• When partners pay expenses related to the business

    It’s not unusual for a partner to incur expenses related to the partnership’s business. This is especially likely to occur in service partnerships such as an architecture or law firm. For example, partners in service partnerships may incur entertainment expenses in developing new client relationships. They may also incur expenses for: transportation to get to and from client meetings, professional publications, continuing education and home [...]

    Published On: May 10, 2024Categories: Featured, Small Business Tax
  • Don’t have a tax-favored retirement plan? Set one up now

    If your business doesn’t already have a retirement plan, it might be a good time to take the plunge. Current retirement plan rules allow for significant tax-deductible contributions. For example, if you’re self-employed and set up a SEP-IRA, you can contribute up to 20% of your self-employment earnings, with a maximum contribution of $69,000 for 2024 (up from $66,000 for 2023). If you’re employed by [...]

    Published On: May 7, 2024Categories: Featured, Small Business Tax
  • When businesses may want to take a contrary approach with income and deductions

    Businesses usually want to delay recognition of taxable income into future years and accelerate deductions into the current year. But when is it wise to do the opposite? And why would you want to? One reason might be tax law changes that raise tax rates. The Biden administration has proposed raising the corporate federal income tax rate from its current flat 21% to 28%. Another [...]

    Published On: May 6, 2024Categories: Featured, Small Business Tax
  • Tax-wise ways to take cash from your corporation while avoiding dividend treatment

    If you want to withdraw cash from your closely held corporation at a low tax cost, the easiest way is to distribute cash as a dividend. However, a dividend distribution isn’t tax efficient since it’s taxable to you to the extent of your corporation’s “earnings and profits,” but it’s not deductible by the corporation. 5 different approaches Thankfully, there are some alternative methods that may [...]

    Published On: February 29, 2024Categories: Featured, Small Business Tax
  • Taking your spouse on a business trip? Can you write off the costs?

      A recent report shows that post-pandemic global business travel is going strong. The market reached $665.3 billion in 2022 and is estimated to hit $928.4 billion by 2030, according to a report from Research and Markets. If you own your own company and travel for business, you may wonder whether you can deduct the costs of having your spouse accompany you on trips. Is your spouse [...]

    Published On: February 23, 2024Categories: Featured, Small Business Tax
  • What’s the best accounting method route for business tax purposes?

      Businesses basically have two accounting methods to figure their taxable income: cash and accrual. Many businesses have a choice of which method to use for tax purposes. The cash method often provides significant tax benefits for eligible businesses, though some may be better off using the accrual method. Thus, it may be prudent for your business to evaluate its method to ensure that it’s [...]

    Published On: February 22, 2024Categories: Featured, Small Business Tax
  • Update on IRS efforts to combat questionable Employee Retention Tax Credit claims

      The Employee Retention Tax Credit (ERTC) was introduced back when COVID-19 temporarily closed many businesses. The credit provided cash that helped enable struggling businesses to retain employees. Even though the ERTC expired for most employers at the end of the third quarter of 2021, it could still be claimed on amended returns after that. According to the IRS, it began receiving a deluge of [...]

    Published On: February 20, 2024Categories: Featured, Small Business Tax
  • Should your business offer the new emergency savings accounts to employees?

      As part of the SECURE 2.0 law, there’s a new benefit option for employees facing emergencies. It’s called a pension-linked emergency savings account (PLESA) and the provision authorizing it became effective for plan years beginning January 1, 2024. The IRS recently released guidance about the accounts (in Notice 2024-22) and the U.S. Department of Labor (DOL) published some frequently asked questions to help employers, [...]

    Published On: February 13, 2024Categories: Featured, Small Business Tax
  • Tax-favored Qualified Small Business Corporation status could help you thrive

      Operating your small business as a Qualified Small Business Corporation (QSBC) could be a tax-wise idea. Tax-free treatment for eligible stock gains QSBCs are the same as garden-variety C corporations for tax and legal purposes — except QSBC shareholders are potentially eligible to exclude from federal income tax 100% of their stock sale gains. That translates into a 0% federal income tax rate on [...]

    Published On: February 12, 2024Categories: Featured, Small Business Tax
  • Does your business have employees who get tips? You may qualify for a tax credit

      If you’re an employer with a business where tipping is routine when providing food and beverages, you may qualify for a federal tax credit involving the Social Security and Medicare (FICA) taxes that you pay on your employees’ tip income. Credit fundamentals The FICA credit applies to tips that your staff members receive from customers when they buy food and beverages. It doesn’t matter [...]

    Published On: January 21, 2024Categories: Featured, Small Business Tax
  • Defer a current tax bill with a like-kind exchange

      If you’re interested in selling commercial or investment real estate that has appreciated significantly, one way to defer a tax bill on the gain is with a Section 1031 “like-kind” exchange. With this transaction, you exchange the property rather than sell it. Although the real estate market has been tough recently in some locations, there are still profitable opportunities (with high resulting tax bills) when [...]

    Published On: January 20, 2024Categories: Featured, Small Business Tax
  • The standard business mileage rate will be going up slightly in 2024

    The optional standard mileage rate used to calculate the deductible cost of operating an automobile for business will be going up by 1.5 cents per mile in 2024. The IRS recently announced that the cents-per-mile rate for the business use of a car, van, pickup or panel truck will be 67 cents (up from 65.5 cents for 2023). The increased tax deduction partly reflects the price of [...]

    Published On: January 19, 2024Categories: Featured, Small Business Tax
  • A company car is a valuable perk but don’t forget about taxes

    One of the most appreciated fringe benefits for owners and employees of small businesses is the use of a company car. This perk results in tax deductions for the employer as well as tax breaks for the owners and employees driving the cars. (And of course, they enjoy the nontax benefit of using a company car.) Even better, current federal tax rules make the benefit [...]

    Published On: January 18, 2024Categories: Featured, Small Business Tax
  • A cost segregation study may cut taxes and boost cash flow

    Is your business depreciating over 30 years the entire cost of constructing the building that houses your enterprise? If so, you should consider a cost segregation study. It may allow you to accelerate depreciation deductions on certain items, thereby reducing taxes and boosting cash flow. Depreciation basics Business buildings generally have a 39-year depreciation period (27.5 years for residential rental properties). In most cases, a [...]

    Published On: January 17, 2024Categories: Featured, Small Business Tax