STS Tax Talk

Tuesday, July 10, 2012

STS QuickBooks Tips - Backup or Portable Company File? How to Decide

When you think about it, it's pretty amazing that Intuit is able to pack the lion's share of your financial data into one giant company file. It certainly makes it easier to separate from QuickBooks and move when necessary.

There are actually three options for saving and relocating that file. You know about backups, since you should be producing them religiously. You generate them so that if QuickBooks -- or your computer itself --- stops working or your file becomes corrupt, you can re-create the entire environment. Portable company files are more limited, and are best used when you want to save your file to a temporary location and/or email it to someone else.

You would only use an Accountant's Copy, of course, when you want us to check your progress. We'll work with you on setting this up.

Figure 1: Once you save and send off an Accountant's Copy, you can't work on transactions created before the dividing date.

The Critical Backup

We can't emphasize this enough: Losing your financial data can be the beginning of the end of your company. You won't know what you're owed, so you'll be unable to collect. You'll miss vendor payments. Payroll will be impossible to reconstruct, and you won't be able to submit payroll taxes. And how will you know what your income tax obligation is?

It can happen to you.

QuickBooks simplifies this process. Click File | Create Backup You'll be asked whether you want to back up locally -- to a network folder or thumb drive, for example â€“ or to the cloud, using Intuit Data Protect (fees apply). If you select the local preference, click on Options to designate a location in this window:

Figure 2: Choose from options in this window to create a backup profile.

Click OK, then Next. QuickBooks will ask when you want to save your backup copy and offer scheduling options. When you're done, click Finish.

Warning: If you're using Intuit Sync Manager, there are special rules about copying the company file. Let us help you handle this safely.

Just the Facts

Portable company files are more compact than backup files, so they can be easily e-mailed as attachments or copied onto another computer. But they don't contain everything that backups do. They lack, for example, letters, logos, attachments, images and templates. Don't use this option if changes will be made, since they can't be merged back into the file.

Be sure to create a current backup before you begin to move your file.

To save a portable company file, click on File | Create Copy (you can do this to copy any kind of file, actually). This window opens:

Figure 3: Click File | Create Copy to access any of QuickBooks' three options.

Select Portable company file and click the Next button. In the following window, you'll browse to a location for your file. QuickBooks will already have entered the name and will save your data in .qbm format. Click Save, then OKwhen QuickBooks tells you it must close and reopen your file first. Click OK again when you're told that the file has been created.

Opening the File Elsewhere

When you're ready to open the file at another location, click File | Open or Restore Company In the window that opens, select Restore a portable file. The Open Portable Company File window opens; make sure that the file's location is displayed in the Look in: field. Click Open. QuickBooks then asks where you want to restore the file.

The following step is critical. Rename your file unless you want to overwrite your current company file. You can add a date or some other identifying information like a version number.

Click Save. QuickBooks will convert your portable file to a standard company file with a .qbw extension.

QuickBooks makes it easy to create copies of your data, but an error here can threaten your company's future. We can help ensure that that doesn't happen. We are your QuickBooks ProAdvisors & financial partners, and we are here to help. Give us a call today.

Security Tax Services LLC

North Sound South Sound

2802 Wetmore Ave, Suite 212 33530 1st Way S, Suite 102

Everett, WA 98201 Federal Way, WA 98003

425.339.2400 253.237.0751

fax 425.259.1099 fax 253.237.0701

www.securitytaxservices.com

Monday, July 9, 2012

Ten Things to Know About Capital Gains and Losses

- Did you know that almost everything you own and use for personal or investment purposes is a capital asset? Capital assets include a home, household furnishings and stocks and bonds held in a personal account.

When you sell a capital asset, the difference between the amount you paid for the asset and its sales price is a capital gain or capital loss. Here are 10 facts you should know about how gains and losses can affect your federal income tax return.

1. Almost everything you own and use for personal purposes, pleasure or investment is a capital asset.

2. When you sell a capital asset, the difference between the amount you sell it for and your basis -- which is usually what you paid for it -- is a capital gain or a capital loss.

3. You must report all capital gains.

4. You may only deduct capital losses on investment property, not on personal-use property.

5. Capital gains and losses are classified as long-term or short-term. If you hold the property more than one year, your capital gain or loss is long-term. If you hold it one year or less, the gain or loss is short-term.

6. If you have long-term gains in excess of your long-term losses, the difference is normally a net capital gain. Subtract any short-term losses from the net capital gain to calculate the net capital gain you must report.

7. The tax rates that apply to net capital gain are generally lower than the tax rates that apply to other income. For 2012, the maximum capital gains rate for most people is 15 percent. For lower-income individuals, the rate may be 0 percent on some or all of the net capital gain. Rates of 25 or 28 percent may apply to special types of net capital gain. These rates are set to expire on December 31, 2012. Starting in 2013 the maximum rate is scheduled to increase to 20 percent (10 percent for taxpayers in the 15% bracket).

8. If your capital losses exceed your capital gains, you can deduct the excess on your tax return to reduce other income, such as wages, up to an annual limit of $3,000, or $1,500 if you are married filing separately.

9. If your total net capital loss is more than the yearly limit on capital loss deductions, you can carry over the unused part to the next year and treat it as if you incurred it in that next year.

10. In 2011, a new form was introduced (Form 8949, Sales and Other Dispositions of Capital Assets) to calculate capital gains and losses and list all capital gain and loss transactions. Subtotals are then carried over to Schedule D (Form 1040), where gain or loss is calculated.

Give us a call us if you need more information about reporting capital gains and losses. We are your financial partners, and we are here to help. Give us a call today.