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8 FAQs about EMV credit cards

June 13, 2015 • Jeff Cecchini • Comments Off on 8 FAQs about EMV credit cards

Source: http://www.creditcards.com/credit-card-news/emv-faq-chip-cards-answers-1264.php

8 FAQs about EMV credit cards

Chip? PIN? Signature? Will old cards work? Answers to frequently asked questions

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The nationwide shift to EMV is well underway.

EMV — which stands for Europay, MasterCard and Visa — is a global standard for cards equipped with computer chips and the technology used to authenticate chip-card transactions. In the wake of numerous large-scale data breaches and increasing rates of counterfeit card fraud, U.S. card issuers are migrating to this new technology to protect consumers and reduce the costs of fraud.

FAQ on EMV cards

“These new and improved cards are being deployed to improve payment security, making it more difficult for fraudsters to successfully counterfeit cards,” says Julie Conroy, research director for retail banking at Aite Group, a financial industry research company. “It’s an important step forward.”

For merchants and financial institutions, the switch to EMV means adding new in-store technology and internal processing systems, and complying with new liability rules. For consumers, it means activating new cards and learning new payment processes.

Most of all, it means greater protection against fraud.

Approximately 120 million Americans have already received an EMV chip card and that number is projected to reach nearly 600 million by the end of 2015, according to Smart Card Alliance estimates.

Want to know more about the transition and your new chip-equipped card? Here are eight frequently asked questions to help you understand the changes.

1. Why are EMV cards more secure than traditional cards?

It’s that small, metallic square you’ll see on new cards. That’s a computer chip, and it’s what sets apart the new generation of cards.

The magnetic stripes on traditional credit and debit cards store contain unchanging data. Whoever accesses that data gains the sensitive card and cardholder information necessary to make purchases. That makes traditional cards prime targets for counterfeiters, who convert stolen card data to cash.

WAIT, WHAT’S THE CARD CALLED?
As the U.S. payment industry transitions to EMV technology, there’s a lot to adjust to, starting what to call the new cards. They might be called any of the following terms:

  • Smart card
  • Chip card
  • Smart-chip card
  • Chip-enabled smart card
  • Chip-and-choice card (PIN or signature)
  • EMV smart card
  • EMV card

“If someone copies a mag stripe, they can easily replicate that data over and over again because it doesn’t change,” says Dave Witts, president of U.S. payment systems for Creditcall, a payment gateway and EMV software developer.

Unlike magnetic-stripe cards, every time an EMV card is used for payment, the card chip creates a unique transaction code that cannot be used again.

If a hacker stole the chip information from one specific point of sale, typical card duplication would never work “because the stolen transaction number created in that instance wouldn’t be usable again and the card would just get denied,” Witts says.

EMV technology will not prevent data breaches from occurring, but it will make it much harder for criminals to successfully profit from what they steal.

Experts hope it will help significantly reduce fraud in the U.S., which has doubled in the past seven years as criminals have shied away from countries that already have transitioned to EMV cards, Conroy says.

“The introduction of dynamic data is what makes EMV cards so effective at bringing down counterfeit card rates in other countries,” she says.

2. How do I use an EMV card to make a purchase?

Just like magnetic-stripe cards, EMV cards are processed for payment in two steps: card reading and transaction verification.

However, with EMV cards you no longer have to master a quick, fluid card swipe in the right direction. Chip cards are read in a different way.

“Instead of going to a register and swiping your card, you are going to do what is called ‘card dipping’ instead, which means inserting your card into a terminal slot and waiting for it to process,” Conroy says.

When an EMV card is dipped, data flows between the card chip and the issuing financial institution to verify the card’s legitimacy and create the unique transaction data. This process isn’t as quick as a magnetic-stripe swipe.

“It will take a tiny bit longer for that transmission of data to happen,” Witts says. “If a person just sticks the card in and pulls it out, the transaction will likely be denied. A little bit of patience will be involved.”

3. Is card dipping the only option?

Not necessarily. EMV cards can also support contactless card reading, also known as near field communication.

Instead of dipping or swiping, NFC-equipped cards are tapped against a terminal scanner that can pick up the card data from the embedded computer chip.

“Contactless transactions are more consumer-friendly because you just have to tap,” said Martin Ferenczi, president of Oberthur Technologies, the leading global EMV product and service provider. “Around the world, there is a move to make EMV cards dual-interface, which means contact and contactless. However, in the U.S., most financial instructions are issuing contact cards.”

Dual-interface cards and the equipment needed to scan them are expensive. Right now, the first step is to successfully integrate EMV cards into the U.S. shopping scene. Dual interface will arrive later, according to Ferenczi.

4. Will I still have to sign or enter a PIN for my card transaction?

Yes and no. You will have to do one of those verification methods, but it depends on the verification method tied to your EMV card, not if your card is debit or credit.

CHIP CARDS, BY THE NUMBERS
575 million: Number of EMV cards to be issued by the end of 201559%: Percentage of retail locations that will be EMV-compliant by the end of 2015.78,800: Current number of EMV chip-activated merchant locations

40%: Percentage of US. debit cards that will be issued as EMV cards by the end of 2015

70%: Percentage of U.S. credit cards that will be issued as EMV cards by the end of 2015

86%: Percentage of financial institutions that plan on issuing EMV debit cards in the next two years

$3.50: Average cost for issuing a new EMV card

$500: Average cost of an EMV-compliant point-of-sale terminal

Sources: Javelin Research & Strategy, Aite Group, 2014 PULSE Debit Issuer Survey

Chip-and-PIN cards operate just like the checking-account debit card you have been using for years.

Entering a PIN connects the payment terminal to the payment processor for real-time transaction verification and approval. However, many payment processors are not equipped with the technology needed to handle EMV chip-and-PIN credit transactions. So it is not likely you will have to memorize new PINs anytime soon, according to Conroy.

