03.13 2021

Unemployment Compensation

What is Unemployment Compensation?

Unemployment compensation is a temporary income paid by the state to unemployed workers who have lost their jobs due to layoffs or retrenchment.

  • In Washington state, the maximum weekly benefit amount is $844. The minimum is $201.

How to apply for it?

The fastest way to apply Unemployment is online. Because of COVID-19, applying by phone has very long wait times. The Employment Security Department provides a helpful checklist for the application of Unemployment Compensation. It will tell you your eligibility and documents needed to apply.

For more information, visit the Employment Security Department website and review their checklist.

How to report and pay taxes?

If you received unemployment compensation during the year, you will need to report it on your tax return in gross income.

You may be may be required to make quarterly estimated tax payments, or Can choose to have federal income tax withheld from your unemployment compensation. Refer to Form W-4V, Voluntary Withholding Request and Tax Withholding.







Why Bookkeeping is important?

Bookkeeping is important for helping maintain accurate financial records and the overall health of your business. Yet, many businesses fail to implement this integral process.


Whether you’re doing your own bookkeeping or having outsiders handle it for you, here are several benefits of prioritizing up-to date bookkeeping.

1. Budget
It‘s challenging for businesses to forecast for future expenses and income without any prior year data. Bookkeeping can help organize incomes and expenses properly as well as it makes it easier to review financial health and resources for future planning.

2. Tax preparation
Tax preparation is another complex task that businesses must get done every year. In most cases, its frustrating to find or gather all necessary support documents for filing a tax return. A great bookkeeping function can help businesses be more efficient for tax filing process by simply recording information and being ready for tax time.

3. Financial and Business analysis
By keeping accurate records, business owners get a snapshot of their company health and standing from financial statements. Financial statements, or reports, allow business owners to know exactly where outgoing money is being spent. They can also help find an opportunity or trend to grow their business.

4. Organization
Achieving financial organization is the most helpful and beneficial outcome of bookkeeping for business owners. Thanks to technological development, businesses can increase accessibility to data, conveniently and securely store and share financials and other data, and easily communicate with clients and accountants. A shift from traditional accounting to accounting software encourages businesses to organize and manage their financial information in an efficient manner.

5. Better cash flow
Bookkeeping improves cash flow. Implementing the routine recording of business transactions will allow business to track when their customer and vendor invoices are paid. For business owners, ensuring payment and being paid on time are essential for maintaining profitability. Avoiding outstanding balances in Accounts Payable and Accounts Receivable also helps keep financial reports clean.

Now you know why bookkeeping is important. There are more benefit businesses will gain from bookkeeping. In general, it can save businesses time, money, and stress! If businesses need to implement this integral process, consider hiring a professional or contact us. We are here to help train business owners to encourage business growth together.

02.28 2021

Get Ready for Tax Season & Use IRS Online Account

Tax season is everyone’s least favorite time of the year. Many business owners and individuals feel anxiety of the filing tax return on time. Do not worry! You can easily file your tax return through IRS online account.

According to IRS, taxpayers can access their personal and business tax information through an individual online account.

With an Online Account, taxpayers can view and check:
• The amount they owe, updated for the current calendar day
• Their balance details by year
• Their payment history and any scheduled or pending payments
• Key information from their most recent tax return
• Details about their payment plan, if they have one
• Digital copies of select notices or letters from the IRS (under the Message Center tab)
• Economic Impact Payments (EIPs)

Using this resources will help taxpayers accurately calculate any Credit they may be eligible for on their 2020 tax return too.
Additionally, taxpayers can:
• Make an online payment
• See payment plan options and request a plan via Online Payment Agreement
• Access their tax records via Get Transcript

If you do not have an account, create online account and let’s finish up your 2020 tax return.

The Deduction for Qualified Business Income

The primary goal for the 2017 Tax Cuts and Job Act (TCJA) reform bill was to lower the Federal Income tax rate for C corporations. It reduced the corporate income tax rate to 21 percent, and Congress included a new bill called the Qualified Business Deduction (QBI) -IRC Section 199 , which applies to non-corporate taxpayers.

At the most basic level, Section 199A permits an individual to deduct 20 percent of his/her qualified business income generated through a sole proprietorship, a partnership, or S corporation. The deduction for qualified business income is the lesser of:

  1. 20 % of QBI
  2. 20 % of modified taxable income

In order to understand how to apply this deduction to your personal taxes, we have defined some important terms below.

Definition of Qualified Business Income (QBI)
QBI is defined as the ordinary income less ordinary deductions a taxpayer earns from “qualified trade or business” conducted. *Each partnership or S corporation can include the distributive share of interest held by the taxpayer.

QBI does not include some income from investment:
– Capital gains or losses
– Dividends
– Interest income
– Certain other investment items

Definition of Qualified Trade or Business (QTB)
In general, QTB includes any trade or business other than providing services as an employee. Sole proprietors, non-corporate owners of S corporations, Partnerships, and LLCs, and independent contractors are covered by this deduction.

If you’d like to learn more about this deduction, visit the IRS website: Qualified Business Income Deduction

What is the Standard Deduction vs. Itemized Deduction?

Taxpayers have two deduction options: a Standard Deduction or Itemized Deduction. They can either claim the standard deduction or itemized deduction to lower their taxable income. *Taxpayers can do both. Many them might have a question which is better to take for their tax return. Let’s start understanding the difference between Standard Deduction and Itemized Deduction. 

Standard Deduction

The standard deductions is a fixed amount that lower the income individuals taxed on. Congress sets the amount of the standard deduction each year. In 2020 standard deduction is:

FIling Status 2020 Tax Year2021 Tax Year
Married, filing Separately$12,400$12,550
Married, filing jointly$24,800$24,800
Head of Household$18,650$18,800
*Standard Deduction increases if taxpayer is age 65 or older, or blind.

Claiming the standard deduction makes the taxpayer’s process much easier and quicker, which is one of reason that most taxpayers claim the standard deduction instead of itemized deduction.

Itemized Deduction

On the other hand, Itemized deductions have a list of eligible expenses and taxpayer can take for various expenses they incurred during the tax year. It sometimes exceed the standard deduction, which means that itemizing allows taxpayers to reduce their taxable income. Most common itemizing expenses:

  • Medical expenses
  • Charitable contributions
  • Mortgage interest
  • Property Taxes
  • Student loan interest
  • Child and dependent care tax credit
  • American Opportunity tax credit
  • State and local taxes
  • Gambling losses
  • IRA contributions
  • 401 (k) contribution
  • Educator expenses

And, more deductions available.

Which to take?

If your standard deduction is less than itemized deduction, you should itemized to reduce your taxable income.

More information available at IRS-Itemized Deduction and IRS-Standard Deduction