you hang up call 911.

We Need Your Social Security Number

Another popular IRS scam is having people pose as IRS officials to ask of your social security number. Once again, the IRS will never call you over the pone and ask you to disclose personal information such as your social security number especially not over the phone.

Downloading Unknown Software

Receiving an email to download unknown software is by far one of the oldest tricks in the book. Don’t ever download any software from unknown users because it may be an attempt from an online thief to steal your information.

The best and easiest way to avoid unknown IRS scammers is to know that the IRS will only contact you via mail and in rare cases via phone. If you are ever in doubt if a communication is coming directly from the IRS, call your local IRS and ask. While it may make you feel crazy for asking if they’ve called it’s always better to be safe than sorry.

Image credit: Sole Treadmill

Qualities of a Successful Accountant

Successful Accountant Qualities Tax Hire

Qualities of Successful Accountants

If you be a business owner of any kind, you have probably found yourself wondering at some point or another if, in fact, you should hire an accountant. While deciding to hire an accountant in most cases should be a no-brainer – especially if you don’t know what you’re doing in terms of business accounting – some people seem to have a problem justifying any of the business decisions they make.

Sadly, this often means if business owners can’t justify a business decision, they just don’t make it. If you’re not one of those people trying to talk yourself out of hiring an accountant then you’re someone who sees the value of one, which is great.

Now you’re probably wondering what qualities a successful accountant should have. Here are just a few traits:

Knowledgeable

Knowledge truly is powerful, especially when one is knowledgeable about the industry they work in. In order to work with a successful accountant, they don’t necessarily need to know everything there is to know about accounting; however, it is important that they have enough knowledge to be able to help you guide your business to success.

Timely

Time is money, especially if you are hiring an accountant by the hour. One of the greatest things you can do for your accountant is make sure you have your documentation prepared and organized before you ask them to step in. The more you do on your own, the more you can maximize your time with your accountant.

Attentive

Being attentive is another great quality of an accountant. This comes in handy during audits. You want to make sure your accountant has a keen eye for mistakes and be trained to point them out, not overlook them. Overlooking mistakes could be one mistake that costs you not only in your finances but could land you in jail.

Image credit: perzonseo.com

How Accountants Can Help You in Your Personal Life

Accounting Personal Life Hire Accountant CPA

Accounting & Your Personal Life

Though accounting may seem like it’s exclusively for accountants, the reality is that accounting can be useful for many different types of people. Accounting can even be helpful in your personal life. According to reputable data, roughly 4 out of 10 Americans live paycheck to paycheck. This means that there is a sizable percentage of the population which struggles with financial literacy and can benefit from some knowledge of accounting principles.

Learning even the most basic of principles can help you not only manage your money more efficiently but can also help you see when you are spending money the wrong way.

Cultural Shifting

When many of us were growing up, it was a common practice to carry a checkbook and balance it as you spent money. In today’s society, people are writing checks less and less frequently and are now commonly having to balance checkbooks on the go. That is, people are balancing checkbooks on the go in cases where they even have checkbooks at all; it’s quite commonplace these days for people to manage their finances without a physical checkbook at all.

Electronic Banking

Many people now use alternative methods such as online bill payments, automatic monthly withdrawal, and debit cards for purchases and for cash withdrawals. Electronic banking has made it harder to keep your eyes on your finances, and this makes an accountant even more important.

Counting the Ways

Curious to know what other ways an accountant can help you personally? Here are a few:

  • When you’re about to start a new job
  • After you Get Married
  • After You Have a Baby
  • Right Before Tax Time

In what other ways do you think it’s valuable to have an accountant? Leave your comments below.

Image credit: Jenni C

What Your Accountant Needs To Do Your Taxes

Accountant Items Business Owner Tax

Tax Items

Tax season can be one of the most stressful times for your company. It is stressful for a plethora of reasons, but mainly because suddenly you have to look Uncle Sam neatly in the face and hope that you handled things correctly throughout the year.

For many small businesses, tax season is the only time that hiring an accountant sounds reasonable, and it is only during this limited window that accountants are able to clean up the mess you have created throughout the year. If you be one of those businesses which only hires an accountant during tax season, it’s important that you equip them with the items required to do your taxes. Below are just a few items you’ll need when hiring an accountant to do your taxes:

  • Financial Statements
  • List of Capital Asset Activity
  • Vehicle Log
  • Office Expenses
  • Other Sources of Income

While most accountants may ask for other documentation, the above items are a great place to start, especially if you’ve never hired an accountant before. You will want to make sure that you provide them with more than enough information to ensure that they’re able to help you lessen the stress load which inevitably comes during tax season.