“There aren’t going to be many issuers requiring a PIN,” she says. “A vast majority will be issuing chip-and-signature cards, which aren’t all that different from how credit cards work now.”

As with a magnetic-stripe credit card, you sign on the point-of-sale terminal to take responsibility for the payment when making a chip-and-signature card transaction.

Once the transition to EMV is under way in the U.S., chip-and-PIN cards will be transitioned in. Again, it is one step at a time, according to Ferenczi.

“The card production demand today is really based on chip-and-signature cards,” he says. “It will probably take two to three years to fully convert to chip-and-PIN.”

Despite a slow transition overall, those who get chip-and-PIN cards will be able to use them right away.

“If a terminal doesn’t have the ability to accept a PIN, it will then step down to accepting a signature,” says Randy Vanderhoof, executive director of the Smart Card Alliance. “There will always be a secondary option.”

5. If fraud occurs after EMV cards are issued, who will be liable for the costs?

Today, if an in-store transaction is conducted using a counterfeit, stolen or otherwise compromised card, consumer losses from that transaction fall back on the payment processor or issuing bank, depending on the card’s terms and conditions.

After an Oct. 1, 2015, deadline created by major U.S. credit card issuers MasterCard, Visa, Discover and American Express, the liability for card-present fraud will shift to whichever party is the least EMV-compliant in a fraudulent transaction.

Consider the example of a financial institution that issues a chip card used at a merchant that has not changed its system to accept chip technology. This allows a counterfeit card to be successfully used.

“The cost of the fraud will fall back on the merchant,” Ferenczi says.

The major credit card issuers each have published detailed schedules about the upcoming shift in liability. The change is intended to help bring the entire payment industry on board with EMV by encouraging compliance to avoid liability costs.

Any parties not EMV-ready by October 2015 could face much higher costs in the event of a large data breach.

Automated fuel dispensers will have until 2017 to make the shift to EMV. Until then, they will follow existing fraud liability rulings.

6. So by Oct. 1, 2015, the transition to EMV technology will be complete?

Not exactly.

Although the upcoming deadline is strong encouragement for all payment processing parties to become EMV-compliant as soon as possible, experts do not believe everyone will comply by that date.

“Don’t expect a big bang in October of 2015,” says Doug Johnson, vice president of risk management policy for the American Bankers Association. “In terms of rollout, we expect about 50 percent of banks and retailers to be completely transitioned over. It’s going to take a little time to adapt.”

Aite Group estimates that by the end of 2015, approximately 70 percent of credit cards and 40 percent of debit cards in the U.S. –1.1 billion cards total — will support EMV.

“We are the most fragmented and the largest market that has ever gone to the EMV standard,” Conroy says. “There’s going to be varied customer experiences over the first year, year-and-a-half of this transition.”

While many chip cards have already been issued, some people may have to wait longer than others before sent a new EMV card, according to Johnson.

“If consumers have cards that are expiring between now and October, those will likely be first in line to transition to chip cards,” he says. “Different companies will have different rollout strategies. Some will base their actions on card expiration dates; others will work to get chip cards into the consumer’s hands by the October liability deadline regardless,” says Johnson.

EMV debit cards may be issued to consumers at an even slower pace due as banks retailers have to prep their software to accept those cards as well, according to Ferenczi.

“Very few point-of-sale systems can accept debit EMV in the U.S. right now and the upgrade specs were issued only late last year,” he said. “But I can tell you that the cards have been produced, they just aren’t in consumer hands right now. I predict the debit delay will catch up by the deadline.”

7. If I want to use my chip-card at a retailer that doesn’t support EMV technology yet, will it work?

Yes. The first round of EMV cards — many of which are already in consumers’ hands — will be equipped with both chip and magnetic-stripe functions so consumer spending is not disrupted and merchants can adjust.

WHAT ABOUT MOBILE PAYMENT READERS?
Retailers using mobile payment devices such as Square will also have to purchase new equipment to read the chips on EMV cards. Square has designed two EMV-compatible card readers for Android and iOS devices — one for swiping and one for dipping. Merchants can pre-order the upgraded payment devices for delivery in the spring of 2015. They will cost $29 and $39, respectively.Until they upgrade, your new EMV cards will be processed without the added layer of encryption security the card chip provides.

If you find yourself at a point-of-sale terminal and are not sure whether to dip or swipe your card, have no fear. The terminal will walk you through the process.

“For example, if you enter a card into the chip reader slot but the reader isn’t activated yet, it will come up with an error and you’ll be prompted to swipe the card in order to use it,” Vanderhoof says.

And vice-versa.

“If a consumer tries to swipe a chip card instead of inserting it, an error will appear and they will be prompted to insert the card for chip processing instead,” Vanderhoof says.

If chip-card readers are not in place at a merchant at all, your EMV card can be read with a swipe, just like a traditional magnetic-stripe card.

“You can still conduct transactions, you just lose that extra level of chip security,” Johnson says.

8. Will I be able to use my EMV card when I travel outside the country?

Yes and no.

The U.S. is the last major market still using the magnetic-stripe card system. Many European countries moved to EMV technology years ago to combat high fraud rates. That shift has left many U.S. consumers who have magnetic-stripe cards looking for other forms of payment when they travel.

Since many foreign merchants are wary of magnetic-stripe cards, consumers who hold some type of chip card may run into fewer issues than those without one, according to Ferenczni.

“Just the existence of the chip will likely make European merchants more willing to accept transactions that they wouldn’t have likely accepted if a customer presented a mag-stripe card,” he says.

However, chip-and-PIN cards are the norm in most other countries that support EMV technology. So consumers with chip-and-signature cards may still find merchants who are unwilling or unable to process their card, even though it does have an embedded chip.

