One Report Every Business Owner Should Know – The Profit and Loss Statement

A profit loss statement (P & L) shows a business’s profit or loss for a specific period of time.

Profit Loss is also referred to as an income statement or an income and expense statement.  

Below you will find how to calculate your profit loss statement.

Cost of Goods Sold (COGS) is basically what you’re spending on what you sell. 

Operating Expenses are just that, what it takes to operate your business. 

Some examples of Operating Expenses include:

·         Employee salary

·         Benefits

·         Rent

·         Power

·         Insurance

·         Internet

Income from Operations would be the profit your business has made from selling a product. For example, the profit Applebee’s makes on a meal after purchasing all of their supplies in order to prepare the meal.

Finally, your Net Income is the actual income you make "at the end of the day."

As you can see your Profit Loss Statement is important to show what your business is bringing in and what you may be losing. Here at Professor Tax USA we want you to be informed and help you be prepared so that you will be less likely to lose any income. We want your business to thrive! If you would like The Professor to review your Profit and Loss Statement with you complimentary or have any further questions regarding the Profit Loss Statement, contact us.

How to Avoid an IRS Audit

Do you ever worry about being audited by the IRS? There is no for sure way to avoid an audit, but there are many ways to reduce the risk. If you are selected for an audit, it does not mean that you have a mistake in your taxes. According to the IRS those that are audited are randomly chosen, forms may not match the information reported, or the returns selected for the audit involve another taxpayer.

Let us help you avoid an IRS audit.

1.   Don’t rush when filing your taxes. If there are many mistakes on your return, then it sticks out to the IRS. One of the biggest mistakes is people forget to sign their return or include their social security number.  

2.   It is important that you report all of your income. Report all bank interest, child support, gambling’s, etc. Remember, just because you didn’t get a copy of a report that it didn’t get turned in by someone else. 

3.   Make sure you don’t claim false dependents. For example, if you’re divorced make sure the other parent is not claiming the child before you do. If both parents claim the child/children on their return this may flag an audit. 

4.   Be careful when claiming charitable deductions. You don’t want them to be larger than your gross income. This will definitely be a red flag to the IRS.

5.   If your income is more than $200,000, your odds of being audited increase by 3%. If your making more than $1 million your odds increase to more than 8%. 

6.   If you find a mistake after you have filed your return, you can fill out a 1040X within 3 years of the initially filed return and correct the error.  

7.   Don’t forget to file your tax return. Just because you didn’t file doesn’t mean you can’t be audited. The IRS can file on your behalf and then your deductions are kept at a minimum. Subsequently, they can then in return audit your return.  

8.    Avoid rounding your numbers on your return. This most likely will trigger a review of your tax return. 

As you can see, there are many important steps to help prevent an audit; however this does not guarantee you will not be audited. Remember, audits are often random even if there is nothing wrong with your return. It is important to remember that if you make a mistake and you were not trying to actually “cheat” the government, the IRS can be lenient.

Here at Professor Tax USA we will represent you or your business if you are ever audited by the IRS. For our clients, we not only prepare your company's taxes, BUT we file your personal taxes FREE of charge. If you have any questions, or want to find out more you can call or email “The Professor” anytime.

Meet Erik and Rhonda!

Professor Tax USA travels all around the United States and has met some amazing people! One of our wonderful clients and friends is Eric and Rhonda Vandrew. The Vandrew’s own and operate Route 11 Glass Plus Inc. in Chambersburg, PA. They have been in business for 11 years. It is a one stop shop for quality work. 

Several Services Offered:

§  All automobile window replacements

§  Excavating and construction equipment

§  Motor homes

§  Big rigs

§  Install Vanity mirrors

§  Double pane home windows

§  Custom cutting for HOTRODS

§  Offer plexi-glass and polycarbonate

Route 11 Glass Plus has been working with Professor Tax since 2003. Henry came to them and he charges a monthly fee. A real plus is “He doesn’t charge extra if you have a question”. What really made Rhonda and Eric choose Professor Tax is “They would represent you if there was ever an IRS audit.” Professor Tax takes care of the taxes for Route 11 Glass Plus and is always available to answer questions.

Henry and Daryl travel to Pennsylvania every other month. During the months that they do not travel they send a postage paid envelope so Route 11 Glass can send anything they need Henry to look at or work on.

Henry is easy to contact. He provided Route 11 Glass Plus with his home, cell and office number. “He always get back to you quickly,” says Mrs. Vandrew. When asked what the most important benefit they have received from Professor Tax Mrs. Vandrew says, “I enjoy his company, him and Daryl both. He is very concerned about his clients. If you have a question he is very informative.” Mrs. Vandrew describes the services received from Professor Tax as, “Kind, fast and courteous.”

“If someone is looking for and accountant, they should meet Henry. He knows the in’s and out’s,” says Mrs. Vandrew. “I’m very pleased.”

When Mr. and Mrs. Vandrew came to visit Florida, Henry took them around the beaches. They ate at the Treasure Ship prior to it burning down. He also took them out on his boat.

  

As a business owner you know the importance of taxes and bookkeeping. Let the “Professor” take care of the accounting, while you focus on your business. If you have any questions or want a free consultation contact, Professor Tax. You will be pleased.

Tax Scams – How to Protect Yourself and Your Identity

Are you worried about tax scams? According to the IRS, impersonation schemes are more wide spread during tax season. They can be in the form of e-mails, phone websites, even tweets. Scammers may also use a phone or fax to reach their victims.

Professor Tax wants to help you stay safe during tax season. That’s why we are providing you with Tips on how to Protect Yourself and Your Identity.

How to Avoid Tax Scams and Identity Theft:

Ø    If it’s too good to be true, it most likely is.

Ø   The IRS never asks for detailed personal and financial information like    PINs, passwords or private credit card information, bank or other financial accounts.

Ø   The IRS will NOT contact taxpayers by email to request personal or financial information.

Ø   If you do get a phone call or email asking for any of the above personal information, you are talking to a crook.

Ø   If you receive a paper letter or notice via mail claiming to be the IRS but you suspect it is a scam, contact the IRS at http://www.irs.gov/contact/index.html to determine if it is a legitimate IRS notice or letter.

  

Ø   Do not routinely carry your Social Security card or other documents that display your Social Security number in case your purse or wallet is stolen.

Ø   Create Strong Passwords; this will keep others from easily accessing your information.

Ø   Make sure you have a password on your cell phone. This will help ensure your information is secure here also.

Ø   Shred your mail. If someone wants to steal your identity they will look through your trash. 

Ø   Make sure the internet you are using is secure. It is important to have a password on your wireless network that way hackers cannot access your personal information.

 

 

The IRS wants to know about all tax scams out there. The agency has investigators to track down these crooks. If you receive a scam e-mail claiming to be from the IRS or discover a website that claims to be the IRS but does not begin with http://www.irs.gov/, forward it to the IRS at phishing@irs.gov.

Professor Tax is here to answer any questions you may have. If you are having trouble with your taxes or simply want a free consultation, call or come on it and we will gladly assist you.

To find out more about how to report tax scams visit the IRS.gov.