by Candy | Dec 11, 2018 | Uncategorized
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...
by Candy | Dec 7, 2018 | Business
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...
by Candy | Dec 4, 2018 | Taxes
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;...
by Candy | Nov 30, 2018 | Business, Taxes
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...
by Candy | Nov 27, 2018 | Business
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...
by Candy | Nov 20, 2018 | News
It’s no secret student debt has been a rising epidemic in our nation; over $1.4 trillion now owed in student bills country-wide. For countless millennials, it’s an easy trap to fall into, and while the reasons behind why student debt is so high in recent years are complicated, for many, it’s a situation that seems impossible to escape. Until now. In a brilliant move to help lower student debt and empower millennial workers, the IRS has now opened a door for employers to contribute towards their employee’s student loans through an altered 401(k) plan. The program, introduced in an private letter ruling, works the same way a 401(k) does, with similar rules and restrictions, but instead of saving towards retirement – a plan only 52% of millennials participate in currently – employees now have the option of putting tax-free dollars towards eliminating their student loans. Plus, as an added benefit, employers may also match employee repayments for additional savings! Like all 401(k)s, this plan has limitations. To be IRS compliant, a student debt 401(k) plan must: • Be voluntary – an employee only receiving nonelective contributions for each student loan repayment if they choose to sign up for the plan; • Have each contribution match what the worker would normally receive with a retirement plan, for each pay period; • Replace any and all other 401(k) benefits – the employee choosing between either saving for retirement or paying off their student loans, not both; • Not exceed $18,500 in yearly deferrals ($24,500 if over 50); • Have all additional employer contributions perfectly match an employee’s deferral until an amount...
by Candy | Nov 16, 2018 | Business
It’s certainly been a year for natural disasters. From hurricanes on the east coast, to fires in our home state of California, the unexpected and uncontrollable has crippled many lives and businesses. But did you know that there are a few preventative measures you can encourage in your company to make surviving a crisis – or even reopening after one – manageable? Here are 6 core principals to ensure your business isn’t counted among the casualties. 1) Know Your Company’s Purpose This may seem business-101, but for a surprising number of companies out there, few actually have a set purpose behind their service. As a business owner, take the time to establish your “why” for what you do – including the community impact you want to leave, what you sell, and your company’s big picture of accomplishment. 2) Avoid Straying Off Purpose It’s easy when there’s no clear business guidelines to get distracted with new service opportunities, new tasks for employees, and new shiny ideas that don’t coincide with your company’s purpose; especially for a business that’s so successful, management has a hard time keeping track of everything. But if a crisis hits and a company is spread too thin to prioritize on what’s important, with employees focused on tasks ill-suited to their skill sets, it can be nigh impossible for that company to find its feet again in the midst of chaos. Know your business purpose, and stick to it! 3) Encourage Employee Greatness There’s arguably nothing more impactful than an employee who’s passionate about their job. It affects service, the quality of work, the customer, the workplace...
by Candy | Nov 13, 2018 | News
For the third time this year, the Federal Reserve has raised their interest rates yet again from 2% to 2.25%, and according to most, it’s a change that was both expected and welcome. Used to calculate the rates for credit cards, mortgages, and other forms of consumer loans, the interest increase was unanimously voted in under Chairman Jerome Powell for one simple reason: The economy is on the rise. Ever since the recession, the Federal Reserve (Fed) have kept the rates at never-before-seen lows in the interest of helping the economy grow and level out once more. But with little unemployment, inflation under control, small businesses thriving, and entrepreneurial optimism blossoming, the time is right for the Fed to gradually begin increasing those rates. The trick, however, lies in the timing and just how much. Too fast and they can risk a recession, too slow and the economy will become fragile from overgrowth. So far, “the Fed shows no signs of taking (a) breath in rate hikes,” Navy Federal Credit Union corporate economist, Robert Frick, wrote in a research article. Though gradual and small climbs, as mentioned above, this is the third interest increase this year, while a fourth is expected by central bankers to take place sometime in December. Come 2019, another three interest hikes are expected by the Fed, before finally settling with one more in 2020. Another change, enacted by the central bank, came in the form of dropping the word “accommodative” from it’s monetary policy description – signaling the belief that interest rates are neutral point in the economy, neither helping nor harming it’s growth....
by Candy | Nov 9, 2018 | Taxes
Yet another provision to the Tax Cuts and Jobs Act (TCJA), employers who traditionally provide paid family leave to their employees, now have a new and improved tax credit available to them. Eligible through the years 2018 and 2019, the IRS affirms that for employers who either establish or fix existing paid family leave programs to qualify by December 31st, the employer credit can be applied for the entire tax year of 2018. There are a few changes as to what is considered “qualifying” paid family leave, however. In addition to the traditional stipulation that employee compensation must not exceed $72,000 to qualify for the credit, the paid family leave policy must also: • Provide at least two weeks of paid medical and family leave for every full-time employee, along with a similar amount for every part-time employee; • All paid leave must be at least 50% of the employee’s usual paycheck; and • Any paid leave given or taken by state or local government is not to be considered into the amount of the employee compensation at all. For more details on how to apply for the tax credit, calculate your amount, and the surrounding rules and limitations, check out the official IRS Notice...
by Candy | Nov 6, 2018 | News, Sales Tax
Ever since the decisive Supreme Court ruling on the requirements of online businesses regarding sales tax, Wayfair v. South Dakota, states across the nation have been enacting new sales tax laws, while the businesses they affect have been left scrambling to keep up. In light of this, to help encourage retailers to move into compliance, several states have adopted amnesty periods to help businesses become current with the new tax code, without the accruing of penalties. In Indiana, for instance, since May 2nd the Indiana Department of Revenue (DOR) has offered a Voluntary Disclosure Initiative (VDI) for online retailers until December 31st of this year. Through this VDI, out-of-state sellers are offered a Voluntary Disclosure Agreement (VDA) on their tax requirements, while qualifying businesses are given a look-back period of: • The full calendar year of 2017, and the current period for state sales and use tax purposes; and • The fiscal or calendar year of 2017 for state income tax purposes. In New Jersey, a potential amnesty of 100% of penalty fees and 50% interest has been passed on July 1st, 2018. In this new legislation, the New Jersey Division of Taxation must come up with an amnesty program of at least 90 days, ending no later than January 15th of next year, that applies to most state tax liabilities between February 1st, 2009 – September 1st, 2017. Alabama also had their own amnesty period that ended on September 30th, waiving interest and penalties for all taxes besides property tax, motor vehicle, and motor fuel – while also applying to those before the first of 2017. In Connecticut,...