Unmanned payment kiosks in Europe — such as bike rental stations, train ticket stations and parking permit dispensers — may give U.S. travelers the most difficulty since most are set up to strictly accept chip-and-PIN card only, according to Ferenczi.

But despite any difficulties in the transition, Ferenczi says the change is a step in the right direction.

“Nobody likes to think that his or her card is being secretly used for other purposes,” he says. “So I think regardless, there is a level of comfort knowing that it will be far more difficult to counterfeit EMV cards.”

Read more: http://www.creditcards.com/credit-card-news/emv-faq-chip-cards-answers-1264.php#ixzz3d0rBFDGt

In Business Management, Mobile Credit Card Processing, Personal Finance, QuickBooks Merchant Services

Bugs in Custom Fields in QuickBooks 2015 R6

April 27, 2015 • Jeff Cecchini • Comments Off on Bugs in Custom Fields in QuickBooks 2015 R6

Check out Charlie Russell’s short article on the description of the bugs and their impact from the QuickBooks 2015 R6 release.

http://www.sleeter.com/blog/2015/04/quickbooks-2015-r6-problems

In QuickBooks Tips & How-to's

FAQs about Affordable Care Act Implementation (Part XXII)

April 26, 2015 • Jeff Cecchini • Comments Off on FAQs about Affordable Care Act Implementation (Part XXII)

FAQs about Affordable Care Act Implementation (Part XXII)

Source: http://www.dol.gov/ebsa/faqs/faq-aca22.html

Set out below are additional Frequently Asked Questions (FAQs) regarding implementation of the Affordable Care Act. These FAQs have been prepared jointly by the Departments of Labor (DOL), Health and Human Services (HHS), and the Treasury (collectively, the Departments). Like previously issued FAQs (available at http://www.dol.gov/ebsa/healthreform/ and http://www.cms.gov/cciio/resources/fact-sheets-and-faqs/index.html), these FAQs answer questions from stakeholders to help people understand the new law and benefit from it, as intended.

Compliance of Premium Reimbursement Arrangements
On September 13, 2013, DOL and the Treasury published guidance on the application of the market reforms and other provisions of the Affordable Care Act to health reimbursement arrangements (HRAs), certain health flexible spending arrangements (health FSAs) and certain other employer health care arrangements.(1) HHS issued contemporaneous guidance to reflect that HHS concurs in the application of the laws under its jurisdiction as set forth in the DOL and Treasury Department guidance.(2) Subsequently, on May 13, 2014, two FAQs were made available on the IRS website addressing employer health care arrangements.(3)

The Departments’ prior guidance explains that employer health care arrangements, such as HRAs and employer payment plans, are group health plans that typically consist of a promise by an employer(4) to reimburse medical expenses up to a certain amount. The Departments’ guidance clarifies that such arrangements are subject to the group market reform provisions of the Affordable Care Act, including the prohibition on annual limits under Public Health Service Act (PHS Act) section 2711 and the requirement to provide certain preventive services without cost sharing under PHS Act section 2713.(5) The Departments’ guidance further clarifies that such employer health care arrangements will not violate these market reform provisions when integrated with a group health plan that complies with such provisions. However, an employer health care arrangement cannot be integrated with individual market policies to satisfy the market reforms. Consequently, such an arrangement may be subject to penalties, including excise taxes under section 4980D of the Internal Revenue Code (Code).

 

Q1: My employer offers employees cash to reimburse the purchase of an individual market policy. Does this arrangement comply with the market reforms?

No. If the employer uses an arrangement that provides cash reimbursement for the purchase of an individual market policy, the employer’s payment arrangement is part of a plan, fund, or other arrangement established or maintained for the purpose of providing medical care to employees, without regard to whether the employer treats the money as pre-tax or post-tax to the employee. Therefore, the arrangement is group health plan coverage within the meaning of Code section 9832(a), Employee Retirement Income Security Act (ERISA) section 733(a) and PHS Act section 2791(a), and is subject to the market reform provisions of the Affordable Care Act applicable to group health plans. Such employer health care arrangements cannot be integrated with individual market policies to satisfy the market reforms and, therefore, will violate PHS Act sections 2711 and 2713, among other provisions, which can trigger penalties such as excise taxes under section 4980D of the Code. Under the Departments’ prior published guidance, the cash arrangement fails to comply with the market reforms because the cash payment cannot be integrated with an individual market policy.(6)

 

Q2: My employer offers employees with high claims risk a choice between enrollment in its standard group health plan or cash. Does this comply with the market reforms?

No. PHS Act section 2705,(7) which was incorporated by reference into ERISA section 715 and Code section 9815, as well as the nondiscrimination provisions of ERISA section 702 and Code section 9802 originally added by the Health Insurance Portability and Accountability Act (HIPAA), prohibit discrimination based on one or more health factors. Offering, only to employees with a high claims risk, a choice between enrollment in the standard group health plan or cash, constitutes such discrimination. While the Departments’ regulations implementing this provision(8) permit more favorable rules for eligibility or reduced premiums or contributions based on an adverse health factor (sometimes referred to as benign discrimination), in the Departments’ view, cash-or-coverage arrangements offered only to employees with a high claims risk are not permissible benign discrimination. Accordingly, such arrangements will violate the nondiscrimination provisions, regardless of whether (1) the cash payment is treated by the employer as pre-tax or post-tax to the employee, (2) the employer is involved in the selection or purchase of any individual market product, or (3) the employee obtains any individual health insurance.

