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Archives for March 2022

How to Automate Email Reminders for Overdue Customers

March 20, 2022 by Admin

Largo CPA FirmOne way to keep your company’s cash flow positive is by sending email reminders to overdue customers. QuickBooks Online can automate this.

Most small businesses struggle with cash flow. How do you get customers to pay by the due date, or at least not long after? We’ve written about some of the possible solutions. Accept credit/debit cards and direct bank payments. Send statements regularly. Offer a discount for early payment if it makes financial sense for you.

QuickBooks Online offers another tool for accelerating incoming payments: automated reminders. If you set these up, you won’t have to spend so much time keeping up with past-due remittances. It’s easy to do, and you can personalize your messages. You can even do this manually if you come across an individual customer who needs a nudge.

What about reminders for yourself? QuickBooks Online doesn’t come with a to-do list that you can use to enter tasks that must be done. But there are still ways to tie a digital string around your finger so you don’t fall behind on your own critical chores.

If you feel like you’re being too intrusive by sending out payment reminders, think about how you feel when you receive one yourself. Often, a financial obligation has simply slipped your attention. You want to maintain a good working relationship with your vendors, so you might even welcome such an email or letter.

Setting Up the Automation

To get started, click the gear icon in the upper right corner. Under Your Company, click on Account and Settings. Click the Sales tab and scroll down to Reminders. Click the pencil icon way over to the right to open the options here, then click the on/off button next to Automatic invoice reminders to activate them. Click the down arrow next to Default email message for invoice reminders to open the template.

If you’ve ever done a mail merge, this will look familiar to you. QuickBooks Online replaces the text in [brackets] with data from your company file. So it will prepare an email for every customer that is past due and replace the bracketed content with your own customer and company names and invoice numbers. Of course, you can choose not to personalize the emails, but it’s likely to be more effective if you do. Everything in the template can be edited, and you can check a box to have a copy sent to you.

Below this email template are three reminder-scheduling blocks. Click the button next to Reminder 1 to turn it on. You’ll see that you can set up a reminder to go out to customers either on the due date or a specified number of days (3, 7, 14, 30, or 90) before or after.

QuickBooks Online checks the due dates for your invoices and will automatically send the email reminder out to everyone who meets the criteria. If a customer record has an email address in it, a reminder will be dispatched even if you didn’t send the original invoice through email.

To set up additional, different reminders, you can do so in the Reminder 2 and Reminder 3 blocks. When you’ve finished, click Save. You can always go back in and edit these. To see who received reminders, click on Sales in the left vertical toolbar, then Invoices. The word Reminded should appear in the Status column.

If you’d rather dispatch reminder emails manually, you can do so in QuickBooks Online. With the same Sales | Invoices screen open, click on the down arrow next to Receive payment at the end of the row and select Send reminder. If you want to send reminders to multiple customers, click the box in front of each name to create a checkmark. Click the down arrow next to Batch actions right above the table and select Send reminder.

Reminding Yourself

We wish that QuickBooks Online had a reminder feature like QuickBooks Desktop does, that greets you every time you launch the software and displays tasks that need to be done. But there are still ways to remind yourself that invoice and bill payments are running late. You just have to make a habit of checking certain data screens regularly. For example, you should be visiting:

  • The Business Overview element of the home page. There’s an Income graph that shows you how much money is tied up in overdue invoices (and open invoices).
  • The Invoices and All Sales screens that you can see by clicking on Sales in the left vertical toolbar.
  • Reports, like Accounts receivable aging detail, Open Invoices, Unbilled charges, and Unbilled time.

If you just started using QuickBooks Online this year and are struggling with it, we’re available to set up training sessions and answer questions. And, of course, we’re always here for longtime users, too. The COVID-19 pandemic is still affecting a lot of small businesses, and we understand you may be facing difficult issues. If we can help you better use QuickBooks Online to manage your finances, please contact us.

Filed Under: QuickBooks

Starting a Side Gig in 2022? Your New Tax Obligations

March 16, 2022 by Admin

Woman Working At Desk In Busy Creative OfficeIt’s not just self-employed individuals who must pay estimated taxes. Here’s what you need to know.

