PRESIDENT'S MESSAGE 

Happy New Year! Wow it’s January 2004 and we are already half way through the month.  It’s a busy time for all and I hope everyone is taking care of yourselves as much as we are taking care of our accounts.  One of my New Year’s resolutions is to take time to eat.  It is easy for me to just work right through lunch and not stop even for a break.  So far I am doing good and even eating breakfast.  Anyways, all the best to everyone for a happy and health New Year and of course prosperous.  Hope to see you at the meeting.

Sincerely, Jennifer Loren

SECRETARY'S MINUTES 
Submitted by Paula Mauro, SBBA Secretary

The Holiday Party meeting of the Santa Barbara Bookkeepers' Association was held on Tuesday, December 9, 2003 .  The luncheon was held at Stella Mare's Events Center .  Thanks were given to Karen Mora and her helpers for organizing this celebration.  There was a gift exchange for those who wanted to participate.  A special surprise awaited the person who found a penny under their bread plate -- they were awarded the table centerpiece decoration.  All had an enjoyable time, and left with the holiday spirit.

COME AND LEARN:           

SPRING SEMESTER AT S.B. CITY COLLEGE BEGINS ON TUE. JAN 20, 2004                   

Acct. 160 - Accounting with QuickBooks will be on Tuesdays 5 PM .  

Class will be hands on in computer lab – room BC314  We will be using QuickBooks Pro 2003    Call Sandra O’Meara – Instructor – if you have any questions - 965-9907.  

Submitted by Sandy O'Meara~

On the Internet, the Santa Barbara City College Web Site www.sbcc.cc.ca.us or  http://ce.sbcc.edu/classes.htm   

The Santa Barbara QUICKBOOKS USERS GROUP  Next Meeting:  MONDAY, Mar 1, 2004, 6PM – 8PM  

@ THE SB CITY COLLEGE – WEST CAMPUS – BUSINESS & COMMUNICATIONS BUILDING  - ROOM BC214/CONFERENCE ROOM.  721 CLIFF DRIVE , SANTA BARBARA , CA    $15 TO RESERVE SEAT. Please send check payable to QB Users Group, PO Box 3302 , S.B. , CA 93130 .  Dinner included.  The topic will be "Problems" Bank Rec Out of Balance, Audit Trail, Cash vs Accrual, why does AR & AP show as negatives when running cash reports?  And of course questions from the Group. For further information and future meeting dates email: qbusersgroup@aol.com, or, email Bonna Hamilton: bonna@silcom.com.   The SB QuickBooks Users Group is for ALL levels of QB users, and is an open forum for users to share experience, knowledge and support.  Our meetings are very successful and informative - please come join us!

 FYI:  Home-Based Office Tax Deductions

Thinking of deducting home office expenses?  For many of us, being able to work out of our home is a dream come true.  And for the most part, it is a great thing.  But many considerations come into play, especially when you consider taking deductions for your home office expenses.  Here are the basics:

Home office expenses are considered either direct or indirect.  Direct home office expenses are those that are 100% dedicated to your business.  Indirect home office expenses are those that must be allocated between personal and business use. Direct home office expenses (100% business use) include things like phone costs, office supplies, equipment and furniture. Indirect home office expenses (not used entirely for business) include things like mortgage interest, real estate taxes, utilities, repairs and maintenance, etc.

The most common allocation method accepted by the IRS for indirect home office expenses is this:

1) calculate the square footage of the office in your home;
2) divide that number by the total square footage of the home;
3) multiply that number by the total amount of the bill you’re allocating;
4) the number you arrive at equals the deductible business portion for the office in your home.

Qualifying for Home Office Deductions

Home office deductions are only allowed for the portion of your home that is used exclusively as your principal place of business.  To satisfy the IRS principal place of business criteria, you need to satisfy one of two different tests, the Statutory Administrative/Management Activities Test or the Supreme Court’s Comparative Analysis Test.

Under the Statutory Administrative/Management Activities Test, a portion of your home must be used for the administrative or management activities of your business, but this only works if there is no other fixed location where you conduct a substantial amount of these activities.  Examples of these functions include paying bills, billing clients, writing reports, setting up appointments, maintaining the books, etc.  If you are performing these functions at another business location, you may still meet this test, but only if you are not performing a “substantial” portion of the functions at another location.

Let’s look at an example: A building contractor builds houses during the day in a subdivision.  At times he needs to be at home to pay bills, order supplies, create ‘in progress’ billings, phone subcontractors, etc. The contractor meets the home office principal place of business test.

Under the Supreme Court’s Comparative Analysis Test, the qualification is more difficult.  You have to look at the relative importance of the activities performed at each business location and the amount of time spent at each location where your business activities occur.

Here’s an example: A doctor who works primarily at a hospital is usually denied a home office deduction because comparatively, the functions she performs at the hospital involve her ‘principal business’ and her home office duties pale in comparison to her hospital work. 

To satisfy the exclusivity requirement, you have to prove that a portion of your home is used exclusively, and on a regular basis, for business.  For example, if you use part of your kitchen for business, the deduction will be denied because the kitchen is not used exclusively for business.  Rooms do not always have to be divided by a wall to allow for exclusivity, but the room must be distinctly separated in other ways to pass the exclusivity test.

Because the law relating to home office deductions is complicated, most taxpayers are afraid to take these deductions - they’re concerned they’ll be audited by the IRS.  But if you are running a business out of your home, take the deductions!  Use IRS form 8829, Expenses for Business Use of Your Home, and be very careful in the preparation.   And take good care of your records; keep them on hand for at least 3 years after you file your tax return.  If things really get too complicated, talk to your tax professional!    

Reprinted with permission from Bookkeeperlist.com

Our guest speaker for January will be David Uhler from Bartlett Pringle & Wolf.  He will be updating us on 1099s and other changes we should be aware of.  If any one has specific questions they would like addressed they can email me and I will forward them to David.  

Vicki St. Martin

NOTE FROM THE EDITOR:  

Kathy Rem prepared this month’s newsletter.  Thank you as always for submissions!  Jo Rogers will prepare February’s newsletter. 

Happy New Year everyone! Kathy~