W-4 IRS Form

What to Know B-4 Filling out a W-4

When I got my first job at sixteen my new boss handed me a form that asked me how many allowances I wanted to take. “Allowances?! Mom told me in no uncertain terms I had to take this job because I WASN’T getting an allowance anymore.”  

So just what was this allowance thing anyway? Essentially, withholding allowances are different life circumstances that directly affect how much money is withheld from your pay. (i.e. Are you single or married? Can anyone else claim you as a dependent? Do you have children or dependents? Do you work more than one job? etc.)

I give you the mystical, magical, famous Form W-4 (*tada*). The IRS requires new employees to fill this out for their employers….looks like this (click to enlarge):

This worksheet is to help your employer know how much to withhold from your paycheck. The top part of page one, as well as page two, are for your use only. These parts are to help you figure out how many allowances you are entitled to take. Page two gets into more specifics for example, if you and your spouse both work, you’re single and work more than one job, or if you plan to itemize.

So what’s it all mean?

More allowances…Mo’ Money

The more allowances you claim, the less income tax will be withheld from your paycheck- aka mo’ money. However, this mean, yes you get more money in your paycheck and less tax taken out in that moment, but in the future this could mean you’ll owe the IRS mo’ money, which could translate to mo’ problems…depending on how you feel about making a payment to the IRS.

Less allowances…Mo’ Refund

The alternative to this is you claim less allowances, so taking more tax from your paycheck up front, meaning in the short term your paycheck will be a little less, but come April, you are more likely to get a refund from the IRS than owe them money.

An additional option…Withhold Additional Money

You can also choose to have additional money withheld from each paycheck if you’d rather pay the IRS upfront and not chance owning come April (this is where a conversation with your CPA could be helpful…have them do an estimate to ensure you’re withholding the correct amount).

Bottom line- The total number of allowances you claim impacts the size of your paycheck and whether you will get a refund or owe money come April.

The key to this, as in anything in life really, is finding balance and what works for you. Would you rather have a little less in your paycheck now and not owe much or maybe even anything in April? Or do you prefer to have more of your money now and plan on paying later? As always, if you’re unsure about how something may affect you financially, you should reach out to your friendly CPA to have the conversation about what may be best for your given situation.

Before Becoming Harold

Before Becoming Harold

In the time I’ve spent working for an accounting firm, there’s a regular occurrence that happens around here. A client calls to tell us about a big decision he’s just made but is running into some snags. Let’s call this client Harold. Harold has gone off and made a big purchase, without talking to his CPA first. Now of course Harold has every right to do that, but this time it’s lead him down a path of it having some not so great tax implications. If only dear ole’ Harold had reached out to his CPA BEFORE, he may have had a different story.

It’s because of clients like good ole’ Harold that Dan Myers wanted to start a company like Kuberneo CPA in the first place. I remember him telling me pretty early on that in the past he just did clients’ tax returns and would see places where he could have helped if only he’d had the chance the previous year, but alas, here he was doing the return so it’s too late. Dan wanted to get into a position of being able to offer strategy to his clients to help make smart tax moves…thus Kuberneo CPA was born.

Never fear future Harolds, I have made a BEFORE list for you. In addition to asking your financial planner, it’s a good idea to meet up with your CPA BEFORE making moves in a lot of these areas. Just taking the time to have the conversation could save you a lot of money, effort and heartache.

  • Before starting the home buying process
  • Before deciding what to contribute to your retirement account or making changes to your retirement account ESPECIALLY withdrawing money early
  • Before setting up a college savings plan
  • Before setting up a business on your own
  • Before changing your business’ structure
  • Before creating partnerships with foreign entities
  • Before moving your business to another state or country
  • Before hiring an employee
  • Before hiring a subcontractor
  • Before paying off a loan (especially your mortgage)
  • Before selling a rental property or business asset
  • Before making big purchases
  • Before making an optional job change
  • Before going to a donut shop alone, without asking your accounting staff if they’d like anything

Hey Harold, you still with me? It’s not that your CPA will tell you “no” regarding a big decision, but they can offer critical information for the decision making process and may be able to offer strategies or alternate options that can help you achieve your goals while minimizing taxes. One more quick note- in general, it’s a good idea to set up a meeting with your CPA sometime between October-December if you haven’t been checking in with them throughout the year. This allows time to implement tax saving strategies, before the end of the year.

