Keep More of Your Hard-Earned Cash When You Elect S-Corporation Status for Your LLC

Many entrepreneurs and small business owners start out as limited liability companies (LLCs) because of the ease of formation and liability protection. With a single member, tax filing is easy – just fill out Schedule C on your tax return with your income and expenses. But as your business grows, electing S-corporation status can save you on taxes. When you file as a sole proprietor on Schedule C, you pay…  Read more

9 Exceptions to Early Withdrawal Penalties from IRAs

We all know we need to save for retirement, but if you’re in a financial bind, your IRA might be an ideal source of much-needed funds. In general, if you’re under 59½, you’ll have to pay a 10% penalty on the taxable portion of any funds you withdraw, in addition to paying income tax. But if you meet any of these nine exceptions, you won’t owe the 10% early withdrawal…  Read more

Debt or Equity – Which is the Better Financing Option for Your Business?

Almost every business reaches a point when extra cash is needed to get to the next level. A manufacturer needs $15,000 to purchase the raw materials for a big order that will bring in $30,000. Or a start-up needs funds to get off the ground. Is it better to go into debt or to offer equity in your business in exchange for the needed funds? The answer depends on your…  Read more

Cut Recurring Costs to Improve Cash Flow

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

Make an Estate Plan Now to Protect Your Family Tomorrow

Do you have an estate plan? Everyone needs one, no matter your age. If you happen to pass on without one, your home state will make one for you, and you may not agree with how they distribute or dispose of your possessions.  You likely want a say in who gets something, what they will get, and when they will get it. And you’d like this to happen with the…  Read more

How to Take a Home Office Deduction for your S-Corporation

If you use a part of your home for your business, the IRS lets you deduct a portion of your household expenses as a home-office deduction. For a partner in a partnership, this can simply be reported on Schedule E of your personal tax return as “unreimbursed partnership expenses.” But a shareholder in an S-corporation who owns more than 2% of the stock isn’t allowed to do that. One option…  Read more

Is Your S-Corporation Compensation Reasonable? Here’s How to Avoid an IRS Audit

A great tax-saving feature of S-corporations is that the net earnings are exempt from self-employment tax. But the trade-off is that S-corp shareholders are expected to take a salary that qualifies as “reasonable compensation.” Since wages are subject to payroll taxes, this is an incentive to keep salaries low and save on payroll taxes, and to boost the tax-free cash distributions. The IRS is hunting for easy sources of additional…  Read more

Do You Have Household Employees? Here’s How to Avoid Trouble with the IRS

Do you pay someone to work in your home? Maybe a nanny or a gardener? Do you control what work is done and how it’s done? If so, that person may be considered your employee in the eyes of the IRS. If you pay them over $2,000 in 2017, you’ll need to issue them a W2 and pay payroll taxes for that employee. There’s no statute of limitations for failure…  Read more

6 Tips for Successful Like-Kind Exchanges

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

4 Things to Know about IRS Notices

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

Save IRS Penalties by Adjusting Your Withholding Now

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

Bunch Your Deductions and Get a Bigger Bang for Your Buck

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

Can I Afford to Buy a Delivery Van for My Business?

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

Track Your Miles to Save Taxes

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

Workers Lose Deduction for Job Expenses Under New Tax Law

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

What Small Business Owners Need to Know About the  New Section 199A Passthrough Deduction

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

Donate Stock to Charity and Save Big on Tax

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

Cash in Your Pocket for College Courses

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

7 Things You Need to Know About State Income Taxes for Your Business

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

Self-employed? Give your future self a raise and save up to $20,988 in taxes today

A Simplified Employee Pension (SEP) is a great vehicle for self-employed solo professionals to save for retirement. A SEP lets you bank up to 25% of your net income, up to a max of $53,000 for 2016, and $54,000 for 2017, in your own individual retirement account.  These plans are easy to set up at a bank or with your investment advisor. They can be set up as late as…  Read more

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