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2022 Thankful Message from Protea Financial

2022 Thankful Message from Protea Financial

Another year is nearly over, and what an eventful year it has been. We have all been through a lot of ups and down over the last few years, and 2022 was no different. Thankfully, some aspects of life are starting to feel a bit more normal, and we were able to make some progress with goals we set for ourselves and our clients.

As the Director and Founder of Protea Financial, I’d like to take a few moments and reflect on some of the amazing things that happened this year. Plus, I’d like to thank some of the people who were there to help make these things happen.

 

Our Clients Are Amazing

Each client that has ever put their faith in the team here at Protea Financial – thank you. We are grateful that you trust us and that you share with others the experiences you’ve had with us. It is thanks to you that we continue to grow, adding new clients to the diverse group of people we’ve had the privilege to work with in the past. From our humble beginnings to where we are today, we have the same mission and goals, but have cast a wider net to do our best to help more people as time goes on.

 

Protea Financial is Growing by Leaps and Bounds

Over the course of 2022, Protea Financial has been able to help more people than ever before. The company, as a whole, has grown to include more financial professionals and more clients than ever. Our goal from the beginning with Protea Financial was to help as many people as possible. This goal was front and center with our message, the people we hired, the clients we chose, and the resources we created. Today, those goals and choices are the backbone of our business that is reaching further and embracing new opportunities at ever turn.

I always hoped that Protea would become a company that community members would know they could rely on, and that is taking place. I am grateful for everyone that works with me at Protea Financial, and want them all to know I see how hard they’re working and appreciate that effort each day.

 

Protea Financial is Thankful for Growth

 

The Team Shares My Determination to Help

I cannot say enough about the team here at Protea. They embody the goals we set in the beginning, and they are as determined as I am to help as many people as possible. We are always trying to come up with new ideas, resources, and methods of helping the people we work with. Plus, we bounce ideas off each other on ways to reach even more people. I am grateful to every part of the team, from our newest member to people who have been at Protea Financial for years – thank you so much.

 

Some Semblance of Normalcy

While the world may never return to what we all felt was normal prior to COVID-19, there are some good changes that we have been lucky enough to make along the way. Many of us are now closer than ever to our loved ones, which many of us took for granted in years past. However, at some points during the remote lifestyle we all became accustomed to, the closeness of working relationships suffered.

Today, we are able to have a new form of normal that allows those personal relationships with co-workers face-to-face again. I was able to spend time with my team in-person, and we are all grateful to be able to come together, brainstorm ideas, and work as a team to help solve problems like we used to. While it may never be the same, this new normal is quite possibly an improved version of life as we once knew it, and for that, I am grateful.

 

Protea Financial is Thankful for Travel

 

Travel is Once Again an Option

The last time I was able to go and visit friends and family in South Africa was in 2019. However, with restrictions changing on travel, I was able to go back and visit with people I’ve missed terribly. We were able to spend time together, talk about what happened in our lives since we last saw each other, and get caught up.

I am grateful for the time I was able to spend there with people who mean the world to me, and also for the fact that we were able to pick up almost exactly where we left off in 2019, as if no time had passed. It is a true testament to how deep relationships can go when they can continue like that. It was an amazing trip, and I look forward to my next opportunity to visit.

 

My Family is At the Heart of All I Do

Outside of the office, I also want to take a moment and show my gratitude to my family. From my parents to my wife and kids, you all support me and the goals I have for this company. I know I work long hours trying to follow my dreams and reach my goals. You are each with me in everything I do, and I am grateful that you are so understanding.

My parents have been there to show me the importance of following my dreams. They taught me that no matter where those dreams take me, I can follow them with confidence. My kids see my determination and day in and day out, I hope that I am instilling the right values in them while setting a positive example. I am grateful for the love and fun you bring to my life.

As for my wife, you truly are my best friend. Your support, understanding, and love are my constant guide. I could not help the people I do without knowing you are by my side with each decision I make. Thank you all.

 

For Every Member of the Protea Financial Family – Thank You

Protea Financial started out as a hope and a dream to help people. Today, it is a company I am proud to lead. Please contact us here at Protea Financial today if we can help your business, or if you want to become part of the Protea family, too.

Become Part of the Protea Financial Family

Reach out to Protea Financial today if you want to be part of the Protea family, too!

What Are 1099s?

What Are 1099s?

This blog post was originally published in December 2021, but we wanted to take the time to update and improve the information we offered. We recently updated it in November 2022.

If you do any type of contract or freelance work for a company, that company may be required to send you a form 1099. This is a tax form required by the IRS to report income for those who are not employees but still do work for and are paid by a company. However, while contractors often receive 1099s, they are not the only people who may get this document. Let’s go over the various types of 1099s, what one contains, why you may get it, and what you do with this document.