BEFORE you end up like Harold, be sure to take the time to ask yourself, “Should I set up a meeting with my CPA to discuss this first?” and “When am I bringing Bethany a donut?”

Kuberneo CPA Support

RCAO Reporting for Duty

About 14 or so years ago, an enthusiastic 12th grade student walked into her small hometown bank in rural Michigan to open her first checking account. Can you feel the excitement?!

Well for me, there was A LOT of excitement actually! I was preparing to leave my little town behind for the slightly bigger town I’d be attending college in that fall and needed an ATM/debit card. Up till this point in life I had a savings account and cash stored in the very secret location of… the top of my closet.

The bank signed me up and besides a lollipop (Where do they even get these? Is there a special candy for banks store?), they also sent me home with a checkbook for my new account. I had watched my mother write in her checkbook my whole life and I had also taken a class in middle school that taught us how to balance a checkbook (A skill I was surprised to find out most of my peers never had been taught really), so thankfully, with a little refresher, I was ready to go. Responsible Checking Account Owner (or RCAO…ooh that’s catching!), here I come!

While RCAO hit a snag here or there with keeping up with her checkbook, the world of internet bank really gave her a leg up. I could check my bank balance anywhere, anytime…so much so that most of my peers didn’t even use checkbooks anymore (So much so that some jerkfaces might make fun of one RCAO for using her checkbook still…it’s fine, it’s fine).

With accessibility on my side, referencing my checkbook against my monthly bank statements became easier than ever. It wasn’t until I came to work for Kuberneo CPA that I found out this action even had a name (besides, “Oh crap how much money is actually in my bank account?”)…Reconciliation.

Reconciling your account (bank or credit card) simply means comparing what’s in your accounting system (QuickBooks, Your checkbook, etc.) verses what’s in the bank. A few reasons it’s important to do this:

  • Ensure you have accurate information to make financial decisions
  • Ensure you’re being charged the correct amount for things you’ve paid for
  • Ensure detection of identity theft or fraud
  • Ensure everything’s made it into your ledger and nothing has been missed

Obviously, this is important to me personally, but if you own a business, it’s even more important that your accounts are reconciled every month. The financial decisions you’re making will be based on what your accounting reports are saying, which get their information from your accounting system…don’t you want that system to have accurate information? (Psst- the answer is yes)

One last tip if you’re getting started: It wasn’t till the last six months that I have transitioned away from using a physical checkbook and now have an app I use on my phone, but I still reconcile my account with my statements every month. (Only now it’s even more likely to be accurate because it does the math for me!) RCAO over and out.

I'm Successful and I know it

I’m Successful and I Know It

The Sale

If you own a business, are looking to start one or just love new idea’s, Shark Tank is probably your favorite show. Almost every other night when my wife and I are able to, we’ll sit in front of our TV and just debate one sided with or against the sharks. The show is a perfect reality for anyone wanting to grow and expand their business.

I’d like to invite you into a unique business opportunity that I fully believe will change the rest of your life, for the good. I’ve surveyed tens of Americans from all over this country and found something worth investing both your time and money in. I live in Orlando, with my company based primarily online and I am looking to expand my business beyond my home into stores, that I know the American people and even global citizens will find beneficial. I’m asking: $600,000 for 10% stake in my company. Now that I’ve left you on the edge of your seats, I’d like to present: Lemon flavored water.

Some businesses want to grow before they KNOW

Well, I don’t have a crystal ball, but I can predict it’s going to be hard to convince a room full of sharks that lemon flavored water a 6 million dollar business – even with headquarters in Orlando in the summer! Just like in the show, the reality of expanding your business is that you’re going to run into snags.

In order to stay on top of your growth I’ve come up with, something super cheesy, that I am very proud of:






Nothing is going to work without being excessively honest with yourself. That is the only way you’ll KNOW to GROW.

Let’s do a quick self-analysis: (Remember, we’re being honest here)

  • Do you have a business plan?
  • Do you have a mission?
  • Have you done a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis?
  • Have you written out a desired time line? (how you plan to grow)
  • Have you gone out, doing field work for your product to get opinions?

If you answered no to any of the questions listed above, reassess yourself for a moment. You have to stop yourself from saying, “Oh, we’re growing too (fast/much/popular), we don’t have time for any of this!” These are barebone questions that are designed to help you expand your business.

