New Business Direction LLC
We’ve heard numerous horror stories over the years of business owners falling victim to sophisticated phishing scams that compromise their operations, cost them thousands of dollars, and expose their customers to risk. Hackers are evolving rapidly, making it harder to distinguish between malicious threats and everyday emails.
Our goal here is to empower, not scare you. The good news? Many of these threats are avoidable with vigilance. Hackers are even craftier than before, and phishing schemes have adapted to exploit newer technologies. However, with a few best practices, you and your team can keep your data safe from current phishing trends.
Below, we outline some common phishing threats and offer ways to safeguard against them.
Common Threat 1: Impersonation of Accounting or Financial Software
Phishers continue to target users of popular accounting software, impersonating platforms like QuickBooks with claims such as “Your file is corrupted,” “Your payment method is expiring,” or “Your software needs an urgent upgrade.” The goal is to either convince you to pay for a fake service or grant them access to your system.
How to dodge the threat: Always verify the sender’s email address. Emails from Intuit or QuickBooksⓇ will end with “@intuit.com” or “@quickbooks.com.” If you receive a suspicious email, permanently delete it. Do not provide sensitive information or remote access to anyone unless they are a trusted, verified partner.
Common Threat 2: The Rise of AI-Assisted Phishing
Hackers are now leveraging AI tools to generate phishing emails that mimic legitimate communications. These emails may come from familiar addresses or look nearly identical to a colleague’s typical correspondence, including personalized details that make the email seem even more credible.
How to dodge the threat: Never click on links or download attachments from unexpected emails, even if they appear to come from trusted contacts. Always hover over links to preview the URL and verify its legitimacy. AI tools are being used both by hackers and cybersecurity experts, so staying ahead of phishing trends is more important than ever.
Common Threat 3: “You Have Voicemail,” “Urgent Invoice,” and “Thanks for Your Purchase” Emails
While voicemail and invoice phishing schemes aren’t new, hackers are increasingly using these tactics to create a sense of urgency. You might receive an unexpected email about a voicemail or invoice, often from a service you don’t use. In addition, we’ve seen emails alerting you to free prizes – you’ve won a free trip – with a link to click to claim your prize.
Lastly in this category, there is a new strategy in which phishers send “confirmation” emails suggesting that you’ve made a subscription purchase, going so far as to even include a pdf of a phony receipt.
How to dodge the threat: If something feels off, it probably is. Never download an attachment or follow a link without verifying the source through another channel. Call the service provider directly to check whether they sent the email, and always be wary of “business” emails that end in @gmail.com, @yahoo.com, etc.
Common Threat 4: The QR Code Swap
QR codes have become a ubiquitous tool, especially in restaurants and retail. However, phishers now use QR codes to disguise malicious URLs. They may overlay fake QR codes in public spaces or send phishing emails with QR codes that link to compromised websites or malware.
How to dodge the threat: Before scanning a QR code, double-check its placement and ensure it hasn’t been tampered with. After scanning, review the web address that appears and make sure it’s legitimate before clicking. If something feels suspicious, don’t scan the code.
Common Threat 5: Social Engineering on Social Media
Phishing attacks are increasingly moving to social platforms like LinkedIn and Facebook. Hackers may pose as recruiters, customers, or industry professionals to extract personal information or trick you into downloading malicious files.
How to dodge the threat: Be wary of unsolicited messages from strangers on social media, especially those requesting personal details or sharing links. Always verify the identity of anyone asking for sensitive information and avoid clicking on unknown links shared via direct messages.
Best Practices: Staying Secure in the Age of Evolving Phishing Tactics
While phishing techniques continue to evolve, the core defenses remain the same: vigilance, awareness, and caution. Here are some key best practices to follow:
- Set up multi-factor authentication (MFA): Use MFA wherever possible. This could involve receiving a code via text, email, or through an authenticator app like Google Authenticator. MFA adds an extra barrier for hackers, making it far less likely they’ll succeed even if they gain access to your credentials.
Use strong, unique passwords: Password management apps like LastPass or 1Password can generate complex passwords and securely store them. Avoid reusing passwords across different accounts. - Stay informed on new phishing tactics: Cybercriminals are constantly adapting. Subscribe to trusted cybersecurity news outlets like PCMag, Forbes, or TechCrunch to stay updated on the latest phishing techniques.
- Train your team: Cybersecurity isn’t just an IT responsibility—it’s an organization-wide effort. Conduct regular phishing simulations and training sessions to ensure that your employees recognize suspicious activity and respond appropriately.