 

What Is a 1099?

Any time you are paid for work by a company, that company is required to report your payments to the IRS as income. Typically, this is done through a form W-2 because most, if not all, of the company’s payments go to employees. However, some companies do hire contractors or freelancers. These individuals work on specific projects for a set amount of pay. They typically receive no benefits such as insurance or paid time off. However, they are often free to work at home and on their own schedule. Once the project is complete, they receive their payment and move on to their next job, though they and the company may also agree to a new contract for further work.

When a company pays one of these contractors, the income is reported on a 1099. It’s similar to a W-2, but there are a few significant differences. The size of the company, their industry, or the type of project does not play any part in a 1099. All companies, even small businesses, must issue 1099s to a contractor who did work for them. 

However, according to IRS rules, a company only has to issue a 1099 if they pay a contractor more than $600 within the calendar year. This means a company that paid a contractor $500 is not required to send them a 1099. Contractors who receive one of these forms do need to include that income in their annual tax return just as they would report income earned on a W-2.

In addition to receiving a 1099 for contract work, you may also receive a 1099 for capital gains distributions, interest payments, dividends, and other income. The type of income will determine the type of 1099 form that you receive. There are a number of types of 1099s, including the 1099-MISC, 1099-R, and 1099-C.

Protea Financial What Information is On a 1099

What Information Is on a 1099?

A 1099 includes much of the same information as you would find on a W-2. This includes the following:

  • The contractor’s full name, address, and social security number or taxpayer identification number.
  • The company’s name, address, and FEIN (or SSN if they are paying as an individual).
  • The total amount of money paid throughout the year.
  • The account number.
  • The total amount of federal and state income tax withheld, if any (typically this is zero for a 1099).
  • The state or payer’s state number.
  • The amount of state income.

As with W-2s, the company will fill out the 1099 and mail a copy to both the contractor and the IRS. The contractor will need to review the information and contact the company right away if there are any mistakes.

When to Expect Your 1099

The 1099 form is an IRS document that reports the income you received from a company or individual during the tax year. If you are an independent contractor, freelancer, or self-employed person, you should receive a 1099 form from each client or customer who paid you $600 or more during the year. You will use the information on your 1099 forms to complete your federal income tax return.

You should receive your 1099 forms by January 31st. If you do not receive a 1099 form from a company or individual who paid you $600 or more during the year, you will still need to report that income on your tax return. You can get copies of your 1099 forms from the IRS, if necessary.

If you are expecting to receive a 1099 form, be sure to keep track of your income throughout the year so that you can accurately report it on your tax return. That way, when you start your taxes, you have accurate data to pull from.

 

Protea Financial 1099 Form

Why Are 1099s Issued?

Any contractor or individual who receives over $600 a year from a business, financial institution, or other payer will be issued at 1099. The IRS requires this income to be reported, and there are no exceptions. A company or other payer who fails to submit a 1099 form will face fines from the IRS. Individuals who do not report this income may be subjected to audits and fines as well.

Individuals who own stocks, receive interest on accounts, or are paid other types of income that is not classified as a wage will also receive a 1099 if they made more than $600. Typically, these forms will come from the payer. However, starting in 2021, some online payment processors such as PayPal may issue a 1099 to those who receive over $600 from the same payer. There are still many questions about how this will affect contractors, businesses, and others who receive payments through these processors.

 

How a 1099 Differs from a W-2

The main difference between a W-2 and a 1099 is that a W-2 lists out the various taxes, social security, and other withholdings from an employee’s paycheck. While a contractor may have taxes withheld on a 1099, typically this is not that case. That means the contractor or other individual will need to pay taxes on that money as part of their annual income tax return.

The two forms are similar in that both W-2s and 1099s are generated and sent out in January. Contractors, individuals, and employees should receive these forms by February first. If they do not, they will need to contact the payer. Contractors may receive 1099s from every company they have worked with over the year, while individuals may receive 1099s from every financial institution that paid them interest or dividends.

It’s also possible for someone to be an employee and do contract work. In this case, they will have both a W-2 and at least one 1099 to file.

How to Pay Taxes on a 1099

If you’re a freelancer or contract worker, you may be used to getting a 1099 at the end of the year. This document is important because it shows how much money you made during the year. It’s also important because it’s required for filing your taxes.

The first thing you need to do is get organized. Gather up all your 1099s and put them in one place. Once you have them, look at each one and make sure the information is correct. If anything looks off, contact the issuing company right away to get it corrected.

Next, you need to calculate your total income for the year. Add up all the money listed on your 1099s. This is your gross income for the year.

Now it’s time to figure out your deductions. These are expenses that can be subtracted from your gross income to arrive at your taxable income. Common deductions for freelancers include business expenses such as office supplies, website hosting fees, and mileage if you use your personal vehicle for business purposes.

