May 2005 Newsletter

IntraScope Accounting Solutions, LLC

May 2005 Edition

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Social Security Reform

If you have been wondering who to believe about Social Security Reform, read on. Recently, the American Institute of CPAs issued an unbiased report on Social Security Reform. I urge you to read the report but here are some interesting facts from the report:

The poverty rate among the elderly is 10%, down from 35.2% in 1959. Without social security, the poverty rate among the elderly would be 48% today.

For almost 30% of the elderly, SS provides more than 90% of income.

Most of today's SS recipients will receive more benefits than they paid in.

In 1945, 41.9 workers paid into the system for every retiree. Today, 3.3 workers support each retiree. By 2080, it is estimated that somewhere between 1.4 and 2.4 workers will support each retiree.

Life expectancies have increased from 61.4 yeas for males in 1940 to 79.2 years in 2050, an increase of almost 18 years.

There are 3 calculations in the report estimating when the social security trust fund will be exhausted. Pessimists think that will occur in 2031, optimists don't believe it will be exhausted at all but those in the middle estimate by 2042 the fund will be exhausted.

www.aicpa.org/members/socsec.htm

Identity Theft

In the last year, several of my business clients have been the victim of identity theft. The thieves simply took a check, duplicated the information and wrote fraudulent checks on their accounts. In one case, the fraudulent checks looked more legitimate than the company checks. In all cases, the bank required the old account be closed, causing additional expense and hours and hours to resolve the situation.

Keep in mind that banks DO NOT verify signatures as checks clear your account. It will be up to you to identify potential unauthorized checks clearing your account. If you are a victim, contact your bank immediately. They will tell you how to proceed.

So, how do you protect yourself?

Reconcile your statement each month and check for unauthorized transactions. This is really important because you only have so much time to notify your bank of unauthorized transactions.
Report any suspicious inquiries or unauthorized account transactions to your bank immediately.
Never give out your checking account number unless it is a call you have initiated.
Reveal checking account information only to businesses you know to be reputable.
Shred or tear up cancelled checks and deposit slips before discarding them.
Deposit mail in U.S. Postal Service collection boxes. Don't leave mail in your mailbox overnight or on weekends.

Payroll Record Keeping Requirements

I am often asked "how long should I keep my records". Here is a summary of the requirements for payroll records. You may be subject to large penalties if you do not follow these guidelines so be careful!

The following must be kept for 4 years after the due date of the employee's personal tax return:

Compensation records, including hours, pay period, withholding, etc for employees
Beginning and ending dates of employment.
W-4's
Copies of all payroll tax returns, including W-2's
W-2's that are returned undeliverable should be kept unopened to show that you attempted to deliver the return.

Tax Simplification or a Flat Tax -- Will it Really Happen?

I just came back from a trip to Washington D.C. traveling to a meeting with the American Institute of CPAs. This meeting is designed for CPAs to meet with their Congressmen and to get a feel for what is happening on the hill. It sounds like Tax Simplification and/or a Flat Tax are on the table for discussion. It is a definite priority for President Bush so this may be a real possibility. Several of the people I came in contact with indicated that action will come in the fall. Will we see real change or just more bandaids on a crazy system -- who knows. I will keep you updated as more information is available.

Staffing Changes

I have an exciting announcement for those clients that have been with me for many years. Sandy Delaney is back!!! Sandy worked with me about 5 years ago as a bookkeeper and accountant. She left to go to work for Robinson Brick and worked in various accounting departments while she was with them. While Sandy was with Robinson, she was known as the person you could always call that would find a way to help you. She has returned to IntraScope to help clients with their bookkeeping and QuickBooks needs.

Jennifer James left the firm in late April to pursue new opportunities. We wish her well and will miss her.

We are in the middle of transitioning Jennifer's clients to Sandy. If you don't know who to call, just call Lynne and I will make sure you are taken care of.

Thanks to all of you for hanging with us during the transition. I know change is not fun but we will do our best to make it as easy as possible.

Summer Hours

During the summer, our hours will be Monday through Thursday 8:00 - 5:00 pm.