- Don’t open doors for strangers: Whether in person or online, never allow someone to access your computer or accounts unless you have verified their identity through an established and trusted channel. If in doubt, don’t engage.
- Verify email senders: Always check email addresses carefully. A small typo or strange domain could indicate a phishing attempt. Cross-check with trusted sources if something feels off.
- Use secure file-sharing methods: When sending or receiving sensitive information, avoid doing so via email. Use encrypted file-sharing services like SmartVault or similar tools.
- Trust your instincts: If something feels off, don’t proceed. Whether it’s a weirdly worded email or a strange request, your gut is often a good first line of defense against phishing attempts.
It’s more important than ever to remain cautious and aware of evolving cybersecurity threats. Phishing is becoming more sophisticated, but by staying alert and following these best practices, you can protect your business and personal data from harm.
If you’re unsure about an email or solicitation, especially related to your accounting software, reach out to us. We’re always here to help!
As an accountant, I know that there is no such thing as bad debt on a cash basis tax return.
Accrual basis taxpayers recognize revenue when they invoice for the services and are allowed to write off a bad debt if it is not collected.
Cash basis taxpayers only recognize revenue when they receive the money. If you never receive the money, there is nothing to write off.
Yet, I’ve seen it; I’ve seen a bad debt expense account on a cash basis profit and loss report in QuickBooks. How does that happen? And how does it get reported on your income tax return?
How a Bad Debt Expense Account Gets on a Cash Basis Profit and Loss Report
Bad Debt can wind up on a Cash Basis Profit and Loss Report when you invoice a customer in one tax year and write it off in another. This is just one more reason to clean up your accounts receivable at year-end, before filing your income taxes.
Let’s look at an example –
In a sample QuickBooks Enterprise data file, I have created an invoice dated 12/15/2027 to Heather Campbell for $1,200 for a building permit.
Behind the scenes, the transaction journal debits Accounts Receivable and credits Income.
The accrual basis profit and loss will report this as Construction Income…
…but the cash basis profit and loss will not.
Now, let’s say I write off that invoice in the next tax year using the QuickBooks Enterprise tool –
QuickBooks creates a credit memo for the write-off –
The transaction journal behind the scenes debits Bad Debt Expense and credits Accounts Receivable –
On the accrual basis profit and loss, we see Bad Debt Expense – this is correct – it’s writing off the income that was reported in the prior year.
On the cash basis profit and loss report, we see both Construction Income and Bad Debt Expense – this is also correct – it’s a wash – since it reports the income and writes off the bad debt.
How a Bad Debt Expense Gets Reported on Your Income Tax Return
Now, let’s discuss what’s supposed to happen on your cash basis tax return. Nothing; technically, it’s a wash, as the Bad Debt Expense on a cash basis profit and loss is simply a reduction of revenue. If I were preparing your income tax return*, I would reduce the Construction Income by the Bad Debt Expense and report the net revenue. For more information on this topic, check out this helpful tutorial our team prepared: https://newbusinessdirections.com/how-to-write-off-a-bad-debt-in-quickbooks-3/
*Note: New Business Directions does not prepare income tax returns.
There are a few scenarios that will cause a negative accounts receivable on a cash basis balance sheet in QuickBooks. Let’s focus on the two most common: unapplied payments and timing differences.
Unapplied Payments –
This occurs when a customer has paid you, you’ve received the payment, but you have not applied it to the invoice yet. As pictured below, a simple checkmark next to the invoice will resolve the negative accounts receivable on your balance sheet.
If you look at your accounts receivable aging report, you will see both the invoice and the payment for the customer – one positive, one negative and they wash to zero.
It’s important to clean up your accounts receivable aging summary report and fix unapplied payments by linking them before monthly reports are issued or year-end taxes are filed.
There are no journal entries required to correct this transaction; simply apply the payment to the invoice and re-run your reports.
Timing Differences –
This occurs when a customer has paid you in advance; you’ve received the payment and applied it to an invoice that is dated in the future.
In the image above, you’ll notice that the date of the payment receipt is the day before the date of the invoice. This is an advance payment from the customer on a future invoice resulting in a negative accounts receivable on the balance sheet dated as of the date of the payment. It will not wash to zero on the accounts receivable aging report until the next day–in this case, it will be in the next calendar year.