Once you’ve calculated your taxable income, you can use tax software or consult with a tax professional like we have here at Protea Financial to determine how much tax you owe. Be sure to pay any taxes owed by the tax deadline to avoid penalties and interest charges.

Paying taxes as a freelancer or contract worker may seem daunting, but it doesn’t have to be complicated. By gathering up all your 1099s, calculating your gross and taxable income, and subtracting any deductions, you can easily determine how much tax you owe for the year.

 

Protea Financial Information On a 1099

What Information Do You Need to File a 1099

To file a 1099, you will need the following information:

  • Name and address of the recipient
  • Amount of money paid to the recipient
  • Date the payments were made
  • Type of 1099 form you are filing

If you are e-filing, you will also need to include your PIN

 

How Do the Types of 1099s Differ?

There are many different 1099 forms. All of these forms are used to report income other than wages earned as an employee. However, each one is slightly different in what income it is used to report. Here are some of the most common types of 1099s:

  • MISC – The 1099-MISC was the form used to report payments made to contractors and other freelancers. However, the form was also used to report other payments, including prize money, payments made to attorneys, rent, and other miscellaneous income. It is no longer used for contractors as of 2021.
  • NEC – The 1099-NEC replaced the 1099-MISC for contractor payments starting with tax year 2021. It lists all non-employee income received in exchanged for services. This is the form that contractors and other freelancers will typically receive. Contractor payments were split out from the 1099-MISC to address certain loopholes.
  • DIV – Individuals who own stock or other types of securities and are paid more than $10 in dividends or distributions will receive a 1099-DIV to report that income to the IRS.
  • INT – The 1099-INT is issued by banks and other financial institutions. It reports interest of over $10.
  • R – Those who receive distributions from a retirement account such as a 401(k) or a Roth IRA will receive a 1099-R stating the total amount of the distributions taken that year.
  • C – This is a special type of 1099 that is only used when an individual settles debt with a credit issuer for less than the amount owed. Typically, this is done during the bankruptcy process, although it could also be done via other types of negotiations. This form shows the amount of forgiven debt, which is not typically taxed as income. However, it still must be reported.
  • Q – A 1099-Q is used to document income received from a 529 educational plan or Coverdell ESA. This form is
  • G – The 1099-G form is used to report several different types of payments. It’s commonly used to report unemployment compensation, but it can also be used to document income tax refunds from the state or local government as well as agricultural payments and income from taxable grants.
  • SSA-1099 – Those who receive social security payments will receive a SSA-1099 form every year detailing the total amount of SSA payments they received that year. This is one of the few 1099 forms in which the identifying letters come before the form number.
  • K – A 1099-K is issued by a third-party payment processor such as PayPal when an individual or business has more than 200 online payment transactions that total over $20,000. Credit card payment processors may also issue 1099-K forms.
  • B – Individuals who sell stock will receive a 1099-B from their mutual fund company or brokerage. This form details the date the stock was sold, the cost of it, and the amount it was sold for.

Protea Financial Understanding a 1099 Form 

Pros and Cons of Being a 1099 Worker

As an independent contractor, you are responsible for paying your own taxes. This means that you will need to save money throughout the year to ensure that you have enough to pay your taxes come tax time. Additionally, 1099 contractors are not always eligible for unemployment benefits, so if you find yourself out of work, you will not have any safety net to fall back on.

On the other hand, 1099 contractors have a lot of freedom and flexibility when it comes to how they work. You can often set your own hours and work from home, which can be a major perk. Additionally, you may be able to negotiate a higher rate with your clients since you are not paying into unemployment or other benefits.

 

Common Mistakes When Filling Out Your 1099

There are a few common mistakes that people make when filling out their 1099 forms, which can lead to some pretty serious consequences. Here are a few of the most common mistakes:

  1. Not including all oyour income: This one is pretty straightforward – if you don’t include all of your income on your 1099, you’re not going to get credit for it come tax time. Make sure to double check that you’ve included everything you need to, or you could end up owing the government a lot of money.
  2. Incorrectly calculating your deductions: This is a mistake that can cost you big time. Be sure to take your time and calculate your deductions correctly, or you could end up overpaying (or underpaying) your taxes.
  3. Not keeping good records: This is important for a few reasons. First, if the IRS comes knocking, you’re going to want to be able to show them exactly what you did and how you did it. Second, even if the IRS doesn’t come calling, good records will help you keep track of everything come tax time so that you can be sure you’re getting all the deductions and credits you’re entitled to.
  4. Filing late: This one can also cost you, in the form of late fees and penalties. Make sure to file your 1099 on time so that you don’t have to worry about these extra charges.
  5. Not understanding the form: Not understanding what the form wants or needs from you is another common mistake. It can lead to open spots or inaccurate information. The best thing to do if you do not understand the form is to ask someone who can help guide you through the process. Not filling out a 1099 properly because you misunderstood something is not going to allow you to bypass the potential consequences from the IRS.

