Instruction Manual For Cpa Project Reporting: Fill & Download for Free

Should the money received in a German PayPal account (personal and not business) be reported as taxable or not?Allow me to classify my answer with this common limitation: The short answer, where one starts to answer the question, is YES. Further, allow me to give an expanded answer that I hope is more helpful. Further, forgive me for not providing the true long answer because I am neither qualified or able write such a book that it would occupy.The short answer can be confirmed by reading IRS literature such as Publication 54 and from there move on to other publications, laws and rules and other applicable material.Moving further, there are numerous exceptions and exemptions that may alter the reporting, the classification and the resulting determination of whether the money is taxable, and if it is taxable, may determine to whom it is taxable. More clearly, if taxable income, who pays the tax?Thinking a little further, the next step is to examine the Source of the money and the Recipient of the money.Assume the questioner is a U.S. Citizen and, for example, a good student of the English, German and other languages. It was agreed between the questioner, named Jason, and a German citizen, Sofia that Jason would translate an instruction booklet, from German into English. The booklet accompanies tape recorders that Sofia imports to the U.S. Jason and Sofia agree that when the booklet is properly translated and returned to Sofia, that Sofia will, by German Paypal, pay Jason $5,000.00 USD for his work. The exchange is completed and the sum of money is paid.Analysis: In the above example the, money received by Jason should be included in his U.S. Tax return for the year that he received the money. The Source of the money, Sofia, is a citizen and businesswoman in German. Jason, the Recipient, is a U.S. Citizen and good translator in the U.S. Neither the status of Source or recipient is notable or the basis of any exceptions or exemptions.Sofia contacts Jason again. She is so pleased with the accuracy and quality of Jason's translation work that she proposes another project. Sofia has decided to purchase a quantity of tape recorders and other electronics from Japan. She proposes that Jason translate large quantity of different booklets, instructions and repair manuals concerning a on many products. They both decide that this larger project, for a variety of reasons, would more efficiently completed on site at Sofia's German plant and warehouse near Berlin. She offers to sponsor Jason for an extended work Visa in Germany to enable him to stay 18 months in Germany. Jason qualifies in Germany for that Visa Status and moves to Berlin and begins his work for Sofia. He begins to be paid weekly, the equivalent of $1500.00 USD (or 1405.35 Euros) for his work by Sofia. The weekly salary is paid from Sofia's German bank and is deposited and spent from Jason's new German bank account. Is the money reportable on his US income tax and is it taxable by the US?Analysis: The Source, Sofia and the recipient, Jason, are the same. What changed? Jason is now living legally in Germany as a U.S. Citizen, but as a legal resident alien. His tax status is changed and it is controlled by a Tax Treaty between Germany and the U.S. and other provisions of both countries laws and tax rules. The Tax Treaty between the USA and Germany has been in existence for some time and it is currently estimated that some 200,000 USA citizens currently work and live in Germany. The principal tax provision that would affect Jason in our example is called the Foreign Earned Income Exclusion. The current exclusion (2017) for German earned income is right at $100,000.00. This means that after qualifying and filing the proper expat tax forms, the first $100,000.00 of income is excluded from USA taxes. However, don't cheer yet. Jason probably will pay some, or a lot, of German taxes. The details are complicated, and are beyond the concerns of this answer.Assume that the business relationship between Jason and Sofia, to everyone's surprise, transforms into a romance and they marry. Part of the new couple's attraction to each other is their mutual admiration of the others business skills. They marry and Jason also becomes a partner in Sofia's company. While Jason and Sofia remain in Germany, they contact a trusted friend of Jason's in the USA, Charlie, and open up a U.S. based distribution company. Sofia, an only child, has a lovely mother who is a widow. Sofia's father was a good engineer and traveled widely training others in electronics. Her father encouraged Sofia's interest in electronics with the result that Sofia entered the field and began her export business before the death of her father.Sofia's mother, Hanna, after a few years became very proud of her daughters choice of a husband, Jason, and put Sofia and Jason both in her will to share in the sizable estate that Hanna and her husband accumulated over their lifetime.The business that Charlie opened for Jason and Sophia, based in Boston, Massachusetts, encountered various import-export regulation problems as it grew and the problems grew into alleged violations of certain Duties and Tariffs. While is was most painful for Jason and Sophia to confront the next step, they both decided that it was necessary for Jason to move to Boston and remain for a period to help Charlie and his lawyers and CPA's resolve the various problems