Such offers fail to qualify as benign discrimination for two reasons. First, if an employer offers a choice of additional cash or enrollment in the employer’s plan to a high-claims-risk employee, the opt-out offer does not reduce the amount charged to the employee with the adverse health factor. Rather, the employer’s offer of cash to a high-claims-risk employee who opts out of the employer’s plan effectively increases the premium or contribution the employer’s plan requires the employee to pay for coverage under the plan because, unlike other similarly situated individuals, the high-claims-risk employee must accept the cost of forgoing the cash in order to elect plan coverage. For example, if the employer’s group health plan requires all employees to pay $2,500 toward the cost of employee-only coverage under the plan, but the employer offers a high-claims-risk employee $10,000 in additional compensation if the employee declines the coverage, for purposes of discrimination analysis, the effective required contribution by that high-claims-risk employee for plan coverage is $12,500 – that is, the $2,500 required employee contribution for employee-only coverage under the employer’s plan plus the $10,000 of additional compensation that the employee would forgo by enrolling in the plan. Because a high-claims-risk employee must effectively contribute more to participate in the group health plan, the arrangement violates the rule that a group health plan may not on the basis of a health factor require any individual (as a condition of enrollment) to pay a premium or contribution which is greater than the premium or contribution for a similarly situated individual enrolled in the plan.

Second, the Departments’ regulations generally permit providing, based on an adverse health factor, enhancements to eligibility for coverage under the plan itself but not cash as an alternative to the plan. In particular, the regulations permit providing plan eligibility criteria that offer extended coverage within the plan and subsidization of the cost of coverage within the plan based on an adverse health factor.(9) An example in the Departments’ regulations illustrates that a plan may have an eligibility provision that provides coverage to disabled dependent children beyond the age at which non-disabled dependent children become ineligible for coverage.(10) Another example in the regulations illustrates that a plan may provide coverage free of charge to disabled employees, while other employees pay a participant contribution towards coverage.(11) However, in the Departments’ view, providing cash as an alternative to health coverage for individuals with adverse health factors is an eligibility rule that discourages participation in the group health plan. This type of arrangement differentiates based on a health factor and is outside the scope of the Departments’ regulations on benign discrimination, which permit only discrimination that helps individuals with adverse health factors to participate in the health coverage being offered to other plan participants. The Departments intend to initiate rulemaking in the near future to clarify the scope of the benign discrimination provisions.

Finally, because the choice between taxable cash and a tax-favored qualified benefit (the election of coverage under the group health plan) is required to be a Code section 125 cafeteria plan, imposing an effective additional cost to elect coverage under the group health plan could, depending on the facts and circumstances, also result in discrimination in favor of highly compensated individuals in violation of the Code section 125 cafeteria plan nondiscrimination rules.

 

Q3: A vendor markets a product to employers claiming that employers can cancel their group policies, set up a Code section 105 reimbursement plan that works with health insurance brokers or agents to help employees select individual insurance policies, and allow eligible employees to access the premium tax credits for Marketplace coverage. Is this permissible?

No. The Departments have been informed that some vendors are marketing such products. However, these arrangements are problematic for several reasons. First, the arrangements described in this Q3 are themselves group health plans and, therefore, employees participating in such arrangements are ineligible for premium tax credits (or cost-sharing reductions) for Marketplace coverage. The mere fact that the employer does not get involved with an employee’s individual selection or purchase of an individual health insurance policy does not prevent the arrangement from being a group health plan. DOL guidance indicates that the existence of a group health plan is based on many facts and circumstances, including the employer’s involvement in the overall scheme and the absence of an unfettered right by the employee to receive the employer contributions in cash.(12)

Second, as explained in DOL Technical Release 2013-03, IRS Notice 2013-54, and the two IRS FAQs addressing employer health care arrangements referenced earlier, such arrangements are subject to the market reform provisions of the Affordable Care Act, including the PHS Act section 2711 prohibition on annual limits and the PHS Act 2713 requirement to provide certain preventive services without cost sharing. Such employer health care arrangements cannot be integrated with individual market policies to satisfy the market reforms and, therefore, will violate PHS Act sections 2711 and 2713, among other provisions, which can trigger penalties such as excise taxes under section 4980D of the Code.

 

Footnotes

  1. See DOL Technical Release 2013-03, available at http://www.dol.gov/ebsa/newsroom/tr13-03.html, and IRS Notice 2013-54, available athttp://www.irs.gov/pub/irs-drop/n-13-54.pdf.
  2. See Insurance Standards Bulletin, Application of Affordable Care Act Provisions to Certain Healthcare Arrangements, September 16, 2013, available athttps://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/cms-hra-notice-9-16-2013.pdf.
  3. Available at: www.irs.gov/uac/Newsroom/Employer-Health-Care-Arrangements.
  4. These arrangements may be sponsored by an employer, an employee organization, or both. For simplicity, this section of the FAQs refers to employers. However, this guidance is equally applicable to HRAs sponsored by employee organizations, or jointly by employers and employee organizations.
  5. Section 1001 of the Affordable Care Act added new PHS Act §§ 2711-2719. Section 1563 of the Affordable Care Act (as amended by Affordable Care Act § 10107(b)) added Code § 9815(a) and ERISA § 715(a) to incorporate the provisions of part A of title XXVII of the PHS Act into the Code and ERISA, and to make them applicable to group health plans and health insurance issuers providing health insurance coverage in connection with group health plans. The PHS Act sections incorporated by these references are sections 2701 through 2728. Accordingly, these referenced PHS Act sections (i.e., the market reforms) are subject to shared interpretive jurisdiction by the Departments.
  6. See DOL Technical Release 2013-03, available at http://www.dol.gov/ebsa/newsroom/tr13-03.html, and IRS Notice 2013-54, available athttp://www.irs.gov/pub/irs-drop/n-13-54.pdf. See also Insurance Standards Bulletin, Application of Affordable Care Act Provisions to Certain Healthcare Arrangements, September 16, 2013, available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/cms-hra-notice-9-16-2013.pdf.
  7. Prior to the enactment of the Affordable Care Act, Titles I and IV of the Health Insurance Portability and Accountability Act of 1996 (HIPAA), Public Law 104-191, added section 9802 of the Code, section 702 of ERISA, and section 2702 of the PHS Act (HIPAA nondiscrimination and wellness provisions). Affordable Care Act section 1201 also moved those provisions in the PHS Act from section 2702 to section 2705.
  8. 26 CFR 54.9802-1 (g); 29 CFR 2590.702(g);146.121(g).
  9. 26 CFR 54.9802-1 (g)(1)(i); 29 CFR 2590.702(g)(1)(i);146.121(g)(1)(i).
  10. 26 CFR 54.9802-1 (g)(1)(ii), Example 1; 29 CFR 2590.702(g)(1)(ii), Example 1;146.121(g)(1)(ii), Example 1.
  11. 26 CFR 54.9802-1 (g)(2)(ii), Example; 29 CFR 2590.702(g)(2)(ii), Example;146.121(g)(2)(ii), Example.
  12. See 29 CFR 2510.3-1(j).
In Human Resources, IRS Tax Info, Payroll