 

Risks of Not Filling Out Your 1099 Correctly

If you’re a business owner or independent contractor, you’re probably aware that you need to fill out a 1099 form for any contractors or vendors you’ve paid $600 or more during the year. What you may not know is that there are some serious risks associated with filling out this form incorrectly.

The first and most obvious risk is that you could end up owing the IRS money if you don’t report all of the income you’ve received. This could result in interest and penalties, and could even lead to an audit.

Another risk is that you could inadvertently misclassify someone as an independent contractor when they should be classified as an employee. This could come back to bite you down the road if the person decides to file for unemployment benefits or sue you for wrongful termination.

Finally, if you make any mistakes on your 1099 forms, it’s possible that the IRS could come after you for back taxes, interest, and penalties. So it’s important to double-check your work and make sure everything is accurate before sending in your forms.

If you have any questions about how to fill out your 1099 forms correctly, don’t hesitate to reach out to a tax professional for help.

 

What Are the Penalties for Not Filing a 1099?

If you don’t file a 1099, the IRS can assess a penalty of up to $280 per 1099. The penalty is based on when you file the 1099 and how many 1099s you must file. The penalties are:

  • $50 per 1099 if you file within 30 days of the due date
  • $110 per 1099 if you file more than 30 days after the due date but before August 1
  • $280 per 1099 if you file on or after August 1

As a Business, You Need to Have Your 1099 Forms Prepared Correctly

It goes without saying that any business that issues 1099s must make certain that the forms are prepared correctly and are issued on time. Being late can result in fines, while sending out incorrect forms can cost you time and money in correcting and resubmitting them. Fortunately, most businesses will only need to deal with one or two types of 1099s.

While a 1099 is a fairly simple form to fill out, you will still need a professional bookkeeper on your side to make certain you submit the correct payment amount to the right contractor or other individual. If you don’t have a bookkeeper of your own, you may want to work with a virtual bookkeeper. These experts are just as skilled and knowledgeable as local bookkeepers.

The team here at Protea Financial is ready to assist you with all of your bookkeeping and other financial needs. We can track contractor payments, assist with 1099s, and much more. Contact us today to discuss how we can help you.

Let Us Know if You Have Questions

If you still want help understanding a 1099 or what it is used for, then reach out to us here at Protea Financial. We are here to help!

How to Track Your Business Expenses: A Simple Guide for You and Your Business

How to Track Your Business Expenses: A Simple Guide for You and Your Business

As the owner of your own business, you’re going to be spending a lot of your time and money on it. You need to keep track of all these expenses to accurately report them when you file your taxes at the end of the year.

You can deduct many expenses related to running it. These are called “business expenses,” and they can be quite beneficial to your bottom line. The trick is tracking them and documenting them correctly, so that come tax time, you are ready to receive the benefits.

Unfortunately, many small business owners don’t take the time to document their expenses until after they have already paid their bills. This won’t help when tax season comes around, which is why we want to give you a hand with getting started now! Here is a quick guide on how to track your business expenses and what type of expenses you should keep track of in order to do so.

 

What Is a Business Expense?

Business expenses are any costs related to running and managing your business. These costs can include your office rent, utilities, insurance, employee salaries, equipment, travel costs, and other expenses that directly relate to your business’s operation.

Usually, only the amount that is above your typical, expected costs is considered business expenses. Your expected costs are what your business would cost you if you didn’t run it. Many of these costs have associated write-offs you can take advantage of by properly tracking them.

Business expenses are deducted from your income when calculating taxes at the end of the year. This lowers how much you owe the government, resulting in a lower tax bill.

 

Where to Track Your Business Expenses

There are countless apps and websites that you can use to track your business expenses. You could write them down on paper or use a virtual notebook, like Evernote. However, this could result in lost notes.

There are also some specialized apps designed to help you track your business’s expenses. These apps are usually designed specifically for tracking business expenses, so they may have features that others don’t.

Until you know which app you want to use, consider using your email. That way, when you need information, you can forward it to yourself for almost instant access to it while you sort through the apps that can help.

After a quick search for business expense tracker apps, you will likely find names like QuickBooks Expense Tracking, Rydoo, Zoho Expense, and Ramp, to name a few. You will have to sort through the apps to see which will be easiest for you and your business to accurately track each expense without taking so much time that you put off doing it.

