How to Organize Spending Priorities for Your Newer Growth Startup

How to Organize Spending Priorities for Your Newer Growth Startup

According to a recent study conducted by U.S. Bank, over 80% of all newly formed businesses that ultimately fail do so due to cash flow problems. If you needed a reason to believe that getting your spending in order and dedicating the time to drafting a proper budget for your new startup is important, look no further than that one.

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Learn what factors determine whether a household worker qualifies as an employee or an independent contractor.

Household Help: Employee or Contractor?

Taxpayers often will hire an individual or firm to provide services at the taxpayer’s home. Because the IRS requires employers to withhold taxes for employees and issue them W-2s at the end of the year, the big question is whether or not that individual is a household employee.

Determining whether a household worker is considered an employee depends a great deal on circumstances and the amount of control the hiring person has over the job and the worker they hire. Ordinarily, when someone has the last word about telling a worker what needs to be done and how the job should be done, then that worker is an employee. Having a right to discharge the worker and supplying tools and the place to perform a job are primary factors that show control.

Not all those hired to work in a taxpayer’s home are considered household employees. For example, an individual may hire a self-employed gardener who handles the yard work for that individual as well as some of the individual’s neighbors. The gardener supplies all tools and brings in other helpers needed to do the job. Under these circumstances, the gardener isn’t an employee and the person hiring him/her isn’t responsible for paying employment taxes. The same would apply to the person hired to maintain an individual’s swimming pool or to contractors making repairs or improvements on the home.

Contrast the following example to the self-employed gardener described above: The Johnson family hired Maclovia to clean their home and care for their 3-year old daughter, Kim, while they are at work. Mrs. Johnson gave Maclovia instructions about the job to be done, explained how the various tasks should be done, and provided the tools and supplies; Mrs. Johnson, and not Maclovia, had control over the job. Under these circumstances, Maclovia is a household employee, and the Johnsons are responsible for withholding and paying certain employment taxes for her and issuing her a W-2 for the year.

W-2 forms are to be provided to the employee by January 31 of the year following the year when the wages were paid and the government’s copy of the form – sent to the Social Security Administration – is also due by January 31.

If an individual you hire is considered an employee, then you must withhold both Social Security and Medicare taxes (collectively often referred to as FICA tax) from the household employee’s cash wages if they equal or exceed the $2,100 threshold for 2019.

The employer must match from his/her own funds the FICA amounts withheld from the employee’s wages. Wages paid to a household employee who is under age 18 at any time during the year are exempt from Social Security and Medicare taxes unless household work is the employee’s principal occupation.

Although the value of food, lodging, clothing or other non-cash items given to household employees is generally treated as wages, it is not subject to FICA taxes. However, cash given in place of these items is subject to such taxes.

A household employer doesn’t have to withhold income taxes on wages paid to a household employee, but if the employee asks to have withholding, the employer can agree to it. When income taxes are to be withheld, the employer should have the employee complete IRS Form W-4 and base the withholding amount upon the federal income tax and FICA withholding tables.

The wage amount subject to income tax withholding includes salary, vacation and holiday pay, bonuses, clothing and other non-cash items, meals and lodging. However, if furnished for the employer’s convenience and on the employer’s premises, meals are not taxable, and therefore they are not subject to income tax withholding. The same goes for lodging if the employee lives on the employer’s premises. In lieu of withholding the employee’s share of FICA taxes from the employee’s wages, some employers prefer to pay the employee’s share themselves. In that case, the FICA taxes paid on behalf of the employee are treated as additional wages for income tax purposes.

Although this may seem quite complicated, the IRS provides a single form (Schedule H) that generally allows a household employer to report and pay employment taxes on household employees’ wages as part of the employer’s Form 1040 filing. This includes Social Security, Medicare, and income tax withholdings and FUTA taxes.

If the employer runs a sole proprietorship with employees, the household employees’ Social Security and Medicare taxes and income tax withholding may be included as part of the individual’s business employee payroll reporting but are not deductible as a business expense.

Although the federal requirements can generally be handled on an individual’s 1040 tax return, there may also be state reporting requirements for your state that entail separate filings.

Another form that is required to be completed when hiring a household employee who works for an employer on a regular basis, is the U.S. Citizenship and Immigration Services (USCIS) Form I-9, Employment Eligibility Verification. By the first day of work, the employee must complete the employee section of the form by providing certain required information and attesting to his or her current work eligibility status in the United States. The employer must complete the employer section by examining documents (acceptable documents are listed on the I-9) presented by the employee as evidence of his or her identity and employment eligibility. The employer should keep the completed Form I-9 in his or her records and make it available upon request of the U.S. government. It is unlawful to knowingly to hire or continue to employ an alien who can’t legally work in the United States.

