Several financial fraud schemes can affect businesses. These include:

Payroll Fraud

This is one of the most common types of corporate fraud. It can be defined as the theft of funds from a business via the payroll processing system. Payroll fraud is usually committed by an employee attempting to receive any money they are not entitled to from their workplace.

Asset Misappropriation/Skimming

This can be defined as using company or client assets for personal gain. Although the average loss of each fraud case is low, asset misappropriation is the most common type of occupational fraud committed.

Invoice Fraud Schemes

Invoice fraud is when a third party submits fake invoices to a company with the intent to extract money. Often, companies are unaware of the scheme and unwittingly pay for goods or services never rendered.

Tax Fraud

Also known as tax evasion, tax fraud is the illegal abuse of the taxation system for financial benefit. It’s a serious crime and carries a maximum penalty of up to 10 years’ imprisonment. Many different federal and State offenses fall under the umbrella of tax fraud.

Other schemes that businesses may come across include:

-Data, Intellectual Property and Identity Theft

-Insurance and Banking Fraud

-Money Fraud

-Bribery and Corruption

Critical Steps to Reporting a Crime and Potentially Recovering Lost Funds

For companies that previously functioned with primarily in-person interactions, payments, and other dealings had to shift online quickly when the COVID-19 pandemic hit around the world. Even for those who already managed money transfers digitally or customer communications via email, some level of adjustment still had to be made. Unfortunately, the shift has led to a rise in business fraud.

One crime, known as business email compromise, involves a company receiving an email and pretending to be a known client or vendor. The message may indicate that the payment details have changed, and funds must now be transferred to a new account, bank, or recipient.

Because the note includes familiar information, such as the logo or name, the reader may deem it legitimate and follow the instructions. In the wake of this payment, a business may likely recognize their error and find themselves in an alarming situation – their money is gone.

Realizing your business has become a victim and funds have been sent to a fraudster can be distressing. The actual number of instances is unknown as not all crimes of this nature are reported. It’s essential to notify the appropriate parties so action can be taken. Immediately contact your accounting department and make sure you keep records of ALL contacts made with the fraudster (i.e., electronic copies of the emails).

Do not make any further payments to the beneficiary until the security issue is resolved.

It’s important to note that corporations are “legal persons” capable of suing and being sued and capable of committing crimes. A corporation may be held criminally liable for the illegal acts of its directors, officers, employees, and agents. To be held responsible for these actions, the government must establish that the corporate agent’s actions (i) were within the scope of his duties and (ii) were intended, at least in part, to benefit the corporation.

In all cases involving wrongdoing by corporate agents, prosecutors should consider the corporation and the responsible individuals as potential criminal targets. It is very common for corporate fraud charges to include conspiracy, other types of fraud, and other types of theft. In addition to a prison sentence for conviction of corporate fraud, federal criminal statutes allow for the imposition of criminal fines and restitution.

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The post New 1099 Form Rules first appeared on TNT Accounting Services, LLC.

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The Internal Revenue Service (IRS) reports that more than 80 million taxpayers use paid professionals to complete and submit their tax returns. And it certainly does make it easier and less stressful for all parties involved.

If you’re one of these 80 million taxpayers, it is important to organize your receipts, forms, and other documents well before tax time. Your preparer (like us) may take information directly from you or ask you to complete a questionnaire. Either way, you’ll need time to gather everything you—and your preparer—will need. Here are the steps to take.

• Even if you hire someone else to prepare your tax return, you’ll need to do some of the advance work yourself—and the earlier you start, the better.
• Round up your receipts and check that you’ve received all the forms you need from employers and financial institutions.
• Last year’s tax return can be a good guide for making sure you aren’t missing any important information.

The sooner you meet with your preparer, the sooner you should be able to complete your return (even if you decide to file for an extension). If you anticipate a refund, you’ll get that sooner, too. If you wait too long to schedule an appointment with a tax preparer, it might not happen before April 15th, and you could miss out on opportunities to lower your tax bill, such as making a deductible contribution to an IRA or a health savings account.

Gather Your Documents

By the end of January, you should have received all the various tax documents that you need from your employer or employers, as well as from banks, brokerage firms, and others with whom you do business. For each form, check that the information matches your own records.

These are some of the most common forms:

• Form W-2,⁵ if you had a job.
• The various 1099 forms that report other income you received.
• Form 1098,¹¹ reporting any mortgage interest you paid.
• Form W-2G,¹² if you had certain gambling winnings.

Round Up Your Receipts

Which receipts you’ll need to provide depends on whether you itemize your deductions or claim the standard deduction. You’ll want to choose whichever produces the bigger write-off, but the only way to know for sure is to add up your itemized deductions and compare that with your standard deduction. For the 2020 tax year, the standard deduction for single taxpayers is $12,400 and for married couples filing jointly it is $24,800.