Protea Financial Track Business Expenses

How to Track Your Business’s Expenses for Taxes

In order to properly track your business expenses, you’ll need to know which ones to track. Here is a basic list of common business expenses that you should keep track of for your taxes:

  • Office Rent and Utilities: You can deduct money for each square foot of your office space. You can also deduct any utility expenses that are directly related to your business.
  • Office Supplies: Any office supplies you use for your business can be deducted as a business expense. This includes things like pens, paper, printer ink, etc., so make sure you always keep receipts for each of these purchases.
  • Employer Taxes: You can deduct the employer portion of your payroll taxes. This includes things like Social Security and Medicare taxes.
  • Employees’ Retirement: Any amounts you contribute to your employees’ retirement accounts can be deducted from your taxes. This includes 401(k)s and SEPs.
  • Insurance Premiums: Amounts you pay into your insurance premiums should also be tracked to reduce your future tax bill.

 

Advertising and Marketing Expenses

Advertising and marketing expenses are essential business expenses that many people overlook. You can deduct these expenses as long as they are reasonable and related to your business.

Advertising and marketing can include anything from buying ad space on a billboard to paying for an ad on a website. It can also include things like hiring a branding agency to design your logo and branding materials. Hiring a social media agency to promote your business also falls into this category.

You can also deduct any online marketing costs that are related to your business. This includes things like buying ad space, hiring a marketing firm to increase brand awareness, or buying products from Amazon to resell and promote them as an affiliate.

 

Office Supplies and Equipment

Office supplies and equipment are another necessary business expense that you need to track. This is another expense you should track so long as it is reasonable and related to your business.

You can deduct things like printer ink, paper, and toner cartridges. You can also deduct the cost of office furniture, your computer, and other equipment that is related to running your business.

Another thing you should be aware of is that you can depreciate certain assets over time. This is when you deduct a portion of an item’s cost each year over its expected life span.

Protea Financial Small Business Receipts Protea Financial Common Business Expenses

Travel and Entertainment Costs

While you could deduct travel-related expenses related to your business, you can only deduct 50% of the amount that exceeds the standard deduction. This means that if you travel for work and spend $1,000 on travel, only $500 of that can be deducted from your taxes.

Entertainment costs, however, are a bit different. You can deduct most reasonable expenses related to your entertainment, but only up to the amount of income that you earn. This means that if you make $100,000 and spend $10,000 on entertainment, you can only deduct $10,000 of those expenses from your taxes, no matter how many tickets or dinners you bought.

 

Professional Services

Professional services are another important business expense. This includes things like hiring an accountant, a lawyer, or hiring an outside firm to manage your website and engage with your social media followers.

It also includes hiring a bookkeeper to manage your finances and keep track of your business expenses. Having a good bookkeeper is as essential as having a good accountant. They keep track of your expenses and workflows in order to help you avoid silly mistakes and oversights.

You can deduct the cost of these services from your taxes, just like any other business expense. You might want to consider having your bookkeeper and accountant bill you for their services instead of paying them up-front each month.

 

For Help Tracking Your Business Expenses, Contact Protea Financial Today!

Business expenses are any costs related to running and managing your business. To properly prepare for your taxes, you’ll need to track all these expenses.

Many of these have associated write-offs you can take advantage of by properly tracking them. For help keeping track of your business expenses, contact Protea Financial. We can help keep your business organized so you can focus on growth and customer engagement.

Let Protea Financial Help Teach You How to Track Your Business Expenses Properly

When you need help learning how to track your business expenses properly, it’s essential you learn from the people who track them for a living. Let the experts here at Protea Financial teach you how!

Tips to Make Your Month-End Close Processes Easier

Tips to Make Your Month-End Close Processes Easier

Month-end processes are often a source of stress for finance teams. Many organizations find month-end processes challenging, which is why it is important to put processes in place early and consistently.

If that sounds like your month end, you’re not alone – many businesses will face similar challenges. While most accounting departments dread the end of the month, an organized team can make things much easier on themselves at this time of the year. Here are some tips to reduce stress and streamline your month-end close processes.

 

What Are the Most Common Month-End Processes?

Month-end processes are standard parts of the business cycle. You may need to process payments, collect receivables, make payroll, or do regulatory filings at the end of each month. These tasks are often automated in modern businesses but can still be time-consuming and tedious for employees to complete.

  1. Collect payments: Businesses must collect monthly payments from customers if they want to stay fluid. This process can be automated, but it should also have enough human oversight to ensure that everything is current and no payments slip through the cracks.
  2. Write checks: This is often the most tedious process in any business. A lot goes into writing a check, from calculating the proper amount to getting each check sent out appropriately.
  3. Process invoices: Processing invoices involves reading invoices and making sure they are accurate before you pay them. Then there are calculating payment amounts, which can be a challenge for many small business owners who aren’t used to doing it manually.
  4. Pay taxes: Taxes are a hassle every year, no matter how well organized you are. You need to calculate sales tax and ensure all the correct forms have been filed. You also need to track sales receipts to know where your money is going and whether it’s being spent appropriately.
  5. Process credit card payments: When you accept credit cards, it’s important to process them quickly and accurately so that you don’t lose any money. In addition to earning more money from quickly processing these cards, quick and accurate processing of card transactions can help you avoid costly chargebacks. A chargeback happens when a card customer disputes a purchase and gets their money back. It can be expensive for businesses to deal with chargebacks, especially if they are accused of fraud. It’s, therefore, important to keep careful records of all your transactions, monitor your risk, and stay above the minimum transaction amounts for each card type.

