IRS DEPRECIATION-Tangibles

Depreciation is a cost recovery tool that allows the business to spread the capital expenditure and claim the expense against income generated over the years.

Similar to accounting depreciation, tax depreciation also allocates depreciation expenses over multiple periods. Thus, the values of depreciable assets gradually decrease over their useful lives. But, many differences can be noted in terms of eligible property and methods of calculating depreciation.

Under the current tax system, Modified Accelerated Cost Recovery System (MACRS) is the accepted method for calculating depreciation. Also, there are circumstances where you might get benefits from Sec 179 deductions and bonus depreciation and recover all cost at once and at times reduce your taxable income to Zero. Yes, that’s correct.

 

Let’s have a quick look on what are the eligible properties.

  • Property that CAN Be Depreciated :-

You can depreciate most types of tangible property (except land), such as machinery, buildings, vehicles, furniture, and equipment. To be depreciable, the property has to meet all the following requirements.

  1. It must be property you own.
  2. It must be used in your business or income-producing activity.
  3. It must have a determinable useful life.
  4. It must be expected to last more than 1 year.
  • Certain Property that CANNOT Be Depreciated includes Land , Excepted property such as any property placed in service and disposed of in the same year, etc.

Remember, personal property can never be depreciated.


I. MACRS

MACRS stands for modified accelerated cost recovery system. It is the current system incorporated in the United States to calculate tax deductions on account of depreciation for depreciable assets (other than intangible assets). Any property placed in service after 1987(basically anything at this point) will be under the Modified Accelerated Cost Recovery System (MACRS).

There are two sub-systems of MACRS:

  1. General depreciation system (GDS) and
  2. Alternate depreciation system (ADS)

 

GDS is the most appropriate and is used for most assets. For certain asset like residential and non-residential real property, any tax-exempt use property, any tax-exempt bond-financed property, all property used predominantly in a farming business, etc. ADS is required. Or any business can elect to use AD for certain class of property.


Steps in Calculation of depreciation UNDER MACRS

Calculating depreciation under MACRS involves the following steps:

  1. Determine the basis of the depreciable property.
  2. Figure out the class of the property: properties are generally classified into different classes on the basis of their useful life and a recovery period is determined for each class of property.
  3. Figure out the required depreciation convention: to simplify the calculation, it has been prescribed by the IRS, whether an asset should be treated as acquired at the mid of the month, the quarter or the year. These conventions are known as mid-month, mid-quarter and half-year conventions respectively.
  4. Determine the depreciation method to be applied: depreciation is charged on the cost based on 3 different depreciation methods: 150% declining balance, 200% declining balance and straight-line method.

Step 1: Basis of depreciable property:

  1. Cost as Basis:

The basis of property you purchase is its cost, plus amounts you’ve purchased items like nuisance tax, freight charges, and installation and testing fees.

  1. Other Basis:

Other basis usually refers to basis that’s determined by the way you received the property. For instance, if you acquired the property in exchange for other property, as payment for services you performed, as a gift, or as an inheritance.

  1. Adjusted Basis:

To find your property’s basis for depreciation, you’ll need to make sure adjustments (increases and decreases) to the idea of the property for events occurring between the time you acquired the property and the time you placed it in service. These events could include installing utility lines, paying legal fees for perfecting the title, etc.

Step 2: Class of Property:

 

Different categories of assets have different useful life under GDS. Some are listed below:

 

Tractors, racehorses, rent-to-own property, etc……………………………………………………………………………  3 years
Automobiles, buses, trucks, computers, office machinery, breeding cattle, furniture, etc……………  5 years
Office furniture, fixtures, agricultural machinery, railroad track, etc…………………………………………….  7 years
Vessels, tugs, agricultural structure, tree or vine bearing fruits or nuts, etc…………………………………  10 years
Land improvements, such as shrubbery, fences, and sidewalks, etc., municipal waste water  treatment plant, restaurant property, natural gas distribution line, etc………………………………………  15 years
Farm buildings, certain municipal sewers, etc……………………………………………………………………………..  20 years
Water utility property, certain municipal sewers, etc…………………………………………………………………..  25 years
Residential rental property………………………………………………………………………………………………………….  27.5 years
Nonresidential real property ………………………………………………………………………………………………………  39 years