W-2 income tax withholding isn’t perfect. You’ve probably had years when you owed more than you expected to on April 15. Or you were pleasantly surprised to receive a sizable refund. The idea, of course, is to try to come out as even as possible. You can usually do this by adjusting your withholding when you experience a life change like taking on a mortgage or having a baby.

Income taxes are also pay-as-you-go for self-employed individuals – or at least they should be. If you’re striking out on your own by starting your own small business in 2022 or you’re simply taking on a side gig to improve your finances, your tax obligation will change dramatically. Your income will not be subject to employer withholding every week or two. In most cases, you’ll get it all. But the IRS expects you to pay estimated taxes on that income four times a year.

Who Else Must Pay?

There are other situations where you’ll be expected to make quarterly payments. In fact, the only individuals who aren’t required to pay estimated taxes (besides W-2 employees whose withholding is on target) are those who meet all three of these conditions:

  • You owed no taxes the previous tax year (line 24 on your 2021 1040—total tax—is zero, or you weren’t required to file a return).
  • You were a resident alien or U.S. citizen for all of 2021.
  • Your 2021 tax year covered a 12-month period.

tax tips

You’ll find your total tax for 2021 on line 24 of the Form 1040. Notice, too, that line 26 asks for 2021 estimated tax payments.

There are numerous situations where individuals who have payroll taxes regularly withheld on their income may still be required to submit quarterly estimated taxes. For example, did you receive income from rents or royalties? Dividends or interest? Income from selling an asset? Gambling?

If you have an employer who withholds taxes, but you don’t think you’ll be paying enough given the deductions and credits you might receive, you need to plan for estimated taxes. Self-employed individuals are almost always required to submit them.

Special Rules for Some

As with all things IRS, there are many exceptions to the rules regarding estimated taxes. For example, there are special rules for:

  • Fishermen and farmers.
  • Some household employers.
  • Certain high-income taxpayers.
  • Nonresident aliens.

How Do You Estimate Your Quarterly Taxes?

That’s the hard part, especially if you’re new to the world of estimated taxes. There is no magic formula, no way to calculate to the penny what you’ll owe. You’re basically making an educated guess. Since you won’t know for sure what changes to the tax code will be put in place until the end of the year, you can’t be absolutely certain that you might get a particular credit or deduction.

But you know roughly what your income will be for a given quarter once you’re nearing the end of it. Do you have a lot of business-related expenses? Keeping track of those is critical, as they’ll offset your income. If you don’t, you’ll have to budget for a heftier quarterly payment. And you must keep in mind that you’ll be paying self-employment tax – that portion of your income taxes that your employer used to pay.

Once you’ve been self-employed for a full tax year and have seen what your tax obligation was, it will be easier to estimate in subsequent years. But you may have a difficult time your first year.

How Do You Pay Estimated Taxes?

tax tips

Individuals and business that had to pay estimated taxes in 2021 submitted the Form 1040-ES four times. If you’re self-employed in 2022, you’ll need to submit similar vouchers with your payments, unless you’re paying online.

If you’re self-employed and you anticipate owing $1,000 or more in taxes on your 2022 income, you’ll need to file quarterlies using IRS Form 1040-ES vouchers (available on the IRS website) along with a check or money order. There are also ways to pay online using a credit or debit card or direct bank withdrawal. Corporations would file the Form 1120-W if they expect to owe $500 or more.

Estimated taxes for the 2022 tax year are due:

April 18, 2022 (January 1-March 31, 2022)

June 15, 2022 (April 1-May 31, 2022)

September 15, 2022 (June 1- August 31, 2022)

January 16, 2023 (September 1-December 31, 2022)

A Challenging Task

Estimated taxes are not precise. And it may be difficult to set aside money for them if your income is not where you’d like it to be. But as you might expect, the IRS will levy penalties on you if you don’t.

Year-round tax planning can help you in this critical area. We’ll be happy to set aside time to consult with you about estimated taxes. We’re also available to do tax preparation and to look at how your taxes fit into your overall financial situation. Contact us soon to get a jump on the 2022 tax season — or to finish up 2021.

Filed Under: Business Accounting

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