there. Seven months later, while Jason was still in Boston, Sofia's mother, Hanna, died. Jason and Sofia discovered they were the German equivalent of Executors (Co-executors) of Hanna's will and the sizable fortune that was in the Estate. They quickly hired an international law firm which reported back that the estate, while sizable, has no problems or creditors and that each will receive USD$7,000,000.00 from the estate.Analysis: To what extent will all of the cash flows that are occurring be subject to USA tax; and, conversely, what is controlled by German tax laws?Hint: This is an excellent time for the Attorney and CPA serving Jason and Sofia to each hire assistants.The following tax questions are presented:1. What are the individual tax reporting situations of Jason and Sophia who are: Married and living in Germany, and also, together own a business that is based in Germany and owns a related business based in the USA; and. while, the husband, Jason, is currently living and working in the USA?2. Which income and other tax laws apply to the cash flows back to Germany to Sofia and Jason from the USA based business?3. Which countries' income tax laws apply to income to Charlie, Germany or USA?4. What is the income tax status of Jason after he began living again in the USA? Does he need to pay taxes in both the USA and Germany.? How does he report income?5. The big question is: Which tax laws control and to which country, German or USA, does Jason owe taxes on the $7,000,000.00 inherited from Hanna?Jason and Sofia's Lawyer and CPA, probably around a table together, can answer all the questions presented by applying rules from the Source of income and the Recipient of Income, along with Tax Treaties and lastly Probate/Estate/Inheritance laws of USA and Germany.The above short story and problems illustrate that while the general rule of US tax law that US citizens must report all income received anywhere in the world, does not mean that they pay taxes on all of it. The cash flow reporting and taxes owed questions presented above are complicated and not answered here. There is one happy result that I present here: The Estate Tax exemption in the US this year, 2017, is $5,149,000.00 which means that Jason would need to report the receipt of the $7,000,000.00 from Hanna's estate. Jason reports the income, but when the Exemption is applied, he only pays taxes on $1,510,000.00 at 40%, or approximately $640,000.00. There are other adjustments that favor the taxpayer in the US, including some rare, specific tax rulings wherein the US taxpayer owes no on tax on an inheritance from a foreigner. German taxes? Well, that is another subject. ---Nelson Jarnaginbetween the USA and Germany has been in existence for some time and it is currently estimated that some 200,000 USA citizens currently work and live in Germany. The principal tax provision that would affect Jason in our example is called the Foreign Earned Income Exclusion. The current exclusion (2017) for German earned income is right at $100,000.00. This means that after qualifying and filing the proper expat tax forms, the first $100,000.00 of income is excluded from USA taxes. However, don't cheer yet. Jason probably will pay some, or a lot, of German taxes. The details are complicated, and are beyond the concerns of this answer.Assume that the business relationship between Jason and Sofia, to everyone's surprise, transforms into a romance and they marry. Part of the new couple's attraction to each other is their mutual admiration of the others business skills. They marry and Jason also becomes a partner in Sofia's company. While Jason and Sofia remain in Germany, they contact a trusted friend of Jason's in the USA, Charlie, and open up a U.S. based distribution company. Sofia, an only child, has a lovely mother who is a widow. Sofia's father was a good engineer and traveled widely training others in electronics. Her father encouraged Sofia's interest in electronics with the result that Sofia entered the field and began her export business before the death of her father.Sofia's mother, Hanna, after a few years became very proud of her daughters choice of a husband, Jason, and put Sofia and Jason both in her will to share in the sizable estate that Hanna and her husband accumulated over their lifetime.The business that Charlie opened for Jason and Sophia, based in Boston, Massachusetts, encountered various import-export regulation problems as it grew and the problems grew into alleged violations of certain Duties and Tariffs. While is was most painful for Jason and Sophia to confront the next step, they both decided that it was necessary for Jason to move to Boston and remain for period to help Charlie and his lawyers and CPA's resolve the various problems there. Seven months later, while Jason was still in Boston, Sofia's mother, Hanna, died. Jason and Sofia discovered they were the German equivalent of Executors (Co-executors) of Hanna's will and the sizable fortune that was in the Estate. They quickly hired an international law firm which reported back that the estate, while sizable, has no problems or creditors and that each will receive USD$7,000,000.00 from the estate.Analysis: To what extent will all of the cash flows that are occurring be subject to USA tax; and, conversely, what is controlled by German tax laws?Hint: This is an excellent time for the Attorney and CPA serving Jason and Sofia to each hire assistants.The following tax questions are