Downloading an online bank statement opens the wrong version of QuickBooks

April 22, 2015 • Jeff Cecchini • Comments Off on Downloading an online bank statement opens the wrong version of QuickBooks
You download an online bank statement (Web Connect file or .QBO) directly from a Financial Institution (FI) site, and the wrong version of QuickBooks opens.
This may also occur when double-clicking a Web Connect file (.QBO) after it has been saved to your computer.
Why this is happening

With multiple versions of QuickBooks installed, electing to open a .QBO file from the bank’s web site, defaults to the last installed QuickBooks version and opens the file. The banks branding process in the QuickBooks installation could also be damaged.

OR

The latest update is waiting to be installed.

How to fix it

Intuit recommends more than one solution for this problem. The first solution may solve your problem, or you may need to try all of them to resolve the issue. For best results, perform the solutions in the order shown.

Solution 1: Install the latest product updates for your version of QuickBooks.

  1. Click here for instructions on downloading the latest release for QuickBooks.
  2. Re-open QuickBooks.
  3. Click Install now when the update prompts to be installed.
  4. Restart your computer if prompted when the installation of the update is complete.
  5. Attempt the online banking download process again.
Solution 2:  Save the web connect (.QBO) file to your desktop and import it manually to the desired version of QuickBooks (Recommended if you use more than one version of QuickBooks to download bank transactions)

  1. From the Financial Institution’s web site, select the option to download transactions to QuickBooks.
    • Note: The location and title of this option will differ based on the financial institution.
  2. When prompted to Open, Save, or Cancel; click Save.
  3. Save the .QBO file to your Desktop or My Documents folder.
    • Once the .QBO is imported to QuickBooks you can delete the file from this location.
  4. Open the version of QuickBooks to the company file that you wish to import the .QBO file.
  5. Import the .QBO file to the QuickBooks company file.
    1. Go to Banking > Online Banking > Import Web Connect File.
    2. Click on Desktop or My Documents on the left side of the Open file window.
    3. Click the option that corresponds to the location where the .QBO file was saved in Step 3.
    4. Click on the .QBO file, choose Open.
    5. Follow on screen prompts to import the .QBO to a new or an existing bank or credit card account.
  6. If the download continues to open a different version of QuickBooks and does not give you the option to save, follow these steps:
    1. Go to the File menu.
    2. Select Close Company/Logoff.
    3. Once the company file is closed, go back to the File menu.
    4. Select Exit. Doing this will break the link between the incorrect data file and the bank.
    5. Attempt the previous steps in Solution 2 again.
Solution 3: Change file properties of .QBO files so these files always open with the correct version of QuickBooks. (Recommended if you only use one version of QuickBooks to access Online Banking)

  1. From the Financial Institution’s web site, select the option to download transactions to QuickBooks.
    • Note: The location and title of this option will differ based on the financial institution.
  2. When prompted to Open, Save, or Cancel; click Save.
  3. Save the .QBO file to your Desktop or My Documents folder.
  4. Open the Desktop or My Documents folder and find the .QBO file that was saved.
  5. Right-click on the .QBO file and choose Properties.
  6. Click on the General tab.
  7. Click the Change button in the Opens with: section to display the Open With window.
  8. Click the Browse button and navigate to the QBW32.exe file or QBW32[Flavor].exe.
    • Note: The default location is:
      • (WIndows 8, 7 or VIsta) C:\Program Files (Program Files X86(64 bit computer)\Intuit\QuickBooks [year].
      • (XP) C:\Program Files\Intuit\QuickBooks [year].
  9. Once you have found the correct QBW32.exe file or QBW32[Flavor].exe, click Open.
  10. Place a check in the box next to Always use the selected program to open this kind of file.
  11. Click Ok.
  12. Close the Properties window.

You will now be able to download the .QBO file and click Open; the .QBO file will now import into the file that is opened in the correct version of QuickBooks.

 

If these solutions don’t resolve the issue, you can read discussions and post messages and questions relating to your issue on the Intuit QuickBooks Community site for free. You can contact an agent for additional guidance. Fees may apply.

KB ID# SLN42439
In QuickBooks Tips & How-to's

Advantages and Disadvantages of Different Business Entity Types

April 21, 2015 • Jeff Cecchini • Comments Off on Advantages and Disadvantages of Different Business Entity Types

Advantages and Disadvantages of Different Business Entity Types

Source: http://blog.accountants.intuit.com/from-the-experts/above-the-forms-advising-clients-on-type-of-entity/

Sole Proprietorships

A sole proprietorship is the simplest and most common business structure. This is an unincorporated business with one owner. There is no legal distinction between the business and the owner. Here are some advantages and disadvantages of sole proprietorships:

Resources:

Partnership

At a fundamental level, a partnership is the agreement of two or more people to go into business together. At the federal level, a partnership is not taxed, but instead serves as a conduit to distribute all of the income and expenses to the partners.

