Friday, June 22, 2018

Audit-proof your shareholder loan

If you’re a business owner and your company lends you money, you’ll enter it in the books as a shareholder loan. However, if your return is audited, the IRS will scrutinize the loan to see whether it is really disguised wages or a dividend taxable to you as income.
Knowing what the IRS might look at may be useful when you structure the arrangement. Here are some items that will be considered if you’re audited:
  • Your relationship with the business. First, the IRS will look at your relationship to the company. If you’re the sole shareholder with full control over earnings, that may weaken your case that the loan is genuine. On the other hand, if you’re one of several shareholders and none of the others received similar payments, that suggests it may be a genuine loan.
  • Loan details. The IRS will want to know all the details related to your loan. This may include whether or not you signed a formal promissory note, if you pledge any security against the loan and if the loan has a specific maturity date or a repayment schedule. Other questions may come up about the rate of interest you’re paying and if you missed any payments. The more businesslike the terms of the loan, the more it will appear to be a genuine debt.
  • Other financial details. In addition to loan specifics, the IRS may ask you if your company is paying you a salary that’s in line with the work you perform, and if the company pays dividends.
Whether the IRS taxes you on the loan will depend on all these factors. If you’ve paid attention to the details, the loan should withstand IRS scrutiny. Contact us if you’d like more information about getting a loan from your business.
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Wednesday, June 20, 2018

Summer’s a time for vacations and tax planning

It’s tempting to take a break from everything this summer, but you may regret it come tax season if you push off tax planning. Here are some tips to help you keep your head in the game even when your feet are in the pool:
  • If you are a sole proprietor with children, consider putting them on the payroll during the summer months. Wages paid to your children under age 18 are not subject to Social Security and Medicare taxes. What’s more, their earnings are not subject to federal unemployment tax until they turn 21.
If employing your children is not an option, you might still be able to score a deduction by sending them to summer camp. Day camp expenses for kids under 13 can provide a tax credit of up to 35 percent. Just remember, overnight camps do not qualify, and usually both parents must work to claim this credit.
  • Keep in mind that tax deductions for moving have been limited. The recent tax code changes have eliminated the moving expense deduction. That means most taxpayers will no longer be able to deduct moving expenses. There are exceptions to the new rule, so give us a call if you have questions.
  • Business and pleasure can mix – if you follow the rules. Perhaps your sights are set on some leisure travel. Tacking on a few fun days before or after a business trip might be a tax- and cost-efficient way to pay for a vacation. But you have to follow all the rules if you want your business travel to remain tax-deductible. Travel that is primarily for charitable work might also qualify you for a tax deduction.
No matter what your summer plans are, this is always a good time for a general tax checkup to ensure your withholdings and estimated tax payments are on target. For help with any of these issues, contact our office.
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Wednesday, June 6, 2018

6 ways to avoid credit card catastrophes


Credit cards should be a convenient short-term way to pay, not a source of regular spending. Unfortunately, some people have a hard time staying true to this concept. Instead of paying off the entire balance due on the card each month, they let it grow and pay only the minimum amounts.
If this sounds all too familiar, it’s time to stop what you’re doing and start following these rules:
  • Pay the entire balance due each month.
  • If a balance remains unpaid at month’s end, do not use the card again.
  • Do not use more than one credit card.
  • Do not accept credit cards from specific retail stores.
  • Do not pay off one credit card with another.
  • Do not purchase gifts for people with your credit card. It’s often too easy to let your generosity exceed your ability to pay.
Spending habit monitoring tip: Take your credit card charges and your canceled checks for the past year and sort each charge and canceled check into two piles. One pile is for the “must” payments such as utilities, taxes, medication, rent or mortgage payments. The other pile is for the optional spending, such as meals at restaurants, gifts for people, recreational events or equipment.

Want more cash flow ideas?

Give us a call today and we will be more than happy to discuss specific strategies that are geared to your situation.

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Monday, June 4, 2018

Considering divorce? Think about your tax filing status


The advantage of filing a joint tax return is well known — couples generally save money when compared with filing separately. However, there is at least one potential disadvantage. Both spouses are liable for the entire income tax bill, including interest and penalties, even if one earned most or all of the income.

The joint-filing downfall

This issue most ordinarily emerges when there are unpaid assessments from joint-documenting years, and a couple later isolates or separations. The IRS can seek after either companion for everything. In case you're the least demanding one to discover, or in the event that you have fluid resources, you can wind up paying the whole bill.

At the point when this happens, the main help is known as the pure life partner run the show. On the off chance that you can demonstrate that you had no motivation to speculate assess shortages and you didn't by and by advantage from unreported wage, or that you marked joint returns just under pressure, you may get free. Lamentably, the IRS and the courts don't frequently permit guiltless companion alleviation.