Protea Financial Month End Close Process Easier

Organize Your Data

There are many examples of disorganization leading to errors and delays in month-end processes. If you can’t find something, you could be heading towards mistakes, such as incorrect calculations, incorrect payment amounts, and misapplied bank credits.

If you are experiencing issues, you may need to re-examine how you store data to find what you need when needed quickly. Organize your data to ensure that information is easily accessible and can be understood.

There are many ways of organizing data, so choose an approach that suits your organization. Some standard methods include data tables, dictionaries, and architecture models. Data tables are simple tables that show how data is used. Data dictionaries are more prescriptive and indicate what data should look like. Data architecture models show how information is delivered and consumed.

 

Automate Processes Where You Can

Many month-end processes can be automated to save time and reduce human error. For example, you might have a process to check your customers’ payment terms. This process might involve a person looking up the details for each customer.

You could instead automate this process and use data tables to select the customer details from the data table and have the system look up the payment terms automatically. You could use automation to schedule the payment or even generate the payment and send it to the customer.

It could save significant time and effort in areas where automation is available. Some processes may be more challenging to automate. If so, consider if they can be simplified. A more streamlined process will be easier to automate and more efficient when completed manually.

 

Use Checklists to Ensure Nothing Gets Missed

As part of the process of ensuring all data is correct, you might need to check each account. This could be a time-consuming task if you have a large number of accounts. A more efficient approach is to use checklists to ensure you have checked each account correctly.

Checklists can also show that every step in the month-end process has been completed and is accurate. This can be particularly useful in team environments. Using checklists for account reconciliations can demonstrate the company’s level of due diligence, which can be particularly important if your organization is audited.

 

Establish Clear Processes and Timing

If each team member has clearly defined responsibilities, they will know what to do and when to do it, reducing confusion and allowing everyone to focus on their own tasks. For example, you might have one person responsible for checking the payment terms for all accounts within a particular time frame. Another person could be responsible for monitoring payment dates for these accounts and bringing any issues to the attention of other team members.

It is also essential to ensure that all team members are aware of the company’s payment terms. You might have team members who are unaware of the payment terms but who are responsible for checking accounts.

Protea Financial Making Your Month End Close Process Easier

Define a Clearing Date and Vendor Date

A common cause of issues at the end of the month is accounts that are inadvertently paid too early. This typically happens due to a misunderstanding of the company’s payment terms. For example, if your customers generally pay 30 days after the invoice date, but your payment terms are net 10 days, you must ensure that your accounts are only paid 10 days after the invoice date.

Some organizations use the last day of the month as the clearing date. However, this is not always ideal because it may mean you must wait until the next month to pay some of your essential suppliers. A better approach is to use the first date on which you plan to pay suppliers each month as the vendor date. This will give you a more realistic time frame for paying suppliers.

 

Lock Down Permissions

You might have been using your month-end processes for years with no issues. But, as your business grows and the team changes, it can be easy for someone to make a change to a process inadvertently, potentially resulting in a process that no longer works properly.

It is essential to lock down the team’s permissions to prevent errors from happening. It is even more important to do so at the end of the month when processes are more tightly controlled. Permissions are often set up based on the functions and roles of team members. You may want people in accounting to have complete control over payment terms and dates, while other team members may only need read-only access.

 

Protea Financial Can Help Keep Your Month-End Processes Going Smoothly

Month-end processes can be challenging, particularly for large teams or organizations with many customers. However, if you take the time to prepare and put processes in place, they can be much easier to manage.

Organize your data, automate where you can, use checklists for account reconciliations, and establish clear processes. These simple steps can help reduce the stress and errors associated with the end of the month.

If you simply want to hand over the month-end responsibilities, reach out to us here at Protea Financial. We will do whatever we can to help make your business successful.

Protea Financial Can Help Make Your Month-End Close Processes Easier

If you need help to make your month-end close processes easier, then please reach out to us here at Protea Financial. Our experts can help guide you to a smoother month-end close so you can focus on the next step for your business. 

What is a W-9 and What You Should Know About It

What is a W-9 and What You Should Know About It

A W-9 is an IRS (or Internal Revenue Service) form used to collect the correct tax identification number from all third parties that the business pays during the year. You will usually be required to fill one out if you become an independent contractor, a vendor, or are brought on for a contractor position.