When advising your clients on establishing a partnership, consider the various types, including the following:

  • General Partnerships
  • Limited Partnerships
  • Limited Liability Partnerships
  • Limited Liability Limited Partnerships (not recognized in all states)
  • Joint Ventures

Each of these types of partnerships has its own advantages and disadvantages, and many of those factors will depend on the nature of the particular business. This article presents advantages and disadvantages of partnerships at a general level:

Resources

S Corporation

An S Corporation is a legal entity separate from its owner or owners. While it has similar requirements to a C Corporation, it also has a pass-through feature like a partnership. Of course, there are specific requirements for making the S election, so become familiar with those before advising your client of this option. Here are some advantages and disadvantages of an S Corporation:

Resources

C Corporation

A C Corporation is also an incorporated entity that is separate from its owners. Most larger corporations, including publicly traded companies, are C Corporations. Here are some advantages and disadvantages of C Corporations:

Resources

Limited Liability Company

A Limited Liability Company has a hybrid legal structure. For federal tax purposes, an LLC is not a separate entity, but for some states it is. When your client chooses to form an LLC, you should also discuss what type of tax entity the business will have for federal filing purposes. An LLC can be a sole proprietorship (Single-Member LLC or SMLLC), a partnership or a corporation.

In Business Management, IRS Tax Info

Use Online Tools for Tax Help

April 10, 2015 • Jeff Cecchini • Comments Off on Use Online Tools for Tax Help

Get a tax transcript. You may need a tax transcript for a variety of reasons including if you apply for a loan or student financial aid, information needed for state or local tax filing purposes, or even for medical, housing or utility social services. Visit IRS.gov and use the Get Transcript tool.

Try IRS Direct Pay. If you owe taxes, pay with IRS Direct Pay. It’s a safe, easy and free way to pay from your checking or savings account. Go to IRS.gov/directpay to pay your federal tax bill.

Apply for an IRS payment plan. If you can’t pay all your taxes at once, apply for an IRS Online Payment Agreement. A direct debit payment plan is a great way to pay. It has a lower set-up fee, you won’t miss a payment and you won’t get an IRS reminder to send a check each month.

Check on your refund. The Where’s My Refund? tool is a fast and easy way to check on your tax refund. Use the IRS2Go mobile app to access the tool, or click on the ‘Refunds’ tab on IRS.gov.

Use IRS Free File. If you need to file your tax return, you can e-file for free by using IRS Free File. If you earned $60,000 or less you can prepare and e-file your taxes using free brand name tax software. If you made more, you can use Free File Fillable Forms. This option is the electronic version of IRS paper forms.  You can also use Free File to file for an extension.

Get answers to tax questions. The Interactive Tax Assistant covers many common tax topics. Type in your question or search terms and it can lead you step-by-step to the answer. The IRS Tax Map gives you a list of tax law subjects to select. It integrates tax topics, forms, instructions and publications into one research tool.

Get health care tax information. IRS.gov has information about the Affordable Care Act atIRS.gov/aca. You can visit this site for details on how the health care law affects your taxes. For example, the pages provide information about:

  • Reporting health insurance coverage.
  • Claiming an exemption from the coverage requirement.
  • Making an individual shared responsibility payment.
  • Claiming the premium tax credit.
  • Reconciling advance payments of the premium tax credit.

You can also use the Interactive Tax Assistant tool for help on how some of these laws apply to your situation.

Check out a charity. You must donate to a qualified charity if you want to deduct the donation on your tax return. Use the IRS Select Check tool to see if a charity is qualified.

Get forms and publications. View, download and print federal tax forms and publications anytime.

Calculate your tax withholding. If you get a larger refund or owe more taxes than you expect when you file your tax return, you may need to change your tax withholding. You can complete and give your employer a new Form W-4, Employee’s Withholding Allowance Certificate. Use the IRS Withholding Calculator tool to help you fill out a new form.

Some taxpayers are currently visiting a TAC as a result of having received a letter 5071C from the IRS to verify their identities. Taxpayers are encouraged to go through the identity verification process by accessing idverify.irs.gov. The website will ask a series of questions that only the legitimate taxpayer can answer. Because of the high-volume on the toll-free numbers, the IRS-sponsored website, idverify.irs.gov, is the safest, fastest option for taxpayers with web access.

The IRS offers multilingual services to taxpayers in more than 150 languages through bilingual employees or an Over-the-Phone Interpreter.

Most TACs operate on a first-come, first-served basis, but some TACs now require an appointment. Taxpayers should always check IRS.gov for days and hours of service as well as services offered at the location they plan to visit. For information on how to make an appointment, please visit thecontact my local office page on IRS.gov.

 

Source: http://www.irs.gov/uac/Newsroom/Avoid-Long-Lines-and-Hold-Times,-Use-Online-Tools-for-Tax-Help

In IRS Tax Info

Kevin O’Leary Shares 3 Essential Elements of a Great ‘Shark Tank’ Pitch

March 26, 2015 • Jeff Cecchini • Comments Off on Kevin O’Leary Shares 3 Essential Elements of a Great ‘Shark Tank’ Pitch

Kevin O’Leary Shares 3 Essential Elements of a Great ‘Shark Tank’ Pitch:

  1. “They’re able to articulate the opportunity in 90 seconds or less.”
  2. “They’re able to explain why they are the right people to execute the business plan.”
  3. “They know their numbers.”