What other items have you found to be helpful when hiring a new accountant? Share those additional items in the comments below and help another business owner have a less stressful tax season.

Image credit: Alan Cleaver

Why Your Accountant Uses a Balance Sheet

Balance Sheet Liability Asset Finance Company Business

Balance Sheets

Once of the most important tools you will ever see your accountant use is a balance sheet. A balance sheet is a financial statement which gives an accountant insight at any given time as to what exactly your business is worth. The overall purpose of the balance sheet is to help the company determine where they stand financially for both tax purposes and also for business purposes.

In a well-conceived balance sheet, you will be able to identify the total number of assets a company has as well as the amount of equity. Unfortunately, balance sheets cannot show everything; however, they do a great job at showing increases and decreases in revenue.

What Does a Balance Sheet Look Like?

A traditional balance sheet generally has two sides which are required to balance each other out. For example, if you have a company and you decide to withdraw a $1 million loan from the bank, your assets would increase to $1 million but your liabilities will also increase because they have to balance each other.

Simple Equation

The formula of the balance sheet is quite simple: assets = liabilities + owner’s equity. The balance sheet literally has the power to provide a snapshot of your company’s accounts at any given time. This sheet, combined with your income and cash flow statements, can be a critical piece of documentation, especially for investors.

Defining Terms

So what exactly are liabilities and assets? Well, it’s quite simple. An asset is property owned by a person or company, regarded as having value and available to satisfy debts, commitments, or legacies. A liability is defined as a company’s financial debt or obligations which arise during the course of its business operations.

Image credit: www.cafecredit.com

Hiring an Accountant vs. Finance Intern

Accountant Professional CPA Finance Intern Employee Hire

Accountant vs. Intern

When many companies first begin, they often struggle with whether or not they want to hire full-time employees or pursue the alternative route and only hire interns. While interns are a great asset to any and every business, you have to know when to draw the line and know when to hire a full-time employee or an intern.

Below are just a few of the pros of hiring an accountant as opposed to an intern:

More Experience

Let’s face it. I know every business is looking to save money, so instead of hiring a full-time employee, many companies resort to hiring interns. While you may save money, hiring a full-time employee means you’re hiring someone with more experience. The more experienced your team, the more chance you have of avoiding mistakes.

Quality Assurance

Quality assurance is almost guaranteed when hiring a professional accountant. You don’t have to worry about micro managing an accountant like you would an intern, and so you save yourself a considerable amount of time and energy.

Trustworthy 

When you hire a full-time accountant, you should never have to worry about constantly having to look over your shoulder or having to see what your employee is up to; instead, you should have the confidence that the individual you hired can be trusted with their expert knowledge.

Have you found hiring a full-time accountant to be more cost effective than hiring a full-time finance or accounting intern? We want to hear about it. Leave your comments below.

Image credit: Markus Spiske

Three Secrets You Should Never Keep From Your Accountant

Secret Knowledge Know Accountant Finances

Secrets Your Accountant Needs to Know

Having an accountant can sometimes be a gift and a curse. Oftentimes, people view accountants as babysitters because they often ask you to keep them up to date with all things related to your finances. While this may be an annoying practice, most accountants generally do this to make sure you’re not making poor financial decisions which could later put your business in jeopardy. Open communication with your accountant is critical, especially when working with a new accountant, and it’s best to understand that your accountant isn’t trying to control your life but is trying to help you keep control of your finances.

Below we have listed three secrets you should never keep from your accountant:

Money Spending Habits

Do you spend money just as quickly as you get it? This is something that your accountant needs to know about to make sure he or she is properly monitoring your habits. Again, this isn’t to put a constraint on your finances, it is designed to make sure that you’re not making bad decisions which could ultimately impact your business or your personal finances.

Past Debts

The past may be the past, but sometimes your past can come back and haunt you. In fact, sometimes the past can be so daunting that it rains into your future. Because of this, you will want to make sure your accountant knows about all of your past debts, especially those you have yet to pay off.

