Monthly Archives: July 2015

Bassim Michael Will Present at the Sikka Optimization Summit 2015



Questions and Answers: IRS Audits and Your Dental Practice

Being selected for an audit doesn’t mean that you’re suspected of incorrectly reporting your taxes for your dental practice.

There’s no getting around it: The prospect of being audited by the IRS is unnerving, but the agency chooses to audit individuals and businesses for a number of reasons, including:

  • Mismatched documents. If numbers from forms like W-2s and 1099s don’t match what was reported, a taxpayer may be targeted.
  • Proximity. When someone has a business relationship with someone else who’s being audited, like a partner or investor, an audit may be ordered because of shared issues and/or transactions.
  • No reason at all. Some are selected for audits simply because a statistical formula was applied and they came up.

What is an IRS audit?

The goal of an IRS audit is to determine whether the taxpayer has paid the correct amount of money in taxes. This is done by examining the taxpayer’s accounts and financial information.

How will I be contacted?

You’ll receive a phone call and/or a letter. The initial contact is never made via email.

Where will the audit be held?

There are many options. An audit may occur at an IRS office, or it may be at your home, your place of business, or at an accountant’s office. It may also be done through the U.S. Mail.

How long will it take?

There are many factors that have impact on the length of an audit, including complexity of the issues and availability of both the necessary records and the involved parties. An audit will of course take longer if the IRS and the taxpayer(s) have difficulty agreeing on the results.

How long after I’ve filed a return can the IRS still order an audit?

Audits are usually conducted within three years from the date a specific tax return was filed, so you should keep supporting documentation for at least that long. You should keep payroll records for a minimum of four years. In some cases, a longer period of safekeeping is needed. We can help you determine what should be stored and for how long.

What are my rights as an audited taxpayer?

There are many. The IRS has a publication called Your Rights as a Taxpayer. These include the right to:

  • Courteous, professional treatment by IRS representatives.
  • Confidentiality and privacy.
  • Representation, either by you or by an authorized representative.

How is the outcome of an audit determined?

An IRS audit can conclude in one of three ways. There can be no change, which means that you have provided information that the IRS accepts as valid, and the return does not have to be modified. In an audit that is agreed, the IRS has recommended changes based on the information provided. You understand them and agree with them. An audit can also be disagreed. The IRS has proposed changes, but you don’t agree with them. In a case like this, the IRS may call in a manager to review the findings. You also have the right to file an appeal.

Is there any way to avoid being audited?

Since some audits are selected randomly, there’s always a chance that you’ll be audited. However, there are red flags in tax returns that sometimes prompt the IRS to order an audit. We can tell you what these are, and we’ll prepare your return accurately and thoroughly to minimize your chances of being singled out.

Password Strength – More Important Than You Think in a Dental Office

fwL4E21kZJ3UIv3ENAL3x_n1gkk8uc_JyUjj9nqcxPgA password is an account’s first line of defense against hackers. Without a strong password, hackers may be able to breach your accounts’ security and access sensitive information vital to your dental practice that they can use for their own personal gain. Unfortunately, few people realize just how important the strength of passwords can be. In fact, according to Password Genie, although the average person visits 25 password-protected sites, most people use only six different passwords, and 73 percent of people use the same password for every site.

Understanding Hackable Passwords

Studies have shown that some passwords are inherently weaker than others. The easier your passwords are to guess or remember, the easier they are to crack. According to Imperva, shorter passwords and passwords that use only one type of character are the most vulnerable to attacks from hackers.

Imperva also reports that as many as 60 percent of users choose passwords that contain only letters and numbers, and up to one-third of users have passwords containing six characters or less. Studies also show that certain common passwords are hacked more frequently than others. These passwords include predictable phrases like “123456,” “password” and “iloveyou.” Using any of these phrases for your dental practice account passwords increases the risk of a breach.

Important Statistics

Even if a password isn’t easy to guess, it may still be vulnerable. Password Genie reports that a computer program can crack a 6-character password that used only lower case letters in as little as ten minutes, regardless of the letter combination. Likewise, a 7-character password with both upper and lower case letters would take 23 days to crack. On the other hand, a 9-character password that includes uppercase letters, lowercase letters and numbers or symbols would take 44,530 years to crack using an automated computer program.