The W-9 should be provided to the hiring company at least once annually, so you have it on hand in case you need it for any reason. It is meant to provide information for both the company receiving it as well as the person filling it out. You should create your own if you don’t receive one after asking for it. It helps the IRS ensure that all businesses and individuals are paying the right entity for income, rent, services, and other payments.

The W-9 form provides the hiring company or vendee with your correct Tax Identification Number (TIN), serving as one form of documentation that proves you are eligible to work in the United States through citizenship or by being a tax resident. Through the certification that this person is U.S. based, it also means the company is not required to withhold or report payments to people who are not U.S. based.

The W-9 form allows the IRS to estimate the taxes an independent contractor or freelancer would owe, while also allowing businesses to be exempt from withholding and paying taxes on their behalf. If you are working for any company as any type of contractor or vendor, no matter if they are an individual or corporation, many will ask that you fill out a W-9 form. If you don’t know what this means, read on to find out more!

 

What is a W-9?

A W-9 is a form that tells the person you’re working for who you are, so they know they are paying the right person or company. When you first start working for someone as a vendor or in a contractor position, they will typically ask you to fill out a W-9 form. It’s basically a form that verifies your name and taxpayer identification number (TIN).

The W-9 form also provides information about you, including your address, your job title, and the type of work that you do. It also tells the hiring company if you are an independent contractor or a vendor. There are different rules for every kind of work, so knowing the difference is important.

Protea Financial What is a W-9

How Do You Fill Out a W-9 Form

Ideally, the company’s W-9 form should be provided to you so you can follow its instructions. You can also download a blank form from the IRS website for your own use if you do not get one from the company directly. You can find the form by searching the IRS website for the “W-9’’.

With the W-9, you need to give your name, address, Taxpayer Identification Number (TIN), the name of the business you are providing services for, along with the type of work you do. You also need to sign the W-9 and keep a copy for yourself.

 

When Should You Submit a W-9?

You should give the company your W-9 form as soon as you start working for them, if not prior to your start date. Some companies, like payroll services, will specifically ask that you send the form before you start working for them.

You should also submit the W-9 when you are hired as an independent contractor. The person hiring you will often ask you to fill out a W-9 and should also be able to answer any questions you may have during the process of filling it out.

 

What Required Information is on a W-9 Form?

There are two main sections on the W-9 form: The “Name’’ section and the “Taxpayer identification’’ section. Each has different information you need to input.

  1. The “Name’’ section includes the name of the individual filling out the form as well as the name of the person or business they are providing services for.
  2. The “Taxpayer identification’’ section includes the individual’s TIN, address, and the type of work they are doing.

 

Who Receives the W-9 Form?

The company that hires you receives the form. It is the company’s responsibility to ensure they are paying the correct person or company, whether that be as an independent contractor or as a vendor. The W-9 also verifies that you are eligible to work in the United States.

Protea Financial Independent Contractor or Vendor W-9

Why Is It Important to Know the Tax Status of Individuals?

Working with contractors and other individuals can be tricky when it comes to taxes. If someone is declared an independent contractor, they have to pre-pay federal or state income tax out of their earnings. However, they are responsible for paying self-employment taxes, which are often higher than many expect.

Since their income isn’t reported to the IRS, there is no way to know if they are paying their taxes correctly. If they work as an independent contractor, they are supposed to provide their 1099-MISC tax form to the person they perform work for each year. This shows how much they made during the year, and whoever receives this form is supposed to report it on their taxes.

 

What Do Employers and Individuals Learn from a W-9?

Both individuals and companies can learn information by looking over the W-9 form. The hiring company can learn if the individual is correctly declaring themselves as an independent contractor or a vendor. They can also see if the individual is accurately reporting the amount of taxes that they paid during the year.

The individual filling out the form can learn how much they need to pay in taxes, based on the income they received during the year. This knowledge helps them figure out how much to set aside from each paycheck so they can keep up with their self-employment tax amounts.

 

Turn to Protea Financial to Keep Your Company’s W-9 Information Organized

The W-9 form is important because it determines if an individual has taxes withheld from their pay. It is essential to fill out the W-9 form correctly and report your income accurately. If you don’t, you could end up owing a lot of taxes at the end of the year.

For help filling out forms correctly or to keep your company’s W-9 forms organized, contact Protea Financial.

Let Protea Financial Help You Understand the W-9 and What Its For

Have you ever needed to fill out a W-9? As a vendor or independent contractor, it tells any company you perform services for a lot about you. To learn more, reach out to Protea Financial today!

Harvest: What Information Your Accountant Needs

Harvest: What Information Your Accountant Needs

Inventory is arguably the most complex accounting function for wineries, starting with harvest. Harvest is the most exciting and demanding time for wineries, requiring a lot of information to be communicated back to your accountant. Still, luckily some information can be provided before this hectic period.