If the individual providing household services is determined to be an independent contractor, there is currently no requirement that the person who hired the contractor file an information return such as Form 1099-MISC. This is so even if the services performed are eligible for a tax deduction or credit (such as for medical services or child care). The 1099-MISC is used only by businesses to report their payments of $600 or more to independent contractors. Most individuals who hire other individuals to provide services in or around their homes are not doing so as a business owner.

Please call this office if you need assistance with your household employee reporting requirements or need information related to the reporting requirements for your state.


Isler Northwest LLC is a firm of certified public accountants and business advisors based in Portland, Oregon. Our local, regional, and global resources, our expertise, and our emphasis on innovative solutions and continuity create value for our clients. Our service goals at Isler Northwest is to earn our clients trust as their primary business and financial advisors.

Isler Northwest

(503) 224-5321

1300 SW 5th Avenue
Suite 2900
Portland, Oregon 97201

Top 10 Startup Business Questions Every Entrepreneur Should Answer

Top 10 Startup Business Questions Every Entrepreneur Should Answer

Starting a small business can be one of the most exciting and rewarding events in someone’s life. But it can also be extremely stressful. If you’re thinking about becoming an entrepreneur, you might have more questions swirling around in your mind right now than you can count. Don’t despair. This is completely normal. After all, it shows you’re serious about your business venture and care enough to want to do things the right way. Before moving forward with a new business idea, ensuring you know the answers to the following vital questions is crucial.

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May 2019 Due Dates

May 2019 Individual Due Dates

May 10 – Report Tips to Employer

If you are an employee who works for tips and received more than $20 in tips during April, you are required to report them to your employer on IRS Form 4070 no later than May 10. Your employer is required to withhold FICA taxes and income tax withholding for these tips from your regular wages. If your regular wages are insufficient to cover the FICA and tax withholding, the employer will report the amount of the uncollected withholding in box 12 of your W-2 for the year. You will be required to pay the uncollected withholding when your return for the year is filed.

May 31 –  Final Due Date for IRA Trustees to Issue Form 5498

Final due date for IRA trustees to issue Form 5498, providing IRA owners with the fair market value (FMV) of their IRA accounts as of December 31, 2018. The FMV of an IRA on the last day of the prior year (Dec 31, 2018) is used to determine the required minimum distribution (RMD) that must be taken from the IRA if you are age 70½ or older during 2019. If you are age 70½ or older during 2019 and need assistance determining your RMD for the year, please give this office a call. Otherwise, no other action is required and the Form 5498 can be filed away with your other tax documents for the year.

May 2019 Business Due Dates

May 10 – Social Security, Medicare and Withheld Income Tax

File Form 941 for the first quarter of 2019. This due date applies only if you deposited the tax for the quarter in full and on time.

May 15 – Employer’s Monthly Deposit Due

If you are an employer and the monthly deposit rules apply, May 15 is the due date for you to make your deposit of Social Security, Medicare and withheld income tax for April 2019. This is also the due date for the non-payroll withholding deposit for April 2019 if the monthly deposit rule applies.


Isler Northwest LLC is a firm of certified public accountants and business advisors based in Portland, Oregon. Our local, regional, and global resources, our expertise, and our emphasis on innovative solutions and continuity create value for our clients. Our service goals at Isler Northwest is to earn our clients trust as their primary business and financial advisors.

Isler Northwest

(503) 224-5321

1300 SW 5th Avenue
Suite 2900
Portland, Oregon 97201

Short-Term Rental, Special Treatment

Short-Term Rental, Special Treatment

With the advent of online sites such as Airbnb, VRBO, and HomeAway, many individuals have taken to renting out their first or second home through these online rental sites, which match property owners with prospective renters. If you are doing that or are planning to do so, there some special tax rules you need to know.

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How to Enter Bills in QuickBooks

How to Enter Bills in QuickBooks

It’s not as much fun as creating invoices, but the bills must be paid. Here’s how QuickBooks helps.

We’re in a bit of a transitional period with business bill-paying. Some paper bills still come via the U.S. Mail, however you may also be getting some through email. Others don’t come at all: You might get a reminder email, but you have to go to the vendor’s site to make a payment.

How do you keep track of it all so you don’t miss any due dates? You could record them on a calendar, but you’d still have to go back to the actual bill to retrieve the amount. But where is it? Is it online, in your email inbox, in a file folder, or hanging on the wall?

