In payroll, this is the amount of adjustments to an employees paycheck to determine the final federal income tax to withhold from each paycheck. An employee prepares a Form W-4 to determine the number of allowances in calculating the withholding amount. An allowance is similar to the number of dependents in your household. Single equals one, married equals two and add one for each child you care for in your household.

Bookkeeping – Tracking Returns and Allowances (Lesson 39)

Not every customer is satisfied with the product they purchase.  The old saying of ‘You can’t please everyone all the time’ is true.  This is reality and business management must accept this basic principle.  What is important is the trend involved with returns.  If they continue to increase from one period to the next, something …

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Construction Accounting Terminology

In construction accounting accountants and bookkeepers use certain terms and there are distinct meanings associated with these terms.  This article is designed to introduce beginner accountants and contractors to these terms from the perspective of financial reporting.  If you are a contractor, the term used by accountants may have a different meaning than how the …

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Allowances in New Home Construction Contracts – The Business Model

Allowances in Construction

In almost every new home construction contract that I reviewed as an accountant, I saw where the contractor would lose several thousand dollars in this area of his business.  In every case, the situation was the same, there was no mutual understanding between the home buyer and the contractor.  Invariably, the contractor paid out significantly …

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Form W-4 – Employee’s Withholding Allowance Certificate

Form W-4 is a form filled out by an employee to certify to the employer the personal tax situation of the taxpayer.  It is used by employers via the human resources department to fulfill three primary tasks.  First, confirm the legal name and address of the employee.  Secondly, the form is used to set the federal …

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