DHA Econcomic Survey Results

Davis & Hodgdon Associates, conducted an Economic Survey developed by the VT Business Roundtable earlier this month regarding the future of Vermont-based businesses.

More than 50 Respondents were asked how they anticipated their companies’ sales changing over the next six months. Over half (55%) foresaw their sales increasing by 10% to 30%. Only 10% estimated that sales would decrease by the same percentage range. Approximately 31% believe their sales levels will remain the same for this period.

When asked to forecast their companies’ capital spending over the next six months, 56% indicated they would see decreases of over 70%. Only 34% indicated they would increase their capital spending.

On the employment front, 46% of the businesses surveyed responded that they did not anticipate any changes in their companies’ employment levels over the next six months. However, 38% intend to hire one to three people in the same time period. Only 4% of respondents indicated they will decrease hiring by three to ten people.

“The waters appear calm and this is significant in terms of moving forward,” shares John Davis, Davis & Hodgdon’s managing partner. He continues, “These economic indicators, based on a sampling of thriving Vermont-based organizations doing business in- and out-of-state, show promise. Sales are projected to increase, employment is stable and businesses are still remaining prudent with capital spending somewhat decreasing. We also see that business owners are demanding the Governor address important issues like healthcare costs and improved broadband service. All of this bodes well for our state’s economic future. Compared to some other states, I believe we are in an enviable position to move forward.”

For complete results visit:  Economic Survey Reults

First installment of taxes owed on 2010 Roth conversions

Individuals who did a Roth conversion in 2010 and elected to spread the tax payment over 2011 and 2012 will have to pay one-half of the tax owed on their 2011 income tax return. However, if a taxpayer took a distribution in 2011 from their 2010 Roth conversion, they may be required to pay more to cover taxes on the distributed amount. In addition, tax on any additional conversions done in 2011 will have to be included on the 2011 tax return.

2011 Tax Return Deadline

Taxpayers will have until Tuesday, April 17 to file their 2011 tax returns and pay any tax due because April 15 falls on a Sunday, and Emancipation Day, a holiday observed in the District of Columbia, falls this year on Monday, April 16. According to federal law, District of Columbia holidays affect tax deadlines in the same way that federal holidays do, giving all taxpayers two extra days to file this year. Taxpayers requesting an extension will have until Oct. 15 to file their 2011 tax returns. The IRS will began accepting e-file and Free File returns on Jan. 17, 2012.

Recordkeeping: Part II

Part II:  Key Components of a Recordkeeping System

Currently, there are many different computerized accounting software programs available, such as QuickBooks, which help small business owners keep detailed records of their business operations.  No matter what system you decide to install, there are several key components that should be implemented. 

First, the system should be accurate.  A good system will separate items on the balance sheet as assets, liabilities, and equity.  Likewise, an income statement will separate items based on whether it is an income or expense item.  If you are unsure of the proper classification, it is recommended that you contact your accountant.  For example, classifying an item as a Research & Development cost (an expense), instead of Inventory (an asset), could have a substantial impact on your bottom line.

Second, the system should be current.  If you are paid by a customer in February, but do not record the payment until April, you will not have the most recent information available to make a reasonable decision.  Make recordkeeping a habit and update regularly.

Third, the system should be consistent.  Consistency allows you to compare your records from one period to another period, as well as with industry standards.  For example, a change in accounting policy, such as changing from a cash basis to an accrual basis affects the consistency of information.  While a change in accounting policy is sometimes necessary, it will affect your ability to compare information.

Jessica Taylor, Associate Accountant

Davis & Hodgdon Associates, CPAs

January 2012

Recordkeeping: Part I

Recordkeeping is an essential component of a successful small business.  The benefit of being able to “see the big picture” of your business’ operations and cash flow, allows you to make decisions more timely and helps to prevent any large problems before they occur.  Additionally, historical data from previous years can be compared to the current year, enabling you to anticipate future sales and obligations.  The following 3-part series discusses key areas of recordkeeping, the requirements of a recordkeeping system, and how to implement a computerized recordkeeping system.

Part I:  Key Areas of Recordkeeping for a Small Business

There are many elements that are recorded in a business, such as accounts receivable and accounts payable, however two elements that can have the greatest impact on a small business are inventory and payroll.  The following describes the importance of each to a small business and why accurate, updated recordkeeping is so essential.

Inventory:  While it is imperative to have enough inventory on hand to be able to deliver goods to customers, it is equally important to not have too much inventory.  An excess amount of inventory represents money that could be spent elsewhere, whether it is for paying suppliers or for purchasing equipment.  Additionally, if you have excess inventory, you are more likely to run into the problem of it becoming obsolete, thereby resulting in a loss of income.

Payroll:  For most small businesses, paying employees can be one of the largest expenses.  Additionally, payroll requires accurate recordkeeping, as there are taxes collected by the state and federal government, worker’s compensation laws, and wage/hour laws to abide to.  If records are not correct, the taxpayer may risk penalties from the IRS.

In our next blog post, we will talk about implementing a computerized recordkeeping system. 

Jessica Taylor, Associate Accountant

Davis & Hodgdon Associates, CPAs

January 2012