presented:1. What are the individual tax reporting situations of Jason and Sophia who are: Married and living in Germany, and also, together own a business that is based in Germany and owns a related business based in the USA; and. while, the husband, Jason, is currently living and working in the USA?2. Which income and other tax laws apply to the cash flows back to Germany to Sofia and Jason from the USA based business?3. Which countries' income tax laws apply to income to Charlie, Germany or USA?4. What is the income tax status of Jason after he began living again in the USA? Does he need to pay taxes in both the USA and Germany.? How does he report income?5. The big question is: Which tax laws control and to which country, German or USA, does Jason owe taxes on the $7,000,000.00 inherited from Hanna?Jason and Sofia's Lawyer and CPA, probably around a table together, can answer all the questions presented by applying rules from the Source of income and the Recipient of Income, along with Tax Treaties and lastly Probate/Estate/Inheritance laws of USA and Germany.The above short story and problems illustrate that while the general rule of US tax law that US citizens must report all income received anywhere in the world, does not mean that they pay taxes on all of it. The cash flow reporting and taxes owed questions presented above are complicated and not answered here. There is one happy result that I present here: The Estate Tax exemption in the US this year, 2017, is $5,149,000.00 which means that Jason would need to report the receipt of the $7,000,000.00 from Hanna's estate. Jason reports the income, but when the Exemption is applied, he only pays taxes on $1,510,000.00 at 40%, or approximately $640,000.00. There are other adjustments that favor the taxpayer in the US, including some rare, specific tax rulings wherein the US taxpayer owes no on tax on an inheritance from a foreigner. German taxes? Well, that is another subject. ---Nelson Jarnagin

The first question you should ask is: IS MY BUSINESS FRANCHISEABLE?Franchising your business can be a very successful way of expanding your business, provided that you have a business to begin with. Many of today’s well-known brands have used franchising to accelerate the growth of their existing businesses, building national or even international brands in the process. However, franchising should never be seen as a testing ground for a brand new (and unproven) business idea but as a means of expanding an already successful business.The following characteristics make a business franchiseable:Credibility and a proven concept - The concept needs to be proven. The company must have a good track record and an experienced management team.Potential to establish a memorable brand -The brand should be memorable, registered and capable of being expanded into different parts of the country, eventually perhaps even into other countries.Profitability and access to capital - To franchise a business is not, and can never be, a means of funding a new business, or rescuing a business that is in trouble. For a business to be franchiseable, it needs to offer more than mere potential. It needs to have a proven record of success and generate adequate gross margins to allow franchisees to make money after they have paid their franchise fees, repaid their loan and paid themselves a market related salary. Franchising is also capital intensive as the franchisor needs to get professional advice and build an infrastructure. The franchisor should have access to capital and shouldn’t sell franchises for survival. Return on investment for the franchisee and franchisor Both franchisee and franchisor should obtain a reasonable return on investment. The franchisor should receive a return on the investment in the development costs. The franchisee should receive a return on the investment in setting up an individual outlet. A good franchise will deliver a return on the initial investment within 3 to 4 years.Uniqueness and high barrier to entry - The business to be franchised needs to have a unique selling point that will allow it to differentiate its products or services from those of its competitors. This sustainable competitive advantage would allow it to compete successfully in its markets nationally, with possible potential to eventually expand internationally.Sustainable and growing demand - The franchisor needs to ensure that demand exists in different areas, and that the product has staying power. The market for the product or service should be growing and the demand must be sustainable.Intellectual property and systems - The business needs to have a set of systems, procedures, expertise, skills and know-how that optimises every operational step. This, in a nutshell, is the purpose of the operations and procedures manual.Transfer of skills - It must be possible to train prospective franchisees lacking experience in the sector within a reasonable period. This is important because to permit new franchisees to operate a business under the network’s brand before they are adequately trained would be a recipe for disaster. Practical considerations dictate that franchisees cannot afford to spend long periods in training. Most franchisors recognise this and aim to train their franchisees within three months or less. However, there are exceptions. This needs to be considered when working out the total cost of the franchise the prospect incurs (which needs to include the lack of income