Based on the evidence, it is clear that the strength of passwords is extremely important. Hackers often use computer programs to discover passwords, so simply creating a password that is difficult for a human to guess isn’t enough to protect your accounts. To prevent breaches, passwords should contain a combination of uppercase letters, lower case letters, numbers and symbols. Passwords of at least eight characters are also recommended.

Start Planning for 2015 Income Taxes Now: 5 Tips

Even if your 2014 refund hasn’t hit the mailbox yet, it’s time to get a jump on your 2015 taxes.

What does the phrase “tax planning” mean to you?

  1. Hurriedly giving charitable donations in December to try to knock down your total income tax obligation
  2. Setting aside time for tax preparation as soon as your tax forms come in after the first of the year
  3. Making tax planning a year-round element of your larger financial planning

There’s nothing wrong with the first two here, but we also hope you’re practicing #3. If not, here are five ways you can do that.

Run your financial reports conscientiously.

Figure 1: Reports are a critical part of your year-round tax planning. We can create and analyze the standard financial reports you’ll need.

All of that hard work you do entering transactions and receiving payments conscientiously pays off in reports that can help you make better business decisions for your dental practice every day. But reports are also an important element of your tax planning. There are many simple ones that you’ll want to generate regularly to keep an eye on your income and expenses, but some, like the Trial Balance and Statement of Cash Flows, are more complex and can require a professional’s interpretation.

If you’ve not already done so, talk to us about setting up a regular schedule for these standard financial reports, either monthly or quarterly. We can explain how the insight you receive can have an impact on your tax obligations.

Consider your “green” options. Energy conservation is not just a good idea — it can help you save money on your taxes. The government makes a number of energy credits available to businesses and consumers who install and use products that are energy efficient. You can get more information here.

Watch expenses like the proverbial hawk. Business expenses will offset your income and help you lower your tax bill, but they need to be the right expenses. And they need to be documented comprehensively and accurately.

Technology can be your friend here. There are applications that help you rein in travel expenses, for example. You can lay out your policies within them, and they will flag expenses that are out of your reimbursable and/or billable range. Others help you track and manage receipts. There are also numerous time-and-billing applications that will help you ensure that all hours worked are recorded and billed back to the appropriate customers.

These solutions are easy to use and inexpensive, and they can help you trim the fat and charge your customers for the expenses you incur for them. We can help you explore and implement what’s available.

Are you getting too much of a refund, and you’re tired of loaning the government your money without getting any interest? Or conversely, are you having to pay too much at filing time? Evaluate your withholding to determine whether you should be claiming more or fewer allowances. You can talk to us about this. If you need to complete a new Form W-4, you can find one here.

Figure 2: Allowances are often the culprit if you’re regularly receiving a large refund or you frequently have to pay at filing time. We can help you evaluate your situation.

Use a recommended small business or dental accounting product. Whether it’s desktop software or a cloud-based solution, there’s simply no reason why you should still be using Excel and paper. You need solid financial information year-round that culminates in a thorough, accurate set of forms and schedules come tax time. In fact, your income tax obligation is good enough reason to invest a modest amount of money and some training time to automate your finances. There are many other benefits, but tax planning is a significant one.

We want to help you take some of the dread and anxiety out of tax deadlines. Setting up a year-round planning strategy will do just that.

Michael & Company Welcomes Rudy Macias as a Shareholder within the Firm

Michael & Company, a CPA firm headquartered in Fresno, Calif., is pleased to announce that Rudy Macias, CPA has been appointed as a shareholder of the company.

A life-long resident of the central valley, Mr. Macias received his Bachelor of Arts in Accounting from Fresno Pacific University in 2005. One year prior to graduation, Mr. Macias started working as an accounting intern at the Fresno-based CPA firm, Michael & Company. He became a full-time employee upon graduation.

As a shareholder of the company, Mr. Macias will acquire new responsibilities, rights and privileges within the firm. Mr. Macias will oversee the accounting and tax departments, as well as help set strategic direction for the firm.

“I really enjoyed working in public accounting. It gives me great satisfaction knowing that I am doing something to help my clients in any way possible,” said Mr. Macias. “Becoming partner is a dream come true and a great accomplishment for me.”

Since 1997, Michael & Company has provided accounting, business advisory and tax services to business entities and individuals in California and across the country.

Mr. Macias can be reached at For more information about Michael & Company and the financial services offered, call 559-436-8907 or visit the firm’s website at