In particular, look for receipts for medical costs not covered by insurance or reimbursed by any other health plan, property taxes, and investment-related expenses.

The better organized your records are, the less time it will take a preparer to process your taxes, which translates into lower fees for their service.

List Your Personal Information

You probably know your Social Security number, but do you know the Social Security number of each dependent you claim? You’ll want to jot those down, along with any other information your tax preparer is likely to need. For example, if you own a vacation home or rental property, note their addresses. If you sold a property in the past year, note the dates you bought and sold, the amount you originally paid, and how much you received from the sale.

Plan Ahead for Any Refund

If you expect a tax refund, you have several options for how it’s handled.

• You can apply some or all of the refund toward next year’s taxes. If you normally pay estimated taxes throughout the year, that can help cover the first quarterly installment.
• The government can send you a check or deposit the refund directly into your checking or savings account.
• You can contribute some or all of your refund to certain types of accounts (IRAs, health savings accounts, education savings accounts) or buy U.S. Savings bonds through Treasury Direct.

Find a Copy of Last Year’s Return

If you use the same preparer that you used last year, they are likely to have your previous information. If you are going to use a new preparer, last year’s return can serve as a reminder to the preparer—and you—of some items you don’t want to overlook. Here are two examples:

• Interest and dividends. Last year’s return should indicate which banks, mutual funds, or other financial institutions sent you 1099 forms. Use that list to make sure you received 1099s from them again this year (unless you closed those accounts or sold the investments in the meantime).
• Charitable deductions. If you made small gifts, you may not have received any acknowledgment from the organization, but you can still deduct these contributions as long as you have a canceled check or other proof. Consult last year’s list of organizations you donated to and see whether you made similar gifts this year.

The Bottom Line

Whether you do your own taxes or hire someone else to handle it, keeping good records will save you time and, in the case of a paid preparer, money. The earlier you start, the more smoothly it should go, and the sooner you’ll have put the process behind you for another year.

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Virtual accountants compile and verify financial transactions and ensure that their clients are financially efficient as well as compliant with lawful business practices. Instead of working in the office, Virtual Accountants work from home or in another location outside of the office. Virtual Accountants handle a wide range of responsibilities, depending on their specialty. 

During tax season, a Virtual Accountant prepares tax documents, calculates taxes owed, and follows up on payments made to or received from different government agencies. 

Other responsibilities may include documenting individual expenditures, reviewing financial statements for quality assurance, and verifying transaction compliance. Virtual Accountants may also be expected to make budget recommendations to increase the financial efficiency of their clients.

Benefits of Using a Virtual Accountant For Small Businesses

Business owners, increasingly, who, according to the report, “value their time tremendously and believe that focusing their time on what they do best – rather than what they can do if needed – is good business strategy.”

Outsourcing the bookkeeping part of your business to Virtual Accounting services allows you to have more time to study the financial health and well-being of your business and develop plans for future investments in growth. It helps focus your analysis at the strategic level. You can utilize this time to review and manage company productivity, the recruitment process or other current business planning needs.

Because of this, a Virtual Accountant may be the best option for small businesses, particularly when it comes to cost. For one thing, you can hire a Virtual Accountant on a contract basis. This is a massive advantage over paying for vacation time, benefits, payroll taxes and additional office space.

There’s no need to go through the tedious process of recruiting, hiring or training someone new. Instead, you enjoy instant access to trained, experienced and qualified accountants and can choose one based on your financial needs, be it part-time or full-time.

Virtual Accounting Apps

Additionally, you can get your pending work done quickly, as Virtual Accountants are generally available 24/7. Virtual Accounting apps are easy-to-use and include Freshbooks, Quickbooks, Xero and Wave which are relied on for accurate and transparent results.

With virtual accounting, you sign up only for the services you need. This means you only pay for what you need without wasting money on additional services. There is no need to worry about data security. We understand businesses need to keep financial data secure and it can be difficult to completely trust someone to keep it safe. This can be a problem when a business’s accounting is outsourced.

However, Virtual Accountants require access to your organization’s financial data, either from a local computer using a remote desktop protocol (RDP) or from your cloud. This means that none of your data is transferred and it will remain completely under your control. The information is encrypted, ensuring that confidential data remains safe from any threat.

If you are a business that currently does their own accounting but it is all becoming too much and taking up way too much time, then a Virtual Accountant is definitely a choice that you should consider.

The post Why You Need A Virtual Accountant first appeared on TNT Accounting Services, LLC.

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