Read the rest of the article here:

http://sba.thehartford.com/article/kevin-oleary-shares-3-essential-elements-of-a-great-shark-tank-pitch/3b0727544dd2d9d45d9c1ecd24b5e0d8?cmp=SOC-SC-Great_Shark_Tank_Pitch_FBSC-03162015

 

In Business Management

How to handle reimbursements to Independent Contractors

March 20, 2015 • Jeff Cecchini • Comments Off on How to handle reimbursements to Independent Contractors

This is an excerpt from IRS Publication 463, “Travel, Entertainment, Gift, and Car Expenses”, Chapter 6:

Rules for Independent Contractors and Clients

This section provides rules for independent contractors who incur expenses on behalf of a client or customer. The rules cover the reporting and substantiation of certain expenses discussed in this publication, and they affect both independent contractors and their clients or customers.

You are considered an independent contractor if you are self-employed and you perform services for a customer or client.

Accounting to Your Client

If you received a reimbursement or an allowance for travel, entertainment, or gift expenses that you incurred on behalf of a client, you should provide an adequate accounting of these expenses to your client. If you do not account to your client for these expenses, you must include any reimbursements or allowances in income. You must keep adequate records of these expenses whether or not you account to your client for these expenses.

If you do not separately account for and seek reimbursement for meals and entertainment in connection with providing services for a client, you are subject to the 50% limit on those expenses. See 50% Limit in chapter 2.

Adequate accounting.   As a self-employed person, you adequately account by reporting your actual expenses. You should follow the recordkeeping rules in chapter 5 .
How to report.   For information on how to report expenses on your tax return, see Self-employed at the beginning of this chapter.

Required Records for Clients or Customers

If you are a client or customer, you generally do not have to keep records to prove the reimbursements or allowances you give, in the course of your business, to an independent contractor for travel or gift expenses incurred on your behalf. However, you must keep records if:

  • You reimburse the contractor for entertainment expenses incurred on your behalf, and
  • The contractor adequately accounts to you for these expenses.
Contractor adequately accounts.   If the contractor adequately accounts to you for entertainment expenses, you (the client or customer) must keep records documenting each element of the expense, as explained in chapter 5 . Use your records as proof for a deduction on your tax return. If entertainment expenses are accounted for separately, you are subject to the 50% limit on entertainment. If the contractor adequately accounts to you for reimbursed amounts, you do not have to report the amounts on an information return.
Contractor does not adequately account.    If the contractor does not adequately account to you for allowances or reimbursements of entertainment expenses, you do not have to keep records of these items. You are not subject to the 50% limit on entertainment in this case. You can deduct the reimbursements or allowances as payment for services if they are ordinary and necessary business expenses. However, you must file Form 1099-MISC to report amounts paid to the independent contractor if the total of the reimbursements and any other fees is $600 or more during the calendar year.

 

Source: http://www.irs.gov/pub/irs-pdf/p463.pdf

In IRS Tax Info

New California Mandatory Paid Sick Leave Law begins 7/15/15

January 26, 2015 • Jeff Cecchini • Comments Off on New California Mandatory Paid Sick Leave Law begins 7/15/15

Healthy Workplace Healthy Family Act of 2014 (AB 1522)

 

See overview: http://www.dir.ca.gov/dlse/ab1522.html

See FAQ: http://www.dir.ca.gov/dlse/Paid_Sick_Leave.htm

 

An employee who, on or after July 1, 2015, works in California for 30 or more days within a year from the beginning of employment, is entitled to paid sick leave. Employees, including part-time and temporary employees, will earn at least one hour of paid leave for every 30 hours worked. Accrual begins on the first day of employment or July 1, 2015, whichever is later.

Exceptions: Employees covered by qualifying collective bargaining agreements, In-Home Supportive Services providers, and certain employees of air carriers are not covered by this law.

An employer may limit the amount of paid sick leave an employee can use in one year to 24 hours or three days. Accrued paid sick leave may be carried over to the next year, but it may be capped at 48 hours or six days.

Usage

  • An employee may use accrued paid sick days beginning on the 90th day of employment.
  • An employee may request paid sick days in writing or verbally. An employee cannot be required to find a replacement as a condition for using paid sick days.
  • An employee can take paid leave for employee’s own or a family member for the diagnosis, care or treatment of an existing health condition or preventive care or for specified purposes for an employee who is a victim of domestic violence, sexual assault or stalking.

Employers

There are several things employers must do to comply with the Healthy Workplace Healthy Family Act of 2014 (AB 1522).

  • Display poster on paid sick leave (Spanish) (Vietnamese) where employees can read it easily.
  • Provide written notice to employees with sick leave rights (Spanish) (Vietnamese) at the time of hire.
  • Provide at least 24 hours or three days of paid sick leave for each eligible employee to use per year.
  • Allow eligible employees to use accrued paid sick leave upon reasonable request.
  • Show how many days of sick leave an employee has available. This must be on a pay stub or a document issued the same day as a paycheck.
  • Keep records showing how many hours have been earned and used for three years.

Retaliation or discrimination against an employee who requests or uses paid sick days is prohibited. An employee may file a complaint with the Labor Commissioner against an employer who retaliates or discriminates against the employee for exercising these rights or other rights protected under the Labor Code. Local offices are listed on our website at http://www.dir.ca.gov/dlse/DistrictOffices.htm.

In CA Payroll Taxes, CA Wage & Hour

12 steps small business owner can take to prevent fraud.

January 22, 2015 • Jeff Cecchini • Comments Off on 12 steps small business owner can take to prevent fraud.

There are lots of steps recommended by experts to prevent fraud, some more practically and affordably implement by small businesses than others.

In my experience, there are a few important things that small business owners should be doing themselves on an monthly basis that are very effective to deter, help detect, and stop most fraud fairly quickly.