during training.)Support infrastructure must be in place - The franchisor must provide intensive initial and ongoing support to franchisees. This requires manpower, facilities, a veritable set of skills and absolute dedication to the creation of win/win outcomes.The product should demand a price premium- It’s difficult to franchise a product that is seen as a commodity or that is the target of price wars. This makes for a difficult competitive environment where franchisees will be under constant pressure. The margins must also be high enough to afford franchise fees. The added element of personal service from an owner operator can mitigate price sensitivity to some extent.The company must have a franchise culture- It’s important to have a culture that is open, learning orientated and participative. Autocratic companies will find it difficult to franchise, since franchisees are not employees to be dictated to but should be seen as business partners.FRANCHISING A BUSINESS IN SOUTH AFRICAHaving a concept that has been working well over a reasonable period as a freestanding business is the first step to the creation of a successful franchise. Moreover, the franchisor must understand how the business operates and what systems, procedures, expertise etc are at the roots of its success.This development period eases the franchisor into the task of entering a new business – to franchise a concept to others. During this period, the franchisor will also have had an opportunity to bring the market research up to date and correct any problems that may have manifested themselves, be they linked to the product range or operational issuesThe importance of a company owned operationIn addition to the core business, the franchisor should operate at least one unit at arm’s length before franchising commences in earnest. This means testing the concept as a franchise, perhaps in the form of a joint venture with a trusted staff member or outsider. At this point, problems that manifest themselves can be addressed. It may emerge, for example, that new franchisees require a longer training period than originally thought, or instructions given in the operations and procedures manual may prove inadequate.Retaining a company owned outlet helps the franchisor to generate income to fund ongoing operations. It also forms the ideal base for providing training and testing new products and/or services.Operations and procedures manualThe operations and procedures manual needs to be prepared with care. This is the blueprint for how franchisees should run their businesses and must contain a detailed explanation of the business system and how the business must operate. Keep in mind that the franchise agreement will contain numerous references to the manual, therefore, it should be prepared before a lawyer is instructed to draw up the agreement.Drafting a good operations and procedures manual is a time consuming task that should not be underestimated. Assistance by consultants will ease the burden considerably. Once in place, however, the manual can be used for a multitude of purposes including:As a day-to-day reference tool for use by the franchisee and his/her employees. (The more comprehensive the manual, the less likely it is that the franchisee has to call head office at every turn or, worse still, develops his/her own solutions to problems.)As a training tool by the franchisor when training franchisees.As a training tool by the franchisee when training employees.It also forms a framework for the further development of the brand and the network.Franchise agreementThe franchise agreement governs the relationship between the franchisor and each individual franchisee. It should protect the interests of the network as well as those of the franchisee, and covers the following:Duration of the initial agreement and renewal rights if applicable. (On occasion, franchise agreements are open-ended, but the majority of them are entered into for a fixed period.)Rights and obligations of both parties.Termination provisions and what happens in the event of illness, death or incapacity of the franchisee.Franchise agreements are governed by the Consumer Protection Act (CPA) and should comply with its requirements. It is important to consult with an attorney with proven experience in franchise matters to ensure that the franchise agreement is compliant.Disclosure documentThe disclosure document must contain everything a prospective franchisee needs to know to make an informed decision regarding the opportunity. In addition to a run-down of the nature of the business, details of the people behind it and the work franchisees are expected to carry out, it is especially important to provide meaningful financial projections. In terms of the guidelines issued by the Franchise Association of Southern Africa (FASA), the franchise agreement will make reference to the disclosure document. Also, the CPA has certain requirements of disclosure documents and these must be met to ensure legal compliance.This implies legal consequences, therefore, the franchisor should consult with a competent consultant and/or attorney before issuing a disclosure document.Franchisee profileDeciding who will make an ideal franchisee is an essential step. Good franchisees help to build the network into the leader in its sector, bad ones can bring it down. Franchise fees notwithstanding, franchisors make a huge investment in their franchisees and depend on them to help them grow the