If you ignore these questions, you’re going to experience a very brief success. Every person that starts a business would love for their business to successfully expand; a lot of us want our company to be the next Apple, Google, McDonald’s, or Starbucks. If you aren’t going to go back to your roots when you started your company, growing successfully will become a huge problem. Although growth to some is a huge success, to MOST, growth will be a huge disaster.

The problems that you carry in with you often expand right alongside the business. Here’s just a brief list of problems that may crop up:

  • Business grows too fast
  • Personnel issues
  • Disagreements among ownership
  • Marketing incorrectly
  • Family issues
  • Complacency
  • Metamorphosis of company culture
  • Changing role of owner
  • Lack of standards and controls
  • Technology
  • Stale products or services
  • Lack of investment
  • Stubbornness
  • Poor Leadership

If you notice, a lot of things on the list above are personal problems. If we know nothing operates willingly, then we need to be honest with ourselves. The key to business expansion is learning. Learn from your mistakes, learn from your customers, learn from your competition, just be open to being intentional to learn things you didn’t know before. The truth is that you don’t know what you don’t know. So learn!

P&L Kuberneo CPA

What is a P&L Statement

A P&L Statement is a whole lot easier to explain and understand than you might think.

I remember the first time I heard the term P&L statement from my accountant, I thought of the consumer goods corporation Procter and Gamble. Trying not to embarrass my accountant I pulled them aside and said, “It’s P&G, do you need inventory on their products that I have for my business? I didn’t think that particular brand would be worth noting. Should I be keeping track of that kind of stuff? I guess I have some tissue paper and paper towels?” My accountant stared at me in disbelief and repeated himself, “No, I mean your Profit and Loss statement.”

Luckily for me, my mouth is big enough for both my feet to fit in. I’m not proud of that conversation, but hey, hindsight is 20/20 and I have an up-to-date prescription because of it that I will be more than happy to explain to anyone who needs to know.

I will start with a simple graph (shown below)

P&L Kuberneo CPA

The Situation

For the sake of discussion let’s say that you have two kids, both of them come up to you and say, “Parent of mine, it’s the first of the year, we’re feeling ambitious and us as siblings want to open up a lemonade stand so that we can make some money for ourselves.” You being the loving and kind parent that you are understand that you’ll be the person providing the property and finances for them to start their new business that they’ve decided to call “Lively Lemonade, LLC” (You have some smart kids, that’s a name I would have thought was clever).

You take this information and you make a deal with them. Saying that you’ll make them a list of rules that they have to follow to the T.

  1. They have to keep track of the amount they make on a daily basis (Total Revenue).
  1. They have to keep track of how much they spend on lemons, sugar, cups and the occasional bottled water to sell to any passerby runners (Costs of Goods Sold).
  1. They must stay on top of how much waste they have at the end of each day (Depreciation).
  1. You can’t forget about the pitcher, the stirrer, the sign, the paint to paint the sign and the chairs to sit and relax on when business is slow (Utilities).
  1. Since they’re using your front yard as a point of sale, it would be ludicrous not to charge them monthly rent (luckily for you in this story you live in a wealthy neighborhood). Your kids are charging $.75 a pop. You put together $2.00 a month just in case there’s a slow month here or there.

If they follow this list of rules you’ll loan them $10.00 apiece. Being that it’s a loan, they have to pay you back.

A Year Later

Your kids have put forth an A effort, they have the looks of true hard workers on their face (the look of defeat and accomplishment all at the same time). They come to you with a problem, they want to grow their business and bring on their friend Sam, who lives down the road as an equal partner, but they aren’t sure if it would be worth it, financially, to bring on Sam.

Thank goodness you had them keep track of everything you had them keep track of, because now, they get to draw out the super, awesome, rocking, cool graph we have listed above.

The Facts

The Lively Lemonade, LLC has a Total Revenue of $250.00 with a Gross profit of $220.00.

The gross profit is calculated by subtracting the Costs of Goods Sold which is of course $30.00, from the total revenue.

The Operating Expense of ($79.00)= rent ($24.00) + utilities ($15.00) + loan ($20.00) + depreciation ($20.00).

The net Income is $141.00 = Gross profit – Operating Expense.