 

Please find detailed table for recovery life of assets under GDS and ADS in Appendix-1 of IRS Publication (Click here)


Step 3: Depreciation conventions:

 

  1. Mid-month convention- This convention is used for nonresidential real property, residential rental property, and any railroad grading or tunnel bore. Under this convention, you treat all property placed in commission or disposed of during a month as placed in service or disposed of at the midpoint of the month. This means that a one-half month of depreciation is allowed for the month the property is placed in commission or disposed of.
  2. Mid-quarter convention- Use this convention if the mid-month convention does not apply and the total depreciable bases of MACRS property you placed in service during the last 3 months of the tax year are more than 40% of the total depreciable bases of all MACRS property you placed in commission during the entire year. Under this convention, you treat all property placed in commission or disposed of during any quarter of the tax year as placed in service or disposed of at the midpoint of that quarter.
  3. Half-year convention –Use this convention if neither the mid-quarter convention nor the mid-month convention applies. Under this convention, you treat all property placed in service or disposed of during a tax year as placed in commission or disposed of at the midpoint of the year. This means that for a 12-month taxable year, a one-half year of depreciation is allowed for the year the property is placed in service or disposed of.

Step 4: Depreciation Methods:

MACRS provides three different depreciation methods under GDS and one depreciation method under ADS.

  • The 200% declining balance method over a GDS recovery period.
  • The 150% declining balance method over a GDS recovery period.
  • The straight line method over a GDS recovery period.
  • The straight line method over an ADS recovery period.

Understanding different methods of depreciation:

  1. 200%/150% declining balance method:

It is a form of accelerated depreciation where “200/150” means 200/150% of the straight line rate of depreciation, while the “declining balance” refers to the asset’s decreasing carrying value with the amount of accumulated depreciation each year. MACRS declining balance changes to straight-line method of depreciation when that method provides an equal or greater deduction.

  1. SLM:

It is a way to figure depreciation for property that ratably deducts the same amount for each year in the recovery period. The rate (in ) is determined by dividing 1 by the number of years in the recovery period.

Applicability: You can check the applicability of different methods using the applicability table published by IRS in this context. Please click here  and refer Table 4-1. Depreciation Methods.

 

Also, IRS provides MACRS table which can be directly used for the calculation of depreciation.


Using the MACRS Percentage Tables

To help you work out your deduction under MACRS, the IRS has established percentage tables that incorporate the applicable convention and depreciation method. These percentage tables are in Appendix A of the IRS publication. Appendix A contains the MACRS Percentage Table Guide, which is meant to assist you locate the correct percentage table to use for depreciating your property. Please click here to refer the same.

 

Key Notes:

  • MACRS must be used (few exceptions) for tangible assets placed in service after 1986.
  • An economic useful life is not considered. Property is placed in classes.
  • Salvage value does not apply.
  • There is no distinction between new and used property.
  • MACRS does not apply to Intangibles, Property that the taxpayer properly elects to depreciate under a depreciation method not expressed in terms of years (i.e., units-of-production method), Motion picture film and videotape, Sound recordings.
  • You begin to depreciate your property once you place it in service for use in your trade or business or for the assembly of income. You stop depreciating property either when you have completely recovered your cost or other basis or when you retire it from service, whichever happens first.
  • Meaning of Placed in Service: Property is placed in service when it is ready and available for a specific use, whether in a business activity, an in-come-producing activity, a tax-exempt activity, or a personal activity. Even if the property isn’t in use, it is in service when it is ready and available for its specific use.

Section 179 depreciation

You can select to recover all or part of the cost of certain qualifying property, up to a limit, by deducting it in the year you place the property in service. This is the section 179 deduction. In other words, in lieu of using MACRS (or in combination with MACRS), you can elect to deduct upto certain limit (currently up to $1,020,000) of qualified new or used property placed in service in tax year.

 

Steps in Calculation of Sec 179 depreciation

Calculating depreciation under Sec 179 involves the following steps:

  1. Determine the cost of qualified property which needs to be depreciated.
  2. Limit the deduction to the extent of the applicable limits – dollar limit and business income limit
  3. Take the maximum deduction for the asset, which can be the total cost of the asset as restricted by the limits calculated in step 2
  4. Any cost not deductible in first year under section 179 because of this limit can be carried to the next year.