Please note that you will have a negative accounts receivable on both the cash and the accrual basis balance sheets for this transaction. Below is the transaction detail for the payment dated 12/31/2026 and the invoice dated 1/1/2027, behind the scenes in QuickBooks.
If you find yourself in a situation where you have negative accounts receivable due to a timing difference at a month-end reporting period (or at year-end for tax filing), you will need to make two journal entries – one regular and one reversing, to move the negative accounts receivable to an other current liability account for advanced deposits, as follows:
These are the two most common reasons why you would see a negative accounts receivable on a cash basis balance sheet in QuickBooks.
This holds true for negative accounts payable on a cash basis balance sheet as well and the process to fix/link or adjust is the same.
We’re pleased to announce that Britney Schaub, our dedicated Office Manager and Certified QuickBooks ProAdvisor, has recently earned her QuickBooks Desktop Enterprise ProAdvisor Certification, QuickBooks Online ProAdvisor Certification, and Fathom Advisor Certification!
Britney’s achievements highlight her dedication to professional growth and outstanding service to our customers. They also strengthen our entire team’s capabilities here at New Business Directions.
It is no small feat to attain these certifications, let alone in such a short time. We are so proud of you, Britney!
Regards,
Rhonda Rosand, CPA
CEO, New Business Directions
Did you know? While New Business Directions works primarily with QuickBooks Desktop, we maintain ProAdvisor certifications in QuickBooks Online as well so that we can effectively navigate both platforms—all in the name of better serving our customers.
As a business coach, I’ve often witnessed the power of familial bonds in the world of entrepreneurship. One strategy that has shown immense potential for both the business and the family is hiring children within the business. While some may raise eyebrows at the idea, there are numerous benefits to be reaped from such a decision, ranging from financial advantages to fostering a sense of responsibility and entrepreneurship in the younger generation.
Two Financial Benefits of Hiring Your Children in Your Business
Hiring your children and offering them a salary can be a mutually beneficial scenario, financially speaking:
- Salary Expenses: Instead of handing out allowances, you can pay them a reasonable wage for the work they do. The IRS allows business owners to deduct reasonable wages paid to their children as a business expense.
- Tax Advantages: Hiring your children can also offer tax advantages for both parties. Children can earn up to a certain amount (subject to change, so consulting a tax professional is advisable) without paying federal income tax. For the business, wages paid to children are deductible as a business expense, reducing the overall taxable income.
Tax Exemptions and Retirement Benefits Associated with Hiring Your Children
As a business owner, it’s also important to understand the potential tax benefits of providing certain benefits to your employees, including family members. In particular, offering retirement planning as a benefit to your children can both introduce them to the concept of saving early on and yield tax advantages for your family. Let’s get into the details:
Tax Exemptions for Certain Benefits: Depending on the structure of your business and the tax laws in your jurisdiction, certain benefits provided to employees, including your children, may be tax-exempt. This could include health insurance premiums or contributions to retirement plans.
Retirement Planning as a Benefit: By hiring your children, you can also introduce them to the concept of retirement savings early on. You may establish retirement accounts, such as a Roth IRA, and contribute a portion of their earnings. This not only helps them start saving for their future but also reduces the family’s overall tax liability.
Three Final Benefits of Hiring Your Children within Your Small Business
Hiring your children can reap benefits beyond providing you and them financial and tax-savings benefits. This decision can also offer them a meaningful learning opportunity and set the stage for their future success, both professionally and financially. Here are three final benefits of hiring your children within your small business:
- Hiring your children provides them with a learning opportunity: Working in the family business provides invaluable real-world experience for children. They learn important skills such as communication, teamwork, problem-solving, and financial literacy, all of which are crucial for their future endeavors.
- Hiring your children creates an opportunity for family bonding: Working together can strengthen family bonds and create shared experiences. It provides an opportunity for open communication and mutual understanding between generations, fostering a sense of unity and purpose within the family.
- Hiring your children allows for proactive succession planning: Hiring children can be a strategic move for succession planning. It allows them to gain firsthand experience and knowledge of the business, preparing them to take on leadership roles in the future.
Ultimately, hiring your children in your business can be a win-win situation for both the family and the business. This business strategy offers financial benefits, tax advantages, and valuable learning opportunities while fostering a strong sense of family unity and preparing the next generation for future success.
However, it’s essential to approach this decision thoughtfully and in compliance with all legal and tax regulations. Consulting with a qualified tax advisor or financial planner is a great way to navigate the complexities–and maximize the benefits–of this arrangement.
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