What’s the right entity type for your new business?
What’s the right entity type for your new business? Two popular options for closely held businesses with multiple owners are LLCs taxed as partnerships and S corporations.
Both offer pass-through taxation, meaning tax items pass through to the individual owners and are reported on their personal returns. But they differ in important ways, such as self-employment tax, loss deductions, ownership flexibility and eligibility requirements.
Before making your decision, contact us. Taxes play a pivotal role in this decision. We can work with you and your legal advisors to determine the optimal setup for your situation.
Midyear is a good time to update your business’s strategic plan
Is it time to review your business’s strategic plan? As market conditions, technology and competitive pressures change, even a well-designed plan may need updating. Regular strategic planning can help your business stay focused and evaluate progress toward short- and long-term goals. If it’s been a while since you last updated your plan, now may be a good time for a strategic planning session. Be sure to set clear objectives, develop strategies to pursue them and establish metrics to track results. We can help ensure your new plan is supported by sound financial analysis. Contact us to learn more.
Don’t overlook these tax issues after a job loss
If you’ve recently lost your job, you’re likely focused on replacing income and evaluating your next steps. But some tax implications related to a job loss may also require attention. For example, unemployment compensation and severance pay are generally taxable, at least at the federal level. And health insurance premiums you’d been paying pre-tax from your paycheck may now have to be paid after-tax — though you might be able to deduct them. There are also tax consequences to consider in relation to your retirement plan with your former employer or withdrawing funds from an IRA to replace some of your lost income. If you’d like guidance, contact us.
Building bench strength for effective succession planning
Smooth leadership transitions depend on a business’s “bench strength” — the depth of employees prepared to step into critical roles when unexpected departures occur. Building a deep internal talent pool is one of the most effective ways to support your succession plan and protect your organization’s stability. Start by identifying potential leadership gaps and talented employees. You should also provide leadership training, mentoring programs, cross-functional projects and job rotations so your employees gain experience beyond their current responsibilities. We can help you create a succession plan and strengthen your bench.
When the sale of an appreciated home triggers taxes — and when it doesn’t
Rising home values are leaving some homeowners with large gains when they sell. But that doesn’t necessarily mean a large tax bill. If you sell your principal residence and meet certain requirements, you can exclude up to $250,000 of gain ($500,000 for joint filers). Gain that exceeds the exclusion or doesn’t qualify for it, however, is subject to long-term capital gains tax (or short-term capital gains tax if you haven’t owned the home for more than a year). It also could be subject to the net investment income tax if your income is over a certain amount. Contact us before putting your home on the market. We can help you estimate the tax impact and discuss possible planning opportunities.
Don’t let the IRS treat your sideline as a hobby
Do you operate a side gig in addition to your regular job? The way the IRS classifies that activity can have a significant impact on your taxes.
If the IRS treats the activity as a hobby, you’re required to report the income but can’t deduct most related expenses. If it’s treated as a business, you can generally deduct ordinary and necessary expenses — even if that results in a net tax loss. The IRS considers several factors when evaluating profit motive, including how you operate the activity, the time you invest, and your history of profits and losses.
If your side business isn’t yet profitable, contact us to discuss your situation. We can suggest strategies to help strengthen your position.
Behind on bookkeeping? Here’s how to get back on track
Has your business’s bookkeeping fallen behind? Getting back on track is often easier than you think. With a disciplined approach and the right support, you can regain control. Start by organizing key records, identifying incomplete bookkeeping tasks and addressing outstanding tax issues. Accounting platforms, such as QuickBooks, can help streamline the process. Once your books are current, you’ll be ready to monitor profitability, manage cash flow and plan for growth. If you need assistance catching up, contact us. We can help ensure you have the right tools and the timely, reliable data your business needs.
Could Your Child Qualify for a $1,000 Federally Funded Investment Account?
What is a Trump Account (IRC §530A) and Who Can Benefit? A new savings opportunity could help parents, grandparents, and employers build long-term wealth for children—with a potential $1,000 head start from the federal government. Who Might Benefit Most? A Trump Account may be attractive for: Parents, especially those with children born between 2025 and […]
Self-employed? Don’t overlook valuable tax deductions
Self-employed individuals often miss legitimate tax savings because they fail to keep adequate records or misunderstand the rules. Don’t let this happen to you.
Follow this golden rule: Business expenses must be ordinary (common in your industry) and necessary (helpful and appropriate for the business). Of course, you can deduct supplies, materials, and employee payroll and benefits. But don’t overlook other deductible costs — such as for your home office, education, business meals and travel, and business vehicles.
We can help you identify qualifying business expense deductions and establish recordkeeping practices that support them. Contact us to learn more.
Summer’s for vacation — encourage your workers to take one
Summer often means vacation time. But if your employees don’t take accrued paid time off (PTO), it can be a problem. Depending on your policies and state laws, workers may lose unused PTO hours at year end. Harms to your business can include lower productivity and greater fraud risk. Encourage workers to use their PTO with a formal policy and regular reminders from supervisors. If you offer a 401(k) plan, consider a PTO contribution program. These programs allow employees to convert unused vacation hours to 401(k) plan contributions. Contact us for help evaluating your PTO policies and developing strategies to keep unused PTO from becoming a liability.
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