Step 1: Qualified Property:

To qualify for the section 179 deduction, your property must meet all the subsequent requirements.

  • It must be eligible property, such as building, machinery and equipment, office equipment, storage facilities, off-the-shelf computer software, etc.
  • It must be acquired for business use.
  • It must have been acquired by purchase.
  • It must not be property described specifically to be Not Qualified, such as Land and Improvements, leased property, property used predominantly outside the United States, property used by governmental units or foreign persons or entities, all with certain exceptions.

 

How Much Can You Deduct?

Your section 179 deduction is generally the cost of the qualifying property. However, the entire amount you’ll elect to deduct under section 179 is subject to a dollar limit and a business income limit. These limits apply to each taxpayer, not to each business. However, there are certain limitations in case of Married Individuals under Dollar Limits or for a passenger automobile.

 

Step 2: Dollar Limit:

The total amount you can elect to deduct under section 179 for most property placed in service in tax years generally cannot be more than $1,020,000. If you acquire and place in service more than one item of qualifying property during the year, you can allocate the section 179 deduction among the items in any way, as long because the total deduction isn’t quite $1,020,000.

Situations affecting dollar limit. Under certain circumstances, the general dollar limits on the section 179 deduction may be reduced or increased or there may be additional dollar limits. The general dollar limit is affected by any of the following situations.

  • The cost of your section 179 property placed in service exceeds $2,550,000.
  • Your business is an enterprise zone business (an increased section 179 deduction is available)

 

Costs Exceeding $2,550,000

If the cost of your qualifying section 179 property placed in service in a year is more than $2,550,000, you must generally reduce the dollar limit (but not below zero) by the amount of cost over $2,550,000. If the cost of your section 179 property placed in service during 2019 is $3,570,000 or more, you cannot take a section 179 deduction.

 

Example, In 2019, Jane Ash placed in service machinery costing $2,600,000. This cost is $50,000 more than $2,550,000, so she must reduce her dollar limit to $970,000 ($1,020,000 − $50,000).

 

Step 3: Business Income Limit:

The total cost you’ll deduct annually after you apply the dollar limit is restricted to the taxable income from the active conduct of any trade or business during the year.

SPECIAL depreciation ALLOWANCE (BONUS DEPRECIATION)

Once your Section 179 limit has been reached, bonus depreciation kicks in. With bonus depreciation, you can deduct a substantial portion of an asset’s cost in the first year instead of depreciating the cost over many years. This means, if you’ve purchased over $2.55 million in new-to-you equipment, you can still depreciate rest of the asset in the first year.

Temporary 100 percent expensing for certain business assets (first-year bonus depreciation)

You can take a 100% special depreciation allowance for property acquired after September 27, 2017, and placed in service before January 1, 2023 (or before January 1, 2024, for certain property with a long production period and for certain aircraft). Your property is qualified property if it meets the following.

  • Tangible property depreciated under MACRS with a recovery period of 20 years or less.
  • Computer software.
  • Water utility property.
  • Qualified film, television, and live theatrical productions, as defined in sections 181(d) and (e) of the Internal Revenue Code.
  • A specified plant for which you made the election to apply section 168(k)(5) for the tax year in which the plant is planted or grafted (explained later in Certain Plants Bearing Fruits and Nuts).
  • It is not excepted property.

Bonus depreciation must be taken in the first year that the depreciable item is placed in service. However, businesses can elect to not use bonus depreciation and instead depreciate the property over an extended period if they find that advantageous.

QUICK LOOK SUMMARY

Depreciation calculations can get very complicated very quickly. Ensuring you receive the total tax deduction available to your business requires a fundamental understanding of how asset depreciation works. Since this is a non-cash expense, there is a lot of scope of assumptions and choices. Hence this is a very important tax tool as well. It is therefore recommended to seek professional help to get the best benefits and reduce the tax burden to minimum.

At MAS, we have got the expertise to guide you the right way. Click here to get in touch!

Find us on social media:

Twitter        |   LinkedIn  |   Instagram  |  Facebook

 

 

 

Manual Accounting vs. Cloud Accounting

Accounting is that the process of recording financial transactions concerning a business. The accounting process includes summarizing, analyzing, and reporting these transactions to oversight agencies, regulators, and collection entities.

