6 Ways to Get Ahead of Your Tax Returns

6 Ways to Get Ahead of Your Tax Returns

Though 2018’s tax return due date is still several months away, it’s never too early to start preparing your records now to make the job easier on both you and your accountant. Here are 6 simple ways to get ahead on your returns, before the end of the year rush. 1) Locate Last Year’s Return For many taxpayers upgrading to a new tax software, switching accountants, or otherwise needing important verification, last year’s return can hold crucial information such as your AGI (adjusted gross income) that’s often needed by the IRS and other tax professionals.It’s highly recommended you keep copies of your returns for at least the past three years, while those looking to claim debt losses or securities should keep on hand seven years’ worth. It’s often recommended to keep actual tax returns indefinitely in case the tax agencies say they were never filed. 2) Request Transcripts in Advance If you can’t find your full return for last year, instead of requesting another one (a process that can take up to 75 days and costing $0.50/per copy), consider filing for a transcript instead. Essentially a “summary” of your full tax return, transcripts can often provide the information you need, while shortening the wait time by at least half – often arriving within 5-10 days electronically, or 30 days via mail. Either way, remember that both take time to arrive, so don’t wait until the last minute! You can request transcripts online, through the mail, or by calling (800) 908-9946. 3) Don’t Depend on Refunds Okay, this one is more of a warning than a tip, but as the...
5 (More) Tips to Get Paid Faster

5 (More) Tips to Get Paid Faster

It’s no secret that steady, on-time cash flow is crucial for a business’ survival. But what about when a client is consistently late for payments? Back in August we brought you 5 helpful strategies small businesses can employ to get paid faster, and now, we’re back at it again with 5 more to make the list. 1) Write Detailed Contracts So much hassle can be avoided with a little extra effort put into your contracts. As the legal foundation to all your business transactions, if you don’t have every detail laid out to both guide and enforce healthy client interaction, problems are bound to arise. Save yourself and your client the trouble by detailing the terms for prices, payment schedules, fees if a project is canceled unexpectedly, and how additional work or revisions are to be handled. 2) Ask for Deposits Though mentioned briefly in our last blog post, for projects that are expensive or lengthy in nature, this one is pretty much a must. I’m just going to say it again: it’s perfectly acceptable for a business to ask for a portion of the payment upfront! Plenty of owners do it, and 50% at the start of a project, 50% upon completion is a well used percentage. Ensure that your cash-flow is still there, regardless of project or timespan, and ask for initial deposits! 3) Schedule Your Invoices Just like you have a payment schedule for your clients, so should you also set the times you send your invoices to a certain day of the week or month. That way, your client can expect when payment is due...
Tax Markers of a Partnership

Tax Markers of a Partnership

Let’s talk about partnerships, and what constitutes as one for tax purposes. According to the IRS, a partnership is when two or more owners “carry on a trade, business, financial operation, or venture and divide the profits therefrom”, while all income and deductions pass through to the partners. Under this description, a partnership can be formed by both entities or individuals. For each tax period, the business owners are to be taxed on the partnership’s income, while the partnership itself must file under Form 1065 to show each partner’s income share, deductions, losses, and gains. Additionally, the business owners should report these on their own tax returns as well. At first glance, this loose terminology of what constitutes as a partnership can be confusing. For instance, what happens when a married couple decide to go into business together? Would they then qualify as a partnership or a sole proprietor? To help clear the air, in case Luna v. Commissioner, the United States Tax Court lays out eight defining factors on what makes a partnership: 1) All parties involved agree on business decisions and to become a partnership; 2) Any contributions made by partners goes towards the business only; 3) Each partner has control over the business’ income and capital, and maintains the right to withdraw money at any time; 4) Each partner – whether principle or co-proprietor – must share in both the net profits and losses; 5) All business is conducted in the joint names of all parties involved; 6) All partners file their returns as a federal partnership, or provide additional legal representation as a collective enterprise;...
IRS Confirms New Meal Tax Deduction

IRS Confirms New Meal Tax Deduction

Since the new Tax Cuts and Jobs Act (TCJA), there’s been a lot of questions and rumors in the tax community, while the IRS has been hard pressed to clear up some of the confusion. Their latest Notice? Whether or not entertainment and meal tax deductions were cut. Turns out, the rumors surrounding that decision were true – the IRS officially confirming that entertainment write-offs are no longer accepted, while meal deductions will remain at 50%. With the new Notice 2018-76, comes a few simple rules: • All meals must qualify as a standard business expense in accordance with Section 162(a); • The expense cannot be extravagant, a luxury item, or over the top; • An employee or the business owner themselves must be present for the meal; • The meal purchased is given to a current or prospective client, customer, consultant, or business contact; and • If the meal is provided along with entertainment, such as purchased at a ballgame, the cost of the food or drink must be bought separately from the entertainment, or otherwise reported individually on tax records. In upcoming months, the IRS plans to release more publications on the details behind what qualifies as nondeductible entertainment and when business meals may be eligible for 50% deductions, but until then, taxpayers are advised to follow the regulations given in Notice 2018-76, as well as seek the advice of their tax professionals. If you have questions on how this change applies to you, consult with your CPA and see how this may affect your tax return. (Thanks to this article by Ken Berry for the...
6 Ways to Prepare for a Disaster

6 Ways to Prepare for a Disaster

Not too long ago we brought you an article describing the 6 principles every business should have to survive the aftermath of a crisis… but what about being prepared for the crisis itself? Here are another 6 tips to help protect your company in the face of a disaster. 1) Make a Plan While most people and businesses have safety protocols in place like evacuation routes, emergency supplies, and first aid kits, few think about rescuing records, tax information, and other important documents until it’s too late. Make a detailed emergency plan that includes where important data is stored, what to grab first in accordance to the amount of response time you have, and what steps to follow before, during, and after a disaster. 2) Keep Copies of Important Documents While important original documents like bank statements, deeds, titles, tax records, and insurance policies should always be kept in secure, waterproof – or even fireproof – containers, the IRS recommends making additional copies of each and storing them someplace safe, off-site. Even by scanning documents electronically to keep on the cloud, or in a device, can help protect your business if there’s no time to retrieve any important data stored inside the workplace. 3) Record What You Own To help aid in insurance claims after a disaster, the IRS recommends businesses take detailed pictures or walk-through videos of their workplace and all that’s inside – with an emphasized focus on all high-value items. This photographic proof of ownership smoothens the claim process, while businesses can further compile lists of belongings by following IRS Publication 584-B. 4) Check with Your...

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