We come to the dreary total of $141.00 made over the course of the year. They have to split right down the middle between the 2 of them to a whopping $70.50. That’s a grand total of $0.06 an hour for 4 hours a day, 5 days a week, for 52 weeks. As a kind parent looking at your kids P&L statement, unless they’ll be opening up a second location in another neighborhood, you should probably advise against adding Sam to their business, but I’m not going to tell you how to parent your imaginary kids.

As you move forward in your business for this 2017 year, utilize the P&L Statement as a compass to navigate to a direction of financial growth.

Twas the Night before Christmas

‘Twas the Night Before…

‘Twas the week before Christmas, when all through your small business,

all the employees were settling down, enjoying the holiday stillness.

Your reports are ready and filled out with care,

knowing good and well that tax season soon will be here.

When out on the floor there arose such a clatter,

you spring from your desk to see what was the matter.

Away to the door you fly like a flash,

it’s finally happened, your computers have crashed.

Laying your face down, smooshing your nose,

You’d planned everything out and now your office expenses just rose.

It’s too late you think to yourself, the timing is uncanny,

it’s too late in the year for any more tax planning.

Is this your Christmas tale? Don’t worry, it’s not too late for you! In fact, it’s never too late to do tax planning for your current tax year. As this year comes to a close, consider some opportunities your business may have when it comes to deductions and write offs (depending on the tax structure of your business of course.) Like the story above, perhaps you know that you need to purchase 3 new computers sometime soon, why not purchase the computers before the end of the year to receive the write off for this tax year (assuming you meet certain requirements)?

Take an honest look at this tax year, and ask yourself, would it be better to purchase these assets this tax year or next tax year. If you’re a small business and will have made $10,000 this year and are projecting to make $100,000 next year, the deduction will be more beneficial for you next year.

Further questions to think through when you are considering the end of this year:

  • What is your business income for this year?
  • What are you projecting it to look like next year?
  • Are you considering prepaying certain expenses?
  • When will your assets add value?

When tax planning, remember to remain calm; you’re not alone in feeling like this is a scary thing. This is the season for joy and peace on earth (regardless how cutthroat Black Friday was) and let that soothe you… then set up a consultation with us to help you finish this tax year strong.

Jillian Smith CPA | Tax Manager

Jillian Smith Wins Practitioner Excellence Awards- Millennial Award

Jillian Smith CPA | Tax ManagerWe are pleased to announce that our own Jillian Smith has won the 2016 Practitioner Excellence Awards- Millennial Award this year!

The Accountex Practitioner Excellence Awards are a prestigious recognition by a distinguished panel of judges. Honorees are helping to shape the profession for the future and display excellence in service to the accounting community.

Please join us in congratulating Jillian!

More about the award here.

Business Lifecycle

Life-Stages of a Successful Business

As a business owner or manager, you face countless decisions in the day-to-day operation of your enterprise. You’ll experience better success when you understand how each decision, policy, procedure, or process relates to your long-term goals and current business stage.

“He’s a zero to two guy!”

“She’s great at three through five, but don’t get her involved any sooner.”

Have you heard phrases like this and wondered what on earth someone was talking about? In all likelihood, they are describing the lifecycle of a successful business.

Every business operates across a continuum of stages – typically described using a scale from zero to ten. Having a proper perspective provides you with the confidence that you’re not making decisions in a vacuum and that you’re helping to keep your business on track.


Business Lifecycle

As you’d expect, no business goes from zero to ten without at least a few other steps on the continuum. Thinking about a business in terms of its life cycle stage gives a business owner or manager a healthy perspective from which to evaluate decisions and priorities.

Think of the scale of stages in four primary groupings:


Business Lifecycle Stages

The stages of any given business are NOT necessarily linear, but the vocabulary of stages helps you couch your understanding in the overall context of your business’s life cycle.

The Fraud Triangle

Keeping an Eye on Aunt Gertrude

Owning a business can be like having a family. You have a lot of love and trust for the members of your family, but that doesn’t mean you don’t keep an eye on crazy Aunt Gertrude who’s been known to swipe a few bucks from your wallet once in a while.

While you don’t want to constantly be looking over the shoulders of your employees and questioning everything they do, it is important to be aware of the warning signs of fraud to help protect your ‘family.’