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 Read to Related Blog on Quora : Payroll services New Jersey 

Friday, May 25, 2018

Why a business appraisal may be your best friend


For many business owners, business appraisals can provide vital planning information and help mitigate risk. Consider what it may be able to do for you:
  • Establish a verifiable value for your business. This can show whether assets have appreciated at a reasonable rate. If not, you may need to adjust your firm’s strategy.
  • Create documentation to support new financing. Lenders need strong evidence that their loans are properly secured. A business appraisal can supply that evidence. An independent evaluation of business assets may also encourage lenders to offer favorable interest rates.
  • Set a reasonable selling price. Without a detailed and defensible appraisal, owners selling their businesses sometimes entertain unreasonably low offers. On the other hand, an appraisal can keep owners from overpricing the firm and thus discouraging potential buyers.
  • Avoid litigation after a death. What happens if one owner dies or otherwise leaves his or her share of the business to others? In some cases, litigation follows. To ensure that the remaining owners’ interests are protected, the business needs to be appraised beforehand.
  • Support proper estate planning. If your estate is audited, the IRS is more likely to accept valuations that include a clear and reasoned appraisal. In fact, if discounts are adequately supported by an appraisal, estate taxes may be reduced.
  • Figure out capital gains. For example, if you inherit a business from your father and decide to sell it, the business can be valued as of the date of your father’s death. A good appraisal can help establish a supportable value for the business and may result in lower capital gains taxes.
PLEASE contact our office if you have questions about selling your business. We’re here to help you make the most of it!
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Monday, May 21, 2018

How to get your marriage off to a good financial start


Wedding season is upon us!
Did you know couples often enter into marriage without ever having had a discussion about financial issues? As a result, they find themselves frequently arguing about money. If you are planning a wedding, here are some steps you can take to get your marriage off to a good financial start:
  • Determine your financial compatibility. Take some time to discuss your finances before you tie the knot. Talk about your assets, debts, credit ratings and your financial attitudes, including your spending and saving habits. Do you share the same goals? Talk it out and see where you two align and where you differ.
  • Make a plan for how to handle finances after you say “I do.” This means figuring out day-to-day stuff, like who will pay the bills and whether or not you’ll maintain joint or separate checking accounts.
  • Involve your financial advisors. Every couple needs to work out their own style for handling money. Call us to assist you in setting up a budget, controlling your taxes and mapping out a financial plan for your future.
  • Discuss any related legal matters. If you have substantial assets, talk about the merits of a prenuptual agreement with your attorney. And ask your attorney how you can protect yourself from your partner’s credits if they have substantial debt. Perhaps you plan on buying a house together or combining financial accounts. Your attorney can advise you on the best way to hold title to your assets.
Discussing your finances before you wed may increase your chances for living happily ever after. Give us a call if you would like assistance in this area.
We love accounting (and happy couples)  =)
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Thursday, May 3, 2018

Sometimes Success is Spelled D-E-L-E-G-A-T-E!


It’s easy to get in the mindset that if you want things done the right way you have to do them yourself. But that isn’t always the best approach at work, even if you firmly believe you’re the best person for the job. There simply isn’t enough time in the day, especially if you have a business to run.
Like it or not, you must learn how to delegate work to your employees. Here are some helpful hints:
  • Develop a game plan. Start by deciding which tasks to delegate and which employees will be assigned responsibilities. The workload doesn’t have to be etched in stone, but you need a basic plan to subdivide jobs.
  • Find your most reliable, autonomous employees. You will need to rely on people who can think for themselves. Don’t rely on employees who you anticipate will be constantly seeking your guidance. If you have to show someone what to do every step of the way, it defeats the entire purpose.
  • Don’t hinder your employees. Give them the authority to act independently and make decisions on the fly. Don’t hinder the process by requiring employees to obtain your approval on every decision. This will only turn into a variation of doing things the same old way.
  • Keep track of work progress. This aspect must be handled with sensitivity. You’ll want to keep an eye on employees, but you can’t keep looking over their shoulders either. Find the proper balance.
  • Analyze the results. Do this to determine if the work met your expectations. If it didn’t, offer constructive criticism for improvements. Make this a learning experience for both of you.
As you become more comfortable delegating work, you can continue to loosen the reins. When you spend less time on routine matters, you’ll have more time to devote to growing your business profits.
Ready to delegate your payroll, accounting, and/or tax prep to a firm that’s been delegated to take those one for 100’s of businesses since 1971?
Find the time that works best on your calendar and schedule a consultation today at www.bas-pc.com/schedule.
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