While it’s true that accounting is most typically viewed as an essential part of the business world, Manual Accounting is a system of accounting that uses physical registers and account books, for keeping financial records. Most small businesses are still using manual bookkeeping systems instead of Cloud Accounting and now they are much more “advanced”. They have that all on Microsoft’s Excel.

On the other hand, Cloud accounting (or online accounting) is very similar as desktop accounting, but moves the whole process to the cloud and expands upon it. It may be hosted and maintained on central servers accessed via the internet. A major advance has been made in Accounting Software which is “Cloud-based” software. Users are ready to use remote servers to store and access their data, rather than storing key information on an area computer or server.

Uses and Advantages of Manual Accounting –

Manual accounting systems are most commonly used by small and new businesses. Their accounting needs are very simple and their businesses may not have many financial entries. There is no delay due to power or Internet outages, and there are no risks of sensitive information being hacked online.

 

Disadvantages of Manual Accounting –

Accounting  can be a complex undertaking. A manual accounting system requires you to understand the accounting process in a way which may be unnecessary with a computerized accounting system. This can be an advantage or a disadvantage, depending on the person doing the bookkeeping; often, a specially trained professional is needed to ensure that accounting is done properly.

Uses and Advantages of Cloud Accounting –

Moving accounting from the desktop to the cloud has been an enormous breakthrough in financial management, with many of the drawbacks and price implications of traditional accounting being removed from the equation. Cloud accounting software has grown in popularity as a software deployment model. It is available with a spread of features and lends itself to companies of various sizes, eventually placing itself as the answer to many organization’s financial management needs.

Below are the main areas where a cloud accounting system adds real, tangible value.

  1. Access your accounts anywhere

Anyone can access it if they have the username and password and permissions can also be given to restrict people to being able to see only what they need to see.

  1. Access to real-time information

By keeping your bookkeeping and bank reconciliation up to date, you can achieve real-time reporting. Instead of watching historical reports that are days, weeks, or maybe months out of date, you’ve got a moment overview of the company’s current financial position. This real-time overview is significant when watching your cash position, planning future spending and when making big financial and strategic decisions as a management team.

  1. Access to the app ecosystem

Open APIs mean you’ll add a variety of third-party apps and tools to expand your core business system. There are income forecasting apps, online invoicing apps, industry-specific project management tools and a number of other practical solutions to settle on from. These tools enable you to further save time, reduce resourcing costs, identify problems further beforehand, and usually ease the pain of unnecessary admin that’s weighing you down.

  1. Live bank feeds

Many cloud accounting platforms offer live feeds to your bank accounts, supplying you with the power to link your banking directly together with your accounting. rather than manually keying-in each statement line, or uploading a .CSV file that you’ve got downloaded from your internet banking portal, a live feed pulls your bank data straight through into your accounts. This accelerates bank reconciliation and provides you a more accurate view of your bank balance.

  1. Always working with the latest software version

When you log in to your accounting platform within the cloud, you’re always using the newest version of the software. There’s no need for time-consuming and costly updates – you just sign in and start working. Plus, you do not need to be liable for applying security fixes – your software provider will handle that for you automatically.

  1. Secure sharing of data

When you’re working together with your accountant, bank or other advisers, you’ll easily grant access to your accounts with cloud accounting software. There’s no need for USB memory sticks or sending emails back and forth. Your advisers have safe and secure access to all or any your financial information, in real time. this is often quicker, safer and provides your advisers the knowledge needed to support and advise you, going forward.

   7.    Connected online payment

Payment apps allowing customers to pay you automatically, speeding up payment times and reducing the burden of admin work on you or your staff.

Disadvantages of cloud accounting –

The key disadvantage for cloud storage versus on-site storage is that it only works with an online connection. Although, most situations in work and life provide for internet access, there are places and times when this just isn’t possible. Thus, you run the danger of not all parties having the ability to figure on an equivalent project.

Although cloud storage servers have best-in-class security, that doesn’t mean they’re invincible. In 2016, the favored file sharing service Dropbox was hacked, exposing 60 million logins. Although no data was breached in this hack, passwords became available for sale on the dark web. This allowed purchasers to access data. Dropbox immediately activated password reset protocol to guard users’ data. this is often only one example of the vulnerabilities inherent when third parties manage data. Cloud accounting software contains personal data and sensitive information. Thus, it’s imperative to stay it safe. If you’ve got concerns about the safety of cloud accounting software, do your research on what information security practices they use.