QuickBooks can organize this unpleasant process, saving time and helping you avoid confusion. Here’s how it works.

A 2-Step Process

QuickBooks divides your accounts payable tasks into two separate processes: entering bills and paying them. It requires some extra time upfront as you complete the first step, but streamlines the second so that the actual bill-paying only takes a few seconds.

To get started, click Enter Bills on QuickBooks’ home page to open a window like this:

Before you can pay a bill in QuickBooks, you need to create a record for it.

The toolbar for the Enter Bills window is not pictured in the image above, but you don’t need it yet. Rather, you start by clicking the down arrow in the field next to VENDOR and selecting the biller’s name from your list (or clicking <Add New> if you haven’t yet created a record for that entity). The ADDRESS should fill in automatically, as should the date.

If you set up default payment TERMS in that vendor’s record, your preference should show in that field and the BILL DUE date should be correct. Enter the AMOUNT DUE and complete any of the optional fields that the transaction requires (REF. NO., DISCOUNT DATE, and MEMO).

Since this is a utility bill, the Expenses tab should be highlighted, and the amount you entered above should appear in it. Below that is the ACCOUNT field; open that list and choose the right one. Don’t worry about the CUSTOMER:JOB and BILLABLE fields. These will only be completed when you’re charging a customer for an expense or item.

Warning: If you’re not familiar with the concept of assigning accounts to transactions, please schedule some time with us. This is a critical designation that affects so many other areas of QuickBooks.

Saving Your Work

The toolbar from the Enter Bills window

Once you save your bill, you’ll be able to access it when it’s time to apply payment. How will you remember when it’s due, though? QuickBooks can remind you – or even pay it automatically. So, before you leave the Enter Bills window, click Memorize in the toolbar pictured above.

The Memorize Transaction window will open with your vendor already entered in the Name field. You’ll have three options here:

Add to my Reminders list. QuickBooks can add this bill to its list of Reminders. To ensure that you’ll see this every time you open the software and can make any changes necessary, open the Edit menu and click Preferences | Reminders | My Preferences. Click in the box in front of Show Reminders List when opening a Company file. Then click the Company Preferences tab (if you’re the administrator) and find the Bills to Pay row. Click the appropriate button to indicate whether you want QuickBooks to Show Summary or Show List, and enter the number of days before due date.

Do Not Remind Me. Just what it sounds like.

Automate Transaction Entry. You can only select this if the transaction will be exactly the same every time (except for the date). If the number of transactions will be limited, enter the Number Remaining. And tell QuickBooks how many Days in Advance To Enter.

If you choose the third option here, be very careful when you define the automation. You should really only do this if you’re an advanced user.

When you’re done, click OK to close the box, and save the bill.

Let us know if you want to schedule a session to go over any aspect of your accounts payable – or anything else in QuickBooks.


Isler Northwest LLC is a firm of certified public accountants and business advisors based in Portland, Oregon. Our local, regional, and global resources, our expertise, and our emphasis on innovative solutions and continuity create value for our clients. Our service goals at Isler Northwest is to earn our clients trust as their primary business and financial advisors.

Isler Northwest

(503) 224-5321

1300 SW 5th Avenue
Suite 2900
Portland, Oregon 97201

The Key Steps to Take BEFORE You Start a New Business  

Very few people think that starting a new business is easy. But at the same time, there are few first-time entrepreneurs who realize just how involved things are from the moment you start trying to bring that idea that previously only existed in your head into the real world. Read more

Day Care Providers Enjoy Special Tax Benefits

Article Highlights: 

  • Business Use of Home
  • Prorated Use
  • Owned Home
  • Rented Home
  • Exclusive Use
  • Meal Allowance
  • Other Deductions

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isler, business advisors, portland

5 QuickBooks Online Reports You Should Run Regularly

5 QuickBooks Online Reports You Should Run Regularly 

There are numerous QuickBooks Online reports that you should be consulting at regular intervals. But you need these five at least every week.

QuickBooks Online’s Dashboard, the first screen you see when you log in, provides an effective overview of your company’s finances. It contains at-a-glance information about your recent expenses, your sales, and the status of your invoices. It displays a simple Profit and Loss graph and a list of your account balances. Scroll down and click the See all activity button in the lower right and your Audit Log opens, a list of everything that’s been done on the site and by whom.

