Tax Less – Give More

money umbrellaThe big gift under the Christmas tree for most Americans this year was the 2018 Tax Code for individuals and businesses. Santa has not delivered a gift this significant for U.S. taxpayers for over 30 years. Most of us are happy he made it down the chimney.

To explain in our blog what’s included in the bill, and how it is likely to affect you and your business, would be redundant. Plenty has been written in the press and online. An article that we found to be easy to understand comes from The Motley Fool. The impact of the Bill is explained in layman’s language and we especially like the tables. According to the Fool, a few interesting individual deductions will soon be history. These include theft losses (no need to fill out that pesky police report), unreimbursed employee expenses (no incentive to bring the boss a Starbucks latte), moving expenses (it now pays to stay in one place), and employer-subsidized parking (no problem for us whose office happens to be in the suburbs).

For corporations, the GOP-proposed Bill is exciting. Businesses can sell worldwide without double taxation, and if you’re one of the those businesses who made money overseas but couldn’t afford to bring money into the U.S. because of taxation, it’s good news.

Read the entire article (really, it’s a good one).

Of course, not everyone is happy. Parents who sacrificed so their kids could go to college won’t get the $2,500 tax credit and charities are all wondering whether the goodness of the average American wage earner will be “as good” if they aren’t able to deduct charitable donations. We believe that generosity and compassion, more than a tax deduction, drive American giving. Next year will be our litmus test. In the last election, according to Pew Research Center, 54% of us Americans voted, but 60% of us gave to charity.

Charitable giving, in all its forms, transcends politics. Giving is as American as apple pie and will remain that way regardless of our politics, tax rules, and financial forecasts.

8 Tasks for Small Business Now

 clock (time) and coins (money)Are you still eating the leftover Reese’s Peanut Butter bars left over from Halloween? Are you thinking about where to share Thanksgiving Dinner? Has it occurred to you yet that you need to start a Christmas list for friends, family and co-workers? And what about that holiday party? Sometimes it seems as though early November is merely a gateway to planning, scheduling, socializing and going just a little nuts thinking about the coming holiday season.

Slow down there, cowboy! It’s time to add some end of the year business planning to that mix. We can help!

  1. Verify your employee data. Make sure your records have a few things correct, because employees marry, divorce, and move. The items to check include correct spelling of names, name changes, current addresses, birth dates, and SS numbers. Also be sure tax ID numbers for independent contractors’ Form W-9 are correct and local taxes are accurate.
  2. Have you closed out each quarter for filing payroll tax returns and personal income tax? If there are any discrepancies, make corrections on the 4th Quarter Form 941.
  3. Check for any 3rd party payouts for disability so you have accurate reported amounts on tax returns and W-2 forms.
  4. Even though Congress is beating the drums regarding the ACA, tax form requirements are still in effect. Be sure you know whether you need to comply and check the IRS website for 2017 instructions for Forms 1094 and 1095.
  5. Check for unpaid bills or open invoices and clean up all your accounting-related processes so you can hit the ground running for end of the year reports.
  6. Change your passwords now to protect your business going into 2018. Don’t let your company be at risk for data hacks.
  7. Conduct employee reviews to ensure that everyone understands what’s expected and don’t forget to praise employees for the good job they did for the company this year.
  8. Set new business goals for the coming year. Write them down and share them with key employees.

Early preparations and organization helps us better reflect on the successes of the past, see clearly where change is needed, and prepare you for the challenges ahead.

You can spend more time watching the weekend games, get some fishing in before the really cold weather sets in, or shop early—if you have us do the accounting-related processes for you. If you only have to tackle Items 7 and 8, the coming holiday season just might be better than ever.

Hidden Tax Deductions

Waiting until the end of the tax year to find, verify, and record potential tax deductions can take a toll on what otherwise could have been more productive time spent growing the business. To make life easier, you can hire a professional bookkeeper to do this for you or use an outside service, like us. For anyone just starting a new business, we’ve put together a list of a few of the most overlooked small-business tax deductions.

starbucks blog#1 Fees paid to your accountant, lawyer or business consultant
To run small business successfully, you need sound advice and a great accountant and bookkeeper. Fees paid to these professionals are “ordinary and necessary expenses directly related to operating your business” and are deductible in the tax year they were paid.

#2 Losses on bad debts
If you paid advance wages to hire a hot-shot “marketing expert” and she bailed on you 10 days into the job because your dress code was just a ‘bit too conservative’ for her, the IRS allows you to deduct those lost wages. You can claim a deduction for most bad business debt, but only if you included the amount owed to you in your gross income.

#3 Carryovers
Carryovers are overlooked deductions from previous years. These are not “carryouts” —so Starbucks to-go while driving to work is not deductible. What if, for example, you started a home-based business and your expenses in the first year were actually higher than your income? You can “carryover” the loss to a future year when you did earn income.

#4 Startup expenses
Start-up costs are out-of-pocket costs for both looking into buying a business and getting the business started. These might include analyzing the marketplace and buying capital equipment like trucks or computers. Then there’s domain name registration fees, website and advertising costs, wages for new employees, consultant fees, costs to secure goods or licensing—the list can be seem endless. It’s a critical time to stay focused on documenting every cost so your accountant can maximize your tax deductions.

The size of the business does matter in terms of complexity, but whether a small business or large enterprise, it pays to keep impeccable daily records. Or simply hire us to do that for you.