business. It follows that choosing the right franchisees is vital, especially but not only during the early stages as the initial franchisees form the backbone of the network.The franchisor needs to identify what skills, experience and characteristics are essential for success, develop a profile around these findings and strictly adhere to it. Next, the franchisor should consider tools such as psychometric assessments to assess whether the potential franchisee fits the profile required.TrainingThe franchisor needs to decide what training franchisees require, its duration, where it will be presented and who will deliver the training. The franchisor should develop both an initial and ongoing training programme for franchisees.Franchise feesSetting the correct franchise fees is a vital success factor. If fees are set too low, franchisee support will suffer, if fees are set too high, franchisees will be unable to make ends meet.Initial fee – Although there is no law governing this, it is accepted good practice that the initial fee should not contain a significant profit component for the franchisor. The franchisor’s return should come from ongoing management services fees. The purpose of the initial fee is to compensate the franchisor for costs incurred during start-up assistance to a franchisee.Management services fee – Set it at a level that ensures that the franchisor’s operation becomes financially viable over time, keeping in mind that the franchisee must have a chance to earn adequate returns on his/her investment and labour. The fee should be market related when benchmarking against other franchises in the category.Marketing fee – Marketing is an investment and not an expense. One of the benefits of joining a franchise is the access to an existing brand and national marketing campaigns. The marketing fee should also be market related. According to the CPA, marketing contributions must be paid into a separate bank account and franchisees must receive feedback on the use of the funds. Ideally, the franchisor should match franchisee contributions to have a marketing budget that is substantial enough to make an impact.Recruiting franchiseesThere are numerous ways of doing this. Leading the way is online portals such as the whichfranchise website, then there are exhibitions, advertisements in business publications and so on. The franchisor will need to create literature that outlines the structure and nature of your franchise and what’s involved in becoming a franchisee of the network.Management and support staffThe franchise management team plays a key role in a franchised network. They are usually responsible for selecting franchisees and providing initial and ongoing support. Moreover, they also monitor franchisee performance and reporting and provide technical assistance to franchisees. As these are key staff members, relied upon to recruit, manage and support franchisees, they should be top calibre people and employed in sufficient numbers to ensure adequate coverage of the network and should be trained on the intricacies of maintaining good franchise relationships.For help and advice on franchising your business find out more about Franchising Plus

Please note that this answer is applicable to franchising a business in South AfricaHaving a concept that has been working well over a reasonable period as a freestanding business is the first step to the creation of a successful franchise. Moreover, the franchisor must understand how the business operates and what systems, procedures, expertise etc are at the roots of its success.This development period eases the franchisor into the task of entering a new business – to franchise a concept to others. During this period, the franchisor will also have had an opportunity to bring the market research up to date and correct any problems that mayThe importance of a company owned operationIn addition to the core business, the franchisor should operate at least one unit at arm’s length before franchising commences in earnest. This means testing the concept as a franchise, perhaps in the form of a joint venture with a trusted staff member or outsider. At this point, problems that manifest themselves can be addressed. It may emerge, for example, that new franchisees require a longer training period than originally thought, or instructions given in the operations and procedures manual may prove inadequate.Retaining a company owned outlet helps the franchisor to generate income to fund ongoing operations. It also forms the ideal base for providing training and testing new products and/or services.have manifested themselves, be they linked to the product range or operational issues.Operations and procedures manualThe operations and procedures manual needs to be prepared with care. This is the blueprint for how franchisees should run their businesses and must contain a detailed explanation of the business system and how the business must operate. Keep in mind that the franchise agreement will contain numerous references to the manual, therefore, it should be prepared before a lawyer is instructed to draw up the agreement.Drafting a good operations and procedures manual is a time consuming task that should not be underestimated. Assistance by consultants will ease the burden considerably. Once in place, however, the manual can be used for a multitude of purposes including:As a day-to-day reference tool for use by the franchisee and his/her employees. (The more