Healthy cash flow is crucial to the survival of any business. Without enough cash on hand to pay your bills when due, your business may fail. According to statistics from the Small Business Association, half of all new businesses fail within the first five years, and only one-third last ten years. But cash flow isn’t just about maximizing what comes in – it’s also essential to monitor what goes out.… Read more
Do you have kids in college? Or have you taken college courses to improve your job skills? The tax code has lots of ways to help you save on taxes, ranging from tax credits to deducting education expenses from your income. The IRS has an Interactive Tax Assistant that can help you determine what tax benefits you might be eligible for. We’ll also look at the whole picture for your… Read more
Are you thinking of making a large year-end gift to a favorite charity? Do you own stocks that have increased in value? If you answer yes to both of these, then consider donating the stock instead of writing a check. Donating stock versus giving cash to a charity can save you a bundle on taxes. This works especially well if you already have plans to sell that stock to rebalance… Read more
This question came in to our office from a small food-manufacturing business. This was why this client was seeking the extra value of working with a CPA. Here are the questions we asked to help them find the answer: What are you using now? What’s the cost of that? Is it causing a bottleneck in your customer service? Will this help to grow your business to the next level? They… Read more
The IRS allows deductions for driving your car for business, charitable or medical purposes. Business mileage includes driving from one job to a second job, driving from your workplace to a client’s place of business, and driving to perform business tasks such as picking up office supplies or going to the post office. If you work out of your home, driving from your home to meet with a client also… Read more
Certain expenses can only be deducted as itemized deductions on your personal tax return if they exceed a threshold percentage of your AGI. For medical expenses, this is 10% if you’re under 65, 7.5% if you’re over 65. If you’ve got some expensive but non-urgent medical procedures planned, consider bumping them into next year if you don’t have enough expenses this year to qualify. Or if you already had medical… Read more
Has this year been especially good for you financially? Was your business more profitable this year? Did your investments pay out big dividends or capital gains? Or did you receive an unexpected windfall? If you answered yes to any of these, now is a great time for us to compare an estimate of the Federal and state taxes you’ll owe this year to the taxes you’ve paid so far. If… Read more
Does your business have customers in more than one state? If so, welcome to the wild world of state income taxes! Forty-five of the fifty states plus Washington, D.C. impose some type of income tax, and no two states have exactly the same tax laws. Cash-starved states are seeking out and testing new ways to tax out-of-state businesses, and you could be on their radar. An exhaustive explanation of the… Read more
Are you considering a like-kind or 1031 exchange? With a like-kind exchange, you sell something you own now and replace it with similar property. If you structure the transactions correctly, you can defer any capital gains as long as you keep exchanging properties. Here are some things to keep in mind to get the best tax value out of it. The properties in an exchange must be of “like kind”… Read more
Getting a letter from the IRS is scary. But if you do the right things, the worst consequences can be avoided. Here are four things to keep in mind about letters from the IRS. Don’t panic! This letter may not be a request for more money, and it may be perfectly harmless. Sometimes the IRS makes mistakes, or gets wrong information. The IRS may even be writing to let you… Read more
Work just got more expensive for some employees, thanks to the Tax Cuts and Jobs Act passed in December of 2017. Under the previous law, employees could deduct job-related expenses that added up to more than 2% of their income as miscellaneous itemized deductions. These expenses include any out-of-pocket expenses related to work that aren’t reimbursed by the employer. This includes uniforms, continuing education, professional licenses, research expenses, home office… Read more
The Tax Cuts and Jobs Act passed in December, 2017 included a big help for many small businesses with the new Section 199A Deduction. Owners of any business that is not taxed as a C-corporation are eligible to deduct up to 20% of the net income passed through to them from their business. The biggest winners are individuals with taxable income under $157,500 and couples filing jointly with taxable income… Read more
A big draw for homeownership in the US has been the deduction for mortgage interest. However, the Tax Cuts and Jobs Act passed in December 2017 may make that deduction less important. With the standard deduction nearly doubling to to $12,000 for single filers, $18,000 for heads of household and $24,000 for married couples filing together, fewer people will be itemizing their deductions. And those who still itemize may face… Read more
The Tax Cuts and Jobs Act signed by President Trump in late December came with a lot of goodies for the owners of rental properties, especially in the area of depreciation. Bonus depreciation is back, and includes used property Through 2022, and retroactive to September 27, 2017, property owners can take 100% bonus depreciation on eligible property. But in 2023, the percentage will drop by 20% a year, until it’s… Read more
Do you know the difference between an employee and an independent contractor? Employers who misclassify their workers may have to pay the IRS additional tax plus steep penalties and interest when they get it wrong, whether this is intentional or not. In general, the IRS looks at three areas of control that an employer has over workers: behavioral, financial, and the type of relationship. Behavioral Control: If an employer has… Read more
Did you know that if you don’t file an obscure form after you sell your business, the IRS could come after you if the new owner doesn’t pay their payroll taxes? Since 2014, the IRS has required Form 8822-B, Change of Address or Responsible Person – Business to be filed within 60 days of a change of address or a change in responsible person. The “responsible person” for a business… Read more
The 2017 Tax Cuts and Jobs Act made big changes to the deductibility of meals and entertainment expenses for businesses. This may result in an increase to your tax bill. Let’s take a look at how things stand now. Travel meals 50% deductible Meals in travel status remain 50% deductible. Note that if meals are charged to a hotel room while traveling, the meals portion of the bill will need… Read more
Did you know that businesses can be victims of identity theft? During the first five months of 2017, the IRS found over 10,000 instances of business identity theft, an increase of 250% over 2016, when only 4,000 cases were reported for the entire year. Here are some of the types of scams run by business identity thieves: Create fake W-2s and file individual tax returns for refunds File fraudulent business… Read more
S-corporation shareholders are considered employees of their businesses, so unlike partners in a partnership, they can’t simply deduct unreimbursed business expenses directly on Schedule E as Unreimbursed Partnership Expenses, or UPE. Until the end of 2017, their only option was to deduct home office and other business-related expenses on Schedule A, where it was subject to the 2% of AGI threshold. However, under the Tax Cuts and Jobs Act, signed… Read more