Browsing articles in "The Shoe Box Blog"

Small Business Bookkeeping: Social Security Wage Base Increases

Nov 2, 2011   //   by Gina Lynd   //   Small Business Bookkeeping, Tax, The Shoe Box Blog  //  No Comments

Legislative Updates

Social Security Wage Base Increases for 2012

On October 19, 2011, the Social Security Administration announced that the 2012 Social Security contribution and benefit base will be $110,100. This is $3,300 more than the base of $106,800 which has been in effect the last three years. The Social Security Old-Age, Survivors, and Disability Insurance (OASDI) program sets an annual maximum limit (called the contribution and benefit base) on the amount of earnings subject to the Social Security OASDI tax. Employers must deduct Social Security taxes from their employees’ pay and contribute to Social Security taxes themselves on total OASDI-covered wages paid to each employee, up to the annual OASDI contribution limit. The OASDI limit typically changes each year with changes in the national average wage index.

In contrast to the OASDI limit, there is no limit to the wages subject to the Medicare tax. In 2012, all covered wages will remain subject to the 1.45% Medicare tax. Employees and employers must pay the Medicare tax based on total Medicare-covered wages.

The 2011 OASDI tax rate is 6.2% for employers and, as a result of the Tax Relief Act of 2010, 4.2% for employees. The 2012 OASDI tax rate for employees is scheduled to be 6.2%. However, there are various proposals currently under consideration in Congress which, if adopted, would reduce the OASDI rate for 2012 below 6.2%, for both employers and employees. If Congress takes no action, the 2012 OASDI rate will be 6.2% for employees and employers. Should the 2012 OASDI rate be 6.2% for employees and employers, the maximum Social Security tax each employee will pay and each employer will pay per employee is $6,826.20.


This content is subject to change and is provided solely as a courtesy and should not be construed as tax or legal advice.   ADP 2012

Small Business Bookkeeping: Legislative Change Regarding Late Filing Penalties

Oct 10, 2011   //   by Gina Lynd   //   Small Business Bookkeeping, Tax, The Shoe Box Blog  //  No Comments

Legislative Change Regarding Late Filing Penalties
Senate Bill 1 Special Session
Article 14 (Effective Oct. 1, 2011)

Beginning with reports originally due on or after Oct. 1, 2011, certain taxpayers will be assessed a $50 penalty when a report is filed late under a new law passed by the 2011 Texas Legislature. The penalty will be assessed regardless of whether the taxpayer subsequently files the report or whether any taxes or fees were due from the taxpayer for the period covered by the late-filed report. The $50 penalty is due in addition to any other penalties assessed for the reporting period.

As always, a report must be filed for each reporting period even if no tax is due.

Taxes or fees affected by this provision are:

  • 9-1-1 prepaid wireless emergency service fee;
  • fireworks tax;
  • franchise tax;
  • hotel occupancy tax;
  • maquiladora export tax;
  • mixed beverage gross receipts tax;
  • motor fuels tax;
  • motor vehicle gross rental receipts tax;
  • motor vehicle seller financed sales tax;
  • sales and use tax (including direct pay); and
  • the off-road, heavy-duty diesel equipment surcharge.

For details about these changes, please visit Publication 98-918 – Late Filing Penalties (PDF) on our website, Window on State Government.


Texas Tax Deadline

Oct 6, 2011   //   by Gina Lynd   //   Small Business Bookkeeping, Tax, The Shoe Box Blog  //  No Comments


Due to the Bastrop fires, personal tax return deadline has been extended until 10/31/11.


Shoe Box Books


Small Business Bookkeeping – Keys to Cash Management

Oct 3, 2011   //   by Gina Lynd   //   Small Business Bookkeeping, The Shoe Box Blog  //  No Comments
Keys to Cash Management 

Cash is king, and many small businesses are in danger of running out in today’s slumping economy. Business owners continue to struggle to find cash flow strategies that will help them survive the recession. Recent research suggests companies both large and small are still struggling to stay financially viable. The stakes are high and decisions critical, so what can you do to keep your business afloat?

Manage Risk

Managing accounts receivables is one of the key strategies for keeping the cash flowing. What can you do to speed up customer payments? More than you might think. According to Pam Krank, president of credit risk and receivables management firm The Credit Department Inc. in West St. Paul, Minnesota, the most important step is to negotiate favorable terms up front in the sales process. Don’t be afraid to ask for money up front in the form of a deposit or a retainer. Enforce your terms by immediately calling customers when invoices are past due. What should you do if a customer is experiencing cash flow problems? One option is to create formal payment notes with interest and agree to do all future business on a cash basis.

Understand Cash Needs

Cash flow projections are an important tool in understanding the cash flow needs of the business. Some recommendations to improve cash flow management:

  1. Create cash-flow projections with best-case and worst-case scenarios.
  2. Focus on understanding short-term cash needs.
  3. Ensure accurate estimates of income taxes.
  4. Keep sufficient cash reserves in the business.
  5. Understand line of credit terms and conditions including compliance ratios.
  6. Establish a line of credit when you don’t need it.

Understanding your financial position is a key component in having a successful business and managing cash flow. Determine the company’s break-even point to better understand how long you can stay in business and to proactively identify financing needs. 

Conserve Cash

Conserving cash is a key strategy for weathering the recession. Many businesses are operating with a cost structure that can’t be supported by soft revenues.