Cloud Accounting Software options

Cloud accounting software has become a necessity today for each business. Cloud accounting software can also be mentioned as online accounting software or Web-based accounting software. The cloud accounting market may be a busy one, with a variety of various providers to settle on from. Below are some cloud accounting software which are discussed as per the size and the requirement of the business –

  • Xero – an excellent choice for little businesses that desires simple accounting alongside detailed reporting because the business grows. Xero also features a huge global app ecosystem.
  • QuickBooks Online – A platform that’s aimed squarely at small businesses, with all the accounting functionality of QuickBooks classic desktop version, plus an excellent app store.
  • Fresh Books – Fresh Books features a in no time , easy-to-use invoice generator. The WYSIWYG format is intuitive, and with just a couple of clicks, you’ll add billable time and expenses, customize the design of the invoice, and found out recurring invoices, automatic payment reminders and late fees.
    Sage 50cloud and Sage 200cloud – Each combine the convenience of the cloud with the facility of desktop accounting software.
  • KashFlow – an honest choice for little businesses that need a straightforward platform that gets the work  All the fundamentals are there but with fewer options when it involves apps.
  • Zoho Books – Unlike many cloud accounting providers, Zoho provides several other business software of its own to attach Zoho Books with. It also sports a couple of connections to 3rd party software too.
  • FreeAgent – For freelancers, contractors or micro businesses, FreeAgent gets your accounts avoided all the extra bells and whistles.
  • ClearBooks – Great for little businesses, ClearBooks even offers a free option called Micro which they assert is best suited to “new or super small business”. It offers a couple of third-party apps to attach to, but not at an equivalent scale as Xero or QuickBooks.
  • QuickFile – Like ClearBooks, QuickFile also offers a free choice to businesses under a particular
  • Exact – For both small businesses and enterprises, Exact offers a variety of monetary software which may offer additional functionality beyond accounting. There’s also an app store to feature even further functionality.
  • Sage Business Cloud Accounting – Bigger businesses will just like the scalable accounting of Sage’s cloud platform, with all the business functionality of their desktop version. Third-party apps are available, but extra Sage modules will increase your costs and budget.
  • MYOB – one among the key providers in Australia, MYOB is meant for little businesses that need a streamlined accounting solution with all the advantages of the cloud.

 

At MAS, we are certified in all the major accounting software and possess extensive expertise in each of the above. Get in touch to know more!

 

Find us on social media:

Twitter        |   LinkedIn  |   Instagram  |  Facebook

 

 

Quick Guide to US Tax Forms

Click here to get in touch!

 

Tax season is around and you must have been thinking that preparing taxes is a big game which you never want to loose and get stuck under loads of penalties and interests due to your unpaid tax bills or missed reporting deadlines.

In the US, Internal Revenue Service (IRS) publishes various tax forms for calculating and reporting federal tax obligations. Using these forms, different taxpayers need to report the required information to the department from time to time. There are over a thousand forms and schedules, which have been published, but to make it simple we are here to explain some of the most commonly used for an Individual tax payer.

  1. 1040: U.S. Individual Income Tax Return

This form is used for personal federal income tax returns filed by United States residents. It consists of two pages; the first page collects information about the taxpayer including name and address, SSN, filing status, dependents details etc. The next page reports income, deductions(itemized or standard), adjustments and credits, and figures the tax due after applying funds already withheld from wages or estimated payments made towards the tax liability. This is the first form you must be aware of or the starting point of your tax preparation. Other related forms in this category are 1040-SR and 1040-ES.

Form

Purpose

1040 This form is Annual income tax return filed by citizens or residents of the United States.
1040-SR This form is U.S. Tax Return for Seniors and is available as an optional alternative to using Form 1040 for taxpayers who are age 65 years or older.
1040-ES This form is Estimated Tax for Individuals and is used to determine and pay estimated tax by persons where income is not subject to tax withholding.
  1. Form W-2: Wage and Tax Statement

This is the Wage and Tax Statement provided by employers to employees detailing how much an employee was paid in a year. The form also reports about how much state and federal income taxes were retained, retirement plan contributions and the value of some workplace benefits. An employer has to mail out the Form W-2 to the employees on or before January 31. There are some other forms in this category, W-4, W-7 and W-2G.

