Kindergartners With A Credit Card?

"Good, better, best. Never rest until good be better and better best."
- Mother Goose

Google tells me that Mother Goose didn’t actually exist — but she sure was smart, eh?

We’re heading into spring … and just a couple weeks remain here in tax season. I do hope that, by now, you’ve taken the steps to be in touch with my office, and that we’re already working on your file.

Next week, I’ll have some advice for "procrastinators" (you know who you are!), but needless to say — let’s not have you be in their ranks, ok?

In my Strategy Note this week, I’d like to address moms and dads. We’ve seen many parents in our offices these last few months, and I’ve asked a few of them how they handle finances with their young children. Well, many parents have no plan for training their children how to understand, and handle finances.

I’d like to help you fix that. We’ve put together some strategic advice to help you raise financially literate children, in hopes that by the time they reach adulthood, they’ll be contributing to your family economy — rather than draining it!

Let me know what you think …

[And again--drop us a line to get in our queue ... and send your friends our way! We reward generously for referrals because they always end up being our best clients.]

John Curtin’s
"Real World" Personal Strategy
Money Lessons For Young Children

Perhaps I’m biased, but I believe that it really is never too early to start teaching your children about good money habits. Obviously, by doing so, you are preparing them for the uncertain future. You’re also establishing a family culture, wherein money is handled with maturity and openness.

But the best news is that helping them to develop these habits can be fairly simple! I’ve put together some basic steps — many of these may not seem like rocket science, but my job is to be a coach and a goad for you to do the things which you already may "know" to do!

1) Give them an allowance–with strings. Don’t just give them an allowance for doing nothing — this actually defeats the purpose! You can buy your young children whatever they ask for, so they don’t need spending money. Instead, see an allowance as a training tool: your children should learn that money is earned by working. Believe it or not, this isn’t an obvious connection for a young child! Because a kindergartner truly is able to help with small chores around the house, you can put them to work and let them earn their allowance this way. Rather than seeing it as a bribe, or some sort of indentured servitude, this is a critical knowledge base for a young child.

2) The old lemonade stand. Encourage this! And do it with adult supervision. Your child will learn how to make a product, market it and sell it. While the idea is to teach good money habits, they are also learning valuable life lessons — nothing sells itself, after all.

3) Saving and investing. Rather than showering your young child with gift after gift, encourage them to go through the process of working towards a savings goal. You can always supplement this process, but having your child save up for an item will teach them that nothing comes for free. In return, children also learn that the items you buy them have real value and should be treated as such.

This might, even, cut down on those "negotiations" so familiar to parents who bring their children into stores!

4) Cold, hard cash. A lot of children nowadays are so used to seeing parents pay with debit and credit cards that they may not know what actual money looks like! This is a new-generational issue, and it’s important that your children learn that money is more than a mouse click, or a card swipe. Show your kids the different types of money – coins, bills, etc. and tell them the monetary amount for each.

When you go shopping, let your child have a try at paying for certain items. This will help them feel quite grown up, and again — they see that transactions don’t just happen, they cost.

What about you? How have you gone about introducing your children to money? I’d be interested to hear some other tactics, and may share them with the list next week.

But until then, I remain your kindly tax professional — out to save the world from unnecessary taxes … and from young adults still living on Mommy/Daddy credit!

To You and Your Family’s Peace of Mind!

Media Contact Information

Details for Appointments at John S Curtin CPA Chartered

Direct Contact:

John S Curtin
Phone:(410) 203-2201
Email: john@curtincpa.com

John’s Availability

* Located in Ellicott City, MD
* Office Hours: Monday – Friday, 8am – 4:30pm
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Understanding Social Media and How It Can Help Your Small Business

The internet has given the small business owner unprecedented access to inexpensive and powerful marketing tools.

You certainly have heard of Twitter and FaceBook but are you aware of how these are being used to help small businesses keep in touch with their customers.