comprehensive the manual, the less likely it is that the franchisee has to call head office at every turn or, worse still, develops his/her own solutions to problems.)As a training tool by the franchisor when training franchisees.As a training tool by the franchisee when training employees.It also forms a framework for the further development of the brand and the network.Franchise agreementThe franchise agreement governs the relationship between the franchisor and each individual franchisee. It should protect the interests of the network as well as those of the franchisee, and covers the following:Duration of the initial agreement and renewal rights if applicable. (On occasion, franchise agreements are open-ended, but the majority of them are entered into for a fixed period.)Rights and obligations of both parties.Termination provisions and what happens in the event of illness, death or incapacity of the franchisee.Franchise agreements are governed by the Consumer Protection Act (CPA) and should comply with its requirements. It is important to consult with an attorney with proven experience in franchise matters to ensure that the franchise agreement is compliant.Disclosure documentThe disclosure document must contain everything a prospective franchisee needs to know to make an informed decision regarding the opportunity. In addition to a run-down of the nature of the business, details of the people behind it and the work franchisees are expected to carry out, it is especially important to provide meaningful financial projections. In terms of the guidelines issued by the Franchise Association of Southern Africa (FASA), the franchise agreement will make reference to the disclosure document. Also, the CPA has certain requirements of disclosure documents and these must be met to ensure legal compliance.This implies legal consequences, therefore, the franchisor should consult with a competent consultant and/or attorney before issuing a disclosure document.Franchisee profileDeciding who will make an ideal franchisee is an essential step. Good franchisees help to build the network into the leader in its sector, bad ones can bring it down. Franchise fees notwithstanding, franchisors make a huge investment in their franchisees and depend on them to help them grow the business. It follows that choosing the right franchisees is vital, especially but not only during the early stages as the initial franchisees form the backbone of the network.The franchisor needs to identify what skills, experience and characteristics are essential for success, develop a profile around these findings and strictly adhere to it. Next, the franchisor should consider tools such as psychometric assessments to assess whether the potential franchisee fits the profile required.TrainingThe franchisor needs to decide what training franchisees require, its duration, where it will be presented and who will deliver the training. The franchisor should develop both an initial and ongoing training programme for franchisees.Franchise feesSetting the correct franchise fees is a vital success factor. If fees are set too low, franchisee support will suffer, if fees are set too high, franchisees will be unable to make ends meet.Initial fee – Although there is no law governing this, it is accepted good practice that the initial fee should not contain a significant profit component for the franchisor. The franchisor’s return should come from ongoing management services fees. The purpose of the initial fee is to compensate the franchisor for costs incurred during start-up assistance to a franchisee.Management services fee – Set it at a level that ensures that the franchisor’s operation becomes financially viable over time, keeping in mind that the franchisee must have a chance to earn adequate returns on his/her investment and labour. The fee should be market related when benchmarking against other franchises in the category.Marketing fee – Marketing is an investment and not an expense. One of the benefits of joining a franchise is the access to an existing brand and national marketing campaigns. The marketing fee should also be market related. According to the CPA, marketing contributions must be paid into a separate bank account and franchisees must receive feedback on the use of the funds. Ideally, the franchisor should match franchisee contributions to have a marketing budget that is substantial enough to make an impact.Recruiting franchiseesThere are numerous ways of doing this. Leading the way is online portals such as the whichfranchise website, then there are exhibitions, advertisements in business publications and so on. The franchisor will need to create literature that outlines the structure and nature of your franchise and what’s involved in becoming a franchisee of the network.Management and support staffThe franchise management team plays a key role in a franchised network. They are usually responsible for selecting franchisees and providing initial and ongoing support. Moreover, they also monitor franchisee performance and reporting and provide technical assistance to franchisees. As these are key staff members, relied upon to recruit, manage and support franchisees, they should be top calibre people and employed in sufficient numbers to ensure adequate coverage of the network and should be trained on the intricacies of maintaining good franchise relationships.For help and advice on franchising your business find out more about Franchising Plus