Form

Purpose

W-2 This form is Wage and Tax Statement for salaried employees
W-4 This form is filed by employees to their employers to ensure that employer withholds correct amount of federal income tax from employees’ pay based on their personal and financial information.
W-7 This form is used to identify taxpayers who do not qualify for a social security number through application for IRS Individual Taxpayer Identification Number (ITIN).

 

  1. Form 1099’s: Income other than wages, salaries, and tips reported on Form W-2

Some of the commonly used forms under this category are listed below:

  1. 1099-B: Proceeds from Broker and Barter Exchange Transactions

You can expect to receive this form if you sell stocks, bonds, derivatives or other securities through a broker. This form is generally issued in January. It is used to report capital gains or losses from such transactions in the preceding year. The data from Form 1099-B helps you fill out Schedule D on your 1040 (and Form 8949 if needed).

  •  1099-DIV: Dividends and Distributions

You’ll receive a 1099-DIV form if some of the stocks you own pay dividends, or a mutual fund you invest in made a capital gains distribution to you during the year. This information goes to Schedule B of your 1040, and is required if either interest or dividends received during the tax year exceed $1,500 from all sources or if the filer had certain foreign accounts.

  • 1099-INT: Interest Income

Form 1099-INT reports most payments of interest income. You may or may not have to pay income tax on the interest it reports, but, you may still need to include the information from it on your return on Schedule B of 1040.

  • 1099-MISC: Miscellaneous Income

This form records the total amount of payments received from a single person or entity during the year you’ve provided services to them. The most common benefit of this form is to record your earnings when you work as an independent contractor. Other uses include a wide range of payments you receive, such as rent, royalties, prizes and awards and substitute payments in lieu of dividends.

  • Composite 1099 Form

Certain brokerage companies issue a “Composite 1099 Form” that replaces multiple individual 1099 forms like,

  1. 1099-B,
  2. 1099-INT, and
  3. 1099-DIV.

The individual sections of the composite form, sometimes may not include all of the information that is available on a standard 1099 form, such as the check boxes for short-term and long-term transactions on the standard 1099-B form. Rather, many of these composite forms simply group the different types of transactions so that one can easily tell the ones which are short-term and long-term.

 

  1. 1098: Itemized deductions/adjustments

The 1098 tax forms report payments or other contributions you have made that may be deductible from your taxable income. These forms will be received in the mail around tax time. Quick summary of most used forms under this category is given below:

Form

Purpose

1098 This form reports the interest that a taxpayer has paid on his or her mortgage. Mortgage interest is generally deductible for taxpayers who itemize their deductions, on first and second homes.
1098-E This form reports interests the taxpayer paid on student loans.
1098 -T This is a Tuition Statement which reports how much you paid in tuition for post-secondary education.

Click here to get in touch!

Bottom Line


Don’t wait till the last minute. It is very important for you to understand the basic fundamentals of tax returns so that the details and exceptions become more manageable. Here is what IRS wants –Right Information – Right Manner – Right Time!

Tax prep is tedious, but there is variety of solutions available online which might help you to file your tax returns right away. There are tax calculation tools, return preparation software, and instructions and guides published by IRS to help you all through. But still if you are spending entire day taking decisions what to do with the forms you received in the mail box with terminologies getting over your head shaking your confidence whether your tax return is prepared properly. Do not worry, you are not alone. We have got the expertise to give the right solution to all your queries. So, save yourself from making a potentially costly mistake!

Please leave your comments if this information helps you in solving your tax puzzle.

Find us on social media:

Twitter        |   LinkedIn    |   Instagram   |  Facebook

 

 

Intuit QuickBooks: An overview of the Accounting Software

Intuit came into existence in the year 1983 intending to provide financial and tax preparation software called QuickBooks with a vision to facilitate small businesses, accountants, and individuals in managing their Statement of Financial Position.