You can actually get a lot of work done from this page. Click the bar on the Invoices graph, for example, and a list view opens, allowing you access to individual transactions. Click Expenses to see the related Transaction Report. Below the list of account balances, you can Go to registers and connect new accounts. Read more

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The Most Common Accounting Mistakes Small Business Owners Make and How to Avoid Them

Most small business owners are an expert in their field, but not necessarily in the accounting aspects of building a business. And, with this comes a few common mistakes. Yet, even simple small business accounting mistakes can prove to be financially limiting and costly down the road. With the help of an accounting professional, it is possible to overcome at least some of these mistakes. Take a look at some of the most common mistakes and how to avoid them.

#1: Choosing the Right Accounting Software for My Business

You’ve purchased small business accounting software. You assume it will be ideally matched to your business and easy enough to jump into. It’s not. The problem is, each business requires a carefully selected and even customized accounting method. There are always risks related to regulatory compliance when the wrong accounting software is used or information is overlooked.

To resolve this, work with a professional that listens to your needs, learns about your business, and modifies your bookkeeping methods to meet your goals.

#2: Your Business Has Poor Organization and Recordkeeping

It’s quite common for small business owners to lack the time and skills to effectively manage small business recordkeeping and bookkeeping. There’s much to do and it takes time away from your business. And, there are dozens of apps and cloud accounting options present. Which do you use?

The good news is all of those options are a good thing. It means there are no longer excuses for not getting your business organized. With a bit of help, it is possible to set up a system that streamlines your business operations.

#3: Cash Flow Versus Profit-Loss Statement

Many small businesses are making money on paper, but they end up going under if their float to getting paid is too long. This is financially limiting and stunts your growth as well.

It’s important to understand how this impacts your business. Cash flow is a critical component of any business operation — it determines how much you end up borrowing and paying for, too. Learn the best methods for managing cash flow.

#4: Not Understanding Standard Accounting Procedures and Terminology

Many small business owners don’t understand key business accounting terms and procedures. What does setting up controls mean? What about bank reconciliation? What are your balance sheets and when are they updated? Profit and loss statements are filled with very specific terminology you need to get right.

It’s possible to learn these terms and methods on your own. There’s plenty of information available. However, it takes time to learn it all. More importantly, you may find applying specific procedures and tax laws to your business challenging. To overcome this, work with a tax professional you can depend on.

#5: The Small Business Budget

A budget provides financial insight. It offers guidance to you about where your business is right now and what your goals are. That’s because a budget — which many small business owners lack — creates key goals for your company to manage. Flying blind, on the other hand, is a common small business mistake.

Creating a budget takes some time and a good amount of dedication. Once it is in place, it can be modified each month to meet current needs. Software is available to help with this, but an accounting professional is also an option.

#6: Too Much DIY

To be frank, one of the biggest mistakes small business owners make is simply trying to save money by doing it themselves. Yes, it is true this will cut your accounting costs, but it also creates a scenario in which you have absolutely no control over “what you don’t know.” In other words, just because you can enter it doesn’t mean you should.

Working with a bookkeeping and accounting service capable of handling these tasks for you is the best option. In nearly every situation, these services will work to save you money, far overlapping any DIY savings you are creating.

#7: Lack of Tax Planning

Taxes are not something you should do just one time a year. Year-long tax planning for small businesses is necessary. It’s not just important to pay your taxes, but also to plan for them and plan for savings options.

If you lack a tax planning strategy, work to improve this by simply working with a tax professional. Create a plan for ways you can invest and cut your tax burden.

#8: Lack of Modernization

Are you still balancing your books using pen and paper? It is no longer considered ideal to do so. Yet, many small business owners see the investment in modernization and cloud accounting to be too costly.

In fact, moving to a digital accounting system is likely to save you time and money. It doesn’t have to be challenging to implement this system either.

#9: Not Realizing True Profit and Loss

You may have a profit and loss sheet, but you may not have a lot of insight into what each line means. More so, you may not know enough about methods for reducing costs or viewing profit potential.

The investment in an accounting service can alleviate this. We are happy to talk to you about methods to save you money or boost your profit margins with simple changes to your methods.

Most small business accounting mistakes come from a lack of insight into the industry. The good news is solutions are available to help you overcome nearly all of them.


Isler Northwest LLC is a firm of certified public accountants and business advisors based in Portland, Oregon. Our local, regional, and global resources, our expertise, and our emphasis on innovative solutions and continuity create value for our clients. Our service goals at Isler NW is to earn our clients’ trust as their primary business and financial advisors.

Isler Northwest

(503) 224-5321

1300 SW 5th Avenue
Suite 2900
Portland, Oregon 97201