New Debts

Did you just take out a loan or get a new credit card without notifying your accountant? Think again. Anytime you open up a new credit line or loan, your accountant should probably be the first to know. This again will help ensure that you’re not making emotionally driven decisions.

What other things should your accountant know? Leave your comments below.

Image credit: Alex Wellerstein

Five Critical Mistakes Small Businesses Make When Hiring an Accountant

Accountant Accounting CPA Hiring Business Small

Hiring an Accountant

Hiring an accountant can be a challenge, especially if you’ve never hired an accountant before. There is no “how to” guide on hiring a suitable accountant, and sometimes we can make bad decisions based on poor information. Below are five critical mistakes small businesses regularly make when hiring an accountant. If you’re in the market – or will be in the market in the near future – for an accountant, do your best to avoid making these potentially costly mistakes.

Not Checking Qualifications

Thanks to software programs such as QuickBooks and Turbo Tax, just about anyone can call himself or herself an accountant these days. Because of this, you will want to check the qualifications of your accountant. You can do this by checking with your local accounting association to see if your accountant is a certified member. While being certified is not a necessity, it could raise flags if your accountant says they have a certification and they really don’t.

Not Checking References

Just because someone is an accountant doesn’t mean they are the right accountant for you. Ask for references when hiring an accountant and actually call them. Determine what kind of accountant they were for previous customers and also find out about their character. Some of the best advice you can get on a new hire can be found in former employers.

Hiring Too Soon

Despite the widespread idea that you should hire an accountant as soon as you start a business, there is such thing as hiring too soon. Too soon could mean hiring an accountant before you have the money to pay him. You want to make sure you actually have funds allocated to paying for your accountant because they can’t work for free.

Hiring Too Late

Just like you can hire an accountant too early, you can also hire one too late. Hiring too late means hiring an accountant after you have gotten your business into a heap of trouble and suddenly need someone to pull you out. You should never hire an accountant as an emergency solution.

Hiring For the Wrong Reasons

Believe it or not, there is such thing as hiring an account for the wrong reasons. Some people hire an accountant just because they think it looks good for the company or some other fluffy reason. Your accountant should always bring something of value to the table.

What other mistakes can businesses make as it relates to hiring an accountant? Leave your comments below.

Image credit: morseinteractive.com

Do I Need a CPA to Prepare My Taxes?

Financial CPA Business Owner Changes Tax Preparation

When to Hire a CPA

Whether or not you should hire a CPA to prepare your taxes can be a difficult question to answer. In fact, many experts suggest that there can be pros and cons associated with hiring a CPA; weighing these pros and cons is important, but it’s also important to know the time periods and circumstances during which a CPA will be a particularly valuable asset. Here are some good indications that you need to hire a CPA:

When You Own a Business

If you are a business owner of either a small, medium or large business, you may want to consider hiring a CPA to prepare your taxes. Your CPA will help you make sure that you’re not only filing accurately, but that you’re not mixing your personal taxes with your business taxes.

New Home Owner

Are you a new home owner? Your tax filing will probably look much different than it did before you became a home owner. Because of this, you’ll want to make sure if you have a home office you hire someone who knows how to help you get all of your major deductions.

Major Life Changes

Major life changes can be hard to navigate, but they can be even harder to navigate when you’re filing taxes. Major life changes may include, but are not limited to: getting married, losing a job, getting divorced, having a child, getting a new job and a plethora of other things.

Failure to Pay Taxes in the Past

If you have struggled to pay taxes in the past, you may owe lots of back taxes. This cannot be managed alone and you may want to hire a CPA to help you make sure you’re in over your head in IRS debt.

Image credit: Dominic Alves

Next Page »

  • Huddleston Tax Accountants / Huddleston Tax CPAs – Redmond, WA
    Certified Public Accountants Focused on Small Business
    8201 164th Ave NE Suite 200 / Redmond WA 98052
    425-483-6600

    Huddleston Tax CPAs & accountants provide tax preparation, tax planning, business coaching,
    QuickBooks consulting, bookkeeping, payroll, offer in compromise debt relief, and business valuation services for small business.

    We serve Tukwila, Auburn, Federal Way. We have a few meeting locations. If you are looking for a Redmond CPA firm, get in touch with us! Call to meet John C. Huddleston, J.D., LL.M., CPA, Lance Hulbert, CPA, Grace Lee-Choi, CPA, Jennifer Zhou, CPA, or Jessica Chisholm, CPA. Member WSCPA.