The Brass Tacks

Income Tax Book Store Online

We have a book store online featuring American and Canadian tax books that we use for reference in our income tax preparation. Visit the new Howland Tax Services Book Store today!

Use Receipts, Not Statements

Credit card or bank statements are generally not adequate documentation of your expenses. You will do better in an income tax audit if you back up your expenses with receipts.

Many self-employed taxpayers mistakenly assume that they don't need to keep receipts, since they purchase everything with a credit card and save their statements. There are some items that you probably do need to use statements to document (i.e. the interest expense on a business credit card, or items purchased in a foreign currency), but everything else should be backed up with receipts.

Imagine the work an auditor must do to verify expenses from your credit card statements:

• It is often difficult to determine whether an expense item is personal or business in nature.
• The description lines on a statement are short and hard to decipher.
• Businesses often use nicknames for their credit card invoicing, making it even more difficult to figure out what an expense line is really for.
• The auditor must thumb through all your statements for the year to add up how much you spent in any one category, and he/she must suffer through this chore for each of your expense categories.

In the event of an income tax audit, you want it to be as easy as possible for the auditor to verify your expenses! Receipts, totalled up with a printing calculator, are the best way to document your expenses. All the auditor needs to do is thumb through the receipts and compare them to the printed tape. Anything that makes the auditor's job easier will be more likely to produce a successful outcome for you.

...Brad Howland

Be Nice To Your Accountant

Guest Author: Frances McGuckin

There seems to be a serious misconception that accountants can survive on no sleep for four months, work eight days a week, 30 hours a day, and not make mistakes–all for a small and reasonable fee. Get your taxes in early and make your accountant's life a lot easier!

Accountants are mostly very nice people. It's not their fault they sometimes appear a little stoic or dry. Think about it: if you spent seven years or more studying this profession, you'd probably become a little dry and staid yourself. It's a lot for the brain to digest, and accountants have a huge responsibility to their clients. Their life consists of number-crunching and shoe-box-sorting, one hand attached permanently to the adding machine, the other on the keyboard or telephone. Accountants have to be serious. Would you appreciate your accountant cracking a joke when you are being told you are going bankrupt?

As every January approaches, accountants prepare themselves for the four-month onslaught of paperwork which must be assembled, processed to perfection, and depleted by the April 30th tax deadline. Do you, the taxpayer, ever stop to think about how much trauma these poor people go through? As the deadline approaches, the latecomers line up in droves, clutching their piles of miscellaneous mountains of triplicate T3s, T4s, T5s, and all that other official paraphernalia.

When all is said and done, accountants are only human, although they are expected to create god-like miracles with tax returns, wondrously changing taxes due into healthy refunds. If there are taxes to pay, of course it is the accountant's fault, don't you agree? There also seems to be a serious misconception here that accountants can survive on no sleep for four months, work eight days a week, 30 hours a day, and not make mistakes—all for a small and reasonable fee.

You may notice that as the tax deadline approaches, you could well be greeted by smiles forced through gritted teeth, accompanied by monosyllabic type conversations and outsized sighs of despair. If you have acute hearing, you will probably hear some under-the-breath, rambling mutterings as you leave the office. Other signs of ATTSS (Accountant's Tax-Time Stress Syndrome), are the slamming of telephones in client’s ears after 10 p.m. phone calls from late filers. This is not to be confused with office doors slamming after late clients leave, or messages on the accountant’s answering machine, informing clients that they are in Tahiti when they call at 11 p.m. on a Sunday evening.

Trembling hands, black, baggy eyes, nicotine-stained fingers, coffee dribbles on clothing, and nervous twitches are all identifying signs of accountants who suffer from this annual affliction. Most of these symptoms are a direct result of clients leaving their year-end until the last minute, then presenting the whole shooting match in the proverbial grocery bag—unsorted of course—and demanding a refund.

Accountants survive on a different diet than do Ordinary People. A Real Accountant needs five to six pots of coffee a day, half a bottle of Stress pills and assorted vitamins, two cartons of cigarettes, a two-for-one pizza order, and at least half a bottle of premium scotch followed by Valium chasers. If these important daily dietary requirements are not met, your accountant will not survive this crucial time of year. There is no available time allocated in the daily agenda for sleep as this process is extremely time consuming and the stand-down pay is lousy.

You can easily identify an accountant on May 1st. Take a trip to the airport and study the departure areas for destinations such as Alaska, Iceland, Tahiti, Barbados, the Caribbean, Tibet, or Australia. You will notice a long line-up of hunched and ragged robotic-type excuses for humans stumbling to the check-out counter. Fifty-five percent of all passengers are accountants. Then check the bookings for the most desolate and isolated fishing or health resorts in the interior. Fifteen percent of the accountants will be heading for a hideaway in the bush.

Twenty percent of the accountants fly to Reno or Las Vegas, preparing to gamble away your accounting fees with great delight and fiendish glints in their eyes.

Sadly though, if you check the admissions to private and mental health institutions, five percent of the accountants will be newly registered. Last but not least, the obituary column will reveal the whereabouts of the final five percent of this loyal, devoted, and sometimes dying breed.

But you—yes you—can help change these sad statistics. Visit your friendly accountant in early January with all your paperwork in neat, organized, and legible order. Stop our Canadian dollar being so heavily invested into other countries on accountants’ recuperative vacations. Reduce mental health costs, and stop the unnecessary trauma of accountants’ funerals and family grief. Make your New Year's resolution now—always be nice to your accountant, get your taxes in early, and don't gripe about your accounting bill.

Related Web Sites

SmallBizPro.com
"Helping people and businesses realize and achieve their maximum potential."

Small business expert and small business author Frances McGuckin is internationally recognized as the "SmallBizPro." An award-winning motivational small business speaker, consultant, columnist, and best-selling small business author, Frances' books are published globally.

Reprinted from Business for Beginners: A Simple Step-by-step Guide to Start Your New Business, with permission from the author. Copyright © Frances McGuckin 2003.

Bookkeeping Methods for the Self-Employed

My tax clients often ask me: "What's the best way to keep our books and records?" Of course, everybody is different, and the same method won't work for people with different skills. After thinking about it for a while I realized that an overview at Howland Tax Services of various bookkeeping methods might be useful for many people!

Happiness is Paying your Taxes

CBC reported on June 15 that "paying taxes can make citizens happy." The source of the article was purportedly a study done at the University of Oregon and published in Science magazine. I hope the nice folks who set our income tax rates didn't see this!

I think there may something to it though. I do find that when I make my quarterly installment payments there is a feeling of satisfaction from knowing that what's left of the money sitting in my bank account is all mine. However, that feeling fades pretty quickly, and is usually completely gone by the time the next bill arrives.