Generally, in business fraud comes down to one of these three:

  • Asset Misappropriation: This can be a plethora of things from embezzlement, stealing money from petty cash or checks, stealing inventory, submitting false expense reports or timecards, or stealing intellectual property.
  • Financial Statement Fraud: Falsifying or manipulating reports, inflating costs, alter earnings.
  • Corruption: Accepting bribery or kickbacks.

There’s commonly three circumstances that lead to fraud:

  1. The pressure or incentive to commit fraud – “My family is really struggling this month and I need to provide for them.” or “I have to meet my numbers this month or the boss will be upset.”
  2. The opportunity to carry it out – “I keep the petty cash in my desk and no one else really pays attention to what’s in there.” or “If I just change the date on these deposits, this month will look better.”
  3. The ability to rationalize or justify the fraud – “I have worked hard for this company and no one appreciates all I do.” or “I’ll work harder next month to make up the difference.”

These three circumstances come together to form the Fraud Triangle:

The Fraud Triangle


Avoiding Fraud

Now that you know what most likely precedes fraud you can devote energy to avoiding it. Put procedures in place that will ensure a checks and balance system and accountability is taking place in your business. Pay attention to your employees and the circumstances around them and just maybe Aunt Gertrude won’t snag that $50 from your wallet next time.

Helping Teens Budget

Helping Your Teen Budget

It’s back to school season and as your kids get older, it gets MORE expensive. (Sorry to break it to you parents of kindergarteners. You’ve only just begun!) In honor of everyone heading back to school, we thought we’d veer away from our typical business and entrepreneur discussions and offer some practical money advice for older teens and college students.

If you have teens, you’ve had the experience of them coming to you with their hand out for money… a lot. It might be general school supplies, another novel for English class, a laptop computer, lunch money, clothes, movie night – we could go on for days, but instead let’s focus on a possible solution to always being greeted by the outstretched palm. This magnificent strategy is a life skill we can all benefit from – learning to live within a budget.

We realize the idea is not new, but how many of us actually hold our kids accountable to their budget? (Do your kids have a budget? If so, do they really understand what a budget is and how it applies to them?) This strategy is one we actually have seen implemented quite successfully by a client with four kids – three of whom have now successfully graduated from college. We’re going to say that’s evidence of victory!

It’s a very straightforward process:

Step 1 – The student and parents sit down together and make a list of the student’s monthly needs and how much each should cost.

(The debate over what is a “need” and what is a “want” is an entirely different topic you’ve hopefully previously established boundaries around.) These needs should be split into categories and they can be as broad or specific as you prefer. For teens just starting out, think: driving age, we’d recommend no more than five categories.

Perhaps, as a starting point:

  1. Food
  2. Gas
  3. School Supplies
  4. Clothing
  5. Entertainment

Step 2 – Decide when (and how) the student will receive their funds.

If they are old enough to drive, perhaps a debit card linked to their own checking account is a wise choice? Many banks and credit unions offer ways to transfer funds from parent to student via online banking or apps as well as fee-free accounts for teens. If your goal is to help them learn to budget and plan, we suggest a monthly deposit.

Step 3 – As the student proceeds through their month, it is their responsibility to track their spending.

That includes how much they have spent, where and when the money was spent, and how that compares to their budgeted amount.

In the beginning, this step may need some coaching from a parent or other trusted adult. It can be as simple as two columns in a spreadsheet or on a piece of paper: my budget & my spending. Or, for the more ambitious and technically inclined, you can use a full scale money management program.

Whatever your choice of tracking method, step 4 is the one that provides motivation for your teen to use the system.

Step 4 – DO NOT give your student next month’s money until this month’s funds have been accounted for.

This is a great time to talk through the differences in their plans and their reality. Have they overspent? Were any categories under budget? Is it okay to borrow money from the gas fund to buy more clothes?

Getting Started

Are you ready to get started? We’ve got two pdf’s for you – one is a blank sample of a monthly tracking spreadsheet and the second is an example of how one teen used it. They may not meet your exact needs, and we certainly can’t guarantee your teen will agree with the numbers in the example, but they’ll at least get you thinking and talking. If you’d like a copy of our spreadsheet with formulas and calculations built in, comment below or send a note to: info [at] 8mh.055.myftpupload.com.

Happy budgeting!

Click on either image below to open the PDFs:

Teen Budget Worksheet

Teen Budget Worksheet Sample