 

Grown or Purchased Grapes

To provide the appropriate information to your accountant, we first need to ask where you are sourcing your crop from? Are the grapes estate grown? Or do you purchase the grapes?

 

Estate Grown Grapes

If you grow your grapes, many vital pieces of information can be provided to your accountant well before harvest and will make the process during and after harvest much more streamlined. First, total acreage is needed for yield confirmation. The total tons harvested are compared to total producing acres to check for reasonableness. Likely the easiest way to provide this information is with a vineyard map.

The vineyard map should include block and varietal information. In addition, when not all vineyards are in production, it’s necessary to let your accountant know which vineyards or vineyard blocks the development relates to. Typically, it takes three years for a vine to produce a viable crop. With this, it’s essential to let your accountant know the date when the vineyard development began. Accounting-wise, this means that all costs associated with developing that vineyard, things like irrigation, vines, and trellising, will be accumulated for those three years.

This accumulated amount will then be depreciated over 20 years. This depreciated amount will be added to the annual cost of maintaining the vineyard. The price of estate-grown grapes is 12 months’ worth of farming and vineyard maintenance costs. Many wineries account for the 12 months based on a harvest year, with usually November through October of the harvest year. Other wineries for ease of reporting take 12 calendar months (January through December). Like all accounting though, consistency is the most important factor for accumulating farming costs. Whichever method is chosen, keeping that selection year over year is crucial to maintaining comparable financial information. Related to this, it’s also helpful to have an annual vineyard management budget to ensure all costs have been considered and the accumulated costs align with projected costs.

Protea Financial Harvest Accounting

Grape Sales

It’s common that wineries that grow their own crop sell a portion of those grapes to different buyers. Your accountant needs the following information for grape sales: customer information including legal name and address, billing email address, payment terms, and expected tons. This is an excellent example of information that can be provided before harvest begins. Providing information beforehand improves the turnaround time of final invoicing, increasing your opportunity to be paid promptly. Once harvest is complete or well underway, buyer weigh tags, or a weigh tag log will need to be provided to complete the final invoicing to the customer.

 

Weigh Tags

Once harvest begins, tonnage information needs to be provided to your accountant. This is usually provided via weighmaster certificates, commonly referred to as weigh tags and/or a weigh tag log. Weigh tags include harvest date, owner, grower, tonnage, vintage & varietal. This information will be used in the ending cost calculation for your wine. It’s important to note that all weigh tags are needed, including grapes sold to other parties, as mentioned in the prior section. It’s helpful to provide additional information than what is provided on the weigh tags, such as corresponding bulk wine SKU because wines are often blended, or a rosé is bled off.

 

Cash Flow Considerations

If you purchase grapes, you likely have grape purchase contracts with the grower. These contracts usually contain payment terms, varietal, and estimated tons. Having this information before harvest is helpful for inventory costing purposes and forecasting cash flow. Managing cash flow for wineries is always a challenge, especially after harvest. Having information early on can help prepare and allow enough time to take corrective action against future potential cash constraints.

Protea Financial Grape Purchases After Harvest

Grape Purchases

The same weigh tag information mentioned above for estate-grown grapes should be collected for purchased grapes. In addition, invoices need to be provided. Something to note is that many farming invoices have payment terms that break the payments into different calendar years. For example, 50% being due 30 days after the pick date, and 50% is due 1/31/23. Even with these split payment terms, all costs should be recorded at the harvest date. This is because the amount is owed to the grower at the time of harvest and is due at different dates, but the entire amount is due. There are times that invoices are not received by period end. When this occurs, the tonnage received times the contracted price will be accrued, which means being recorded as a liability by the winery. So even though a bill for the grapes was not received, they still need to be recorded as owed to the grower.

 

Natural Disaster or Event

In recent years, nature has shown us many ways in which harvest can be affected, both good and bad. Some harvests yield more than expected, some less, including none which has been seen lately. What’s important is to share all relevant information with your accountant if you are affected by a natural event or disaster. Some examples of this are larger than anticipated yields, vines affected by smoke taint, vineyard damage, and any insurance payouts for vineyard or grape-related damages.

 

Never Too Much Information

To summarize, too much information is always better than not enough. When in doubt, provide the information to your accountant and provide it early. Prompt information makes timely reporting possible, allowing for well-informed and better management decisions.

 

Let Protea Financial Help You with Your Next Harvest

Are you looking for more information? Contact Protea Financial today and let us help you organize your finances, streamline your inventory costing, and be ready ahead of the next harvest.

Protea Financial Can Help You Get Ready for Harvest Accounting

Call Protea Financial for help with getting ready for harvest time. We can help organize your finances or help you prepare for harvest bookkeeping. We are here to help!