FaceBook has been called the fastest growing social network in the world. According to FaceBook it has over 350,000,000 active members and 50% of its active members visit their page every day. This is a tremendous potential market.  A FaceBook fan page is an excellent way to tap into this market. You can use this page to make potential customers aware of your business and to keep current customers update to date with what is going on.  Some examples of services you can provide are Google Maps to provide directions , putting coupons on the page, highliting your customers with profiles, etc. If you keep your page active then you give people a reason to frequently check back .

Here are some links with tips on setting up a FanPage.
5 Elements of a successful FaceBook Fan Page

5 Tips for a Successful Facebook Fan Page

Twitter has also been called the fastest growing social network tool in the world. Businesses large and small use it to give short “tweets” about their products and services. Many may be wondering what is Twitter. According to Twitter.com  “Twitter is a communication platform that helps businesses stay connected to their customers. As a business, you can use it to quickly share information with people interested in your company, gather real-time market intelligence and feedback, and build relationships with customers, partners and other people who care about your company.” A crème brulee vendor in San Francisco is an example of a small business using Twitter. His customers wait for him to post the current location of his itinerant cart and list the flavors of the day. A Tweet is a short message (140 characters or less) you send out to your following. Some items to consider Tweeting about are new service offerings, new products, specials,  new hires, etc.

Here is a YouTube video and a link with tips and ideas on how to use Twitter in your business.

How To Use Twitter For Business

Marketing Small Businesses With Twitter from the NY Times.

These tools should be a part of most small business marketing plans. Four major benefits you can get from proper use are:

Branding. You can get your name out to a large number of customers for a small price.
Increased traffic to your website. Your tweets and fanpage can include links to your business website.
Improved customer service and communication. Many people are starting to use these resources as a means to voice their opinions both good and bad to businesses. These tools give you a way to respond quickly.
Market Research.  Social media offers an inexpensive method of gathering data about your customers.

Of course, these aren’t the only internet tools available to promote your business. YouTube can be used effectively for some , websites are an integral part for most small businesses internet presence and blogging can bring interest. The most effective use of these tools is a well thought out plan bringing all of the tools you use together (I.E. if you have a blog or a video promoting your business a tweet can be an efficient way to drive traffic to them).

Payroll: Preparing for Year-End

Year-end technically begins after the close of the last payroll in December, while the new year begins with the first payroll in January. But preparation for year-end doesn’t have to wait until then. In fact, it should begin months earlier to ensure a smooth processing season.

Year-end technically begins after the close of the last payroll in December, while the new year begins with the first payroll in January. But preparation for year-end doesn’t have to wait. In fact, it should begin months earlier to ensure a smooth processing season.

Most of the tasks that have to be completed for year-end or the new year must be performed between late December and the end of January. One of the easiest ways to prepare is also the most simple. By creating and utilizing checklists and spreadsheets, payroll can map out its year-end strategy. Some payroll departments start as early as November while many now make year-end preparation part of their year-round schedule.

What type of spreadsheet or checklist should be used? The details have to be personalized for each payroll department. Overall, the spreadsheets fall into three categories: year-end, year-beginning, and Form W-2.

Year-end. The year-end checklist will help ensure that all tasks to help finish off the year have been completed. Depending on the department’s responsibilities, a typical year-end checklist includes:

1. Create a schedule of all tasks that need to be completed with beginning and ending dates. This will be your year-end log. Assign all tasks as soon as possible, including who will be in charge of the log.

2. Set up a system for collecting employee address changes before the end of the year but after the last payroll is run. This could include an intranet, fax number, e-mail, or dedicated phone line. This will help ensure that Forms W-2 go to the right address. Be sure to update all addresses in the payroll system as they are received until the system is closed out for the year.

3. Set up a year-end committee to make sure that all items on your log are covered. This can be an ad hoc or one-time-only committee just for year-end. Many payroll departments are now running this committee year round to avoid the year-end crunch time. You need anyone who is involved to be included such as AP, HR, and IT. Think outside the box here. For example, who handles company vehicles? You need that information at year-end so this might require a representative on the committee.