Initially, Intuit introduced Quicken software as personal financial management tool. After its huge success and to bring it one step forward Intuit launched QuickBooks for small business owners. Quicken software does not support “Double-entry” bookkeeping system where as QuickBooks not only eliminate loop holes of Quicken software but also enables a lot more advance features.

QuickBooks is cloud-based accounting software. It has been upgraded many times since this software has developed and every time Intuit has improved the reliability and experience of using the software.

QuickBooks is available in 6 versions as listed below.

QuickBooks Online, 

QuickBooks Self-Employed, 

QuickBooks Pro

QuickBooks Premier, 

QuickBooks Enterprise,

QuickBooks for Mac.

Businesses can choose one of the best suites according to their budget and volume of their business operations.

 

Some more features of QuickBooks

QuickBooks is an easy-to-use software, due to this feature it is a leading bookkeeping software. According to a survey, QuickBooks (including all its versions) acquires 80% of the accounting software market in the USA which means approx. 29 million businesses prefer QuickBooks over any other accounting software to form their business accounts. The reason behind ruling over such a huge market is the features that QuickBooks promotes.

Intuit QuickBooks provides wide range of accounting support to small as well large scale businesses including the following features:

  • Cloud Accounting – It is easily accessible on computer, mobile or tablet, therefore one can easily manage their business anytime, anywhere.
  • Invoicing – It enables custom invoice creation, professional invoices, sales receipt, purchase orders, sales orders, estimates that one can send their client conveniently.
  • Online Banking – QuickBooks online facilitates integration of credit card and bank statements in order to automate the process to auto sync and update your statements and transactions in the software which can be categorized later to their respective chart of accounts.
  • Accounting Reports – Through inbuilt reporting format, one can easily reach out to their business performance statements. These formats can be customizable for better presentation to legal authorities and stake holders.
  • Inventory Management – QuickBooks track real-time inventory valuation. It keeps updating inventory record with each, buy and sell order of the product.
  • Payroll – Intuit Payroll helps businesses to manage their Payroll obligations in-house. Enhance Payroll creates paychecks, calculate payroll taxes and send direct deposit, prepare and e-file federal and state tax forms such as 940,941, and W-2.
  • Tax Preparation – Intuit Turbo Tax can be integrated with QuickBooks which helps to file tax returns and provide support to fulfill legal obligations.

 

Challenges that some businesses might face while using QuickBooks

  • Since QuickBooks is easy to use and easily accessible software many small and large businesses are opting QuickBooks to prepare their Financial reports but for someone who is running their business as Property management QuickBooks is not meant for them.
  • It typically has a file size issue which means it will work slowly in case of high volume data.
  • It requires monthly subscription depending upon the version in which a business has subscribed according to their business operations to keep using their QuickBooks account. This becomes hectic to manage funds in the initial stage for some of the small businesses and individuals.
  • Some advanced features like Payroll, Tax, and Inventory management are quite hard to operate for someone who does not have much knowledge about it.
  • Syncing problem is something which usually happens with QuickBooks. Sometimes QuickBooks stops fetching bank and credit card account transactions which were integrated with the software initially. It might result in omission of transactions which can lead to unbalanced accounts of the business.

It is not suggested for property managers to select QuickBooks as their bookkeeping software. It does not provide the required features use to manage a property business. The monthly subscription should only be taken after analyzing the requirement of the business. Individuals having a complete or partial knowledge of accounting, payroll and Taxes can manage the software, else the business requires a trained accountant to handle and feed the transactions in the books.

 

How is QuickBooks helpful?

  • Efficient bookkeeping: – QuickBooks provide you a platform where you can connect your bank, PayPal, all your credit cards with the software that helps you in saving a lot of time to login to all your banks and extract the transactions and record in the books. QuickBooks does this automatically.
  • Easy Mapping or Categorization of bank feeds: – QuickBooks have a smart feature to detect the transactions previously recorded, you just need to check and match the transactions. You don’t need to spend your time over filling the account code and descriptions over same transactions that appeared continuously in your bank feeds whether monthly, weekly or on a daily basis.
  • Flexible: – You don’t need to carry your laptop or computer system all the time with yourself. With QuickBooks your mobile can be your laptop or work as desktop version. Your information is synced with QuickBooks so you’re able to access all your bookkeeping information while on the go.

Continue reading “Intuit QuickBooks: An overview of the Accounting Software”