MinistryCPA - Corey A. Pfaffe, CPA, LLC

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How have Small Businesses Weathered Covid? (a June 2021 outlook)

Over the past year MinistryCPA has taken part in a small business survey from the United States Census Bureau. The survey compiled information from millions of small business owners to analyze how Covid impacted small businesses in different states. If you would like to look at the data for yourself, you can follow the link to the United States Census Bureau Website. Change in Revenues Many small businesses experienced a change in revenue over the past year. In June of 2020, 19.7% of small businesses said that they saw growth in their revenues during the previous month. However, at the same time 42.6% said that they had a decrease in revenue. Certain states struggled more than others. A higher percentage of businesses in California, Nevada, and Wyoming were experiencing less revenue. In those states approximately 47% of small businesses had seen a decrease in revenue. The results of June 2021 tell a significantly different story. 11.2% of businesses said that they had an increase i

Top 10: Questions Not-for-Profits should Ask Their Accountants Regarding Form 990

This is another posting in the MinistryCPA Top 10 series: Filing your not-for-profit (NFP) organization government reports can be a daunting task, even more stressful than Form 1040. We have compiled a list of some of the top questions that we have received when dealing with Form 990. We recommend that NFPs consider asking their accountants these questions. This list is by no means comprehensive, but it does cover some of the areas for which we receive the most questions. 1. Does the organization need to file a Form 990? The IRS has established a list of requirements to help tax-exempt organizations determine whether they need to file Form 990 and which one to file. Most not-for-profit organizations need to file Form 990, but if the organization is small enough it may only need to file an e-postcard (990-N). Churches are automatically recognized as a tax-exempt organization and generally exempt from filing Form 990. The IRS has published articles that give comprehensive lists

EIN Application and Verification Letter Request

Employer Identification Numbers (EIN) are used to identify a business through a nine-digit number. This number is necessary for a business to open a bank account, use accounting software, apply for business licenses, and file tax returns. In recent years it has become common for a bank, software provider, or government office to ask for a copy of the letter that the IRS sends to a business at the time of assigning the EIN. Having the EIN letter also helps an organization confirm the official name of the business per IRS records. If a business has disposed of or lost its EIN confirmation letter then it can request an EIN verification letter through the IRS Business and Specialty Tax Line at 1-800-829-4933. The caller will have to verify his or her identity and answer security questions about the business to receive a new verification letter. The letter will either be mailed or faxed to the business.

Top 10: Bookkeeping Mistakes

Here at MinistryCPA we receive a wide variety of questions and come across many unique situations. We recently received a request to cover different topics by briefly describing the top 10 problems or questions raised in each category. We have since developed a list of topics that will be covered in a series of top 10 posts on our blog. We hope that these discussions will be helpful to you. In this post we will be looking at the top 10 bookkeeping mistakes seen by MinistryCPA. 1. Errors in initial software setup When establishing and setting up accounting software such as QuickBooks, it is important that it is done so carefully and properly. Many of the problems MinistryCPA helps to correct are caused by an error in the initial software setup. It is important to consider what software features are needed for the organization (payroll, inventory, etc.), what accounting method best suits the organization's operations (cash, accrual, modified cash), and that a strong chart of accoun

Advance Payments of the Expanded Child Tax Credit

MinistryCPA has received many inquiries regarding the advance payments of the expanded child tax credit. For 2021, the child tax credit has been increased and made fully refundable. Most individuals with children have likely received correspondence from the IRS indicating their eligibility for the advance payment of these credits which will be sent out each month beginning on July 15. Those who receive the advance payments will claim the second half of the expanded child tax credit on their return. For some families, it may be advantageous to unenroll from receiving the advance payments. Each situation is different, so it may be wise to do some basic tax planning to determine the best course of action. If you are unsure whether to receive these advance payments of the credit now or wait to claim the credit on your 2021 return we recommend unenrolling now. The full credit will be available to you on your 2021 return if you unenroll from these payments. To stop advance payments both you

Potential Tax Law Changes Under New Biden Administration

With the change of Administration in Washington, it is likely significant tax law changes will be made in the coming year. The following highlights some of the potential changes in tax law we believe may be made to increase federal tax revenues as well as some potential actions that can be made in anticipation. Potential targets for tax increases as we see them Increase in tax rates Reduction or elimination of favorable capital gains and qualified dividend tax rates Reduction or elimination of the qualified business income deduction Reduction or elimination of immediate expensing of capital purchases Reduction or elimination of business tax credits Reduction or elimination of retirement savings incentives Caps on deductible compensation of highly compensated employees Strategies in anticipation of these concerns (actions to consider now, while benefits from the current tax law are still in place) Sell assets eligible for favorable capital gains tax rates Acquire investment and busine

Church Management Software Alternatives

Question: Many churches adopted online giving and donor management in the early days of Covid-19. Some churches were forced to make a quick decision, while others have not revisited their donor management tool for some time. What options are available for churches seeking to establish or change their donor management software? Answer: There are many options available, each having its strengths and weaknesses. It is important that the specific needs of the church are considered when deciding which software to use. It is also important that the software is not only selected to meet those needs, but that it also falls reasonably within the church's budget. The church should not be paying for additional features it will not use. A couple of our team members at MinistryCPA serve at their local churches and have become familiar with the following products. Stephanie and Tim have provided a bri ef listing of those alternatives below, including their features and advantages. ServantKeeper

Protect Your Identity- Use an Identity Protection PIN

Question: What can I do to help protect my myself from identity theft and tax-related fraud? Answer: One way you can protect your identity when filing your tax return is by taking advantage of the IRS's Identity Protection PIN program. The IRS has recently begun expanding the use of Identity Protection (IP) PIN's for those who wish to make use of the program. An IP PIN is a six digit code issued by the IRS and known only to the individual and his or her tax preparer. The PIN is submitted on the individual's tax return to verify their identity. Throughout the last decade IP PIN's have been issued to protect individuals who have suffered from identity related tax fraud. Now, beginning in 2021, the IRS is allowing individuals to request an IP PIN regardless whether they have been a victim of identity theft. Because of the increasing risk of identity theft, we recommend you consider making use of this additional security measure when filing your taxes. Those who wish to ob

Simple Cafeteria Plan Eligibility Requirements

Question: A church is considering adopting a simple cafeteria plan in order to provide its pastor and other employees a choice between two benefits. What requirements must be met for the church to be eligible to establish a simple cafeteria plan? Answer: Section 125 Plans, often referred to as Cafeteria plans, allow employers to offer employees certain benefits on a pretax basis. In most cases, participants in a cafeteria plan must be permitted to choose from at least one taxable benefit (i.e. cash) and one qualified nontaxable benefit such as health plans, group term life insurance, and others described in IRS Publication 15-B . In order to be Section 125 compliant, the employer must retain written documentation of the plan and meet various requirements described in Internal Revenue Code (IRC) Section 125. One common type of Section 125 plan is a Premium-Only Plan (POP). POP's allow employers to withhold and remit each employee's portion of health insurance premiums pre-tax