• 55.5 cents per mile for business miles driven
• 23 cents per mile driven for medical or moving purposes
• 14 cents per mile driven in service of charitable organizations

The rate for business miles driven is unchanged from the mid-year adjustment that became effective on July 1, 2011. The medical and moving rate has been reduced by 0.5 cents per mile.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs as determined by the same study. Independent contractor Runzheimer International conducted the study.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.

For the corporation to stand up to scrutiny, you want the corporation as the entity to authorize the conduct of business and the employer of the agent (you) to make the sales.

First, establish the corporation as a bona fide legal entity then have the corporation execute contracts, receive checks in its name and direct your activities(have your “corporate self” talk to your “employee self” in writing).

Checks must be payable to your Corporate Name.  No Exceptions are allowed.  The law says that “gross income” includes all income, from whatever source derived, including compensation for services, fees and commissions.¹ If you as an individual receive Form 1099-Misc, then the government believes you earned the income.  This pierces the corporate veil.

¹ IRC Section 61(a)

The HSA contributions are tax-free fringe benefits to your employees. and a deduction to your S corporation.  Your S corporation must report these contributions on Form W-2 in box 12 using the code W.

The trustee or custodian of the HSA is generally a bank or an insurance company.  It reports distributions from the HSA on Form 1099-SA.

If employees are more than 2 percent shareholders, HSA contributions by your S corporation are treated as wages.  Thus, the HSA shareholders-employees’ contributions are added in box 1 of Form W-2.  The shareholders-employees deduct the contributions on individual tax return Form 1040 by completing Form 8889.

The party is 100% deductible for employees and their spouses. Thus, you will need to categorize the party to an account perhaps titled “100% deductible entertainment.”

To prove your deduction, you should document the names of the employees and spouses who attended the party. Plus, you should have both receipts and canceled checks to prove your expenditures. There are no limits on this deduction other than the standard requirement that the expenses may not be lavish and extravagant.

However, if your only employees are your spouse and children then the holiday party is not deductible.  Under ownership attribution rules that apply to entertainment expenses, the law deems that your ownership interest applies equally to your spouse and children. Thus, if you own 100 percent of the business, so do your children and your spouse.

If you are inviting your customers,vendors, prospects and friends to your holiday party, you  must prove that your party is either

• directly related to the active conduct of your business, or
• associated with a directly related discussion that preceded or followed the party.

These people are subject to the normal entertainment thus only 50% deductible.

If you are inviting Independent Contractors to your holiday party, they also are only 50% deductible.  They do not qualify as employees for entertainment purposes.

In order to support your deduction, you should have a list of guests.

For employees and their spouses, the employees’ names give you the business reason for the party.

To deduct the cost of the party attributable to customers, independent contractors and friends, you must have either

• a directly related business discussion related to the active conduct of your business in a clear business setting, or
• associated entertainment that follows or precedes a bona fide business discussion.

To make this work with the least amount of effort, incorporate group discussion that will help move your business or practice forward.

A good practice is to include your active business pursuit in your invitation, with wording like “Please come for holiday cheer and to help us celebrate 15 years in business.”  Another good practice is to take photos of attendees viewing a bulletin board covered with your product brochures.

Do not deduct the costs attributable to those friends and relatives who are NOT in attendance for business reasons. For example, say you have 50 people at the party, and five are relatives who will not produce any business benefit for you. Treat 10 percent of the costs (5 of 50) as nondeductible personal expenses.

You will also want to prove your costs with receipts such as a canceled check, an ATM receipt or a credit card receipt.

So here are some tips in asking customers to pay invoice(s).

1. When initially sending an invoice, call the accounts payable person of the customer’s company stating you are sending the invoice and ask if the e-mail, mailing address or fax number is correct before sending the invoice so you know they received the invoice.
2. If your terms are net  30 days and the invoice is not paid in the 30 days then send the invoice again with a message giving your customer the benefit of the doubt.  You can state for example, “I know you are real busy or perhaps it was a simple oversight,  but our records  show you owe us for the attached invoice.  Please make payment to us at this time.  If you are unable to pay it all, please pay half now, half next month.”  You can also design a payment plan for individual customers based on their circumstances.
3. If you still have not  heard from the customer in 60 days, then call the customer.  Be patient and understanding, let he/she explain why they have not paid or cannot pay.  With listening,  you can go a very long way.  Their explanation can give you ideas for payment plan you can work with him/her.  Also, by listening, you are giving he/she a chance to vent which may calm him/her down and it shows you care.
4. If you still have not received money after 90 days, then you might need to negotiate even if the amount was agreed upon at the time of sale.  Due to our current economic situation , many people may have had every intention of paying their bill in full or on time, but circumstances beyond their control have prevented payment(s).
5. When negotiating, understand the process, focus on a win-win solution, be patient, be confident and develop your listening skills.

Again, you would just like to be paid for your hard work and keep the ability to put ‘bread on your table.’  If you need to negotiate the fees even though this was not your initially intent, you will likely receive the majority of the money expected which is better than nothing.  Also, when the economy brightens, you will still have this customer.

The QuickBooks 2011 significant improvements are:

• Most payments under $5, 000 are now funded within one business day.
• You can specify a send date for a payment.
• You can provide an incentive discount.
• You can add an eCommerce button to publish it on your web site. .
• Payments received through the Intuit PaymentNetwork can automatically (via Intuit Sync Manager) or manually be downloaded into your QuickBooks file.
• Multiple bank accounts now can be set up.

The Intuit PaymentNetwork is an alternative and/or another  payment method to accepting credit cards and PayPal accounts.  In providing an incentive discount, your cash flow can be improved.

History Pane on Customer and Vendor Transactions – As you are creating your invoices and bills on the right of the form is a collapsible history.  You will need to expand this history pane for viewing prior transactions.

Customer Snapshot - consolidated view so you can assess at a glance your customer’s purchase history, average days to pay, and outstanding balance and make timely decisions on customer requests. You can also identify your top customers by revenue and payment consistency, and prioritize them accordingly.

Batch Invoicing – If you have an invoice that you want to send to multiple customers you can use this new feature. Before you start you want to make sure that all of your customers have settings for terms, sales tax rate, send method and email address.  Please note if you have the multiple currency feature turned on, this feature is not available.

Collections Center – this tool minimizes your time identifying customers who are overdue on their payments, and contacting them for collections.

Web Email Integration - You no longer need Outlook to e-mail your invoices and estimates.  You now can use your Yahoo, Gmail or Hotmail account.

Unless you believe you need the above features or have QuickBooks 2008 or an earlier version, you do not need to upgrade your version of QuickBooks.  Intuit supports versions for 3 years.