Business owners need to act quickly and dramatically to adjust their cost structure to match revenue. They need to be willing to make difficult decisions, such as reducing personnel, to ensure the business remains viable. Review expenses with a fine tooth comb; everything has to be on the table. Ask vendors for discounts or request an extension of terms. Lay off employees or freeze wages, if necessary, based on projections. Work with your financial advisors to help you remove emotion from the process and to be more objective when slashing expenses.

Prevention is often said to be the best medicine, and it holds true for cash flow as well. Strong financial controls, informed management of risk, decisive leadership, and open communication with financial advisors can help you to reduce the risk of cash-flow problems. Never lose sight of your cash flow. Review a statement of cash flow report monthly, if not weekly, to understand your financial position. Don’t sell your way out of this economy—cash flow your way out.

Cash Flow Tips:

  1. Act quickly and aggressively to conserve cash by reducing expenses.
  2. Shift resources to profitable areas, and discontinue unsuccessful products or services.
  3. Negotiate favorable payment terms with customers before the sale.
  4. Ask for money up front in the form of a retainer or deposit.
  5. Research the credit history and financial health of customers before the sale.
  6. Don’t stock pile inventory without sales.
  7. Provide timely and accurate financial reports to your bank.
  8. Understand the terms and conditions of your line of credit.
  9. Create cash-flow projections for best-case and worst-case scenarios.
  10. Keep sufficient cash reserves in the business.
©2011 Wells Fargo Bank, N.A. All rights reserved.


Aug 24, 2011   //   by Gina Lynd   //   Credit Cards, The Shoe Box Blog  //  No Comments

See what these rules mean for you

By now, you have heard about the new laws (the Credit CARD Act of 2009 and revisions to Truth In Lending) that brought many changes to the credit card industry. These changes apply to all consumer credit cards, including retailer credit cards.

A number of additional new changes took effect on August 22, 2010. Here‘s what you can expect to see with your credit cards, including retailer branded credit cards.

Limits on Penalty Fees

Penalty fees will not exceed $25 for the first violation, and $35 for any additional violation of the same type that occurs within the next six billing cycles.

In any case, you will not be charged a late or returned check fee which exceeds the actual minimum payment due.
Example: If a minimum payment due of $38 is late, the late fee for the first violation will not exceed $25. If a minimum payment due of $19 is late, the late fee amount will not exceed 19.

You can only be charged one penalty fee for the same event.
Example: If a payment is made late AND the check used to make the payment is returned unpaid, either a late fee OR a returned payment fee could be charged, but not both since fees are the result of the same event (a payment).

Review of Annual Percentage Rate (APR) Increases

In general, increases to the Annual Percentage Rate (APR) must be reviewed every six months and lowered if the factors which caused the rate increase have changed. Although the rate does not have to return to the rate that existed immediately before the increase, the reduction would be applied within 45 days of the review.

Here’s what you see on your credit cards, including retailer branded credit cards, based on changes that took place in early 2010.

Your monthly credit card statement has changed.

Account statements are easier to read and give you more information at a glance, including:

  • The estimated time it will take you to pay off your balance by making only the monthly minimum payment due.
  • The amount you’d need to pay each month to pay off your balance in about 36 months.
  • Summary of fees and interest paid year-to-date.
  • An easy-to-understand late payment warning describing the potential impact of late payments.

More advance notice.

  • You receive a minimum of 45 days notice before any significant change in account terms is made to your account.
  • If you decide you don’t want to accept the change of terms, you can cancel your card prior to the effective date of the new terms.

Limitations on interest rate changes.

  • Interest rates cannot be raised on existing balances, except when:
      • You have an introductory rate, a promotional rate, or a special payment arrangement that expires.
      • You have a variable rate on your account.
      • Your payment is more than 60 days past due.
    • Otherwise rate increases will only apply to new transactions.

    Predictable due dates.

    • Your payment due date is the same day every month.

    Avoid pay-by-phone fees.

    • It doesn’t cost you anything to make payments through our automated phone system.
    • You’re only charged a fee if you speak to a customer service representative to make a payment the same day.

    Time to review your statement.

    • You have a minimum of 21 days between the day your statement is mailed and your payment due date.

    Amounts over the Minimum Payment Due are generally used to pay off higher rate balances first.

    • Any amount paid in excess of your minimum payment due each month will be paid to your highest interest rate balance first.
    • The only exception to this is the 2-3 billing cycles at the end of a deferred interest promotion. During this time we will apply any payment in excess of your minimum payment due to your expiring promotion. This will ensure you continue to have the best opportunity to pay your promotional balances before expiration.

    No over-credit limit fees.

    • Pay no over-credit limit fees when you exceed the credit limit on your card.
    • Be mindful that any transaction that will cause your balance to exceed your credit limit may be declined and would still be due in full on your next billing statement.

    Protection for those under 21.

    • Young adults under the age of 21 must provide an independent ability to repay along with their written or online application for credit or requests for credit line increases.

    Easy access to card agreements.

    • Samples of credit card agreements are posted online.
    • If you want a copy of your individual card agreement, you can request it either via a web site or a toll-free number.

    What can I do to get more information?

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"Gina was very helpful getting our personal taxes in line. She was able to look through what I had collected over several years and help me decide what to do. She also had good ideas about how to keep better records to make life easier in the future."

- Chris Rowe, Austin, TX

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