 

1. Be interested in the financial aspect of your business.
When you demonstrate that the finances matter to you, that you are involved with them, and that you’re running a tight ship, that in and of itself deters fraud, and promotes accuracy.

 

2. Establish best practices of accounting.
Doing the accounting according to best practices allows others to clearly follow what’s been done, verify accuracy, and detect patterns of fraudulent activity. When the books are a mess, it’s hard for everyone to follow, and easier for fraud to go un-noticed. It also requires more work and money to examine and tie out books that are a mess.

Work is usually performed properly if you have a professional bookkeeper or an accountant doing the books. This is often not the case when an owner, owner’s spouse, receptionist/office manager is doing the books. They usually lack the training, aptitude, and focus required for such detail oriented work. Sometimes with training, this might be able to be turned around. Best practices include accounting procedures and processes, but also related things like separate user names and password on the accounting software and web sites accessed like banking and credit cards.

 

3. Require that bank account and credit card reconciliations are performed monthly.
Fraud can occur from outside an organization apart from the doing of internal staff. If reconciliations are performed regularly, this type of fraud can be detected by your staff more timely.

 

4. Establish a paperless document storage system.
If bank, credit card statement, reconciliations, accounts receivable, accounts payable, vendor documents, etc. are all centrally stored electronically for all appropriate staff, things are harder to hide, because data is readily available for verification. It’s also a much more efficient way to work.

 

5. Review the payroll reports each pay date.
Look at the employee names and make sure that you know everyone that is being paid. Paying a false employee is an easy way to slip in a fraudulent disbursement. The recipient shares the proceeds with the bookkeeper.

 

6. Don’t use a debit card.
If fraud occurs on your debit card, then it can wipe out your bank balance out and other checks and payments to bounce like payroll and payroll tax payments. Also, if you have more than one person with a debit card, it’s usually hard to track purchases by debit card. Instead, use a small business or corporate type credit card account that allows for multiple cards, each with their own credit limit. The statement will come consolidated but will sub-total expenses by card so that you can easily review each card’s transactions. Give your bookkeeper their own card for things that they need to make as opposed to them using your card.

 

7. Don’t ever make cash withdraws or take cash back from deposits.
For most businesses, doing either is an indication of very poor accounting practices that really exposes owners to fraud. Minimize the use of petty cash and write a check to cash so that there is a record of who did it when the check clears. Cash withdraws and cash back is typically done because the owner needs money. Instead, owners should transfer money from their business account to their personal account, and then withdraw or disperse personal funds anyway they see fit from their personal account. If you never withdraw cash or take cash back from a deposit, it will be more easily identifiable if it does occur fraudulently.

 

8. Review bank and credit card statements timely each month.
Look for transactions you don’t recognize and investigate. The quicker you catch inappropriate transactions, the faster you can make it stop and begin taking action to collect the amounts back and/or report fraud to your bank or credit card company.

 

9. Review check images from your bank.
If you have online banking, you can review the image of a item as soon as it clears your account. Look at the payee’s name, do you know who it is? Does the amount seem appropriate? Who signed the check?

 

10. Write as few checks as possible.
Checks are ripe for fraud by sources inside and outside your organization. There’s lots of reasons for this, but they all come down to the reality that a check passes through many hands from internal staff, to postal staff, to the recipient’s staff. Lots of things can happen to that check as it travels through those many hands.

Checks can also be delivered to an incorrect recipient further adding complexity. Checks can be altered after the fact through a process called washing whereby a fairly simply chemical process is applied to the check to lift the toner/or ink of the payee name and/or check amount, while leaving the date and signature and intact. Payee name and amount is changed and looks original. Checks can be written and signatures forged. Checks can be created by someone outside your organization that has seen one of your checks. The list goes on and on. If you have checks, secure them well, and keep track of each check. Most accounting systems can produce a missing check report show gaps in check number sequence.

ACH, wire, and credit card payment is much more specific and traceable as to whom the recipient is, and typically more secure. If you have to write checks, there are steps that can be taken to mitigate fraud, such as using a bill pay service. Some services have levels permissions for users who are authorized to approve and optionally a separate user to release payment. The checks cut are typically on the Bill Pay company’s bank account, and then a total is deducted from your bank account. Many bill pay services allow for ACH payment to the recipient at no cost to the recipient.

 

11. Know your accounts receivable and bank deposits.
This was purposely placed after the explanation about writing as few checks as possible. So, if you skipped that, read it that point in it’s entirety because it applies here too. Check fraud can occur on the receiving side as well.

Here’s how. When a customer’s payment is received, instead of it being deposited into the company’s bank account, that check could be taken by your internal staff and deposited into their own bank account. How can that be you may ask. Well, most ATM deposits under a certain value are not looked at by humans, so there is no verification that the payee shown on the check is the account holder. A second method would be to cash the check, as described above, changing the payee name and/or amount.

The way to prevent this kind of fraud is a bit more intensive on the owner’s part but very doable with some guidance about which reports to run and how to tie them out. Essentially, an owner would need to request some reports from the bookkeeper each week.

The owner would use the reports for two purposes: to verify deposits have been made to the bank account, and to tie those deposits to customer payments of invoices to keep track of open customer invoices. Owner is monitoring that no invoices have mysteriously disappeared, only those that have been paid or credited for some reason such as bad debt write-off should fall off.

 

12. Review your company’s financial statements monthly.
I’ve found that small business owners have great intuition about how certain aspects of their business are doing. By learning how to interpret the income statement and balance sheet, and doing so at least monthly (after reconciliations are complete), they can identify areas that don’t sit right in their gut, and investigate them further. Also in reviewing these statements, they can glean valuable insights on the health of the business, and make strategic changes.

 

We offer one-on-one training to owners on how to carry out these basic steps and do provide various services for hire, including this 12 step monthly process. Contact us for more information.

In Business Management