This committee will get your year-end log and be informed of the processing calendar and the items needed by each department to comply with all year-end requirements. This is when all tasks that cannot be accomplished by payroll must be assigned to the appropriate department. This committee does not need to meet often. In fact, one time only to organize can work out well if good e-mail communication and a constantly updated year-end log are used and distributed as assignments are completed or new items are added.

4. Make a list or update last year’s list of all fringe benefits offered by the company that are not paid through the payroll department but are or could be taxable or reportable on Form W-2. Once the spreadsheet of the items is complete, request the information from the appropriate department. Track the progress of the spreadsheet to make sure the information will be received in time for year-end processing.

Payment items that could be included on the spreadsheet are:

• Business expense reimbursements, including mileage.

• Educational assistance. Payments are made directly to the employee to reimburse for a class already completed or are made to the college or university for an upcoming class.

• Auto allowance. The employee is given a flat dollar amount per month or other time frame for the business use of a personal vehicle.

• Relocation or moving expenses. The employee either has had payments made to a third party on his or her behalf or been reimbursed directly for out-of-pocket expenses.

• Club dues. The employee may have golf, country club, or health club dues paid directly on his or her behalf or be reimbursed for the dues.

• Medical expenses. The employee may have out-of-pocket medical expenses reimbursed, including annual physicals.

• Dependent care. The employee’s dependent care may be paid directly to the provider or the employee is reimbursed for out-of-pocket expenses.

• Employee referral awards. Employees are given cash payments for referring other employees.

• Suggestion awards. Employees are given cash payments for making suggestions to the company that are implemented.

Benefits to include on the spreadsheet:

• Personal use of a company vehicle. The employee may be given a company- owned vehicle to use 24/7. Though it is for business use only, if the employee commutes in the car there is still personal use.

• Dependent care. Dependent care may be provided as a benefit in kind on the premises or paid to a third party provider as a bulk payment instead of by individual.

• Health club memberships. The company may provide health club memberships to all employees for which the payment is made in bulk, not individually.

• Meals. The employer may provide onsite meals to employees or pay in bulk at a local restaurant.

• Length-of-service and safety awards. These awards may be given to employees to promote retention or safety.

• Free use of the company service. Employees may receive the same services provided to customers. For example: Employees receive free cable if the company is a cable service provider.

• Cell phones. The company may give the employee a cell phone to use for business and allow personal use.

• Newspapers or magazine subscriptions.

• Christmas or other holiday gift certificates.

• Employee recognition awards. The employee is given rewards for being voted employee of the month, quarter, or year. The rewards may be trips, tangible property, or cash.

Not all of these items may be taxable or reportable, but they should be tracked to make certain they are not. Some of the items may become taxable and reportable after certain dollar limits have been reached. The year-end committee should delegate collecting this information to the proper departments, such as AP or HR.

Payroll’s tasks are to compile the list of the items, assign collecting of the data to the proper department, and make sure the raw data is received back in time to be processed by the final payroll for the year to allow for taxation.

5. Do all necessary calculations to determine taxable wages for fringe benefits that need to be input to the payroll system for taxation or reporting, once the raw data on fringe benefits is received. The most common type of fringe benefit is personal use of a company vehicle. You may need to collect mileage logs and odometer readings to begin your calculations.

6. Verify pension plan requirements for all employees. If you have a retirement plan—including a 401(k) or 403(b)—the retirement plan box on Form W-2 must be marked for all employees as required by the IRS. Depending on what types of plans your company offers, the box could be marked differently for each employee. Payroll needs to verify if it has a retirement plan, the type of plan, and the requirements for marking the box prior to year-end. Rules for making the determination on marking the box are included in the instructions for the Form W-2.

7. Create a year-end processing and printing schedule for MIS or confirm the schedule with your outside payroll vendor.

8. Create a checklist for all tax forms that will be received or needed for year-end—if you don’t already have one. This includes all federal and state quarterly and annual returns, magnetic media, electronic filing forms, etc.

9. Order Forms W-2 if needed by your payroll system.

10. Verify that all manual checks or voids (especially reversals) have been processed correctly.

11. Deactivate all Forms W-5 for this year.

12. Close out all manual check files and logs, timesheet files, and spreadsheet files for current year (tax files, garnishment files, etc.).

