In the last year, numerous banks have developed apps for the IPhone and/or Droid to assist depositors with depositing checks to their accounts. The depositor simply opens the app and then takes a picture of the check. The check amount is then deposited to their account.

I was recently reconciling a client’s business checking account and discovered that a payroll check had cleared the bank on the current reconciliation. What was odd was that it had also cleared the previous month. Same check number, amount, etc. When I began researching with the bank why it had cleared twice, I was informed that it was processed through the banking app. Of course the employee denied any wrongdoing and that it was simply an oversight on their part. While this may or may not be true, it brings home several issues related to business banking and protecting your accounts.

Recently, I have had discussions with various banks concerning this issue and have been assured that it would not be possible at their institutions since they have limits in the amount that can be deposited and safeguards to ensure that a deposit could not be made twice. Even the bank that processed this check twice assured me that it would be impossible for it to occur. After showing them the transaction that occurred, they began to backpedal on the ability to prevent this from occurring all the time. However, as a business owner, you can take steps to prevent it by incorporating the following procedures:

• Checking accounts should be reconciled on a monthly basis at the minimum. Since online banking makes it so easy, I have some clients reconciling on a daily or weekly basis. This allows the company to identify issues that occur with the cash account and take immediate action to correct them.
• Set up a separate payroll account and maintain a maximum balance of $100. Fund the account for the current payroll only. This will prevent multiple deposits from the same check from clearing provided you have instructed your banker not to overdraw the account.
• Use automatic paycheck deposit for your payroll. Another client I have encountered an instance where the boyfriend of one of their employees copied the checking information from the paycheck, had checks printed and then cashed them as payroll checks. Payroll was being paid through the operating account at the time and he managed to steal over $30,000.
• Allow for only 1 or 2 signers on the account. The primary signer should always be the owner, and a secondary signer should be designated for emergency situations only. This gives complete control of the cash account to the owner.
• Bank statements should be opened by the owner only. This gives the owner a chance to review the cash that has come into and gone out of the company. Also request the photo image of each check with the statement and review the signatures.

Remember, cash is the lifeblood of any business and cash is king! Guard it carefully!

1. If you get a big refund each year, you’re having too much withheld from your paycheck.

In effect, you’re giving the government an interest-free loan.

2. If you have too little withheld, you may be charged an underpayment penalty.

You must pay 90% of what you owe for the tax year by the end of that year or an amount equal to 100% of your tax liability for the previous tax year, whichever is smaller.

3. Not every dollar of your taxable income is taxed at the same rate.

That’s because portions of your earned income fall into different brackets, which are assigned different tax rates. Generally speaking, the first dollar you make will be taxed at a lower rate than your last dollar. Your marginal tax rate is the tax bracket at which the highest (or last) portion of your income is taxed.

4. Your combined tax bracket determines how much tax you’ll owe on income from investments such as CDs and money market funds.

Your combined bracket is the sum of your top (or marginal) federal tax rate and your top state income tax rate. It may be less if you itemize deductions since you will be able to deduct your state income tax on your federal return.

5. If you file your return by April 15, but don’t pay the tax you owe, you may receive a late payment penalty.

The same goes if you file for an extension. An extension only allows you to file your return after the due date. But full payment is still required by April 15. If you make a partial payment by then, you may be charged interest on the amount outstanding.

6. You can reduce your chances of being audited.

One of the best ways is to fill out your return completely, correctly, and on time every year.

7. You should pay estimated taxes if you’re self-employed; expect hefty investment income or profits from a property sale; or if you don’t have enough taxes withheld to cover the taxes you’ll owe on non-wage-related income.

Retirees should also consider paying them if they haven’t opted for voluntary withholding on their pension or IRA payments. Estimated taxes are due four times a year (April 15, June 15, Sept. 15, and Jan. 15).

8. Your adjusted gross income (AGI) is your total income minus certain “above the line” deductions such as deductible IRA contributions, alimony payments, or health savings account contributions.

Your AGI primarily determines whether or not you’re eligible for tax breaks. Almost every break, be it a deduction, exemption, or a credit, has its own AGI limit.

9. Your taxable income is your AGI minus exemptions and deductions.

The less your taxable income, the less in taxes you’ll owe. That’s why it’s in your best interest to take advantage of tax breaks where you can.

10. A credit is better than a deduction.

A credit is a dollar-for-dollar reduction of the taxes you owe. A $100 credit means you pay $100 less in taxes. A deduction reduces the taxes you owe by a percent of every dollar you’re allowed to deduct.

You calculate the worth of your deduction by multiplying your marginal (or top) tax rate by the amount of the deduction. If you’re in the 25% tax bracket, a $100 deduction means you’ll pay $25 less in taxes (0.25 times $100).

Reach Dan Cote today to talk about your company’s accounting and tax strategy

Since the average American has about $10,000 or more in credit cards debt in their portfolio, it doesn’t necessarily mean that that’s a bad thing. Work on keeping current, maintaining a lower interest card, and paying off more than the minimum payment on a regular basis.

Some debt is good and some debt is bad.

Borrowing for some of life’s major purchases such as a car, home or wedding perhaps, isn’t necessarily a bad thing. Just make sure you shop around for a better deal always and don’t borrow more than you can afford to pay back.

Pay off your highest interest rate debts first, always.

Some people are so attached to paying off their largest bills first, when many times this is at a much lower rate than their smaller bills. Make payments smartly and really look at where you can save money overall by paying off the higher interest rate cards and balances first and in larger portions.

Get a grip on your daily, weekly, monthly spending.

Simply that. Watch your extra spending, look for a deal when you can get one. Stay in and watch a movie instead of going out to the movies, or order pizza instead of doing a sit down dinner. For the household, watch your usage of hot water and keep the thermostat down during extended periods of absence or if you’re gone all day. You’ll find yourself having that extra $100-1000 you were wondering disappeared every month.

Don’t just do ‘the minimum’.

This goes across the board. Instead of just getting a receipt, make sure to record the receipts in your folio or ledger, or Quickbooks on a weekly basis or bi-weekly if you have less. Instead of just paying the minumum card payment, pay more if you can. Doing a little extra will go a long way to your debt to income ratio.

Learn to be ready for anything by building and maintaining an emergency fund.

Have some extra cash saved. What if you’re hurt or there is an earthquake, or suddenly you lose your job. What if one of your family members were hurt and you needed to take an extended leave from work. Secure yourself by keeping an emergency fund to keep yourself afloat for 3 to 6-months of bills.

Be careful what and where you borrow.

Don’t always look at your 401k as the place to go for money, or a refinancing of your home loan. You could wind up losing your home and fall short of your long-term investment goals. Give it some thought first!