Our interview today is with Greg Weigle who is a partner in Cyber Financial Services. Cyber Financial Services provides accounting and financial management services to small and medium size companies.

In the Atlanta area you can contact Greg or his company at:

Cyber Financial Services 11030 Jones Bridge Rd. Suite 206 Alpharetta, GA 30022 770-442-8235

Q: How long does a person or small business need to keep their records and receipts?

Greg: Generally speaking approximately 7 years.

Q: Is that how long a person is responsible for mistakes on their taxes?

Greg: Basically they can go back and audit you for 3 years, and if they find reason to back further based on those audits they can. But there are limitations.

Q: What is the difference between a CPA and an accountant?

Greg: A CPA has passed his or her states exam required in order to become certified, and then you also in order to maintain that certification must continue to take professional education classes annually. Versus an accountant may have a degree in accounting or experience in accounting but has never sat for an exam or passed their state exam. An accountant is not required to maintain any further education beyond their degree.

Q: There are a lot of software programs on the market. Are they a good value for a consumer or business owner?

Greg: Yes, they are definitely a good value for anyone to purchase if they feel like they have the time and enough experience to learn and understand those packages, but they really are very user friendly. Even if you don't complete your taxes with those software packages they can help accumulate the information that you may need in order pass it on to your accountant and it can make that process that much easier.

Q: What types of expenses for your home are deductible?

Greg: It depends on what you're utilizing your home for, if it's just a residence or if it's used in your business in anyway. If it's just truly a residence, then you have your property taxes and your interest expense. Those are the two primary deductions for your home if it is strictly a residence. If you're using some portion of your home for your business, then you can include a lot of the expenses of running the household, utilities and even a portion of the overall purchase of your home related to the square footage of the home that you are using. So you can take advantage obviously if it's being used in anyway for business purposes.

Q: If an accountant or CPA prepares your taxes and an error is made that ends up leading to problems or fees from the IRS, who is responsible the preparer or the owner of the tax return?

Greg: If the error truly occurred by misplacement on the tax return of a deduction etc, then the preparer would certainly be responsible. If the error occurred because of misinformation that was provided to the preparer that they would not have had the ability to have knowledge being incorrect of then the error and responsibility would be the tax payer themselves.

Q: If a person is facing an audit, who should they speak with first a CPA or a tax attorney?

Greg: Either would be fine. Obviously both are going to have a lot of tax knowledge; actually you really don't want to have the IRS talk to the tax payer, simply because the CPA or tax attorney have more experience in how to deal with an IRS agent during the inquiry.

Q: What is the difference between a CPA and a Tax Attorney?

Greg: Both can have a tremendous amount of tax knowledge, but the tax attorney has gone on to pass the bar exam and become an attorney. Both have acquired a tremendous amount of tax experience and knowledge.

Q: If you are facing an audit and you're called to an inquiry are you allowed to bring your CPA or tax attorney with you?

Greg: Oh yes, actually the tax payer may not even go to the session but send their CPA or tax attorney for them. Which a lot of times would really be recommended.

Q: If a person owes money to the IRS, how do they go about setting up payment plans?

Greg: You need to contact the IRS agent who was assigned to your account. Either the tax payer or with the help of a CPA or tax attorney can set that up, which the really very willing to do because they'd rather have you pay the debt then to not pay the taxes at all.

Q: For small business owners or people who are starting a business can you explain what quarterly taxes are and how they work?

Greg: If you're a small business owner and you've established the type of small business for example an LLC or even a sub S were it does not pay its own taxes, then you as an individual are responsible for paying in the approximate amount of taxes every quarter. A corporation will not be responsible for paying its own taxes, all of the income then passes on to you as an individual or the partner in the business.

Q: It's just an estimate is that correct?

Greg: The quarterly taxes are estimates of what you'll believe your total tax liability will be at the end of the year. So you really want to analyze as you go through the year especially if your income situation would change drastically during the year to make sure that your quarterly tax payments are keeping up with what you think your ultimate tax liability in total will be at the end of the year, because your suppose to have at least 90% of your tax liability paid in by the end of the year or 100% of what you paid in the prior year.

Q: If someone is starting a business, at what point do you recommend forming a corporation? Or do you recommend it first thing, or should a person wait? This is from a tax point of view I know that an attorney would recommend forming one immediately for liability protection.

Greg: Tough question. Most people from a legal side of things would want to look into that option right away. From a tax stand point it depends on your situation and the legal entity that you choose, remember all that income gets passed on to you as an individual. You need to determine that based on your personal income tax situation is without the business income you receive, because it could be that if you set up a regular C Corp the income tax rates maybe lower than what you'd pay as an individual if the income was passed on to you. Again, depends more on what other income you have as an individual and of course deductions. Obviously if you other income from other investments or other sources it may very well be have your corporation pay its own taxes so it doesn't end up getting passed on to you and increasing your income rate because of the other income that you already have.

Q: What types of expenses are deductible for a business owner?

Greg: That would be a very lengthy list but any expense or cost that is truly associated with conducting the business.

Q: Are health benefits included as a deduction?

Greg: It depends on the entity that you set up your business as. If its setup as an LLC, LLP or S corp. it can not be used as a deduction it has to be taken on your personal tax return. If you really think about it health insurance as an owner is not necessary for you to operate your business. If you really ask yourself are these expenses required for me to operate my business then they're going to be deductible, as long as their legal. If it's a regular C corp., which pays its own taxes, then anyone who an employee can take a health expense and that would be an expense for the corporation.

Q: Everyone has heard a lot about the SUV tax deduction. If someone is coming into your office and wants to take the SUV deduction how would you explain it?

Greg: The simplest way to explain it is not to lose track of the idea that if your going to have any vehicle as a tax deduction then first of all it has to be truly used in conducting your business. The first rule of allowing any vehicle as a business deduction you have to be actually using that vehicle for business and have detailed records of the percentage that that vehicle is used in the business. Otherwise the SUV deduction allows you to take advantage of a significant portion of the cost of that vehicle as a deduction up front, because of the type of the vehicle it is. What gets people excited is that you can take the bulk of the deduction in the first year. Especially in a year were you have a lot of income you will be able to take a larger deduction for that vehicle in the first year to off set that income.

Q: Are the same deductions available to property you use as rental property?

Greg: To officially qualify as rental property if you own a second house or more, there are rules that come into play as far as how much you rent that property out during the year versus how much you use it for personal use. That's what has to be considered on an annual basis to determine how much of a deduction you may qualify for on the expenses related to that home to have it truly qualify for rental property. The main thing that I think people want to be careful of when they try to get involved in rental property is not in anyway try to do it for a tax advantage, but first and foremost trying to make a good investment. Looking at it from the stand point obviously buy low and sell high, and the tax deduction will work itself out in the end, but ultimately you want to consider how good of an investment it is. But certainly if you've determined that you want to buy the property because it would be a good investment then the tax advantages are that all the expenses associated with the rental property are deductible against the rental income. It can get more complicated is if your using it at all for personal use or for a vacation home then there are some calculations and percentages that must be looked at on an annual basis.

Q: Is their an organization or association to get recommendations for CPA's?

Greg: The best place to go to is their states society. Every state has a society for their CPA's.

Cyber Financial Services 11030 Jones Bridge Rd. Suite 206 Alpharetta, GA 30022 770-442-8235

THE FOLLOWING MATERIAL IS OFFERED FOR INFORMATIONAL PURPOSES ONLY AND
DOES NOT CONSTITUTE LEGAL ADVICE