13. Locate and close out all files to prepare for Form W-2 reconciliation and processing. This includes the computer files. Processing year-end should not be held up because someone is out sick and a file is on their computer.

Year-beginning. It is sometimes hard to remember, but year-end is also the start of a new year and tasks must be completed. Here is the basic checklist for starting the year off right:

1. Set up the new year’s payroll processing calendar.

2. Set up new submission calendar for payroll. This informs employees when items, such as Form W-4, must be to payroll to be processed.

3. Verify that all new wage bases for taxes are in place before running the first payroll of the year. This needs to be done even if you use an outside service.

4. Verify that all changes have been made to tax tables and benefits tables, such as insurance premiums.

5. Verify all wage bases and deductions after the first payroll is run. Pull test employees to make sure taxes are calculating correctly, that garnishments are functioning correctly, and that all benefits are being deducted properly.

6. Verify that all SUI rates for the new year are in the system to ensure that tax liabilities are calculated correctly from the first payroll of the year.

7. Make sure that the current year’s Forms W-4 and W-5 are available for all employees.

8. Get the payroll department ready for the new year:

• Download or order new forms. When ordering new Forms W-4 don’t forget the state equivalents.

• Download or order new publications and state tax books.

• Set up tax files and manual check logs for the new year.

• Distribute new mileage logs for the new year if you have personal use of a company vehicle. Take odometer readings if needed.

• Order new reference guides or books.

• Update all infrastructures. This includes department Web sites and bulletin boards (computer and physical) to cover the new year’s information, including wage bases, payroll processing calendars, and pay dates.

• Create new spreadsheets, timesheet files, and report binders or CD holders.

• Make sure that all payroll procedures are updated for any changes in the new year.

• In February, make sure that all expired Form W-4′s are reset at S-0 if the new form has not been received.

Form W-2. To have a successful year-end, it is crucial to make sure that everything is balanced, reconciled, and completed before processing the Forms W-2. Having to do more than one W-2 run because of missing or out-of-balance situations is costly and time consuming.

The following sample checklist might help you in making sure all items are taken care of before calling for the W-2 run:

1. Determine the individual requirements for the retirement plan box in our previous checklist. You may need to physically verify if the box is marked correctly for each employee. Consult with your payroll vendor or systems person to determine how this is handled.

2. Reconcile Form W-2 to Form 941 for fourth quarter. In fact, it is preferred that Form W-2 wages be reconciled on a quarterly basis. Doing so helps uncover any errors that can then be corrected prior to the year-end. If this has not been done throughout the year, all four quarters will have to be verified at this time.

3. Reconcile Form W-2 wages, etc. with all states for the fourth quarter. Again, reconcile wages quarterly rather than all at once at year-end. If you have not reconciled for the rest of the year, do so now and set up a system for the new year to perform both this task and the reconciliation to the quarterly Form 941.

4. Reconcile Form W-2 to itself. Have any limits been exceeded? Do state and federal wages reconcile? Are all benefits being recorded in box 12 correctly? Are dependent care benefits recorded in box 10? Are state wages being recorded in the correct boxes?

5. Verify all names and Social Security numbers against the Social Security Administration’s database to prevent mismatches, avoid no-match letters, and reduce the chances of penalties and audits.

Regarding Form W-2, the best practice is to move this task from year-end to when you are processing a new hire. Payroll departments should verify the employee’s name and SSN upon hire and before the first paycheck is issued. With the new verification service through the SSA’s Web site, all payroll departments can now verify each employee’s name and SSN against actual records. This service is offered through the agency’s Business Services Online feature and is free to all employers.

Year-end is just around the corner. Preparing for this period doesn’t have to wait until then. In fact, it can and should begin months earlier to ensure a smooth and uneventful processing season. Start now.

This article was originally published in IOMA’s monthly newsletter, ‘Payroll Practitioner’s Monthly’ and is republished here with the express written permission of IOMA, Copyright(c) 2009. For more information, visit www.ioma.com or for copyright permissions please call 212-576-8747 or email content@ioma.com.

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